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Times’ new “bundling” scheme suggests revenue stream for blogs

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The Grey Lady, the New York Times, after years of dropping hints, finally is going to start charging for “bundled digital service.”

What this basically means is that the paper is creating a hierarchy of tiered services. Readers will get some stuff for free. For more stuff, they’ll pay more, according to how much access they want.

Like all revenue schemes on the Internet, this tiered model has yet to be proven. A few years ago, it looked like the Times had stumbled badly in trying to figure out how to go online. First they gave everything away for free, leading pundits to predict that nobody would ever pay them for content once they got used to getting it for nothing. Then they started charging for the premium Sunday columnists, a move that so outraged readers that, in short order, the Times made them free again.

Now comes this bundled service. In retrospect, maybe the Times found a lemon and made lemonade out of it. After all, they’ve probably attracted millions of new readers as a result of giving the paper away every day (they get 30 million unique visitors a month). Since the Times remains the newspaper of record in America (sorry, Rupert), it’s likely that many of those new readers, who now are addicted to their daily dose, will fork over the estimated $20 a month for the full package. (I probably will.) So this is one way to formulate a revenue scheme, albeit one that has to be built up over time: Attract a large readership that’s passionate about your site, and then, when you’re pretty sure they’d hate to lose you, start charging a subscription fee.

Are there any indications, though, that people are actually willing to spend money for online content? For all the blather about this over the past several years (and I’ve contributed my share), there’s actually been very little evidence, one way or another. Until now. The New York Times is reporting that consumers will spend for information, “although the sums spent are relatively low.”

The Times reported on a Pew study on “the willingness of Internet users to pay for information…”. (“Information” includes intellectual content, software and music, as opposed to products and services.) Turns out consumers, particularly college grads and women, are indeed willing to spend for information. “But the amount spent was typically only about $10 a month.”

So here we have the Times angling for $20 a month for the full package, while the Pew study finds that the average comfort zone for payment is $10. Those numbers are awfully close and it’s likely the Times’ own research discovered the same thing–that $20 a month is very near the upper limit of the consumer’s budget.

More research now has to be done on why consumers are willing to spend anything at all for online content. What is the tipping point that makes them decide “yes” instead of “no”? Since information is, strictly speaking, an indulgence, not a real need (like food, heat, clothing), the consumer must attach very great value to it in order to part with his hard-earned cash. Do you pay anything now for online wine content? If yes, what? If no, why not? What would you pay for? How much?

  1. Raley Roger says:

    I currently pay for access to several internet portals. I cancelled most of my hard copy subscriptions, and basically went solely on-line with my favorite publications. I pay for this reason: on-line publications with some crediblity (NY Times, Wall Street Journal, etc.) are able to employ a fair number of fact checkers and editors. Most casual, free sites currently don’t have those kinds of resources. There are so many grammatical errors on these sites, erroneous or poorly researched information and almost no accountability. I like my news as true as I can get it; so I feel more comfortable sticking to mainstream publications, or at least more credible ones, for which I’ll pay, so that I can at least have the pleasure of reading an intelligently written, well-researched piece.

    Not that the Times is above reproach; they’ve had their share of controversial journalists, but at least there’s accountablity there. That still matters to me as a reader.

  2. Raley, well said.

  3. Frankly I think it’s the subscription model that is dead, rather than the media that continue to try to make it work.

    Despite having really interesting selections not available elsewhere, eMusic continues to struggle charging a monthly fee while pretty much every pay-per-track site is either doing OK or absolutely killing it. I seriously doubt the Kindle and other e-readers would have taken off if they had adopted a blanket subscription model (including books) rather than a pay-per-piece model.

    My own spending habits for content probably represent a minority demographic but I doubt they are unique. I think a dollar a track is too much, consequently I have to really like a piece of music before I shell out for it. But I’m not likely to pay a subscription for Sirius/XM unless I can record what I like DRM-free. I pay by the piece for content on the Kindle (and will continue to get some books that way even if they go to $14) but don’t subscribe to any periodicals online. IMO, print editions of periodicals continue to deliver a far more compelling user experience than online, especially when it comes to graphics. When I need a professional reference article I am ready and willing to pay $15-$40 per piece to Springer or Elsevier to get it, but I don’t subscribe to any of those journals online or in print.

    And can you imagine how annoying it would be to have your mobile carrier pushing new apps to your phone by subscription? I shudder to think it. On the other hand, paying $0.20 per text can quickly escalate your bill to the point where a subscription plan becomes cost effective.

  4. lori narlock says:

    I think this plan has the potential to succeed. For the reasons you outline as welll as other examples of consumers willingness to pay for high-quality content, such as “listener-supported” radio and televion outlets.

  5. Maybe, because I run a successful print journal that is slowly making the inevitable transition to online subscriptions, I have a somewhat narrow and jaded view.

    My strong sense has been and remains that there is content for which people will pay and content for which people simply do not need to pay because they do not need that content. The Wall Street Journal is a case in point. Its content is available in paper. yet, because it is an important reference source, it is able to sell itself online as well.

    The NYT may or may not be able to get away with its latest idea, but it does make intellectual sense. There is content that people want so badly that they will pay some nominal amount to get it. I would rather see it offered by the piece or by the section than by the “tier” for the whole newspaper in that I don’t want to read the whole NYT. But, I suspect that model does not work for the NYT and they feel the need for a more regular and reliable stream of revenue.

    In point of fact, I personally do not read the NYT at all except occasionally for Eric Asimov’s wine column. On the other hand, as a Bostonian who still bleeds for the sports teams of his youth, I read the Bonton Globe every day and I am so addicted to the sports section that I would pay for it.

    That is the bet that the NYT is making–that there are enough folks addicted to its content that they can create an additional revenue stream of some consequence. I am guessing that they can.

    On the other hand, I don’t know how many papers could replicate whatever success the Times may have. It is, after all, a unique newspaper, and one of the few that has a nationwide reading audience.

    The ancillary question to all this is what does it say about blogs. I don’t see how many blogs can develop a subscription revenue stream. Appellation America could not do it, and whatever else their model might or might not have done, their central information and cast of writers was first rate. If they could not sell the writings of Dan Berger, Laurie Daniel, Tom Elkyer, Alan Goldfarb and others, it is hard to see how a lone bloggist is going to be able to do it.

  6. The problem with news is the plethora of outlets and the few minutes it is relevant. That makes it different from a research paper or music.

    I pay for something that gives me pleasure day in and day out, like jazzandblues.org. News doesn’t. Despite the fact that news is my heart and soul.

    Would I pay $20 a month for NYT online? No. But I do play $150 (or whatever) for year subscription to hard copy The Economist.

    Meanwhile, my hard copy Sunday New York Times didn’t arrive the last two weekends. Go figure.

  7. Hi Kathy, it was great seeing you in NY! You got a behind the scenes view of the WE gang at play.

  8. Charlie

    Thanks for the plug to Appellation America. Not dead yet, there is a small subscription base that uses the database, but not so much the editorial. That is the transitory change, data that takes a long time to track down for free.

  9. I subscribed to WS for both print and online access, since I’m ITB and needed to have it available for trade use. Over the last 14 months, my customer service experiences with WS have made the decision for me, in that I won’t be renewing my subscriptions. I’ll look at the print editions on a monthly basis and, if there’s anything critical that I have to have, I’ll pay the “by the piece” price of an individual issue.

    The only other online subscription that I’ve tried in the last year was with Pandora and, while it was interesting in the beginning, the endless repetition of mostly the same music again and again has led me to the decision not to renew. My music purchases will be via iTunes on a “by the piece” basis.

    I have yet to have an online experience that has convinced me that a blanket subscription rate would be worth the cost. QPR applies here, as well as in wine.

  10. Thanks Sherman.

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