Wednesday, January 20th, 2010 | Posted by Editor - Blog News Service

The Times to Charge for Frequent Access to Its Web Site

By RICHARD PÉREZ-PEÑA

The New York Times announced Wednesday that it intended to charge frequent readers for access to its Web site, a step being debated across the industry that nearly every major newspaper has so far feared to take.
Starting in early 2011, visitors to NYTimes.com will get a certain number of articles free every month before being asked to pay a flat fee for unlimited access. Subscribers to the newspaper’s print edition will receive full access to the site without extra charge.

But executives of The New York Times Company said they could not yet answer fundamental questions about the plan, like how much it would cost or what the limit would be on free reading. They stressed that the amount of free access could change with time, in response to economic conditions and reader demand.

“This announcement allows us to begin the thought process that’s going to answer so many of the questions that we all care about,” Arthur Sulzberger Jr., the company chairman and publisher of the newspaper, said in an interview. “We can’t get this halfway right or three-quarters of the way right. We have to get this really, really right.”

Any changes are sure to be closely watched by publishers and other purveyors of online content who scoffed at the notion of online charging until advertising began to plummet in 2007, battering visions of Internet businesses supported solely by ads. Few general-interest publications charge now, but many newspapers and magazines are studying whether to make the switch.

Still, publishers fear that income from digital subscriptions would not compensate for the resulting loss of audience and advertising revenue.

NYTimes.com is by far the most popular newspaper site in the country, with more than 17 million readers a month in the United States, according to Nielsen Online, and analysts say it is easily the leader in advertising revenue, as well. That may make it better positioned than other general-interest papers to charge — and also gives The Times more to lose if the move backfires.

The Times Company has been studying the matter for almost a year, searching for common ground between pro- and anti-pay camps — a debate mirrored in dozens of media-watching blogs — and the system will not go into effect until January 2011. Executives said they were not bothered by the prospect of absorbing barbs for moving cautiously.

“There’s no prize for getting it quick,” said Janet L. Robinson, the company’s president and chief executive. “There’s more of a prize for getting it right.”

This would not be the first time the company had tried an online pay model. In the 1990s it charged overseas readers, and from 2005 to 2007 the newspaper’s TimesSelect service charged for access to editorials and columns. TimesSelect attracted about 210,000 subscribers who paid $49.95 a year, but it was scrapped to take advantage of the boom in online advertising.

Company executives said the current decision was not a reaction to the ad recession but a long-term strategy to develop new revenue.

“This is a bet, to a certain degree, on where we think the Web is going,” Mr. Sulzberger said. “This is not going to be something that is going to change the financial dynamics overnight.”

Two specialized papers already charge readers: The Wall Street Journal, which makes certain articles accessible only to subscribers, and The Financial Times, which allows nonpaying readers to see up to 10 articles a month, a system close to what is planned by The Times.

Most readers who go to the Times site, as with other news sites, are incidental visitors, arriving no more than once in a while through searches and links, and many of them would be unaffected by the new system. A much smaller number of committed readers account for the bulk of the site visits and page views, and the essential question is how many of them will pay to continue that habit.

Executives said the computerized subscription service must work smoothly and communicate seamlessly with the computer systems that handle the database of print subscribers. The Times will not use one of the pay systems being marketed by other companies, like Journalism Online, led by Steven Brill, or the News Corporation, instead choosing to create the system essentially from scratch.

“There’s a lot of technical work that we need to do over the next year to get this right,” said Martin A. Nisenholtz, the company’s senior vice president for digital operations. “And I think if you were to benchmark this against other, similar implementations, you would find that a year is not excessive.”

Bill Keller, the executive editor, embraced the plan.

“It underscores the value of what we do — trustworthy, aggressively reported professional journalism, which is an increasingly rare and precious thing,” Mr. Keller said. “And it gives us a second way to sustain that hard, expensive work, in addition to our healthy advertising revenue.”

Company executives would not release estimates of how many subscribers and how much revenue an online system would attract, how many visitors the site might lose because of it, or how much ad revenue would decline.

The Times Company looked at several approaches, including a straightforward pay wall similar to The Journal’s; various “metered” systems, including the one they chose; a “membership” format similar to the one used in public broadcasting, with rewards for supporters but little or no limit on access to the site; and a hybrid among those options.

The approach the company took is “the one that after much research and study we determined has the most upside” in both subscriptions and advertising, Mr. Nisenholtz said. “We’re trying to maximize revenue. We’re not saying we want to put this revenue stream above that revenue stream. The goal is to maximize both revenue streams in combination.”

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