EPIC 2014, an online video about the future of online content. Like many futurist visions, time has proven its predictions to be a mixture of misfires and close shots. One that rings chillingly close today in light of The New York Times introducing its subscription paywall this week was that by 2014 The New York Times would go offline and become a print-only subscription newsletter for the rich and elderly.
Well, it's not 2014 yet, and the NYT seems committed more strongly than ever to online publishing, but the way that it has implemented its paywall strategy does leave some doubt as to what the future holds for traditional news organizations. The good news for publishers seems to be that online paywall strategies are probably going to help major news media companies meet their goals. The greater question, though, is what end those goals are really serving.
The outlines of the NY Times' announced plan are easy enough to grasp: anyone online can access up to 20 of their articles a month without any payment barrier. After that, you have an option of a $15 or $35 a month subscription package, depending on how much content you want. That's roughly the cost of their typical print subscription plans, making it heftier than The Wall Street Journal's online subscription package but roughly in the ballpark of the Financial Times' paywall payments. So if you're currently a print NYT subscriber, it's situation normal, for the most part; little will change as you continue to get both online and print editions of your content.
And that's roughly the point of this package. It's trying to cut a careful line between maintaining an online brand with a readership used to unrestricted access to ad-supported online news and being able to support its current print-scaled revenue stream as long as the presses keep rolling. It's likely that anyone who clicks into more than 20 online NYT articles is already a print subscriber anyway, a "heavy user" to borrow a term from the fast food industry. People who click into less than 20 articles are not likely to pony up for a "just because" premium online package, especially when they can still view their headlines on their Web and mobile home pages for free under the new plan and learn about events that they can search for from free sources anyway. The 20+ click crowd are likely brand loyalists who may opt for the print edition anyway as a leanback time luxury or status symbol.
No doubt the NYT has done its math and expects to get some upside to its online revenues through this plan. Looking at the FT's introduction of pay access constructed along similar lines, their Managing Director of FT.com claims in a recent article that they have grown online revenues 50 percent in the past year, presumably helped by its 210,000 online subscribers. That's probably a bit more than ten percent of its online monthly unique visitors, which is in line with most expectations today for paywall-based readership, but only about half of its print circulation.
The likely ratio for NYT's online subscription plan is a little harder to divine based on these ratios. With about 13-15 million monthly online unique visitors, applying the ten percent rule would put the likely online NYT subscription pool at 1.4 million readers. But that's roughly their current Sunday edition print circulation, according to late 2010 statistics. I don't think that it's likely that you're going to see all of those readers picking up online editions. So it's quite possible that paid online subscriptions for NYT content will fall short of the typical ten percent goal. I'll throw a dart at it and say that if they manage 400,000 subscribers accessing their content online in the next year at these new rates they will have done quite well.
More significantly, none of this may have a positive impact on long-term readership trends or newspaper profitability. Looking at recent Compete.com statistics, FT.com's monthly uniques have fallen more than 38 percent in the last year, while the NYT's online readership has fallen about 13 percent. WSJ.com's long-established paywall site fared none too well either, dropping about 32 percent of its monthly unique visitors. So the news site without a significant paywall component until yesterday did twice as well as subscription sites in retaining their audiences. Yet none of these operations are yet ready to turn off their printing presses, so they have little choice but to subsidize them from online revenues as their most loyal readers ease over from print to electronic-only access, hoping to pick up some small portion of new recruits in the process.
In other words, online subscription revenues have become the lifeboat strategy for enabling print news operations to remain viable for some period of time, after which they will have to make an EPIC 2014-style choice: turn off or scale back drastically either their online operations or their dedicated print operations in order to remain profitable. Whichever way they choose, the net result will be close to EPIC 2014's prediction of subscription newspapers surviving as much smaller entities written for rich people and for marketers trying to reach rich people. Since most high-end marketers have not yet cracked how to translate their traditional advertising into online venues with the same impact as print editions, it's likely to take a few years before newspapers like The New York Times will have the courage to turn off or shrink the presses.
But pretty soon, say by 2014, it's likely that the marketers will have caught up with making online channels work to the point that the presses could go dark and online subscription content for the carriage trade could sustain some portion of NYT operations. In the meantime, of course, print is not likely to go dark altogether. By 2014 we're likely to see technologies like Instapaper leveraging printing presses to create custom-packaged leanback print content assembled from multiple editorial sources. Some magazines will also continue to soldier on for highly targeted markets, though increasingly it will be the marketers themselves producing them.
Whatever the ultimate outcome, this year's big push for online subscription revenues will help to define opportunities for marketing to elite audiences for those publications that can define them well, but until their print operations can be dumped these new revenues are not likely to contribute to operating margins significantly for these publishers. We won't likely see GoogleZon in 2014 as predicted by EPIC 2014 seven years ago, but my guess is that their prediction for The New York Times will ring far more true than many in the media industry may wish to admit today.