ADOTAS 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.
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