Thursday, March 17, 2011

New York Times Requiring Paid Subscription For Online Content

The wall is slowly going up around The New York Times web content. For the occasional user, sampling will be free; but once you've read too much, a subscription to the site will be required. "There are three pricing plans for people to choose from; at each pricing level, the level of access readers have to the paper's content increases. The cheapest costs $15 per month. The most costly plan costs $35 per month, and allows unlimited access to the Times' website, smartphone and tablet apps. People who subscribe to the print edition of the paper will also have unlimited access." For print subscribers, it will be like getting a bonus edition. For newsstand purchasers, it might be financially more attractive to buy the online version.

Other newspapers and magazines will watch and see how well this change is treated by The New York Times' customer and what the financial ramifications may be. It could lead to higher subscription revenue; it could also lead to a drop in online usage and consequently online revenue. And should it prove successful, watch as the free amount of content drops. They will initially offer 20 free article views per month. Success could drive that sampling number down; instead, they could offer a daily fee for access.

Given the rise in iPads and smartphone usage, the timing may just be right. With other content competing in this space, however, the Times must really push its brand value to justify its cost. Otherwise, free and lower cost content from other sources will simply push the Times further out of the picture.

Content Wants To Be Paid On Every Platform

Consumers have always wanted content on their terms. The rise of the VCR first enabled viewers to tape their favorite shows and watch at their convenience. The challenge was those that couldn't even set the clock. VCRs begat the Tivo and the DVR experience. No clocks to set and an easier way to record. And the DVR has led to On Demand where the content has already been recorded and simply waits to be called up and viewed. Yet throughout this evolution, the content view has been limited to the TV screen. The most recent innovation has been the Time Warner App to push TV content from the TV to the iPad.

Great for consumers, but a challenge to TV Networks. Programmers want to be paid for this new distribution platform. "Network legal reps are issuing a flock of heated missives to the nation’s No. 2 cable operator, calling for an immediate halt to a new service that allows subscribers to stream video content to iPads and other tablet devices." When On Demand was released, revised agreements were needed for use; content owners argue that their agreements don't enable usage on mobile devices. These agreements tend to describe the technology used to transmit and the security to protect it. Time Warner argues that its use is limited to inside the home, but that may not matter in their programming agreements.

And while I can understand the Networks trying to increase their license fees, more views of their channels would also mean more advertising dollars. Perhaps more emphasis should be on measurement of iPad TV views. I also wonder if Programmers are so opposed to Time Warner pushing their content to more consumers, then why haven't they also sued Slingbox and Dish. Their boxes have been out on the market for a while and apps to access on mobile devices already exist, without any limits on where the content is viewed. Slingbox doesn't pay license fees for pushing content either.

Should Networks be entitled to more dollars for rights to more platforms? That certainly is what contract negotiation is all about. Value for value. But at the same time, recognize that when consumers are asked to pay too much or are restricted in accessing content, they tend to find innovative ways to move forward. Look no further than the music industry and Napster as an example. For TV, Tivo was developed to skip commercials and Slingbox was built to access content remotely. Networks not working together with Cable Operators to find a viable solution will find that consumers will simply build a work around solution. The Time Warner App adds value to the cable subscription. And keeping cable subscribers keeps Network annual license fees from declining.