Brother, Can You Spare a Dime?

January 26, 2010
A thought by James Berardinelli

Over the 30-year span that comprised his retirement, my grandfather regulated his life with impressive consistency. He adhered to a standard routine every morning when his golf game didn't take him out on the links at the crack of dawn; I witnessed it year-after-year during those summer weeks I spent at the lake house where he and my grandmother lived. He would awaken around 6:00 (I can't confirm the hour first-hand, since I am allergic to early rising), do his calisthenics, shave and take a shower, eat breakfast, then settle in his easy chair to read the newspapers. First came The New York Times then The Newark Star-Ledger. He read both from front to back, even on Sundays. When he was done, he'd hunt down a pencil and work on The Times' crossword puzzle (the one in The Star-Ledger being my grandmother's domain). Even toward the end of his life, when his eyesight was failing, my grandfather retained a fondness for The New York Times. At age 92, he still appreciated it, even though he needed a magnifying glass to read the articles.

My morning routine is similar in spirit if not in the particulars. I arise about 90 minutes later than my grandfather did, and prefer to consume my breakfast before taking a shower. I eat in front of my computer, with a bowl of cereal to one side and a cup of coffee to the other. While alternately ingesting spoonfuls of shredded wheats and sipping my caffeinated drink, I surf through a regular group of six websites which have been carefully selected to bring me up-to-date on news, sports, weather, and entertainment. None of these sites is owner or operated by The New York Times, but one is the on-line home of the two Philadelphia papers: The Inquirer and The Daily News. I also visit Roger Ebert's page a couple times per week (although not every morning), and that's run by The Chicago Sun-Times.

I don't read physical newspapers because I don't like them. Never have liked them, even when they were not in danger of becoming extinct. I don't like getting my fingertips stained black. I don't like the awkwardness of having to fold them several times over to reduce them to a comfortable size. And I don't like the way they accumulate. A week's worth of newspapers can clutter a room in an alarming way. The digital versions provide the same content in a cleaner, more elegant fashion, albeit without the romanticism that old-timers attribute to the paper-reading experience. My grandfather never owned a computer but, even if he had, he would have kept reading The New York Times the way he did for most of his life. He wouldn't have considered reading it on-line to be an abomination (in most cases, he was progressive about technology), but it wouldn't have been for him.

The on-line revolution of our current information age has been a double-edged sword for The New York Times, much as it has been for every newspaper across the country. Distribution has never been easier. Readership has never been higher. And revenue has never been worse. Circulation of the physical version of the paper is dangerously low. People are increasingly reading the paper on-line. For free. And that's a problem, because the expected profits from ad sales have fizzled.

The question faced by the publishers of The New York Times is the same one faced by the owners and operators of thousands of for-profit websites: how to make money in an environment when "freedom of information" emphasizes the free aspect of the term. Twice before, The Times has attempted to turn its on-line format into a profitable venture. On the first occasion, it locked all the content behind a pay-to-view wall and promptly lost more than 90% of its readership. Oops. The second time, access to its columnists required an annual subscription, although the bare-bones news articles remained free. That went over well with readers but not with advertisers. Strike two.

Is the third time a charm? For this iteration, The New York Times is planning to allow readers a certain number of free page views before requiring payment. So, you might be able to read six articles (for example) without charge but when you open the seventh, you're asked to register with a credit card. At the moment, it hasn't been revealed what form the charges will come in - per article or per-day or something else - but that's the approach. Will it work? No one knows, not even The New York Times.

There are two things to be considered. First, is the content unique enough that people will pay for it? Second, how will readers feel about having to pay for something that was previously available for free? Both questions have to be answered in order to understand whether The Times' business model makes sense.

ReelViews was ten years old when, in 2006, I decided to abandon my slogan: "The largest non-commercial movie review website on the 'Net." Running the site was taking an increasingly large bite out of my wallet (especially once Colossus, which had been hosting the site gratis for a decade, went under and I had to migrate to a less generous host). So I made what at the time seemed like a bold decision: I was going to find some way to monetize the site. The goal was not merely to break even, but to accrue a reasonable compensation for all the hours spent traveling to and from movies (at the time, a 2.5 hour round trip), seeing films, and writing reviews. In the back of my mind, I envisioned generating enough revenue that I might be able to abandon my day job and become a full-time critic. Welcome to Fantasy Island! I would learn that only those without families and significant financial responsibilities (like mortgages) can make a living writing movie reviews, unless their last name begins with an "Eb" and ends with an "ert" (or something similar).

I had three choices: (1) make ReelViews a subscription site, (2) make it a hybrid free/pay site, or (3) keep it free but pollute it with ads. I did what is commonly called "market research" and determined that it wasn't realistic to expect people to pay the $10 per month it would require for the site to become a full subscription-based movie haven. Reviews are a commodity. My voice might be unique, but not many readers would be willing to pay for that - not when there are dozens of other critics whose equally erudite and sometimes superior analyses can be had for free. The most loyal of my readers might pay, at least to start with, but for how long? Financially, it was dubious. From a publicity standpoint, it was a potential disaster. No one wants to shrink their readership from 10,000 to 300, even if those 300 are willing to pay for it.

The hybrid approach wasn't more attractive. I could offer new reviews for free but lock up the archives behind a pay wall, but would anyone be willing to pay even a modest fee (say, $25 per year) to have access to the old stuff? There would probably be a few, but likely not enough to justify the added overhead. And I have a particular dislike for sites that mix free and pay content. That's why I hardly ever visit the ESPN site, because I'm inevitably going to click on links where they'll want me to pay. I don't have that problem with

Option #3 was all that remained. When I started with ads, I didn't realize how complicated it would be. In general, ads turned out to be less lucrative than I initially assumed. Those that pay per impression generally only provide a dollar or two per 1000 page views. Those that pay on a "per click" basis (like most of the Google ads) can pay nicely, but only if people actually click and allow the linking webpage to load. Pop-unders, like the Netflix one I currently serve, pay per impression, but only if every once in a while someone actually starts a trial subscription to the service. (Note: I abandoned pop-unders for a while after a failed trial period, but returned to them with an exclusive contact for Netflix because I believe in Netflix. With the ability to stream video directly to computers and TV sets, there's not a better legal movie-related value out there.) With the buttons, I only get a commission if someone links to from my site, puts something in their cart, and checks out during that session.

The ads look ugly. Many of them are garish, and that's intentional because the designer's hope is to combat the phenomenon known as "ad blindness," where readers don't notice the ads. The ReelViews re-design was instituted partially to better integrate the ads into the overall site. This was mostly successful, although Chrome in particular has trouble with the placement of ads and occasionally plunks them down right on top of a review. (Generally, reloading the page will fix this, and it almost never happens in Firefox or IE.)

My experience with Internet advertising makes me sympathetic to The New York Times' situation. It's tough to boost the bottom-line when even elite advertisers are paying cut-rate fees. The Times can get a lot better rates than I can and it has a huge reader base, but the numbers aren't that impressive. If a CPM of $15 is achieved for 4 million daily on-line readers, that equates to a rather pathetic $60,000 per day. Horrible for a major newspaper. So a new revenue stream, it was felt, was needed.

News, a paper's bread-and-butter, is widely available at little or no cost. The original element being sold is the perspective and depth of the coverage, the astuteness of the columnists and reporters, and the thoroughness of the reporting. The Times is betting there is a large contingent of newshounds willing to pay extra to get this. I'm not sure they're right. For the most part, I believe those who fall into this category are still buying the physical paper. Those who visit the website will turn away when asked to pay, or search for something similar - and free - elsewhere.

Another problem faced by the paper is electing to charge readers for something they are currently getting for free. The Times is hoping people will miss the expanded content and will be willing to pay a nominal fee for it. But one wonders whether some readers, having developed a sense of entitlement, will turn away from the paper altogether in disgust.

From a business perspective, the move makes sense. If there's still enough free content available for the casual surfer, readership won't drop significantly and some additional revenue may be generated by this plan. But it's hard to see how this is going to be more than a band-aid or temporary fix. Certainly, on-line content providers will be watching this experiment with great interest because, whether it fails or succeeds, it will provide valuable information.

I don't visit The New York Times site with regularity, but if I did, I wouldn't pay for the additional material - just as I wouldn't pay for Roger Ebert's reviews or the articles found in my local Philadelphia papers. There's too much alternative content available and I'm not wedded to any one provider so much that I'd be willing to part with any money. That perspective is why ReelViews will never be a pay site. If the ads prove to be insufficient to support it, the site will close down. To me, the underlying philosophy of the subscription site, which is built upon hubris ("my opinions are so important that people will pay to read them"), is flawed. I suspect The New York Times is about to learn this lesson, and the entire on-line business community will have a front-row seat.