The NYT’s Middle Ground

Beneath the outraged reactions to the New York Times plan to charge heavy users for access to its content, there was an undercurrent of people going through the motions. No matter what plan the Times came up with — it has been prepping this for many months — there would be catcalls that it was doomed to fail. Let’s face it: people don’t like paying for things, and the tech elite hate anything that challenges the orthodoxy of “Free.”

The Times is ready to do just that. The problem with “Free” is it has never delivered on its promise for those that pay a fairly high amount to pay for high-quality content. Free, which means ad-dependent in most cases, is a winning strategy for tech platforms that rely on others to create the content for free. Should Facebook adopt a pay wall? Why when it has 600 million content creators beavering away for the reward of likes. Things are different for publishers. The Web ad game, as we’ve mentioned, is rigged against outfits like the Times. All those reporters covering the Middle East come at a high cost. The Web ad system is premised on page views. The Times has plenty, but it still can’t make it work. That’s because ad rates remain low online. The Times can charge premium rates for its audience, but not so much that an ad buyer can’t easily find that audience in cheaper places. The vogue for audience based buying over context doesn’t help, either.

That leaves the Paper of Record in a tough position. There are two basic camps to solving its dilemma. The slash-and-burn school is led by Henry Blodget, the Business Insider publisher and former Wall Street analyst. Blodget believes the answer is clear: embrace the free Internet but bring down your costs to make up for the lower revenue generated by online ads versus their print counterparts. Blodget counselled the Times to cut its newsroom costs by 40 percent. That’s a tough pill to swallow, no doubt, for the Sulzbergers.

The second school, which I’m sympathetic to, is the you-ain’t-getting-no-Coke approach. You might remember the scene in Caddyshack where Danny Noonan fills in for the caddymaster in the shack. He tells his rival D’Nunzio that Coke’s are now $1 because “Lou’s been losing at the track.” When D’Nunzio says, “I ain’t payin’ no 50 cents for no Coke,” Noonan tells him, “Well you ain’t getting no Coke.” Nobody likes paying for stuff. But if you want something, if it has real value, people will do so. The mistake was not doing this from the start. James Murdoch, a pay wall proponent, summed it up well last November at the Monaco Media Forum. “First rule—if you are going to monetize something, you probably should not give it away for free.”

The Times is choosing a middle ground. It’s not shutting itself off from the web. Far from it, actually. The Times is understandably objecting even to the term “pay wall” because there are so many ways to access its content without paying a dime. People can read up to 20 articles a month free of charge. Links in social media and elsewhere will go directly to the story without encountering the paywall system. There are several pricing tiers. Some grumble the prices charged by the Times — $15 per month for web and mobile, for instance — are too high. Maybe. But Times media columnist David Carr put it best in a tweeted response to the kneejerk critics, “To those predicting doom w/meter, sheer tonnage of eyeballs will never solve problem of funding many boots on ground.”

The Times’ plan isn’t perfect. But it’s clearly trying to balance two competing notions. It is committed to remaining part of the hurlyburly of the open Internet while trying to change the economics of an ad system that simply doesn’t yet generate enough revenue to pay for quality journalism.