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