Good article in BusinessWeek about the future of the New York Times. (Requires registration.) The Times is facing a crisis.

...NYT Co.'s stock is trading at about 40, down 25% from its high of 53.80 in mid-2002 and has trailed the shares of many other newspaper companies for a good year and a half. "Their numbers in this recovery are bordering on the abysmal," says Douglas Arthur, Morgan Stanley's (MWD ) senior publishing analyst.

[...]

There are those who contend that the paper has been permanently diminished, along with the rest of what now is dismissively known in some circles as "MSM," mainstream media.

[...]

Advertising accounts for almost all of the digital operation's revenues, but disagreement rages within the company over whether NYTimes.com should emulate The Wall Street Journal and begin charging a subscription fee. Undoubtedly, many of the site's 18 million unique monthly visitors would flee if hit with a $39.95 or even a $9.95 monthly charge. One camp within the NYT Co. argues that such a massive loss of Web traffic would cost the Times dearly in the long run, both by shrinking the audience for its journalism and by depriving it of untold millions in ad revenue. The counterargument is that the Times would more than make up for lost ad dollars by boosting circulation revenue -- both from online fees and new print subscriptions paid for by people who now read for free on the Web.

Sulzberger declines to take a side in this debate, but sounds as if he is leaning toward a pay site. "It gets to the issue of how comfortable are we training a generation of readers to get quality information for free," he says. "That is troubling."

What's a platform agnostic to do? The New York Times, like all print publications, faces a quandary. A majority of the paper's readership now views the paper online, but the company still derives 90% of its revenues from newspapering. "The business model that seems to justify the expense of producing quality journalism is the one that isn't growing, and the one that is growing -- the Internet -- isn't producing enough revenue to produce journalism of the same quality," says John Battelle, a co-founder of Wired and other magazines and Web sites.

Interesting perspectives. Would people pay for the New York Times online? Some. I wouldn't. They have some great stuff and I read the paper version of the IHT and the NYT when I'm offline, like on an airplane, but there are so many free sources of information and ways to get to information online that the incremental value added by the New York Times on my news consumption habits wouldn't be worth the hassle and the price. I really believe there is great value in the brand and the organization that is the New York Times, but I'm not sure what the business model is. I'm sure the world is better off with The New York Times, but how do they survive? People can make fun of bloggers, but blogs are growing and the metrics show that The New York Times is not. Is the New York Times the only "MSM" doing poorly or is everyone in trouble?

I've said this before, but I believe there is a role for MSM and that blogging is not a replacement, but rather something that can support MSM by adding more voices, view points and feedback. On the other hand, from a business model perspective, I'm not sure how blogging can help MSM. It's really an amateur revolution and it's probably going to have to look like the sometimes awkward but sometimes successful dance that Open Source does with businesses in order to be successful.

via Susan Crawford (and NOT via browsing BusinessWeek)

17 Comments

So it's troubling to train a generation of readers to get something of quality for free? I'll put on my curmudgeon hat here and say that I'm acutely aware of the price I already pay to access some information, both in print and on the web - sifting through more ad space than information space to access a scrap of text that I might be interested in reading.

I worry about this a lot. Look at what's happened to TV news in the US over the last few years; its gotten more and more vapid, less investigative news pieces, fewer overseas news bureaus, etc. Many media watchers tie this to the consolidation of the media, news divisions are part of a portfolio of holdings by media giants, they must have the same rate of return as the entertainment divisions.

We've already seen what this kind of economic pressure has done in the newspaper industry. Chains like Knight Ridder bought up 2nd tier papers and demanded ten percent more profit. This happened to the paper in my home town (Philadelphia), it went from a well regarded paper that did occassional hard hitting news, to a piece of trash. Top tier papers like NYT and Wash Post have been able to resist that pressure but as is pointed out, the writing is on the wall.

I don't see any institutions on the web that can support an organization like NYT. Could they syndicate their content to the major web portals? Not likely, or not at a premium. I hardly ever visit portals like MSN, Yahoo, Comcast, etc but when I do I am blown away at how vapid they are. They are definitly not aiming at NYT readers.

It is inevitable that newpapers will move to a subscription model. There is just too much money involved, and the sources of the information are in the hands of a few news organisations.

Just like iTunes changed music, one day (quite soon, and just as suddenly) we will see an iNews equivalent giving paid access to multiple news sources. On the other side legal enforcement of their IP by news agencies will be stepped up (just like RIAA). There will be lots of complaints form the "information wants to be free" crowd, but they will end up paying anyway. I also suspect that bloggers, to maintain their sites, will actually be amongst the first to sign-up to such a model. Especially when they realise they can receive substantial affilliate money for sign-ups :)

Blogs are opinion, not "journalism". The hard bit, the newsgathering and primary reporting is what people have to pay for (because there can be no opinion pieces without it).

Blogs will always be hampered by this lack of ability to actually gather news. As mainstream media realisea that blog-like opinion is easy to add to their sites, there will be further integration of user opinion and blog-like features into their sites.


As business entities, you should look at the NYTimes (struggling) vs. the Washington Post company (growing). The Post is looking at expanding their content into other mediums, be it magazines, television, online, whatever--expanding the WPCo. and increasing their profits. The NYT seems stuck in a 1970s newspaper funk, and is going downhill.

Going to a pay model is just going to make the NYT less relevant to the future. Perhaps it will get them some short term money, but long term impact is going downhill.

A superficial thought. I might consider paying if the NYT start claiming they have arms of commando journalist go into danger zones and undercovers or insiders in DC politics scene and NY financial scene. but if the NYT stick to their past reputation that if they think great, I would not consider paying.

I don't read the NYT much b/c it's such a PITA to blog, digging up a valid bugmenot to add to the post, etc. If they went pay, I'd never visit it again -- not b/c it's too expensive, but if I can't blog it, I just don't care.

If you haven't read it already, you should take the time to read Tim Oren write about the how reach and flexibility of digital media will eventually undermine the advertising/subscription business model of MSM.

I value the insight and judgement of a brand but my loyalties are more towards individual authors and less towards an editorial board. I can have a dialog with an individual, not an institution.

Tim Oren apparently does not realise that MSM is not out of options: MSM can fight back/co-opt and new competitors can come in and create valid subscription models/bundles.

Customers/readers will always gravitate to news sites due to their fresh content. Most of the top 20 sites on the web are news sites. Consumers do not need job sites or classifieds every day and those services, once the initial free-growth phase has past have to support their brands by advertising or collaborating with news sites. Newspapers have always known that their primary job is distribution through content creation, which then feeds through to other services they provide.

Mr Oren's thought processes about bundling stop short. He states all of the problems but gives no solutions. Taking his example of advertising on a channel-surfed TV, which he calls an "experiment", anyone can see that bundling has actually worked, especially on cable. Customers pay for a selection of channels, which then advertise their brands individually on the platform. CNN makes money from the package subscription and from the advertising on its channel. The subscription platform supports the brand (It is well known that advertisers prefer to advertise on subscriber-based publications, for the reason that they know the reader has made an active choice to purchase the media).

He floats the popular but misguided idea that because of a very few high profile fact-checking misses that either 1) blogging will take the place of MSM or that 2) newspapers/news sites will die. Neither of these will happen. His notion that consumers will not purchase newspapers because of loss of trust is not substantiated by any facts. Inaccuracy is rare and bias is part of the purchase decision. Consumers actively choose the type of media that suits them (sensational, serious, left or right). The huge success of Fox News on subscription-based cable is just one example.

As I said in the above post it does not take much for MSM to co-opt new trends such as blogging and social networking (note Knight-Ridder's investment in tribe.net).

He ends his piece by saying "Can the value of transaction cost reduction be recreated in another fashion, and revenue extracted for it? Now that's a question to get a venture capitalist's attention! If the answer was obvious we'd already be there".

Maybe it's just not obvious to him, but there are plenty of people working on it.

Since you're in the print publications buiness, and have gone on the record saying "I think that blogs will die out soon", I guess we will find out who's right a bit down the road.

Step back and think about this a minute. Print newspapers have _always_ been largely dependent on the advertising revenue stream. The main purpose of the cover price is to cover printing and distribution costs. Most of these distribution costs are greatly reduced for Internet readers.

There are some big problems with the idea of advertising-led online news media, which we are reluctant to deal with.

Problem 1. It's hard for new players to enter the marketplace. It's too difficult for a new player to build relationships with advertisers. You have to achieve massive scale before you can really play.

Problem 2. There is a big risk that editorial will become advertiser-driven rather than reader-driven. Advertisers, after all, are paying all the bills. This certainly seems to be happening. Look at cnet.com. At the beginning, it offered real critical journalism, but it now it is full of industry drivel.

I think that if we want objective, well-researched factual reporting and professional journalistic values, we readers will probably have to be prepared to pay the piper ourselves.

I read New York Times everyday online but would not pay for it. Maybe when I get some more money.

Just a few days ago when reading NYT on the net and thinking all this amount of information for free, someone would think twice about charging something, eventually?! As an international reader, i would go to nytimes.com almost everyday, but hardly ever would i buy the paper even when living in NYC.

I consider the online editions to be far better and more comprehensive, especially for the photos and multimedia presentation. If NYT should put themselves through with restructuring, they would need to provide something more extraordinary, and that isn't only about journalism.

Through the reading of mostly the art section and magazine section, and sometimes technology, it is all i need. Do you think anyone will click through every section, everyday. The idea of pay subscription will come through people's mind, and hopefully it will eventually dissipate. Although there will be many voices to be heard not only coming from the New Yorkers, but many from a foreign land to see MSM as the fastfood of America (or could apply to others) and i hope people from NYC would take some action like always.

Generally speaking, news web site that charges is challenging the loyality of their readers. Then again if Bloomberg's city is issuing a $150 moving violation ticket and a $75 parking ticket, why not charge us for reading your paper. There are no relations between the tickets and NYT. But than again is it purely business talking or is someone doing a drive-by. Keep it real.

I personally am not happy with the ads in the NYT online.
When I do read the paper version there are great adds that are approriate for the area that I buy the paper in. I think that the problem with the NYT online is that they are selling ad space at fees comparable to online (aka way to low). they are not using the offline advertisement.
They should have webpages just for advertising... Challange the advertisers to come up with copy that people would want to read. They do that fine with the paper version.

When you buy a full page ad of section 1 where does that ad go on the website? Where is the op-ed advertising box. That box costs good money and to put an ad there requires convincing. I wouldn't know of tompaine.com if it was not for their ads in that box.

I personally think that the online should offer an option that is not in the standard web mold. Why not have the side columns having a small column of what would be next to the article that you are reading.

You can use your side vision to see the articles in a paper version why not have that for online?

If my crossword puzzle goes away, I don't know what I'll do.

Interestingly the daily crossword has been one of the few pieces of the NYTimes that has been subscription for several years. Only a "Classic Puzzle" is available daily for free from their site.

When I lived in NYC I paid for a print subscription to the NYT. If there were an equally good english language print paper in Tokyo, I would pay to get that. I read the NYT online now and would pay for it if they switched to subscriptions. Sure they make mistakes (everyone does) but overall they are a damn fine paper.

FWIW, I still subscribe to the print version of The Economist even though its available online.

Cory "if I can't blog it, I just don't care" Doctrow: I guess I admire your commitment, but damn that looks shallow.

Yeah, FWIW, I subscribe to the paper version of the International Herald Tribute. One thing I do is read it on the train to the office, mark the articles that are interesting, google them at the office and blog them.

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