The discussions played out over most of 2009 amid the hum of the third floor newsroom and in the executive suites high above Times Square, consuming what seemed like countless meetings and consultants’ recommendations.
At issue was the biggest strategic leap in a generation for the 159-year-old New York Times: would readers be willing to pay to read its journalism online?
The Times announced its new subscription plan last week to widespread debate. Many readers and bloggers said they were happy to be able to finally pay for their frequent use of the Web sites, while many others — joined by some industry analysts and pundits — said that The Times was dangerously out of step with the digital age and that the approach was doomed to fail.
The same debate raged inside The Times, with executives and senior editors sometimes heatedly taking sides. In the middle was Arthur Sulzberger Jr., chairman of the company, who grew to embrace the idea of a pay model. But he was opposed by several senior executives, especially those who had worked to build NYTimes.com into the most visited newspaper site in the world.
"I believe that our journalism is very worth paying for. In terms of ensuring our future success, it was important to put that to the test."
The risks were manifold. The company might jeopardize its huge online reach, and no one could predict what would happen to digital advertising, which had gone from being a drop in the bucket to more than a quarter of The New York Times Company’s overall advertising revenue.
Given the size of its online audience and its historic position as the country’s paper of record, its pay model, which takes effect on March 28, may be the most watched experiment in American journalism. The announcement last week might have laid out the company’s plan, but it did not end the debate, inside the building or out.
“On the one hand, I think there is some anxiety around it,” said Martin A. Nisenholtz, the senior vice president for digital operations, who initially wanted NYTimes.com to remain open and free. “On the other hand, I think the model we have chosen mitigates 90 percent of it.”
The Times had experimented with a pay model before: TimesSelect, which ran from 2005 to 2007, charged for access to popular opinion columnists like Frank Rich and Maureen Dowd and for The Times’s archives. That program brought in 227,000 subscribers at $49.95 a year, generating about $10 million in revenue.
But after they commissioned a study to examine how TimesSelect was working, company executives became convinced that restricting access to the site was constricting its potential for more readers and more advertising.
When that program was ended, traffic to the site almost doubled. It now stands at more than 30 million unique domestic visitors a month.
“It made more business sense to end TimesSelect,” said Vivian Schiller, who was senior vice president and general manager of NYTimes.com and championed ending the pay model. “At that time the game was about math.”
When the depths of the recession arrived in 2008, revenue from digital efforts had started to decline. In 2009, the Times Company borrowed $250 million from the Mexican billionaire Carlos Slim Helú at the extremely high interest rate of 14 percent, and for the first time in its history the paper resorted to layoffs in its newsroom. While online advertising has since recovered, it has not rebounded at a pace sufficient to make up for the continuing drop-off in print advertising.
These developments added fresh urgency to discussions about an online subscription model. There was a sense that online readers might be willing to pay, as print subscribers always had, according to Denise Warren, the chief advertising officer of The New York Times Media Group, which includes The International Herald Tribune.
“Some of them even send us checks unsolicited,” she said. “I have this woman in Canada who’s sent me two $50 checks because she doesn’t understand why she can get our journalism for free. Each time I have to tell her I can’t accept the check.”
Executives studied a variety of online business models including those used by Weight Watchers, which charges $17.95 a month plus a $29.95 initiation fee for weight loss guidance, and Apple’s iTunes service, which popularized the micropayment with the 99-cent song download. They even looked at a donation model and at creating a digital newsstand where people could buy The Times as part of a bundle with subscriptions to local papers and national papers like The Wall Street Journal and The Washington Post.
Mr. Sulzberger wanted a flexible system, one that would allow the company to adjust the limit on the number of free articles as needed — in the case of a big breaking news event, for example.
“Let’s imagine there’s a horrifying story like 9/11 again,” he said in an interview. “We can — with one hit of a button — turn that meter to zero to allow everyone to read everything they want,” he said. “We’re going to learn. We built a system that is flexible.”
Contentious and divisive issues
The issue had long split the newsroom, as well. Many reporters and editors embraced the reach of the free site while others worried about further cuts if The Times could not tap a new source of revenue.
“I believe that our journalism is very worth paying for,” said Jill Abramson, The Times’s managing editor for news. “In terms of ensuring our future success, it was important to put that to the test.”
In the end, executives decided on a tiered plan, one that would allow visitors to read 20 articles a month at no charge before being asked to select one of three subscription models: $15 every four weeks for access to the Web site and a mobile phone app (or $195 for a full year); $20 for Web access and an iPad app ($260 a year); or $35 for an all-access plan ($455 a year).
"I’m not saying that anybody who believes in this is some kind of dinosaur, but it says that as a business we can be a modernized form of what we do."
“I think people across the board would find it unacceptably uncomfortable to have a hard wall up,” Mr. Nisenholtz said. “But I think everybody is much more comfortable in an environment where content can still be shared, tweeted, blogged.” Articles that readers gain access to through social networks will not count toward the monthly limit.
But there were two looming issues in the model. The first was technical: computer errors had marred TimesSelect. Home delivery subscribers, who were given free access, often had difficulty linking to their accounts online.
“That is one of the things we learned with TimesSelect,” said Janet L. Robinson, chief executive of the company. “We had to have the user experience down cold.”
For that reason, the new system took more than a year to build and was rolled out several months behind schedule. The Times has not publicly said how much the system cost to build.
The other issue was price. Executives considered more than 100 product combinations priced as low as $5 and as high as $40 a month, and they studied more than 20,000 consumer survey responses. Executives say they were surprised how many readers were willing to pay.
“It was high,” said Paul F. Smurl, vice president for paid products for NYTimes.com. “So high I said we needed to do the testing again.”
The company also wanted to get in early on the paid-app market, which the iPad has demonstrated can be a growing business. “This should be a huge marketplace for The New York Times,” Mr. Nisenholtz said.
Despite the consumer testing, the plan has been met with considerable skepticism. Critics point out that paying for general news online, as opposed to business news, is something that few without expense accounts have demonstrated a willingness to do.
“At the moment, I can’t see any evidence of a general interest newspaper making a success of this,” said Alan Rusbridger, editor of The Guardian, which does not charge for its Web site. “I think financial journalism is the one exception to the rule because the information is of value, and it’s time-critical. If I can know something five minutes before you do because I have a subscription to The Financial Times or The Wall Street Journal and you don’t, that’s of value.”
The Times will not say publicly how many online subscribers it hopes to get. But company executives have said privately that the goal for the first year is 300,000. And Mr. Sulzberger and Ms. Robinson insist that the plan is not intended for short-term gain.
“This is not a bet on this year,” Mr. Sulzberger said. The question that remains to be answered is whether that bet pays off in 2015, 2020 or ever.
“There’s no mystery here about what the risk is. This is essentially a bet that you can reconstitute to some degree the print economics online,” said Jonathan Landman, who was deputy managing editor for digital journalism until 2009, when he was named culture editor.
In his digital role, Mr. Landman argued against charging readers. But he says he believes the model the paper has settled on is sophisticated and designed to minimize traffic loss as much as possible.
“I’m not saying that anybody who believes in this is some kind of dinosaur,” he said, “but it says that as a business we can be a modernized form of what we do. And that may be true.”