Put up a paywall ... and be damned

Sometime in the next month or two, The New York Times will finish building a paywall around its popular website and turn it on. It will be a minimum-security kind of wall, which most visitors probably won't notice and few will have to pay to pass.

After an interminable gestation, its arrival will be closely watched by other publishers keen to discover a more consistent and lucrative revenue stream than solely relying on online advertising. Most have found dollars in print have given way to cents online.

That is partly because The New York Times is perhaps the most prestigious newspaper in the world. It has the most-visited newspaper website in the United States - last year, its unique visitors numbered about 45 million in total around the globe, including 20 million Americans.

It is also interesting because it is trying a different kind of paywall to the most prominent experiment in charging for general online news now under way.

News Corp has imposed high-security paywalls around The Times and The Sunday Times in Britain, which costs #1 ($1.60) a day to get past or #1 for the first month and #2 a week after that. In November, it said 105,000 people had paid for access and about half of those were monthly subscribers. But its web traffic plunged by somewhere between 60 and 90 per cent, depending on the estimate.

It has built a similarly solid wall around its controversial Sunday screamer, News of the World, which costs #1.99 a month, but its weekday sister tabloid, The Sun, so far remains free. It plans to charge for The Australian website sometime this year, although it hasn't revealed the date, price or model.

Fairfax Media, publisher of the Herald, also has a solid paywall around The Australian Financial Review. Non-subscribers are given a taste of an article, then tempted to subscribe with a two-week free trial. A web-only subscription is $109 a month, the same as a print and web price, while a print-only subscription is $75 a month.

But rather than a solid wall or choosing some stories readers can read free, as its home-town News Corp rival The Wall Street Journal does, The New York Times plans to charge only heavy readers of its site.

After reading a certain number of stories, it will ask readers to subscribe and register their credit card details before being allowed to read on. Clicking on a link in Facebook or Twitter won't count, but there might be a limit on the number of story links you can click on from a search engine like Google.

The Financial Times has done something similar for some time - it allows non-subscribers eight stories a month before being blocked with a screen saying: "Enjoy UNLIMITED access to articles ... click here to continue". On the next page, it asks you to pay $US3.59 a week in one annual payment of $US186.68 a year.

The New York Times says it wants a metered model because it allows a "proper ratio" between free and paid reading, maintains its online advertising and keeps its material visible on search engines.

It has not said how many stories will activate the paywall, but last month, its chief of digital operations, Martin Nisenholtz, told a media conference that about 15 per cent of its online readers read more than 20 pages on nytimes.com a month, and the company considered them "heavy users".

If 15 per cent of its 45 million unique visitors are heavy users, then expect about 6.75 million readers a month will be asked by the newspaper to cough up. If 10 per cent actually do - and given they like what they read, that's not unlikely - and the fee paid is similar to what the company charges a Kindle subscription now ($US19.99 a month), its additional revenue would be in the region of $13.5 million a month.

Its chief executive, Janet Robinson, told Reuters last month the company had examined a "myriad" of online industries as it finalised its model. They included Consumer Reports and Weight Watchers, which have been able to increase revenue by allowing some free material online but charging for in-depth information on products and losing weight.

It is spending about $50 million on the project, and on Saturday Bloomberg reported it had fixed about 500 of 700 glitches discovered during testing.

The New York Times Company is listed on the New York Stock Exchange, but is controlled by the Ochs-Sulzberger family through a special class of shares. The chairman and the paper's publisher is Arthur Sulzberger jnr, who bridled when a Reuters reporter brought up The Times experiment last month.

"Please don't compare us to The Times of London. They have a gate, a real wall. We aren't doing that," Sulzberger said. "To compare us to them is just a false comparison."

There is no love between Sulzberger and News Corp. Murdoch has turned the guns provided by his $5 billion takeover of The Wall Street Journal on to The New York Times with more local coverage, and the battle for readers is personal.

As a Vanity Fair feature reported in October, Murdoch has described Sulzberger as a "wuss" and the Journal used part of a picture of Sulzberger's face to illustrate a story on effeminate men.

But aside from the intense competition between the publishers of two extremely good New York newspapers, they both want to rely a little more on direct revenue from readers and a little less from the fickle advertising cycle.

In October, The NYT Co, which also owns The Boston Globe and 15 other newspapers, said its total revenues fell 2.7 per cent in the third quarter of 2010, compared with the same period the year before, with advertising and circulation revenue both down by 1 and 4.8 per cent respectively. Print advertising revenue fell 5.8 per cent, while digital rose 14.6 per cent. That's after a bad 2009, which saw advertising revenue fall by 25 per cent.

Yet as it noted in its annual report last year, thanks to its websites and expanding into places left by closing newspapers, more people are reading the company's news than at any other time in the history of The New York Times.

That is not uncommon - it is also true of the Herald, thanks to its popular website - but publishers receive far less revenue for advertising space online than in print.

Sulzberger told a digital conference in Munich last week that print would be around for a long time yet, but that news organisations had to be available where readers wanted them to be, in print, online, and on mobiles.

"I think one of the joys of the era we are in is the ability it gives all of us to try things, learn things, to adapt," he said, referring to its short-lived Times Select experiment of charging for opinion columns. "What we have found in an app world ... is that people are showing a willingness to pay for something they feel is important. And sometimes that is a game, sometimes that is ... restaurant reviews, and sometimes that is quality journalism.

"We believe that enough people will pay, but that we will not cut ourselves off from the rest because, quite frankly, to cut yourself off from Google access is just crazy," Sulzberger said. "We want to be part of the digital ecosystem, and that's critical to us."

Crazy or not, that is what News Corp does in Britain, although not at the Journal, and it is launching another form of solid paywall this week. Its new paperless newspaper for the tablet computer, The Daily, is tied specifically to Apple's iPad - at least for now - and was to be launched by both Rupert Murdoch and Steve Jobs. Now, another Apple executive, Eddy Cue, will stand in at the launch tomorrow at the Guggenheim Museum in New York.

For its part, The New York Times is "agnostic" about tablet computers, according to Robinson. "We're dealing with everyone - Microsoft, Sony, Samsung, Apple and Amazon," she told Reuters. And while it has tablet editions, it is not planning to follow News with a tablet-specific publication. "We have a superior daily. We call it The New York Times."

At the same conference in Munich last week, James Murdoch - son of Rupert and head of News Corp in Europe and Asia - said The Daily would succeed or fail on the journalism itself, not the bells and whistles around it.

It will cost 99? a week, for now. "Pricing models for apps and for paid journalism in general is developing, and we're going to see how it goes," Murdoch said, flagging bundling it with other things or introducing tiers for premium access.

He stressed that charging had to be simple and easy for readers, but raise enough to pay for journalism, pointing to the large amount of wire stories republished on multiple websites that has "homogenised" much digital publishing. "We want to break out of that as much as possible."

He said while The Times online audience had "contracted dramatically", subscribing readers were using the website for longer periods and advertisers were happy. Asked if the The Sun would go behind a wall, he sounded the need for caution. "I would be very confident that there would be a strong paid component in it," he said. "Whether or not the paywall is structured in the same way is a different question."

And like Sulzberger, he remains confident of a future for some printed newspapers. "Big franchises that are really differentiated continue to do well," he said. "The thing that suffers is the middle ground; it's not the top of the market or the specialist niche of the market."