NYT Paywall: A Viable Model Unveiled for the Digital Era (but just for them)

Apr 24, 2012
NYT paywall: Successful model for digital subscriptions, but challenges for Brazilian media groups in replicating it. Conversion requires valuable content, initial loss, porous restrictions, and uncompromising quality.
Much of this summary is not mine. It was made by the journalist from the Guardian, Fréderic Filloux, in a post in the digital version of the newspaper. Filloux was extremely didactic in his text, and I thought it appropriate to base this post on it (citing the credit and the author, as is customary). The subject is not only "hot". It is basically a compendium on the dilemma that traditional media publications have been facing in not knowing how to convert print readers into digital ones.
With the result of the two operations (digital and print) of the Times group publications (which include the Boston Globe and others), the NYT kept revenue stable at half a billion dollars, but with net profit decreasing by 23%. Circulation revenue grew (largely thanks to a smart combination of cross-selling with digital subscriptions) almost 10%, and digital subscriptions are close to half a million subscribers. Digital advertising already accounts for 22% of the group's total revenue. On the negative side, is the fact that all forms of advertising (print AND digital) fell (8% in print and 10% in digital - but the larger fall in digital is explained by the degradation of one of the properties, About.com, after a change in the search algorithm of Google, the cash cow of the site's audience). In any case, the fall in digital advertising revenue is a red flag.
Filloux talks about three indicators in evaluating the NYT's numbers: 1) there is indeed a brake on the performance of digital ads (especially when they compete with really exclusive and quality content, because the more you pay attention to the content, the less advertising "yields"; it is a compliment to the quality of the content, but it is a problem to be solved); 2) this performance drop will generate new forms of sale for the ads, with a degradation for those ads that are not premium, which, sold in bundle, will have increasingly larger discounts (another issue to be addressed by sales strategists WITHOUT thinking about alternatives that compromise the quality of the content) and 3) yes, it is possible to charge for access and be successful (what the NYT collects from digital subscriptions is already significant for the group's revenues). However, the paywall requires certain conditions that, frankly, few media groups in Brazil have the ability to do.
First, start from a large enough open audience (the NYT began to close its content when it received about 40 million unique users per month). If you work with a niche, conversion is only possible if you provide not "just" good quality content, but are a reference - like, "indispensable". Otherwise, the user will find free alternatives.
Second, expect to work at a loss for a good time (Filloux talks about two years). It is difficult to imagine a Brazilian media group thinking about this without including in the transition measures things like downsizing the newsroom, hiring interns, or something like that. The acquisition of digital subscribers depends on the user's perception of the value of your content. This does not happen in a day or in a month. Meanwhile, it is necessary to keep the operation intact from a business point of view.
Third, it is inappropriate to think about systematically closing content or making "teasers" with a paragraph of the article saying "the rest of the article exclusive for XXX readers". First, it is necessary to get the user to register and acquire information about him (data mining, remember?) and then think about restrictions, which will work much more if they follow trends like those of the Financial Times, where any user can read a number of articles per month and beyond that, needs a subscription. This "porosity", as Filloux calls it, is also fundamental not to limit traffic coming from search engines (which can reach half of the total circulation, in some cases). Digital "geniuses" like NewsCorp put the British The Times behind a paywall all at once and saw the site's audience drop by 95% three years ago (and some of this has not been recovered, and also took the Times off the agenda of advertising agency planners).
Fourth (and most delicate for Brazilian news organizations), quality is non-negotiable. The drop in the quality of content provided by the main Brazilian newspapers and magazines over the last two decades is astounding. If you intend for someone to pay for your content it has to be 1) exclusive (it's no use reselling it through your news service - even if it's badly and poorly rewritten), 2) really of quality (and in this case, it's no use marketing on top of your own work saying that "in XXXX, the text is tirelessly polished" because it doesn't stick) and 3) the content needs to offer a considerable differential under ALL aspects to ANYTHING that is available for free.
For media companies, the most relevant thing in the NYT example is that there is a possible path to tread in the conversion from print to digital. Of course, the suggestions of the Guardian journalist do not deal with all the necessary aspects. Rethinking the flow of content production, establishing a work center in the newsroom to think about the way of convergence between the various platforms for the same subject (print, PC, tablet, mobile, social media) or if this subject will only be dealt with in some of them, reorganizing the newsrooms with more qualified professionals, who earn more and can generate this "multi-delivery" content, redoing the hierarchy of the newsroom itself (and the company) to enable the agility that the new processes need, cutting costs with "councils", "directions", "vice-presidencies", and other instances that no longer make sense in the new scenario are aspects that Filloux did not address - even because, many of them have to do with the cultures of the companies, which certainly need a shock - a shock that is absolutely unique for each company.
P.S.: 11 years later, it’s clear that the NYT is only an example for themselves. A massive brand, which used to have above-average journalism (now, it’s not - even if it has some quality, it no longer fulfills the mission to inform the whole society, but just panders to its own readers). A paywall depends on a surplus in the budget of individuals, and that is really something rare. And the cruelty is in the fact that those needing solid information the most are those with fewer resources.

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