The Times to charge for onine content later this year

The Times and The Sunday Times will start charging for online content later this year. Readers will be offered a week’s subscription for £2, or a day’s access for £1, to two new sites, www.thetimes.co.uk and www.sundaytimes.co.uk.  Existing subscribers to the print editions will be given free online access. International pricing has been set at $2/€1.5 a day or $4/€3 for a week.  Last August Rupert Murdoch announced plans to charge for all the newspapers’ websites. This move was referred to as a ‘defining moment for journalism..’ presumably because bold steps are required to attempt to reverse what has become the accepted model of free online news and to charge a fee for the ‘value’ it represents.

Times Online — which includes The Times and The Sunday Times — has c. 20 million monthly unique visitors. The print edition of The Times has 1.7 million readers and The Sunday Times has 3.2 million readers.

Newspaper publishers are desperate for new business models to compensate for declining ad revenues. In January The New York Times said that it would charge for access to its website and The Financial Times and The Wall Street Journal already have online subscription models.    The New York Times plans to introduce a ‘metred’ model where a reader is charged after accessing a set number  of free articles every month.

The Guardian said it will not charge for online access while certain papers, such as London's Evening Standard has abandoned readership revenue and made print editions free.

The NYT's publisher, Arthur Sulzberger, agreed that the strategy is not without risk: "This is a bet, to a certain degree, in where we think the web is going."  But like many newspapers, the New York Times is in the midst of a financial storm. Its parent company, the New York Times Company, owns 15 papers, including the International Herald Tribune and the Boston Globe, and sustained a loss of $70m in the nine months to September last.  It recently accepted a $250m loan from Carlos Slim, the Mexican billionaire, to strenghten its balance sheet.

For publishers, internet charges are a dilemma.  Online promotions are likely to fall dramatically with the advent of paid for subscriptions, which may make newspaper websites less appealing to advertisers.

The New York Times has experienced difficulties with paid for online access in the past -  some of their well known columnists objected on the grounds that many readers, especially in developing countries, would not be able to afford to read their important content.

Critics, including Arianna Huffington of the Huffington Post, believe charges to access online content will not work because there is already so much free content available in cyberspace. She said last year: "Unless you're selling porn, and especially very weird porn‚ online subscriptions are a dead loss."

Ebook Pricing an Unknown Quantity

A survey of 840 international industry representatives conducted at this year’s Frankfurt Book Fair, in cooperation with buchreport and Publishers Weekly, confirms the lack of consensus in the publishing industry as far as ebook pricing is concerned. While most publishers suggested that ebooks should be cheaper than the same (or equivalent) print version, the range of the discount suggested by publishers varies enormously.

The responses reflect, I believe, the wide range of publishing experience, types of book and level of sophistication in pricing calculations (including gut feel favoured by many publishers). The responses raise a number of questions about ebook pricing:

Do publishers start from a position where they strip out print and distribution costs and thereafter price to achieve the same margins as print – or do they see this as an opportunity to squeeze higher margins?

Do they give a little more discount to reflect the absence of returns – ie to take account of books which otherwise would be returned to the publisher from booksellers in exchange for a refund ?

Do they – following any discount to relect zero print and distribution costs – add back in a percentage to reflect the cost associated with piracy risk?

Are the growing number of conusmers who are used to purchasing music, say, off iTunes, more inclined to favour a flat-rate price – like on Amazon front list titles?

Another consideration – linked to the piracy consideration, but from the consumer /reader side – is whether a discount should be factored in to allow for limited usage of an ebook. If a ebook is made difficult to share then can it be considered by the consumer as a less useful product? ....on the other hand if you believe that the sharing of print books leads to increased sales of books, then the restricted sharing opportunities of ebooks should lead to a more shallow discount to maintain margin.

The point I’m illustrating here is that ebook pricing is not so scientific (yet)! Other known unknowns – I believe – could be in the variable cost of sale of using different channels and formats ; how far publishers will consider use of advertising revenue – e.g. like Spotify for music – in exchange for ‘free’ to end-user content; subscription rates buying consumers access to whole /sections of publishers’ catalogues ; whether mobile access to ebook content should in fact be at a premium, rather than discount, to the print.

Here are the results of the survey:

The price for an e-book should be:

More than the printed book: 4% of respondents
Same as the printed book 15% of respondents
10 per cent cheaper than the printed book 11% of respondents
20 per cent cheaper 17% of respondents
30 per cent cheaper 14% of respondents
More than 30 per cent cheaper 16% of respondents
A standard price as with Amazon ($9.99) 15% of respondents
Other price model 6% of respondents