Although it was published before Easter – a lifetime in digital publishing, I know – it's worth revisiting this interview with the New York Times on the second anniversary of the newspaper's move behind its metered paywall.
Journalism.co.uk's Rachel McAthy spoke to NYT's Paul Smurl, general manager for core digital products, and for my money these are the key lessons:
1. It can be worth trading (some) ad revenue for subscription revenue…
Given there continues to be an oversupply of advertising inventory online and given most publishes' remaining run-of-site stock is sold at very low levels the financial risk of lost ad revenue in exchange for potential subscription revenue is worth taking. That, at least, is Smurl's take:
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[T]ypically half, sometimes more, sometimes a bit less, of your inventory is sold on a remnant basis on a few dollars, or sometimes even less, on a cpm basis. And so what you're doing, if you design the model correctly, you are trading off the ad inventory or advertising that's sold on the margin at those dollar, two dollar cpms, for the benefit of the digital subscription gains.
This point is particularly telling where machine-based real-time bidding (RTB) has become the de facto method of selling remnant advertising. As a side note, RTB appears to be precipitating a race to the bottom for CPM (cost per thousand impression) rates and publishers, either side of the paywall, urgently need to convince advertisers and agencies that the human touch matters more.
2. …so long as you don't lose too many readers
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Despite Smurl's bullish words, the New York Times' advertising revenue last year – the first full year of paywall – amounted to $214.5m, 1.9 per cent down on 2011 (an anomaly of a 53-week 2012 initially made revenues appear flat). But one encouraging sign is that digital traffic has not declined as anticipated.
Website page views are down by 10 to 15 per cent domestically and between 5 to 10 per cent outside the United States. "I think we were steeling ourselves for much different results," says Smurl.
3. Digital subscriptions can help print circulation
One of the unintended consequences of the NYT's digital subscription model has been to stem the decline in print circulation, especially of the Sunday edition.
We didn't design this model to support print but in fact what we've seen is an increase in home delivery subscriptions, in particular on Sundays, for the last several ABC periods since we launched and an improvement in trend in terms of print cancellations and retention and that has been a surprise to us.
The weekend-plus-digital model is an interesting one to watch and one that the Guardian and the Times are embracing (Saturday and Sunday home delivery plus app for £5.99 and £5 respectively). This has a decent chance of emerging as a winning strategy as readers choose to luxuriate in print over the weekend and commute with the app Monday to Friday. Once again, the binary assumptions of digtal or print are being challenged.
4. Hostility towards the paywall model has softened
Smurl notes that pre-launch:
[W]e were faced [with] some pretty withering criticism from a lot of industry insiders and from a lot of consumers who didn't think this model would work, thought content should continue to be freely available
And adds:
The tenor of this conversation and the media coverage of it has changed 180 degrees
With over 300 papers in the US behind some form of paywall and the Telegraph and the Sun following the Times, Sunday Times and FT over here, perhaps this change of tone is to be expected. In fact, the hostility is now reserved for those who insist they can make a go of "free to air".
5. Amazon and Apple have taught people to pay online
Whether it is paying for books, music, tablet/smartphone apps or freemium software upgrades today's digital consumer is more ready to pay for products online, says Smurl:
Amazon and Apple have kind of conditioned consumers to think about paying for digital content as something more ordinary that it was several years ago, even before we launched in 2011 Part of it I think is also the technology that enables us to offer that kind of freemium approach or metered approach and give people a free allotment – in our case 10 articles a month – and then a pay experience on top of that.
You can listen to the whole interview here.
Jon Bernstein is a freelance digital media consultant. You can read his personal blog here.
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