Content Revenue Models: Pay Per View vs. Ad Supported
Question posted to Martin A. Nisenholtz, senior vice president, digital operations for The New York Times Company. (via @cvvalencia)
Q. Do you see online newspaper and magazine content becoming pay-per-view (or pay-per-month, etc.) in the future? With newspaper and media revenues declining, we hear that idea thrown out every once in a while as a way to stabilize the industry. What are your thoughts?
— David N., Minneapolis
A. Martin A. Nisenholtz: The short answer to your question is “yes.” We’ve experimented with many different versions of online payment over the years. For example, when we started the Web site in early 1996 we charged for international usage. Our thinking was that Times content was unavailable outside the United States, hence, users would be more likely to pay for the online version. After about 18 months we had generated under 4,000 subscriptions, so we ended the experiment in July 1997.
Our most ambitious effort in paid content was TimesSelect, where we charged for access to Times columnists, arguably our most exclusive content (since, for example, Tom Friedman is only available from The Times.) This was much more successful, generating more than 200,000 subscriptions and around $10 million in annual revenue. However, we decided to end TimesSelect after careful analysis suggested that the ad revenues resulting from increased traffic from offering this content free through the exploding search and blogs sectors would exceed $10 million over time.
Today, we continue to carefully analyze the question of how paid content (subscriptions, micro-payments, membership tiers) can augment our core advertising business. The trick, of course, is to garner incremental revenue from the user without significantly cannibalizing the high rate ad pages that now account for a very significant amount of money. Unlike many local news Web sites that still depend mostly on declining classified ad revenues, NYTimes.com has a very large national display revenue stream. As we develop new pay-for-content ideas, we must carefully balance our ability to generate meaningful dollars from both sources.
