Case Analysis – The New York Times Paywall
The New York Times, as well as every other newspaper and magazine around the world, is struggling to find the best way to transition from traditional print to the digital space while still maintaining a profitable business. The current solution for the largest local metropolitan newspaper in the United States is a paywall, which requires readers of online content to pay for a digital subscription in order to have access to the site after a fixed monthly allowance of 20 articles. However, this pay metered method has been tried by the most popular American newspaper website before and the question is whether or not this strategy can help The Times evolve with the ever-changing technologies and continue to live up to its motto: All the News That’s Fit to Print.
External Environment Assessment
The newspaper industry in the United States is in major need of a transformation. Over the past decade, circulation numbers have been declining for weekday and weekend editions according to the Newspaper Association of America [Exhibit 5]. The accessibility and popularity of the internet is changing the way the world consumes media. The transition from print to digital has provided a challenge for media companies, with The New York Times being no exception. Revenue streams from print newspapers are mainly based on advertising revenue [75% Total: 42% retail, 25% classified, 8% national – Table A]. However, with readership moving to online consumption, a gap is present between past and present advertising revenues. For one the new medium is more economical while also being more customizable for various target markets of consumers, such as those reading the headlines or the sports page. In addition, retail companies, such as car manufacturers, are more likely to use their own websites as a vehicle and classifieds are more likely to be posted on various free websites such as Craigslist.com. In the end, according to Peter Preston on The Observer, an online advertisement only brings in 10–20% of the funds brought in by a duplicate print advertisement.
As the internet was growing early in the 21st century, newspapers rushed to digitize their content and make it available to new and adopting audiences free of charge. As the companies came to realize the internet not only decreased the number of print subscriptions, but also was unable to provide the same amount of advertising revenue, changes were investigated. Certain newspapers modified the number of days in circulation or removed print circulation altogether while yet others investigated the idea of charging a fee for the right to read online content. The term “paywall” was coined for a system that prohibits internet users from accessing a particular website without a paid subscription. Various paywalls are used or have been tried by daily newspaper websites as well as by other media such as magazines. The strictest type of paywall is used by the Wall Street Journal, the top US newspaper based on circulation. Minimal to no access is allowed to content on www.wsj.com without a subscription, which runs on average $16.67 per month [Exhibit 11]. It’s an all or nothing system that has worked well for the Wall Street Journal due to its specialized content, niche audience and position in the marketplace. Other options are softer paywall that provide users more flexibility, such as selective free content and/or a preset number of free articles per month. The New York Times utilized an exclusive content paywall for two years beginning in September 2005. Circulation was decent for TimesSelect, but ultimately the journalists/writes whom were having their content blocked were unhappy by the restriction of audience. Currently, The Times is utilizing a metered system where online users can read 20 articles a month before being prompted to become a subscriber. The goal behind the...