Free at Last   

Why major news outlets are giving up on charging for online content

In September, NYTimes.com tore down the subscription wall known as TimesSelect, releasing its columnists and much of its archive back to the general population, once again to be blogged, Googled and read by all.

NYTimes.com stands in a long line of great and small news sites that have tested and jettisoned subscription models over the years. In July CNN.com stopped charging for its Pipeline video service; in October the Financial Times broadened its offering of free content. Before News Corp.'s official takeover of the Wall Street Journal, Rupert Murdoch was publicly forecasting that opening the site would expand its reach from 1 million subscribers to between 10 million and 15 million readers worldwide.

The common reason for dropping the pay wall is that an ad-supported model simply pays better. At the end of its two-year run, TimesSelect had 227,000 paying subscribers and was generating $10 million a year in revenue. Not too shabby, but the future was limited. In its own coverage of the change, the New York Times said the project had met expectations but projections for subscriber growth were low compared with the growth of online advertising. According to comScore, which measures Internet data, NYTimes.com's total page views surged 52 percent from the end of August through the end of October; unique visitors jumped 64 percent.

Likewise, CNN.com portrayed the end of Pipeline not as a failure but an evolution. In a June 25 note to subscribers, the site's management explained that "it became clear to us that reaching true scale was going to be impossible if the product remained a pay service." Subscribers were promised that CNN's new free video service would be even better than Pipeline.

With no more high-profile practitioners, can we finally stick a fork in the subscription model? Certain bloggers seem to think so, but the concept still has its holdouts. One of those is Arkansas Democrat-Gazette Publisher Walter Hussman Jr., who declared free online news a disastrous business plan in a May 7 Wall Street Journal column titled "How to Sink a Newspaper" (see "Online Salvation?" December/January). Hussman suggested a causal relationship between declining print circulation and free online content.

While the vast majority of news sites do not charge subscription fees, there's some evidence they still dream of the possibility. The Project for Excellence in Journalism's 2006 State of the News Media report said that, heading into 2006, only about 40 small dailies in the U.S. charged for content. However, 40 percent of online newspaper editors and managers said they expected to charge a subscription fee in the future. That seems a little odd, but given the uncertainty around online business models and the basic survival of the newspaper business, perhaps it's understandable they'd harbor that hope.

The third paragraph of Hussman's Wall Street Journal column summarizes the prevalent theory of the pro-subscription contingent: "The newspaper industry wonders why it is losing young readers... Why would they buy a newspaper when they can get the same information online for free?"

Over the years, the old "why-pay-when-you-can-get-it-online-for-free" argument has furnished many newspaper managers with a convenient but false excuse for avoiding more sobering truths about their product and its relevance to today's consumers. For one thing, it's a leap to assume that most young readers — really, anyone under 40 — would pay for standard newspaper fare online if it weren't free. Where's the evidence that younger adults care enough about the average newspaper story that they'd pay for the privilege of reading it? Traditional news outlets have enough trouble appealing to the next generation of news consumers without creating extra barriers.

Second, as the New York Times acknowledged, the subscription wall has a ceiling. While a subscription site can offer a well-qualified audience to advertisers, that audience will reach a certain size and stop growing. On the other hand, the potential reach of a free site with good content and search rankings is virtually unlimited. Today many sites are experiencing traffic levels they never would've dreamed possible a few years ago. A large audience doesn't automatically produce revenue, but it does create opportunity.

Finally, do we really want to live in a subscription-based world? Imagine daily life if all news sites started charging admission. The convenient micropayment system heralded in the '90s has not materialized, which means we'd be paying a fee to every news site we visited or for every story we read. If we're trying to drastically shrink the average person's news diet and broaden the online culture divide — not to mention opt out of the online ad explosion — that'd be a quick way to do it.

None of this is meant to knock the sites that have tried subscription models in the past or to suggest that it's impossible for them to generate revenue. It's hard to call TimesSelect and CNN Pipeline mistakes; both were bold experiments by industry leaders. The Wall Street Journal has done well as a paid site to this point, and several local sites continue to charge for specialty content.

But it would be a mistake to cast one's lot with the minority of readers willing to pay for online news, while ignoring the major transformations happening around us. That's how to sink a newspaper.

Barb Palser (bpalser@gmail.com) is director of digital media for McGraw-Hill Broadcasting Co.