Notes on the heightened pay-fence at the 'Times,' plus: Malia Obama, Andrew Breitbart, Oprah Winfrey
12:19 pm Mar. 20, 2012
The Lineup collects the media stories, big and small, that are on our radar each day.
The brilliant reporter-columnist-pundit Peter Kafka over at AllThingsD this morning digested the news that The New York Times plans to reduce the number of "free" articles available on its digital platforms from 20 to 10, and ends with the following question:
Is the Times is cutting back on its free reads because:
A) It can, having proved that people will pay to read the paper online?
B) It has to, because the rest of its business continues to weaken?
The article we published this morning may have seemed inadvertently to slant the answer toward A, with the headline: "Bolstered by higher-than-predicted subscription rates, the 'Times' gets more aggressive about charging for online content."
But in fact, the answer is probably both.
As Kafka points out, overall revenue at the company is in decline; it's without a C.E.O.; and really the revenue from digital subscribers is a nice but not enormous chunk of the total revenue pie. (Specifically: 12 percent of the Times' yearly circulation revenue and $100 million less than the company's annual digital advertising revenue.)
As analyst Ken Doctor put it recently: "the Times digital circulation seems to be an increasingly important part of the next-gen publishing model, but not an earth-shaking one."
12 percent is an interesting number: It's just about exactly the percentage by which profits slid company-wide in the fourth quarter of last year.
When the Times introduced the pay-meter, they said explicitly (in several interviews and appearances one way or another) that they did not believe the company could survive without finding a way to monetize their readers directly through subscriptions.
The success of the meter model (a frequently reported internal benchmark, never made public, was that the paper expected to get 300,000 subscribers in the first year; they've just reached 450,000) means that the program must expand in order to become a more important part of the overall revenue; otherwise, the Times dies.
Analysts told Capital yesterday the Times would have to expand the scale of the program in order for it to continue to be of use to them. New marketing strategies, social engagement and a few other things were batted around; but the most significant thing analysts said was that the Times would have to become a global news brand to find the kind of large audience from which a small chunk of paying subscribers could bring value.
One thing the analysts didn't suggest, and that we didn't foresee, was widening the market among the many people who surf the Times right up until they hit the paywall, then go away.
It's impossible to say how many readers are presently within the 10-19 free articles range; but now that the paper has reduced the number of free articles to 10, some chunk of those now become a new market for the product, no?
And what's the downside? If the paper finds that they're losing traffic that they depend upon to keep bringing in more than $100 million a year in ad revenue, they'll simply jack it back up. It doesn't seem like a Netflix-style user revolt is in the offing at any rate.
And besides, one of the big shots in the arm for the digital subscription program was the sponsored subscriptions. That's where the automaker Lincoln comes in and "buys" 100,000 subscriptions; some percentage of the beneficiaries then re-up out of their own pocket once they realize they can't live without the subscription.
Now, the Times has an all new product to sell sponsors like that: The vast number of people who are this close to paying, but haven't yet.
Now, we'll find out just how large that group is.
In other news...
Why the media scrubbed a story about Malia Obama's spring break. [Dylan Byers]
The Huffington Post is developing a weekly iPad magazine. [Mixed Media]
Former Gawker Media exec Chris Batty is headed to Atlantic Media's forthcoming business site to run ad sales, marketing and e-commerce. [Ad Age]
"Why The Wall Street Journal Isn’t Adding Digital To Its Sunday Edition." [paidContent]
Keach Hagey reports: "Two of Andrew Breitbart’s closest friends and business associates are stepping in to take over the roles he held in his eponymous media company and carry out the expansion plans he made before his sudden death earlier this month." [Dylan Byers]
David Corn's new book reveals that President Obama once blamed Fox News for some of his political woes. [Politico]
Behind the scenes of the Fox News upfront. [The Hollywood Reporter]
Layoff at Oprah's OWN. [Media Decoder]