The New York Times Pay-Wall: A New Era for Paid Content?

The New York Times finally came out with it — the official announcement of its long-rumored plan to re-erect a pay wall for its online content. Beyond the confirmation of what everyone suspected, the Times Co. offered virtually no details. Here’s what we know:

• The conversion won’t take place until January 2011, so online readers of the Times have a year to enjoy their free goods.
• The system will be modeled along the lines of The Financial Times, with free access to a fixed number of articles per month before the pay wall goes up.

What we don’t know is how many articles will be free or how much the service will cost on the other side of the pay wall. We also don’t know about possible relationships between print subscriptions and online access, or about the cost of access via mobile or emerging platforms such as e-readers or Apple’s not-yet-announced tablet.

However, The Times’ own article called the FT model “a system close to what is planned by The Times.” This will not come as great news to those who currently enjoy the NYT online for free. The FT allows only 10 free articles per month, and an all-access subscription to its digital edition costs a whopping $300 per year for US readers. That’s more than double the Wall Street Journal‘s online subscription of $140.

Given that the WSJ and FT are more specialized publications catering to a financial audience, it’s possible the NYT has a more affordable price point in mind. Another interesting question is what effect this will have on the Times’ online advertising revenue. As James McQuivey points out, Web traffic to the Times won’t remain at 15 million visitors per month for long.

Even if you get the balance between free and paid right, traffic will fall. WSJ.com has about two-thirds of your traffic, even though it has 600,000 more paid daily subscribers to its print edition than the Times does. That’s a good metric to shoot for: a quarter as many paid subscribers as print subs, or about 250,000 in your case, with traffic somewhere around 9 million uniques a month (using Compete.com’s metrics here, adjust accordingly). That’s after you rebound from the initial confusion. Of course, advertisers will still panic. Ironically, the drop in traffic will constrict supply, driving ad rates up, but over a smaller reader base. The result will be a reduction in ad revenue of at least 50 percent. Plan for it, send the message internally that there’s no way around this iceberg but to try to plow right through it.

So, what does all this mean for the future of paid content? Should we expect every news organization to start charging for online access, after giving it away for so many years?

I see the NYT example as an isolated case based on the value of its content. In other words, the Times is doing this because it can afford to. I wouldn’t think that more “commoditized” news outlets would be able to get away with charging customers. In fact, this could be an opportunity for competitors to siphon some of the NYT’s online audience by luring them with free access. In a nutshell, I’d expect advertising models to continue to dominate the online news landscape, despite “islands” of paid content from the NYT, WSJ, FT and possibly a few others.