What to Watch for in New York Times' Pay-Meter Experiment

Will New System Provide Sustainable Model or Just Send Readers Elsewhere?

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The New York Times' new effort to charge frequent visitors will undoubtedly find many takers when it goes into effect on March 28. Whether the model ultimately works for the Times, however, depends on the action at three key fronts. Here's what's worth watching.

Too many loopholes in the gate?
As soon as the Times described its plan last week, it started running ads from Lincoln inviting about 200,000 frequent readers to enjoy free, unlimited access to NYTimes.com and its smartphone apps for the rest of the year. The new meter will allow anyone to read 20 free articles a month, but after that everyone but home-delivery subscribers will have to pay at least $15 a month. Lincoln targeted its ad at the heaviest Times Online readers, relieving them of any pressure to pay before 2012.

The more-systematic ways to keep reading free are even more important. Readers who come to Times articles through search, blogs and social media won't have to pay even if they've hit their monthly maximum. There will be limits on reading Times content that way -- visitors from Google will get a five-article daily limit, for example -- but that's still a lot of wiggle room.

Fans of The Times' Dealbook franchise for financial and M&A news, presumably a well-heeled group, don't have to fish for their wallets yet either. It's staying free, at least for now.

The 20-article boundary may fall on the restrictive side -- it's easy to imagine even casual Times Online visitors reading that many articles -- but the Times has rigged the meter so it can avoid asking many readers to pay or click away. After all, it's easier to close loopholes than it is to raise prices. If the meter doesn't generate enough money but does cost the site significant traffic, expect to see more limits descend -- and loopholes snap closed.

What will the VIPs do?
The heavy Times Online visitors who do agree to pay will become the site's most important readers, not just because they contribute digital circulation revenue but because advertisers might pay extra to reach them. They'll be the site's most-engaged readers in a world where marketers prize engagement, as well as the most demographically attractive, given their willingness to pay for high-quality journalism on subjects such as world affairs, business and government. The Times, moreover, will know more about its paying customers than it can know about casual visitors, letting it sell ad programs targeting these desirable consumers all the better.

"We have for a number of years put together customer programs for our advertisers because we know a lot about the people who use our website and how they use our site," Times Co. CEO Janet Robinson told Ad Age. "Those customer packages are going to continue to be presented to our advertiser base. And with more information, certainly in regard to digital subscribers, we will be making sure that our advertiser base is aware of how people are converting to this paid model and how they're using our website and how they're interacting with the content and the advertising."

But there's also peril in charging only the most-devoted readers; those are the readers the Times can least afford to lose.

Will it be a boon or bust for print?
Don't forget print, where ad rates remain much higher than they are online. Just as a free website undermines print, charging for digital access might reinforce print, or at least slow its erosion. Home-delivery subscribers will get unlimited digital access under the new plan, so the Times has just given that group a reason to stay on.

But the Times is charging little enough for digital access that a subscriber could still save money by quitting print. "It could actually increase churn," industry observer Ken Doctor wrote for the Nieman Journalism Lab last week, "as readers compare the $600-a-year-plus for an undiscounted 7-day NYT sub against the digital bundle prices, starting at $195 annually and up to $455."

The paper's average paid weekday circulation declined 5.5% in the latest reporting period to 876,638, according to the Audit Bureau of Circulations. The Times will be watching to see whether it can do better in the reporting periods to come. If it can't, watch for meter tweaks meant to benefit print.

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