We’ll undoubtedly look back at great Pay Wars offensive of 2011 with great laughter. We’ll likely be gloriously right or wrong about news media’s ability to charge for digital access.
There’s little laughter now.
The arguments are political, spiritual, psychological, communitarian and Marketing 101. Everyone it seems has at least one strongly felt opinion about the New York Times and its want to charge us, to pay its reporters and sooner than later to part ways with the world’s richest man, Carlos Slim, the gray knight whose deep-in-the-recession loan provided oxygen to the then-almost-breathless company.
The Times’ announcement last week about its pay plan gave us a good half-dozen tests to immediately ponder (“The Newsonomics of the New York Times Pay Fence”), and on reflection, raised as many or more questions than it answered. That’s partly the limited view the Times gave us into its laborious 14-month planning period, and partly the nature of the uncertain pay beast.
Here are the nine I’m thinking about in the run-up to the March 28 launch, after the Times' Canadian friends help it work out the kinks:
Is part of the plan a backdoor Sunday paper/tablet subscription? Three of the people I talked with on the day of the announcement had begun to run the subscribe-to-Sunday, get-free-digital access numbers in their head. At a $4-a-week introductory rate, that’s $208 a year. Which gets you enough print reading for a week, thank you, and avoids all the parsing of the three digital plans, assuming you are or are becoming mainly a digital daily reader.
Do the math. If I want to lean way back and fully enjoy the Times on my new iPad2, I’ve got to pay $260 a year. Why not pay $52 less, and get the Sunday paper. The daily paper doesn’t have to pile up and I can feel good about my new hybrid life.
Now, this could be a stealth strategy or an unintended consequence of the pay fence.
It seems to be an unintended consequence, which, frankly sounds bizarre. As Martin Nisenholtz said in talking with All Things Digital’s Peter Kafka:
Kafka: For first-time subscribers, at least, you can get more for your money by buying a print subscription than a digital-only offer. I assume that’s intentional.
Nisenholtz: Not really, no. I don’t think anybody ever had a discussion of favoring print over the Web. This research was done on digital loyalists. Obviously, the print subscribers are very, very valuable to the franchise, but I can’t remember a single discussion where we linked the digital price point to our print subscriptions.
I say, “bizarre” because, in the real world, of course, people will do the math. That’s not a bad thing.
The Times, like all publishers embarking on pay schemes, will tell you the new plans are all about digital, not print. After being criticized for years for protecting print franchises at the expense of digital vision and growth, that's understandable. Yet, they doth protest too much.
With no more than 20% of their overall revenues driven from digital sources, they’d be foolish not to consider print ramifications – or upside.
What they say: This a digital initiative, period. What they should say: We’re no longer going to let print strategy dictate digital strategy decisions, but, of course, we’re trying to figure out the whole print-to-digital customer and revenue strategy.
The Sunday paper/tablet subscription is a big idea, intentional or not. I'll further explore it in my Nieman Lab column this Thursday.
Is the Times’ trying to create a League of its Own? It may be more accurate to say it’s playing in a new league, the one founded by the two dominant business newspapers of the English-speaking world, the Financial Times and the Wall Street Journal.
Though the Times’ pricing is rich – compared to many regional papers’ tests, coming in at $9.95 or less per month for all digital access – it parallels the FT, the paper on which it has patterned its metered system. The Times' full digital bundle is a hefty $455; the FT's $468, and, yes, that's dollars, not pounds. A good third of the FT's audience is American.
Take another example of a little paper down the street from the Times, the one that is trying to slit its throat, Mr. Murdoch's Wall Street Journal. The WSJ charges $207 a year, after initial discounting, for its digital-only bundle, comparable to the Times’ $455, or less than half as much. WSJ Publisher Les Hinton recently touted 200,000 new mobile subscriptions, just days before the Times' long-expected announcement. Expect the competition between America's two true national newspapers to get more brutal. It's significant that the print strategies -- the Times has been maintaining high print rates while the Journal has been doing heavy discounting, under Murdoch, and has the numbers to show for it -- are now being ported over to the digital, and mobile, businesses.
In a sense the Times has two pay battles, here. One is to prove out the notion of its high value to enough digital customers. The other is to prove it's more than twice as valuable to those segments of customers who do compare the Times to the Journal. (While it may not have a major impact in that battle, it's significant that the Times is keeping the Journal-competitive DealBookfreely accessible in the new era.)
Is the Times smart not to charge print customers more for digital access? Maybe. We’re into the psychology of value and price here. The Times – and, prominently, the Dallas Morning News – want to establish a new monetary value for digital content, wiping away the “news wants to be free” culture of the last 15 years. Both, though, are concerned about the repercussions of charging on top of print prices that have ramped way up in recent years. So, both are “including” total digital access for print subscribers.
There’s a certain logic, there, -- with Times’ subscriptions going for as much as $769 a year and the Morning News for as much as $407 -- though in these new bundles, many readers will consider digital “free” or tossed in.
Journalism Online co-founder Gordon Crovitz takes a different view. He notes that preliminary market data, from early JO launches, reveals two things to this question:
- Print readers who must pay a small increment for digital access (typically $2.95 to $4.95 a month) sign up at the same rates as print readers who are offered “included” digital access, but must register/sign-up to get new access after a pay plan goes into effect. He says that print subscribers who are heavy web users are willing to pay a modest amount extra for digital access, while print subscribers who aren't heavy web users seem to perceive little value from free access -- so the publisher doesn't benefit by bundling online access for free to them.
- At sites where print readers must pay extra for access, overall digital bundle sales appear to be higher. Crovitz attributes that metric, potentially, to all customers seeing a price attached to digital news, in all cases. The dynamic, he says, seemsto be that non-print subscribers who see an offer that requires them to pay, but bundles online access for free to print subscribers, are wondering why they should pay for access if the publisher is signifying no value to the web product by giving it away for free to print subscribers.
It’s worth noting that JO’s market experience is limited, if growing, and that the company benefits from any and all digital reader revenue its partners generated; it works on a revenue share basis.
Those caveats clear, it’s a big point to ponder, and points to the precariousness of our print/digital pricing knowledge.
My own sense is that establishing a value for digital access is a good thing. It may be worth considering letting readers know that digital access costs X, but won’t be charged to print subscribers for a year. Then, include it as an opt-out, and maybe in lieu of a print increase. That could mitigate risk, establish value and balance relative print/digital subscription value going forward.
A data point: already about half of the Times' print subscribers have "connected" their accounts, so that they can get digital access. That's good -- and the result of lots of reminders from the Times -- at the launch of the pay system. Don't expect that number to et to 90%. With a 49-year-old average print subscriber age -- and lots of septuagenarians in the fold -- a goodly number will be taking print only for a long time. A seventy-five percent sign-up rate, within a year, would be a great sign of reinforcing value for the Times.
What’s with the four-week pricing? It smells like newspaper legacy thinking, the way newspapers have charged for home delivery or arcane lineage for classifieds. The month, invented by the Mayans or Romans, or someone a long time ago, is well understood and more consumer-friendly. That’s why almost everyone else selling digital goods – including the FT and the WSJ – use it. Yes, we do get it that the 13th month (Ophiuchus made us do it?) yields 9% more annual revenue, but it just seems odd and old-fashioned, adding arithmetical consumer complexity where the name of the new game is simplicity.
While we're at, a few more pricing questions:
- Why isn’t there an annual price? There isn’t one, and the omission seems odd, after 425 days or so of planning. Like monthly pricing, annual pricing would seem to be a no-brainer, and an annual commitment deserves a discount. The biggest issue here, for the Times especially: Lots of WSJ and FT customers expense their subscriptions, and an argument can well be made that NYT access is similarly needed for business. But you can’t easily expenses a news charge every month, I mean, every four weeks.
- What will the introductory offers look like? They’re coming, I’m told. To that end, the new pricing should be just a platform, with all kinds of special deals, targeted to business enterprises, students, teachers, and readers where it has regional news partnerships, among many other possibilities. The new metered system, especially, allows great flexibility in segmenting, targeting and experimenting. How actively the Times uses these capabilities will tell us fast it can evolve into a modern marketing outfit.
- How about family pricing? There’s a great opportunity here, and it’s cryptically referred to in the Times’ FAQs. “If you're a digital-only subscriber, you can create only one account (with one e-mail address and password). If you're a home delivery subscriber, you're also currently limited to one digital account, but you'll soon be able to link additional digital accounts to your home delivery subscription [itals mine].
Where was Eddy Cue? Apple content head Cue did the two-step with Rupert Murdoch, as he launched The Daily. Shouldn’t the Times’ new pay approach,which emphasizes its updated tablet product, have merited at least as big a partnership event? The Times reinforces the iPad’s core promise of deeply pleasurable news reading, and much more so than the quicker-read Daily. News reading is among the top three uses of the iPad, I've seen in early research.
In fact, wouldn’t an old-fashioned late ‘90s OEM deal have been possible here, packaging a special $99 Times tablet subscription offer – with a month free -- with every new iPad2? Especially if Apple were the only tablet-maker to offer that kind of deal, it would be a win-win for the Times and Apple.
Where’s the reader benefit? One news industry veteran – who would love the
Times’ move to succeed – told me he’d read the email the Times sent him Friday and “felt like he was being ticketed by the police.” He’s right; it wasn’t exactly warm and cuddly. Even though Publisher Arthur Sulzberger has been talking about how public radio membership passion helped inform the Times’ plans, there’s precious little about belonging in the announcements. The Times has tried various membership forays, but its relationship with its customers feels more like tough love. We respect and value its prodigious news report, but don’t feel part of the enterprise, as we can with public radio.
The Times’ move into the next step of the digital age could have been better accompanied by more warmth. So far, it seems like a missed opportunity, with communication more Times-facing than customer-facing.
I’m not talking just about warm-and-fuzzies here. Leading with product and reader benefit -- think of the of oft-used "Which product best fits you" chart, accompanying many digital offers -- would help blunt the subterranean concern, rumblings heard here and there, that the Times’ new system “punishes its best [heaviest usage] customers.”
In its customer notification email in regions (Bay Area, Texas, Chicago), where the Time has significant regional content partnerships with Bay Citizen, Texas Tribune and the Chicago News Cooperative, respectively, why not prominently tout that inclusion to paying customers? In one stroke, the Times could both have given readers a sense they are getting something extra and give partners recognition they deserve. Any of those partner articles read by NYTimes.com readers will count against the 20-article monthly limit, I've confirmed.
Why opt into the Apple store, but not Android and others? You can buy Times digital subscriptions two ways, directly through the Times or through Apple. It was semi-news that the Times had opted into Apple’s new subscription plan. I don’t think it had much choice, given Apple’s dominance and overall business terms.
Why not tap into Android and Blackberry stores as well, getting better revenue shares and customer data terms?
It seems to me in this distributed digital age, the more selling channels the better, as long as you maintain that direct customer relationship.
Newspaper companies going paid are going to have to fight the inclination to focus disproportionately on transitioning their print customers to digital customers, while paying too little attention to the masses of 25-to-39-year-old potentials who never developed the print habit. Lots of them will be hanging out in the Android environs.
If the pay idea is the right one for the Times, why isn’t it the right one for the Times’ regional group? Regional publishing head Michael Golden recently told the Borrell Local Online Advertising conference that his group of 15 papers in the New York Times Regional Media Group wouldn’t be putting up paywalls, focusing on developing local commercial marketplaces.Of course, better commercial marketplaces (“The Newsonomics of the Digital Mercado,”) are as key as getting a new digital reader revenue stream.
In a sense, the Times has three strategies: one for the flagship Times, and its Worcester Telegram and two others, one at the Boston Globe and the other in the largely southeastern regional group. Diff'rent strokes for different markets -- or profound experimentation.
Bonus question #10, and call for entries: If it’s not a pay fence, what is it? We need a metaphor. Paywall seems very Times of London, so I tried fence. Maybe we need a more colorful name. Checkpoint Arthur or ? What’s your best moniker for this kind of metered approach?
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