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Source.

The days of “free clicks” to access news media articles could be ending soon. But don’t worry. Newspapers need to reinvent themselves for the new media and The New York Times will be launching a “newsonomics” model that makes sense – at least to a news junky like me.

The Neiman Journalism Lab at Harvard University posted an intelligent analysis of how it will likely work, and could save newspapers adapted to a new age. Come to think of it, the term “newspapers” is likely to become an anachronism. Will this become a new model for the industry?

How much are you willing to pay?

{Note: Initially for The New York Times tiered-model, your first 20 pageviews per month will be free of charge, with exceptions such as breaking news.}

From Ken Doctor’s article:

It’s official — and the world still turns. After 14 months of planning, The New York Times is finally launching its pay system, starting in the U.S. March 28. It’s been a gestation period longer than a manatee’s, due to customer-service identification and coordination issues, tech development schedules, pricing thinking (and rethinking), and new tablet relaunch preparations. As I wrote earlier this week (“NYT’s Good Timing on Pay Launch, Amid News Chaos”), its timing is remarkably good — playing to the astounding iPad 2 launch, big news around the world, and a growing sense of the Times’ outsized importance as media chaos multiplies.

The Times has about 32 million monthly unique visitors in the United States, out of 45 million worldwide. While all are potential customers, its U.S. population is the first, key market. Something less than a million people are 7-day subscribers to the print paper (more on Sunday), and they’ll get digital access (“The Newsonomics of Overnight Customers”) included in their print subs. The Times knows that a great number of those uniques are Google-sent “fly-by” traffic; only a tiny percentage of visitors will ever pay.

How tiny? Maybe one, two, or three percent.

So one percent would be about 300,000 digital-only subs. Two percent would be, of course, twice that, 600,000. Three percent — probably a dream, at this point — at 900,000.

Let’s take the $20 price point as an average sales price, figuring both that tablets will drive sales and that smartphone-only and all-access digital subs will balance themselves out. At $20 per month, that’s about $66 million a year in digital circulation revenue — a new line item. Double it and you have $132 million a year.

Let’s put that number in perspective. The New York Times Media group — essentially the Times — took in $683 million in circulation revenue in 2010. So a one-percent digital success rate would yield a 9.6 percent increase in circulation revenue, if print revenue stays flat (which it won’t). Not bad, but not world-beating. Two percent, or a 19 percent increase on the print base, would be something to shout about — and a great platform for growth. Three percent is an almost magical number: $200 million a year. Even if the new scheme works, it will take some time to get there.

Conclusion:

Let’s remember that the launch is just a moment in time. The pay model will play out over months and years, as publishers seek to reverse more than a decade of habit, and the free-news world morphs (witness AOL’s comings and goings) all around it.

We as consumers won’t be making a one-time decision. We expect that the news products (and services) we’re offered will get better over time.

Tablet products should fully embrace the wondrous potential of the platform. HTML5 should revolutionize the browser experience. The Times is working on both.

Over the years, the Times has thrown lots of products at the wall — Times Skimmer, TimesPeople, Times Topics, Times Reader, among others. It’s thrown so many that most of us don’t have time to track them or use them, no matter how useful they might be. Its product challenge in 2011-12: Match the journalism of the Times with a singular, surpassing everyday digital experience.

Comments

  1. #1 Greg Laden
    March 17, 2011

    The Internet is bound to turn on them, crunch their bones and eat their brains. Oh, and rip their heart out so they can watch it’s final beats with their dying, heavy-lidded eyes.

    Or, I suppose, it could work. We’ll see.

  2. #2 D. C. Sessions
    March 17, 2011

    The key question is whether the increase in subscription revenue will outweigh the reduction in ad revenue.

  3. #3 Jeff
    March 17, 2011

    Well said!

  4. #4 Jeff
    March 17, 2011

    Indeed. The printed newspaper, while beloved by many in my generation, is simply not used by students. When I mention an article I read “in the paper,” their response might as well be “what is this thing, “paper” that you speak of?”

  5. #5 Zen Faulkes
    March 17, 2011

    Jeff: “The printed newspaper, while beloved by many in my generation, is simply not used by students.”

    That’s not exactly the response I got from my students. I asked in one of my classes, “How many of you have read a newspaper in the last month?” or something similar, and most of them had.

  6. #6 Ken
    March 17, 2011

    Recreating the old business model online (in this case relying upon ads supplemented by subscriptions) has rarely worked in the Internet world. The online trick seems to be finding something value-added to sell while giving away a quality basic product as a way to capture, or hold onto, a market.

    Twenty articles a month sounds like less than a “basic product”. If you see them start to sue their potential customers for “pirating” additional articles beyond twenty each month, you will know they have joined the record industry in their efforts to remain in the past while fighting to maintain the status quo in a changing environment.

    Customer satisfaction is also going to be a larger issue as more people pay for access to what they once viewed a free. Any kind of advertising is often rebelled against by online users who pay subscriptions. Many online companies make money by giving away an ad-based product, then charging for the removal of those ads. I doubt that, once behind the pay wall, the NYT will be willing to give up ad revenue. Will their subscribers agree?

    Paying customers also are more demanding about the support of a product. There is a wonderful series about the Civil War going on right now in the Times, but it was shoehorned into a blog format that doesn’t suit being able to read it from beginning to end. As a free, ad-based service that is a minor annoyance. Once I’m a paying customer, however, I will expect them to put a lot of money and resources into making things like that more convenient for me to read.

    I do fear a world where all news is reported as nothing but the generic five W’s of journalism, and would dearly miss an organization like the Times if they couldn’t survive. I just hope they are thinking about what they have to sell rather than making sure they have the technology in place to stop freeloaders from “pirating” what they think their product is.

  7. #7 Kevin R
    March 17, 2011

    How much of what the Times is trying to sell is widely available for free elsewhere? They can control their own content, but wars, tsunamis, political upheavals, artistic and economic successes and failures, and the thousands of other stories that fill the pages of the Times will continue to happen outside their paywall and will continue to be reported on and analyzed by others without any concern for how it might affect the Times new business model.

  8. #8 SoulmanZ
    March 18, 2011

    considering that the free major news services have been serving up rubbish for quite a while (see Fukushimi coverage for clear evidence of this) and cant compete with internet sources of primary information I am gonna go right ahead and say that making me pay for something I already dont value is the wrong direction

    Ken got it right – offering the same service at a new price never worked before, especially when the new price is an infinity more than the old one!

    the only positive I see is that it puts a number of Murdoch’s opinion-ships away from large groups of people, and that can only be good

  9. #9 Altın çilek form seti
    March 19, 2011

    How much of what the Times is trying to sell is widely available for free elsewhere? They can control their own content, but wars, tsunamis, political upheavals, artistic and economic successes and failures, and the thousands of other stories that fill the pages of the Times will continue to happen outside their paywall and will continue to be reported on and analyzed by others without any concern for how it might affect the Times new business model.

  10. #10 Tütüne Son
    December 8, 2011

    Jeff: “The printed newspaper, while beloved by many in my generation, is simply not used by students.”

    That’s not exactly the response I got from my students. I asked in one of my classes, “How many of you have read a newspaper in the last month?” or something similar, and most of them had.

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