NYT has a feature on how the Financial Times buckled the conventional wisdom and charged for access to its site.
The Financial Times, read by business people, has gladly kept its online content behind a pay wall. Pinched by falling advertising revenue, even mainstream newspapers may follow its lead.
Not long ago, when other media executives were convinced that the only way to succeed on the Web was to give away their content, The Financial Times played the eccentric.
“We were regarded as slightly freakish,” says John Ridding, the newspaper’s chief executive.
Indeed, the newspaper started charging readers for access to its Web site in 2002. Now, with few signs that advertising is rebounding from a deep slump, and with other publishers moving to imitate FT.com by erecting so-called pay walls, Mr. Ridding feels vindicated.
“It was pretty lonely out there for a while in paid land,” he said last week. “But it has become pretty clear that advertising alone is not going to sustain online business models. Quality journalism has to be paid for.”
Now The Financial Times is adding to its paid-content strategy with a plan to accept micropayments for individual articles, as an alternative to a subscription.
And one by one, other publishers are starting to see wisdom in the paper’s ways. Rupert Murdoch, chief executive of the News Corporation, said this month that the company intended to charge for all its news Web sites. That plan would have the company’s major newspapers in the United States, Britain and Australia joining their sister newspaper, The Wall Street Journal, which already charges for access to most of its site.
Executives of The New York Times have said they are considering ways to get readers to pay for online access, though they have yet to disclose specific plans.
That is a big change from 2007, when The Times site abandoned a pay wall for some content, concluding that it was restricting the potential for online advertising, despite the site’s having attracted 227,000 paying customers.
Around the same time, Mr. Murdoch was saying publicly that he might drop the pay wall around the Web site of The Wall Street Journal, which the News Corporation was in the process of acquiring.
Pearson said last month that operating profit at FT Publishing, the unit that includes The Financial Times, had fallen 40 percent in the first half of the year, with revenue down 13 percent.
The print circulation has also fallen, with sales in June down 7 percent from a year earlier, to about 412,000 copies, according to the Audit Bureau of Circulations in Britain.
FT.com has not attracted a huge paying audience, with about 117,000 worldwide, up from 101,000 in 2007. That is far short of the one million paying customers of The Journal’s Web site.
Yet FT.com is lucrative because it charges a premium for its content. A premium subscription to the Web site, with access to all content, costs $300 a year in the United States. Adding the print version costs $100 more.
Because of rate increases by FT.com, revenue from Web subscriptions has risen 30 percent over the last year, Mr. Ridding said. The Financial Times has also raised the price of its print editions.
In another effort to generate additional digital revenue, the newspaper restricted access last year to its content through databases like Factiva and LexisNexis, requiring users to buy special licenses to read archived articles. More than 600 corporate customers, with a total of about 50,000 users, have done so.
The price of a subscription to the databases “wasn’t reflecting the value of what we were producing,” Mr. Ridding said. “So we took control of the pricing,” he said, adding that the change led to “robust revenue growth.”
While FT.com is certainly a trendsetter and should be complimented for it, it’s pay wall strategy may not work well for other types of newspapers. It is clear that people are willing to pay for information that directly relates to money such as WSJ and FT. But would they be willing to pay for general news? There is no past evidence to support this.