NYTimes.com has a strategy problem, not an inventory problem
Posted by Barry Parr
I agree with my colleague David Card that the New York Times must cut costs and raise the price of the print edition. David also agrees with Henry Blodget that Times should start charging for its online product. But Blodget's analysis rests on some on a comparison with the Wall Street Journal, which I don't think is useful:
- The Times cannot gather anywhere near the number of online subscribers that the Wall Street Journal enjoys. Journal readers often expense their subscriptions and the Journal's reporting is far more valuable to its readers than the Times's reporting is to its readers.
- The Journal should have gone free more than a year ago. As the Journal goes through its own inevitable cost-cutting, it's going to be less competitive with free products, such as Bloomberg, Reuters, its own Marketwatch site, Henry Blodget, and the rest of the Internet. They will have to deal with this eventually and it's going to be more difficult the longer they wait. Finally, the Journal's readers will always be more valuable to advertisers than those of the Times and the Journal would have a lot less difficulty selling its free inventory than the Times is having.
- The Times's problem is not that it has too much inventory. The problem there is not enough demand among advertisers for its readers' attention. Cutting their numbers will not make them any more desirable. This is where Blodget makes his most questionable assertion: "NYTimes.com would be able to charge more for ads served against known, paying subscribers (the company would have some demographic info)." That reasoning passed its expire date ten years ago.
If NYTimes.com's problem is that it has too much advertising inventory, nothing can save it.
Traditionally, subscribers barely covered the cost of printing and distributing newspapers and magazines. Michael Kinsley did a great job of laying this out way back in 2001. The genius of William Randolph Hearst, among others, was to pretty much give away the product to sell the ads.
The solution to this problem is not as simple as putting a price on your Web site and treating it like a streetcorner vending machine. The eventual winners in Twenty-First Century "paper" wars will succeed by thinking a lot bigger, and lot stranger. No one knows the answer to this problem, but many folks now see the direction in which it lies.
I have a report coming out soon that will address media strategy in the networked era, but my Best Practices in Networked Media report is a good place to start. Bloomberg and Reuters are on their way to becoming networked media giants, and trying to charge for access will only slow the Times's progress to its own transformation.