New York Times, people will pay for what they once got free

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nytimes1.jpgADOTAS EXCLUSIVE — Reading about the challenges facing The New York Times brings back memories from January 2001.  At the time, I was the product marketing manager of an Internet Startup that was about to migrate from freeware to a paid model.  That wasn’t a very popular thing to do in 2001 (is it ever?), and we weren’t sure what kind of response we’d get.

After we sent out the newsletter announcing our new pricing models, I received a broad range of emails in my in-box. My personal favorite – and I received several emails like this – were from writers who said that they had used our product for several years and had introduced thousands to our product (though the company did have several thousand customers, we were less than one year old).

To each one of the emails I received complaining about the new pricing, I responded very politely, thanking them for their support and explaining that in order to keep providing the best possible features and service, we needed to pay our engineers and tech support staff. And most of those who received that personal email did end up selecting one of our paid services.

Now I’m not suggesting that NYTimes publisher Arthur Ochs Sulzberger, Jr., should start writing emails to thousands of non-paying customers, but I think The Times could find value in the following lessons learned from this and other similar successful migrations:

1. Get a plan (any plan) – I am not the first to say this, and I won’t be the last, but The Times needs a consistent game plan to guide execution.

2. Create multiple products and multiple price points – Some will argue with me that this will complicate matters for The Times, and of course, The Wall Street Journal doesn’t really do it, but The Journal is a business publication and their pricing policy has been around for years. As a general newspaper, The Times has different types of consumers who are price-sensitive to different degrees.

3. Be unapologetic about it – I was polite but unapologetic when I wrote to customers why they had to now pay for something that just last month they got for free.

4. Do as Ralph Lauren does – As an advertising student in the 1980s, my dream job was to be the advertising manager for Ralph Lauren. Though that never worked out, my interest was peaked when I read about Pearson CEO Marjorie Scardino’s recommending that premium media companies to use the Ralph Lauren Business Model. “It’s the Ralph Lauren effect—If you charge higher for it, people will think it’s really good.” The Times must create perceived value. The perceived value of a free product is next to nothing. Only by pricing their offering can The Times create a perceived value.

Back to my old company… a few weeks into our campaign, the company I worked for had over 1000 paying customers. And now, that company, under the brand-name of the company that had acquired it a few months before our migration to a paid solution, is the market leader in its respective category.

The New York Times is already a market leader with strong name recognition and lots of eyeballs. Now they just need a game plan to create perceived value, and the courage to execute their plan.

— Express your opinion, comment below.

9 COMMENTS

  1. Historically publications survived and even prospered with a blend of subscription and advertising revenue. Why should online be any different?

  2. it shouldn’t and it’s an old model. Eventually they will find their way. Let’s hope they don’t loose direction like AOL did trying to find it’s direction from ISP world to ad world.

  3. This article is very vague. What is the NY Times going to charge customers for that was once free? I doubt it’s to browse their website for news because that would be retarded. You would be committing suicide by trying to charge customers for something that they once got for free in this economy. What the NY times needs to do is figure out a way to monetize on their current customer base without having to charge them anything. How? With advertising and I know a lot of the big boys out there are pulling back from running ads but there are smaller online companies out there that would love to advertise on a big name site like NYtimes.com. You just need to reach out to them and offer good rates that won’t break their wallets. Uriah, why don’t you finish your article and let us all know what the NY Times is going to start charging their customers for that was once free? Don’t you think that is relevant to your article? I did a quick Google on this and didn’t find anything so I would love to find out what they are going to start charging for.

  4. The challenge for the NYT is to come up with a dependable advertising revenue stream. Personally, I’d have no issue with a paid online subscription to a publication I trust and depend on. But it would have to be a penny a click kind of deal.

    I’d only pay for what I’d use.

    There simply has to be a solid and dependable source of advertising revenue to afford the key resource, the journalists.

    Brian Olson
    Video Professor, Inc.

  5. PJ, My apologies for taking so long to respond to your question.

    Though, as you pointed out, it is a challenge to go from a free model to a paid one, particularly in 2009, the answer will come from understanding what the real value of the NYTimes is to their most loyal readers is. Knowing that will enable determining the revenue model.

    For example, I believe that a lot of people would be willing to pay for content written by Thomas Friedman. Perhaps an opportunity exists to create an offering which includes getting Thomas Friedman’s content 12 hours before it’s published elsewhere online. Why not include access to all of his content online. Throw in an advance copy of his next book. And there are other reporters who have followings.

    Another challenge / opportunity is reaching out to readers under 30. The is a challenge for all newspapers, not just the Times. Perhaps a solution for this market would be a mobile product which enables the readers to stay up-to-date in world news in 12 minutes. Rocketboom meets The New York Times.

    The Wall Street Journal had an easier time with their paid model because their product is tightly defined. It is harder to put a concise definition on what the NYTimes, but knowing who the Times is will help determine how the Times will get to where it needs to get.

    Is a Ralph Lauren Polo shirt really better than the ones you get at the Gap? Regardless of the answer, there are plenty of people willing to pay the 200-300% premium for the privilege of wearing Ralph Lauren.

  6. Thanks for replying Uriah, what you wrote makes sense, I just doubt that this will work for the NY Times. Regarding your comparison of Gap and Polo, yes there will be people willing to pay higher prices for RL products but if you check, Gap stock has fallen about 50% in the past year while Ralph Lauren has fallen more than 50%, so your comment about “plenty of people” just doesn’t seem right. LOL, sorry man, had to point that out.

  7. As an avid internet user I’m really bugged by this move. If the NYTimes is successful at charging their audience for reading their content, that’s gonna set a very big precedent for the entire content-based internet. Next our favorite bloggers are gonna start charging us! Personally, I think a donation-based thing works better in this case… I will freely donate to my favorite bloggers and websites to keep them rolling, but I will turn away if they start MAKING me pay.

    I will just find someone else that will give me the same content for free, as will most internet users. It seems pretty condescending of the NYTimes to think that their content is THAT much better than anyone else’s…

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