Traditional revenue from advertising and sales of the print edition are falling, and the New York Times can’t figure out how to monetize its website. Giving stuff away for free is a business model which only works if the stuff costs very little to produce. The New York Times, however, seems to be quite an expensive operation. According to its 2008 annual report, the New York Times had an annual operating cost of $2.8 billion. That’s a lot of money!
The New York Times previously had the idea that people would be willing to pay $50 per year to read its op-ed pages. This didn’t work because the internet is full of high quality opinion articles which you can read for free.
I have a subscription to the Wall Street Journal’s website. It’s worth the money because the Journal has a lot of high quality articles which you can’t read anywhere else, and it’s still less expensive than paying for a print subscription.
Unfortunately for the New York Times, its content isn’t quite as unique. If the NY Times closed off its national and international news to non-subscribers, you could read the same stories at the Washington Post or CNN. Some would see unique value in the way the NY Times presents these stories, but the majority of internet readers, accustomed to reading the news for free, will turn to other websites.
An example of the type of content only available at the NY Times is the article currently atop the most-emailed list, 101 Simple Salads for the Season. Is this content worth paying for? Maybe if you’re the type of person who serves salads to a lot of guests and want to impress people with your knowledge of the latest trends in salads. I think I could live without it.
If the NY Times simply said, from now on, you can’t read our website unless you pay us, a certain percentage of readers would definitely pay. I would probably pay, but the majority of readers won’t. The New York times fears that the loss of readership would ultimately harm its reputation as the premier source of news, and is probably also hesitant about making predictions regarding what percentage of its internet readers, accustomed to reading the news for free, will pull out their credit cards.
One plan that’s guaranteed not to make a whole lot of money is the one described at Gawker in which the news remains free but subscribers are given access to special new content. Would I pay $50 per year to view “videos of [] reporters telling the story behind the story”? I don’t think so, who has time for that? I also don’t need a New York Times tote bag. The NY Times might make one or two million dollars a year from this plan, but it’s not going to save the company.
Maybe the only way to make the NY Times really profitable is to cut costs. Does it really require $2.8 billion to run the NY Times? The cynical view of corporate spending is that expenses always rise to the level of revenue available. Why can’t the Times produce a product nearly as good for a lot less money?
