Good News for the New York Times

A short postscript to yesterday’s article on the strong recent uptake in paid subscription music services:

Today the New York Times revealed that 281,000 users are paying to receive its content digitally, including 224,000 in its new Digital Subscriber program and the remaining 57,000 paying for Times subscriptions through e-readers.   The Digital Subscriber service launched in March.  The Times has already beaten its stated goal of 200,000 digital subscribers by the end of the first year. 224,000 is 26% of the paper’s daily print circulation; the figure does not include the 756,000 print subscribers who also have digital subscriptions.  The 26% ratio is about the same as the percentage of digital to print subscribers to Cook’s Illustrated.

To put those numbers in context: the goal that the Times surely has in mind is 400,000.  That’s the number of paid online subscribers to the Wall Street Journal.  The other interesting number in the periodical publishing space is that of Consumer Reports, which is the largest paid online publication at 3.3 million online subscribers (as of November 2010).  Neither Consumer Reports nor Cooks Illustrated carries advertising.

Different subject: How do you like the new site layout?

6 comments

  1. Great post Bill!

    To what do you attribute the (apparently) massive success of Consumer Reports? Is it that we are such a consumer culture that we value full subscriptions — rather than e.g. ala carte access — to their reviews?

    Confession/disclaimer: I always check Consumer Reports before buying anything significant, but when a review I need is behind their paywall, I get it through my local library…

  2. Hi John,

    Consumers Union (publisher of Consumer Reports) has actually been a client of mine off and on over several years, so I am pretty familiar with its processes, business models, etc. I am also a long-time paying subscriber (digital only, natch). CU is a wonderful, mission-driven organization that consistently attracts top NYC publishing talent up to the boring suburb of Yonkers at lower pay.

    They don’t offer a la carte access to online content. The only repackaging they do is in their Buyers Guide books. They started the paid online subscription a long time ago, with a view to the eventual goal of point-of-sale access to ratings data — which is now feasible through their mobile apps. (The big-box retailers HATE this.)

    The website is on track to overtake print subscribership. The stats I report are somewhat out-of-date, but someone from CU told me back in January that they expect to see print/online subscribership parity by sometime this year. Recently CR’s web operation got new leadership that has really taken it to higher levels in functionality and currency; it’s come a long way from being “shovelware.”

    I think the key is that a large number of Americans are price-conscious in general, and for them, CR is the Bible, just as Zagat is the foodie Bible for restaurant reviews. I consult CR not just for big-ticket items like cars and major appliances but also for smaller purchases. I think I’m like many people in that I find it worth the subscription price to know that it’s always there for me to consult. It saves money on price as well as TCO (total cost of ownership), so it’s viewed by many as a worthwhile investment.

    Anyway, I’m always amused by the fact that industry pundits always cite WSJ’s 400k paid subscribers while CU is out there with over 8x as many. (There’s also Cook’s Illustrated with 300k online subscribers….)

  3. I was feeling instinctively that something was wrong when a paywall appears to be working, but have given up caring much about what newspapers do or don’t do with paywalls, and didn’t pay much attention to the NYT claims. But I just read Erik Sherman’s well-argued piece (http://www.bnet.com/blog/technology-business/nyt-hows-that-paywall-working-for-ya-no-we-didnt-think-so/11936). His analysis indicates that:

    – ad revenue and overall revenue is down
    – print subscriptions are down
    – the About group is down 17% (no surprise there — Google plugged that hole)

    So maybe its business is up a little, maybe it’s down. More importantly I think that the NYT is displaying real editorial and publishing confidence online. It’s more clearly the paper of record than it was, say, 2 or 3 years ago (and it’s more compelling to spend time with online). They’ll no doubt figure out how to balance revenue and expenses. As for my local paper, I doubt it.

  4. Thad,

    I just read Sherman’s piece. Au contraire, it is not “well-argued.” It is just yet another variation of the “[fill in blank with old media entity] has to totally rethink its business model, though I have no idea what they should be doing instead of what they’re doing now” warhorse. Sherman only improves on this tired, smug riff by doing a little research and adding a few statistics instead of just confining himself to the usual lazy rant.

    In fact, there are several holes in his argument:

    • He says “customers are choosing digital over print subscriptions and not the other way around.” Well duh. The Times undoubtedly expects this. Nowhere is it argued that the Times’s objective is to shore up print circ. The whole idea of this exercise is to transfer subscriber revenue to digital.
    • The Times is a paper recognized all over the world. The idea is for the Times to monetize the millions of website users who are physically unable to get the paper in print and/or don’t want to settle for a lollapalooza such as the International Herald Tribune. I helped the Christian Science Monitor with a similar strategy ten years ago.
    • As someone from the Times took pains to point out to me, the 226k digital subscribers are incremental to print subscribership. That means that overall paid circ is up, not down. And even Sherman allows as how lower revenue from digital subscribership is offset by lower distribution costs (I wish I knew by how much, but I don’t).
    • The lower revenue model for iPad access includes less content. That’s a well-known differentiation strategy that is designed to bring different classes of readers into the paid-subscriber fold.

    The Times appears headed for success with their digital transition. In doing so, they will force many of the techblogerati to change their own business models. The shoe will be on the other foot!

  5. I think you’re right, Bill.

    Before I quoted Erik I looked at his other pieces and I thought that overall his level of knowledge was pretty low, and that he was writing mainly to provoke. But my disdain for the paywall and also my increasing disdain for Henry Blodgett was enough for me to to link to his post.

    I saw just now a writer who I do think is solid, Felix Salmon, also notes: The New York Times Paywall Is Working
    http://www.cjr.org/the_audit/the_nyt_paywall_is_working.php

    I’m all in favor of paying for content. My concern when the big papers like NYT, WSJ, The Times of London, etc. erect paywalls is that it distorts the picture for everyone else.

    Smaller papers (except some very small papers) can’t succeed with paywalls. And so the best morsels are removed from the buffet and the opportunity for implementing a single subscription for all web content evaporates (this is the model I favor). Further there really are not many lessons to be learned from the NYT. They are so large and so essential that they can succeed at a many different models — I’d buy the t-shirt AND the bumper sticker.

    In the end I’m far more interested in whether ‘Copyright & Technology’ and ‘The Future of Publishing’ can successfully erect paywalls.

  6. Thad,

    There are actually some ideas floating around on how to make pay schemes work for small, local papers, such as distinguishing by geolocation of the user. The Financial Times already uses such a scheme to determine whether to charge according to its US or UK pricing schemes, the latter being higher. In my whitepaper I cite a couple of studies about this.

    Having said that, I completely agree with you that the lack of single subscription model is a real obstacle. And I don’t think that the Google or Apple payment schemes are sophisticated enough to handle the different models that could be implemented. This is both an opportunity for some vendor and a tough sell to many newspapers, especially the big ones that have already built their own infrastructure.

    As for your site or mine erecting paid models (sorry, I really don’t like the term “paywall,” because it belittles the models being implemented today, such as NYT’s), you go first 🙂

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