The End Of Free

- - The Future

If there’s anything that signals the end to the internet era of free it’s the long anticipated, much talked about, subscription plan for the New York Times. Announced on Thursday, visitors to the NYTimes.com website will be given access to 20 articles a month for free and to read the 21st article they will be given the option of buying one of three digital news packages:

$15 every four weeks for access to the Web site and a mobile phone app (or $195 for a full year), $20 for Web access and an iPad app ($260 a year) or $35 for an all-access plan ($455 a year). All subscribers who take home delivery of the paper will have free and unlimited access across all Times digital platforms except, for now, e-readers like the Amazon Kindle and the Barnes & Noble Nook. Subscribers to The International Herald Tribune, which is The Times’s global edition, will also have free digital access.

They have smartly decided to make some of their content available for free to take advantage of social distribution so that anyone can read an article someone passes along to them via email, twitter, facebook and blogs. The freemium model has really become the standard for making money on the web and it works quite well when you have a digital product that costs next to nothing to make a copy of.

Personally I believe this marks the end of an era where everyone scrambled to make something free and marveled at all the people who used it. Increasingly I’ve found myself looking at all the free options and then going for the higher quality paid option. That doesn’t mean that free will no longer exist, just that products you use heavily or want more quality/reliability out of will be paid. And historically, with new technologies, this has always been the case. As consumers begin to rely on something or competing products battle for attention the quality goes up and so does the price. I think we’ll all look back at this moment, forget about all the hand wringing that went into it, and talk about the genius behind hooking everyone for free and charging the addicts who want more.

There Are 37 Comments On This Article.

  1. I just think with this model they have proposed they have priced themselves out of a larger market.

    Comments on both Twitter seem to be running against them at the moment. In fact there’s the likelihood of a tool to erase their cookies and to block their DNS reads providing freer access.

    I like many others thought a $25-$30 annual fee (after all they don’t have to print anything) was reasonable but at $195/year it’s too rich for my wallet. Even at that you’ll still see their advertising.

    It looks to be either a money grab or a test balloon to see what the market will bear. I’m betting on the latter and they’ll have to reduce the fees because of the loss of readership.

    • Rich…a $25-$30 annual fee is simply not sustainable, especially if the idea is that fewer and fewer people will actually buy the printed edition. And I’m sorry, advertising still drives all publishing.

      • @Brad Trent,

        First off before anyone gets the wrong idea, I’m not begrudging a revenue stream but I do think it is the wrong price point.

        Having reviewed their financial statements, I don’t think their model is tenable either. I think that Eric below has a good handle of what will happen to the site. I think the $30 price point is very workable in combination with other subscriptions.

        They are punishing loyal readers with a subscription fee and giving it away via Facebook for free. How much sense does that make.

  2. I think a change back to paying is good news (if it is successful) for photographers.

    As a consumer I really enjoy reading the NYT (and watching the photos) on the ipad, much closer feeling to reading the actual paper than with the website. I just wish there was an option to buy it daily, at a daily price, like in the old days.

  3. No, there are simply too many other free sources of quality news for the current readers to move to. I think what’s really going to happen is that they’ll see a sharp drop in traffic down to a core group of mostly home-delivery subscribers who’ve already paid and they won’t make any more money off of, and the few die-hards who simply have to have their Times online are feel it’s worth it. Mix in some come and go stragglers for the limited freebies they find from social networking, etc. and that’ll probably be it. So only a nominal increase in revenue at a substantial loss in exposure, which isn’t very good, especially for any advertisers that might be looking for a large market to present to.

    And why do iPad users have to pay $65 more a year for the same content as other mobile users? That’s ridiculous and will drive current iPadders away I’m almost certain.

  4. @Rich – a larger market means nothing if its not profitable… and I don’t think $30/year was ever on the table in a serious way. A lot of the twitter negativity is from people who balk at paying anything for products that are not only incredibly expensive to produce, but also deeply valuable (as the current crises in Libya and Japan emphasize… )

    To me they missed the sweet spot by maybe 30-40% in their pricing (where is the discount for an annual plan!?) and therefore may drive some of their “converted” free readers to a home delivery subscription because it makes more sense and is only pennies more per day. That being said I think that 20 articles per month is actually pretty liberal and may not do anything to close the door to the continued bleeding from aggregators/opinionators like HuffPo.

    • @John Loomis,

      A larger market in this case does indeed mean profitability. The expense if you look at their 10k’s is in salaries, printing and delivery. If they didn’t have to pay for printing & delivery their costs would drop significantly. They basically want the online users to subsidize the print customers and provide profit.

      The $30 model (I might be convinced 49.99 is a good deal) is good for those of us that read it and throw it away. IOW I don’t need but 7-10 days of access to a particular issue. If I want more then I have to pay to access the archive. On top of that just like the print version I see advertisements

  5. I just read my email from Arthur Sulzberger Jr. May this give the New York Times and other media publishers the breath of life they need; long live good reporting, decent writing, great imagery and the magazines & newspapers that deliver them! I sincerely hope it works out for them — and the others who will undoubtedly fall in their footsteps.

  6. I am happy to pay for quality of content made available by the NY Times though I think they may be setting the price a bit too high. And not including the iPad version in the basic digital rate I don’t get at all.

  7. I’m hopeful this model takes off but not sure that of that price point, especially in this hobbled economy. I would have like to seen a $99 access iPad/tablet access package but regardless of that, I’ll take the plunge.

  8. The question for me is whether or not the paywall business model at the Times will translate into new hires, better coverage and salary increases for reporters and photographers, among other changes. If there is no trickle down to the people who provide the content, then this year’s model is just last year’s with a new paint job to please the stockholders.

  9. Many of you are missing the point. It’s not the pricing plans, it’s not the details, it’s not even about the overhyped iPad.

    Try to see the forest for the trees. This is about a historic company deciding to advance its broken business model by being progressive and not giving a damn about its neighbors’ opinions. They’re making a statement that they’ll have to live up to, “Our News is better than Their news. Try it and you’ll see.”

    By the way, Pandora is doing this now too, along with many other companies. Free-to-try turned subscription models are probably the next big trend. Have a taste. You like? Buy more now!

    If you show the customer they can’t live without your product, you’re a wealthy genius. Seth Godin said this years ago and few listened.

  10. it’s about Time!

    i think they have to start at highest price point possible, and test it. as it would be easier to lower it if things get a little rough. which is probably why they arent betting on lower pricing first, as i think it takes longer to raise price points than the other way around. i am sure a great deal of $$$ went into marketing surveys and analysis to determine that price entry. they have their market segment down pat and even know things like what time of day a middle-class reader goes to the bathroom (perhaps not exageration at all), and how many of us take sections of The Times there with us to read while we sit at our throne, and what age group is most likely to do that.

    even though it is a pain in the ass to enforce it, i do think they should offer a tri-monthly payment plan for a year subscription. in this economy, most of us are okay with parting with $50 at a time, than getting hit in the belly with $200. besides, most of us subscribe to many outlets, so it adds up.

    the ipad may be dominating, but there will be a ton of gadgets within 2 – 3 years, so the high entry price there is just taking advantage of the usual-suspects paradigm to make quick $$$ out of the hot cakes that just came out of the oven with those of us who have the cash, and love to stand on line to be the first buyer. once the gadgets level off, and i am sure more gadgets are on the way, i can see it dropping substantially.

    yes, now that we live in an open-source internet, and that hackers’ tools are really going mainstream, they need to figure out ways to protect their property from software that changes DNS and cookies. it’s napster dejavu-alloveragain to easily bypass online subscriptions. it is already being used en masse to watch counterfeit movies online for free. someone check movie-houses income over the last six onths and i bet a dollar it is dropping off fast. in my opinion, because they are such a colossal and well-known outlet, they will face the danger of anywhere from 5% upwards of revenue loss, if they dont get the right IS folks to start preventing measures. because they may get caught flat footed at a critical juncture it may prove significant in undermining their first baby steps.

    they failed miserable at setting up a more forgiving entry price-point for the third world and developing nations where $200 is what someone in the middle class makes a month, and so it is completley cost-prohibited. The Times is an important platform in the world for disseminating human knowledge highly critical for the development of all societies. i am not sure they, as well as other prestigious outlets, yet fully know the astonishing capacity for social impact on all of the world that their content represents. they are a changing tool that empowers the dispossessed, the voiceless, the disenfranchised, all of humanity, in ways we are yet to measure. particularly, they reach those mavericks who are seeking to change their societies. they need to radically lower that price point for the developing world. and urgently so.

    ultimately, i think the key ingredient is them sticking to their guns long run, come hell or high water. i mean, do it at least 5 years. that’s very key. cause a lot of users hold off to see if something will work. and most of us like waiting 2 years to see if we need a cell phone, an iphone, or whatever hot gadget takes hold of the public’s imagination.
    when media started opening up free web outlets you got the sense they were doing it free mostly because it all looked fragile and sketchy; not just visually, but interactively. it was slow, and poorly designed for the end user’s appetite, and so was the hardware, software, and distribution channels. and it even took them a long time to figure out *if* they could sell ads. now that the medium is delivering *very* high-quality, much faster, and gorgeously – designed content, and now that the internet is faster and more available on a multiplicity of channels and platforms, it makes sense to begin the process of collecting for it.

    we keep talking about a distant future, but i think the future *is now* and continuing to explode with technological advances in web access, hardware and software faster than we can collectivley process it. so, it is the perfect time to make this happen. chips are about to take giant leaps forward within the next decade,opening up a cornucopia of advances and access and efficiency and speed in an open-source world that will make today pale in comparison.

    isn’t it terrific one of the premier outlets is taking the big step into uncharted territory? success is not for the timid. kudos for the Times.

    on their shoulders, a lot of us shall stand. so i am hopeful they shall pull it off.

  11. scott Rex Ely

    The problem is as long as the NYT uses the euphemism “Enhanced Interrogation Techniques” for American’s doing the torturing and has no hesitation to blast China, Iran and Nazi Germany for their , government sanctioned, exact same acts signals that they are not really a journalistic institution, but a propaganda arm for the White House.

    Free of charge for their capitulation is about right.

    Charging for that same slanted content, people are just subsidizing propaganda.

  12. Interesting link to pass on – Rob Grimshaw, managing director of FT.com, tells Atlantic that the NYT paywall will ‘absolutely’ work:
    http://tinyurl.com/5ub89yc

    @Chris#12 – I think we get this is a lot bigger than today’s details… most of us have been talking about this, and pleading the NYT to set up a paywall, for at least a couple of years. But today’s details will massively impact the initial reaction and success of the paywall, even if NYT has to be in it for the long term and slowly find the correct price, free article allowance, etc.

    • @John Loomis,

      Where Grimshaw’s falls down is that FT, as well as WSJ, have a expertise in a specific market of news while the NY Times casts a wider net around news.

      The two deterrents at this point are the plethora of free news feeds and the price point in this economy. Both of these are probably going to cause them to reconsider

      Since they’re rolling it out to Canadian customers first we can watch and see what happens.

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  14. I don’t mind paying for something if it’s quality. The problem is that content isn’t always the highest priority for sites that charge. I just hope it doesn’t get to where it’s out of the average persons ability to afford to obtain news.

  15. Stella Kramer

    Will they still be asking for free content in the form of photos and “your stories?”

  16. The New York Time and NPR are my two most valued news sources. I chose to support them both. NPR with contributions to my two local stations and by subscribing to the New York Times.

    After the Huffington Post sold for million on free contribution I stopped going to that source.

    If you are a content creator, I feel that is right to support content creation in other forms as well. I hope that the new plan is successful.

  17. matthew pace

    Business is business and publications simply can’t run on free although at times they think that we should. The problem however is that at the price level they are proposing and all those who could follow, will put internet readers at high subscription rates to read several publications. It could force some to revert back to the printed page and use our “pads” for other things.

  18. scott Rex Ely

    When exceptions are made to your master none can see you as anything but a slave. NPR and the NYT have the golden knee pads out and have become courtesans for the office of the President of the United States.
    Ronald Reagan signed the CAT and if anyone bothers to read it people will find it to be extremely clear about the legal parameters and a signatories’ responsibility regarding torture. We torture people and condemn those that do the same. Why endorse or subsidize a business that is an accomplice to criminal activity?

  19. At a time when so many are dropping their cable subscriptions this move by the NYT is timely, and I will most likely jump for the subscription.

  20. Maybe they will start paying their photographers too, especially the ones that do the T Style magazine…..they are so cheap..

  21. I’m a little late to this post but…. It’s my understanding that online news wasn’t something the publications were losing money at. I might be wrong on that. Companies today need to see increases in profits every year or they feel something is wrong making about the same amount as last year is not a goal. Bonuses are paid on % increase in corp profits The iPad has opened up a way to make more money. More to the point tablet publications. The software that makes this posable want an on going cut of the money. I think adobe want a monthly fee for the software and .30 an issue distributed not sold so even free issues cost .30 to Adobe. Woodwing is the other big software option and they to want a monthly cut. My point is they are all seeing a way to get that yearly increase in profits but don’t expect to see more money for photos. They will now just want more photos and can you do some video while you’re there. And it will all be for the same fee.

  22. Paying for good journalism and editorial is proper and a great move for the industy. NYT’s digital pricing model is insane though, they really screwed it up.

    John Gruber (major technology writer) has put it into words far better than I could, read up.

    http://daringfireball.net/2011/03/pricing_should_be_simple

    Quoting from that larger article:

    “…The New York Times’s new digital subscriptions. They’re neither easy-to-understand nor sound like a great value. Unlimited access to the NYT costs four times more than Netflix — $35 every four weeks. You can pay $15 or $20 every four weeks instead, but then you’ve got to choose between using a Times app on your smartphone or iPad (respectively). And how many normal people realize that if you, say, opt for the $15 plan, that you’ll be able to access the Times website from your iPad?

    Netflix: one price, access from any device.

    New York Times: three tiers, arbitrary division between devices based on screen size.

    ….

    “I’m pretty sure it’s too expensive — that is to say, that I think The Times would make more money by charging significantly less, making up for the difference per-subscriber in the number of people who’d be willing to sign up. But even worse, it’s too complex. Further, by offering relatively generous access to the nytimes.com website for free to everyone, the Times is providing an enticement to read the Times less.”

  23. This New Yorker is a little late in commenting but….it would be interesting to know how they came to this digital subscription cost because in many ways it’s not a bad deal.

    If you buy the daily print edition, you are probably still paying more in a year than you would for a digitial edition. This might appeal to many who subscribe to print but find themselves reading the online edition, too.

    It you buy print, aren’t averse to digital, and want to save money, you might switch to the online edition.

    If you intermittently buy print (i.e. Fri-Sun, with an occasional Wednesday thrown in for the Food Section), you might just stay with print and do the 20 free articles a month – you could look for free news elsewhere and read the Times occasionally.

    So for many it might be a good deal. I think another issue is the length of access….i.e., can you bookmark a page and have it available ‘forever’? I have friends who stack the paper and read it at a different time than on the published date. That could be tough to search through an archive – I’m not certain that the Times saves ‘today’s paper’ in full digital format – could be.

    In other words, though I’m not crazy about paying for what has been free, doing the math, I can see how it’s not a bad deal.

  24. One more thought …..currently, I can’t read the Times on my Apple Touch…there’s a bug somewhere caused by another app that I can’t seem to locate or correct. So if I’m paying for digital access to the Times and have trouble accessing it, I’m out of luck and still paying….not quite like losing a copy of the daily paper for one day and buying another copy, is it?

    As in many things digital, the user issue is not their concern, unless they’ve done something to cause the problem, so it’s basically profits all the way for them, with the access problems left up to you.