Industry in 'death throes' seeks online salvation

New York Times plans to charge for content in 2011; will other newspapers follow suit?

The New York Times' announcement yesterday that it plans to start charging readers some time next year for unlimited access to its Web site has industry insiders closely watching whether smaller newspaper publishers follow suit.

Times officials offered few specifics of its plan, reporting that users will be able to access a still-unspecified number of articles every month for free, but once that limit is passed, users wil be charged for access. Executives said they're hoping the new Web publishing model will boost the company's online advertising coffers.

The company did not disclose a specific starting date for the pay wall, saying only that it would be launched in 2011.

The publishing giant has reportedly has been mulling a move to a partially paid online access model for at least a year. Media analysts say the move is risky, even for a newspaper with the reputation, national reach and clout of The New York Times, while the vast majority of online content is accessible without charge. Will readers lay down money, especially in a struggling economy, for news stories that are freely available on other news sites?

"For media companies that rely on print advertising for a large share of revenue, the Web has taken a wrecking ball to their business model," said Dan Olds, an analyst with The Gabriel Consulting Group. "Over time, more and more free content has been made available on the Web, which has siphoned off eyeballs and subscribers from traditional newspapers. Traditional media companies are between a rock and a hard place."

Desperation can make corporate executives do crazy things like trying to force readers to pay for things that have long been free, media experts said. What traditional media outlets should be thinking about instead is how to repackage and rethink their content so it can be sold onto devices like smart phones and tablets.

"Traditional media as we know them are in their death throes and it's fairly well along at this point," said Dan Kennedy, an assistant professor of journalism at Northeastern University in Boston. "The whole notion behind paid content is not aimed at reversing the slide, because it's not reversible, but at least in slowing it down. The future probably belongs to the small and the swift, not these legacy organizations. I think the Times will find a way to survive just because it's still so popular, but the future belongs to small specialized fast-moving projects."

Kennedy pointed out that the Times tried a paid model -- charging for opinion columns -- between 2005 and 2007 but quit when it didn't work as hoped. The Wall Street Journal is one of the few media oputlets that successfully charges for content, but critics note that it is a specialized business newspaper.

In recent years, declining print circulation has forced most general interest newspapers and magazines to shift some of their business online. Few have been successful in offsetting the loss of display advertising due to fewer readers and profitable classified advertising to online companies like Craigslist along.

"Newspapers are desperately trying to find a way to get readers to share the costs," said Kennedy. "I tend to believe that charging for basic Web access is a losing proposition. There are things you can charge for, but basic Web access is not one of them."

Several analysts say that the emerging e-reader technology is a potential cash cow for online publications -- if readers would be willing to fork over some cash for content designed specifically for their favorite device.

"They're all waiting to see what the Apple tablet may hold for them," Kennedy said. "It offers the possibility for a reading experience that would be much better than the Web. That might be something people would pay for."

He noted that both The New York Times and the Boston Globe already offer editions - the Times Reader and the Globe Reader -- for e-readers. "Basically, they're the whole newspaper downloaded to you," Kennedy said. "It's a better experience than just reading from the Web, and they charge for that. It's had some success." The upcoming Apple tablet, he added, promises an e-reader experience "that it will be much better and richer."

Allen Weiner, an analyst at Gartner, said the emergence of e-reader devices is offering hope to publications looking hard for new ways to generate revenue.

"The emergence of devices that seemingly are better fits for news raises all this hope," said Weiner. "The profile will be an umbrella that you pay for that will allow you print access, Web access, smart phone access and tablet access."

Weiner added, though, that any effort to generate new revenue in dire times could prove painful for a lot of publications.

"There's a possibility that there will be a handful of newspapers with large national audiences and that have the money to invest in development that will succeed," he said. "But once you get past the Wall Street Journal, The New York Times, and maybe the Washington Post and USA Today,and once you get down to metro newspapers, then it's really different. If you're the Dallas Morning News, you better make sure there are enough people with smartphones or tablets in your market to make this work. I'm a bit nervous to see what comes out of all of this."

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, send e-mail to sgaudin@computerworld.com or subscribe to Sharon's RSS feed .

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