Why the New York Times Is Free

September 17, 2007

Why the New York Times Is FreeAt midnight The New York Times stopped charging for its content online. It’s even handing out refunds to any online subscribers who paid for it in advance. Here’s why…

The Times is strongly repudiating the idea that newspapers can earn big profits by hiding their online content behind a “pay wall” which can only be accessed by web surfers who pay a subscription fee. Crunching the Times’ own statistics shows the two-year experiment was earning the Times about $833,000 each month — or $10 million a year — but that’s about a third of the $80.9 million (per quarter) earned by all digital businesses at the Times. And even then, almost 90% of the company’s money was coming from its non-digital offerings.

The Times’ revenue from subscribers broke down to about $27,400 a day –
but given that the newsstand editions cost $1 apiece, that additional money was the equivalent of just a 2.4% rise in their daily circulation of 1,120,420. Yet according to the newspaper, out of the 787,000 subscribers to Times‘ web site, about 29% were already paying for complete access to the site. “[O]ur projections for growth on that paid subscriber base were low,” acknowledged the general manager of NYTimes.com — at least compared to the potential profits from making the content free, and then earning revenue through advertising. In an article which appeared in the New York Times, a media analyst notes that the the ads on the Times‘ site have been carefully targetted to its readers — which makes their ads even more lucrative.

But how much more money can the Times make by placing ads on their newly-available pages? In April of 2005, their parent company announced the site brought in 555 million pageviews in the month of March — about 18,500,000 a day. (Though just five months later, the site erected its pay wall — meaning 23 popular news and opinion columnists were inaccessible to non-paying subscribers.) Assuming the site receives $5 for every thousand pageviews, the Times could replace their lost subscription revenue by just bringing in an extra 5,480,000 pageviews a day — or just 2,740,000 pageviews a day, if they’re able to earn $10 for every thousand pageviews. In other words, if their free content can increase their traffic by at least 14% — they’ll end up making more money.

And the Times’ site has a few more tricks. Today they announced they’re making available the last twenty years of the New York Times — also for free. They’re even putting up another 71 years for free — from the paper’s first issues in 1851 through 1922. While those 71 years are already in the public domain, the additional 25,915 back issues from their archive could bring in still more traffic.

The Times’ move represents a milestone for the internet. According to their own article, the only other major newspaper still charging for online access is the Wall Street Journal. After over ten years, “The Journal has nearly one million paying online readers, generating about $65 million in revenue.” And despite that, the Times reports an interesting rumor. The Journal’s new owners have been discussing the possibility of discontinuing their paid access as well.

Monday night the news was already generating excitement on the web. One blogger said they were already looking forward to reading columnists like Paul Krugman and Maureen Dowd without having to pay a fee to the New York Times.

“It was a bad idea from the start, and I’m glad it’s gone.”

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One Response to “Why the New York Times Is Free”

  1. Landon Creecy:

    Hi! I could have sworn I’ve been to this web site before but after looking at a few of the articles I realized it’s new to me. Anyhow, I’m certainly pleased I found it and I’ll be bookmarking it and checking back regularly!|

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