In March, the New York Times launched an online paywall for its website, forcing subscribers to pay in order to read articles. At the risk of losing a vast number of readers, the NY Times started charging $15-35 per month for access to its content. One month later, could the risky paywall actually be paying off?
The Good News:
The NY Times says that it has gained more than 100,000 new subscribers since it announced the digital subscription service. This represents at least an estimated $26 million in annual revenue, far exceeding early expectations for the service. Other hopeful news for the company is an increase in print edition subscriptions of the paper.
"While the advertising marketplace remains challenging, we are confident the path we have been pursuing to transform our company is the right one," Janet L. Robinson, chief executive of the Times Company, said in a conference call with analysts.
The Bad News:
On the flip side, the New York Times is the US's third largest newspaper, so 100,000 new subscribers is not an extraordinarily impressive figure. Many are questioning how difficult it will be for the company to sustain this kind of business model. However promising the initial results are, NY Times says it is too early to consider the paywall a success.
First-quarter revenue at the Times Company dropped 3.6 percent to $566.6 million. Earnings fell 57.6 percent to $5.4 million (compared with $12.8 million in the same quarter last year).
Though the newspaper's initial modest expectations have been exceeded, it is not clear what kind of long-term effect the paywall will have on its website traffic and advertising revenues.
Other newspapers around the world have been closely watching the success of this project to see how charging for access affects readership. These days, many people can access news for free online. As a result, newspapers are struggling to survive and are constantly looking for new revenue streams.
