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Who Will Control the Cost of the NYT On Digital Readers?
RobotRunAmok writes "Ryan Tate, at Gawker, describes the 'heated turf war' waging at the New York Times. The print and digital divisions have differing views over how much a subscription to the Gray Lady (iPad edition) should cost. The print troops believe $20-$30 monthly is the proper price point (fearing that setting the mark any lower will jeopardize print distribution), while the digital soldiers are digging in their heels at $10 a month. The Kindle version is already managed by the Print Army, so don't count on logic necessarily driving any decisions here. It's complicated: the Web version of the paper is still free through 2011, and the computer 'Times Reader' has already been released and priced at $14.95 monthly."
Most people seem to believe that because content is available in electronic form that it's somehow significantly cheaper to produce than in print. Having had some experience with the printing industry I can assure you that printing costs are relatively small compared to the overall cost of producing a newspaper or magazine. And in the case on NY Times or WSJ printing costs must be even cheaper given the relationship they've obviously established with their printers, assuming it isn't done in-house. Also keep in mind that some of the expense that may be spared by not printing physical copies inevitably goes to hosting and site maintenance.
And most publications live on advertising, almost more so than actual sales. Another department at my company does a lot of publication work and their clients have cut pages if they don't have a sufficient density of advertising versus content. There are obvious exceptions where they're just taking advantage and cramming the magazine excessively full of ads. Magazines like Maxim, Cosmopolitan and other such crap come to mind.
However, advertising on the web versus print are very different animals. While web ads can be more intrusive they're also easier to ignore. It's a lot easier to quantify their effectiveness. So it's difficult to charge what would be charged for print ads. Although in print, the publications actually have the work of having to place these ads and ensure there are no printing issues with them.
I had to deactivate ad block to get a sense for how they place advertising. I'm surprised by how few ads both NYTimes and WSJ run on their homepage. WSJ features a house ad at the time (advertising for themselves) and the first other ad appears pretty far down on the right which means if you're browsing on a netbook, for example, you probably wouldn't even see it. NYTimes has two small ads to either side of their header and then links to sponsored content here and there which most people may miss.
On the other hand, visit some of the news aggregate sites, anything from Gawker Media is a good example. Their sites feature more invasive advertising and they routinely do themed promotions, like one they're running now for some HBO show. So they're obviously getting a lot more bang for their buck even though they're producing far less content themselves. Of course the audience is a little different. I think most readers of WSJ and NYTimes would be pissed if suddenly they started covering their sites in advertising. Whereas the visitors to these other sites, who I'd say skew younger, tend to have lower standards and are more tolerant of this sort of thing. But of course, it enables them to continue offering content for free.
The work that NYTimes and WSJ does is not cheap by any stretch of the imagination. So if charging for content doesn't work they need to embrace a more advertising-heavy model. And even then they may be forced to cut staff and content which will hurt the quality of their work and make them a little more generic.
I personally hate advertising. But I acknowledge that sometimes you have to pay a little more for quality. Unfortunately, on the internet people seem to believe that everything should be free. They're apparently oblivious to all the work that goes into creating this content.