A year into the ‘Times’ digital subscription program, analysts and insiders see surprising success, and more challenges to come

The New York Times building. (wallyg via flickr)
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Almost exactly a year ago, on March 17, about two dozen New York Times employees gathered in a conference room not far from where the paper's journalists were busy putting the next day's print edition together.

It was a momentous day at 620 Eighth Avenue, one that had been several years in the making, and one that was arguably a watershed moment in the evolution of the media: After more than 15 years of giving its journalism to readers for free on the web, the world's most influential newspaper was about to start charging for it.

A number of executives gathered with various web developers around the two long tables where the company's strategy was about to pivot dramatically. There was Martin Nisenholtz, then the Times Company's senior vice president of digital operations, who would go on to retire nine months later after steering the paper's digital strategy for 16 years; Marc Frons, then the company's chief technology officer, who was recently promoted to chief information officer; Denise Warren, the general manager of nytimes.com; Yasmine Namini, senior vice president of marketing and circulation; Paul Smurl, vice president for paid products; David Perpich, a promising young member of the Ochs-Sulzberger clan, which controls the publicly-owned company through a tiered stock ownership structure, who'd been recruited by the paper's ruling family the previous year after resisting earlier offers to enter the company fold; and others who'd had a hand in the marathon effort to get the paid model off the ground. Times Company chairman Arthur Sulzberger stopped by for awhile to see how things were going.

The mood was anxious at first, and the work mundane, according to people who were in the room. Mostly, it was a bunch of people with their heads buried in their laptops monitoring the launch and making sure everything was running smoothly.

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But the operation was fraught with larger questions. Newspapers were going down the tubes. Very few papers had managed to charge readers for content and still keep them coming. And revenue growth in digital advertising was growing at a snail's pace while print advertising revenue was hemorrhaging. It's hard to remember that, as little as a year before this day, there was talk in intelligent circles of a future without The New York Times. And that prospect, it was widely held, would mean a future without the kind of journalism the Times represents.

So the paid digital strategy was about survival, really. For years, readers had been migrating to the web and other digital platforms with increasing regularity, taking with them a big slice of the demand for print advertising that had always kept the heart of the Times, and countless other newspapers, beating. Developing a new, circulation-based revenue stream wouldn’t stop the bleeding on the print side, but it would at least pump some new blood into the system.

The test of the new paid model would start in Canada. It was a "metered model" that would require subscriptions from the hardcore subset of readers who were consuming 20 or more articles per month on the paper's web and tablet and phone platforms, but would maintain an "open-web" approach to the large majority of less frequent readers. Any articles to which readers were directed via blogs or social media, for instance, were to remain free.

This was a risky strategy, to be sure. To ask people to pay to read news on the Internet was to ask them to alter their notions of what they've always known the Internet to be. But if it worked, it would solve the problem lots of pundits were saying was insoluble.

If they could ensure that web articles weren't blocked off to all those casual or drive-by readers, nytimes.com would continue to thrive in the digital ecosystem rather than falling out of the conversation (as was the fate of another general interest global news brand that erected a paywall around its online content—Rupert Murdoch's Times of London). At the same time, it could start monetizing that self-selecting pool of voracious Times readers for whom parting with an extra $15 to $35 a month, depending on which of three subscription packages they opted for, was no big deal.

>> Developing: Times announces 454,000 subscriptions at the one-year mark; lowers number of free monthly articles to 10.

The technology behind the metered model had been in development for more than a year. Canada was chosen as a soft launch, and the rest of the world would become subject to the same payment requirements starting March 28, a year and two months after the paper had announced, to the consternation of many within the industry, that its future was not one in which the journalism it produced could survive without a price tag online.

After some careful preparation, they flipped the switch on the meter. They watched as the Times almost instantaneously ensnared its first paid online customer in history—some guy in Canada who saw a promo for the digital subscriptions and bought one right away. Then they watched as more and more subscribers followed. A sense of relief and euphoria set in once it became clear that not only was the technology working, but that people were actually whipping out their credit cards.

"Everything could have gone wrong," said someone who was there. "The commerce system could have failed. The article meter could have not worked. The website could have crashed. But for all the issues we had leading up to the launch because it was such a huge project, it went off surprisingly trouble free."

TWELVE MONTHS LATER, THE FULL ROLLOUT OF THE NEW SUBSCRIPTION model has surprised insiders with its degree of success. Overall web traffic has been mostly unaffected, despite dire predictions that a paywall (even a limited one) would deflect readers. Digital advertisers have not gone running for the exits. As of the end of the most recent fiscal quarter, a total of 390,000 subscriptions had been logged (roughly 10,000 of which were specific to sister brand The International Herald Tribune), 30 percent better than the 300,000 subscriptions the paper reportedly set as an internal benchmark for success in the first year.