Unexpectedly Intriguing!
23 May 2005

The problems of operating a mainstream news outlet are continuing to mount. Outside of growing questions regarding the credibility and quality of news being reported by mainstream outlets, decreasing circulation, sagging revenues from print ads and increased competition from online news sources are beginning to take a toll on the mainstream news organizations' bottom lines, driving established newspapers and other media to begin charging for content that they had previously provided online at no charge.

The latest evidence of these moves came recently, as the New York Times announced that it would wall off its more popular op-ed and news columnists from the remaining portion of the newspaper's online edition, after long resisting such a move. The newspaper will require paid subscriptions in order for online readers to access their columns. The new premium service will also include access to the newspaper's online archives.

The New York Times is initiating its "TimesSelect" premium service at a time when the online ad market is surging, and other newspapers have moved to make their online content free to capitalize upon increased online advertising revenue. Wendy Post of Online Media Daily reports industry analyst David Card's reaction to the announcement:

David Card, an analyst with Jupiter Research, called the decision to implement a subscription model "somewhat puzzling," given both a surging online ad market and the NYTimes.com's long refusal to charge for content. Even when the online ad market was in a slump, and other businesses migrated to a subscription model, the Times stuck with free offerings--which, Card said, makes Monday's announcement particularly ironic.

As noted by BusinessWeek back in its January 17, 2005 issue, the New York Times had been considering whether or not to implement a subscription-based revenue model for access to its online content for some time. The move appears to be designed as a hedge against potential declines in online advertising revenue, which suggests that the New York Times' management anticipates a falloff in this area in the future.

Not Just For-Profits

The drive to begin generating revenue from services that have previously been provided at no charge or as a public service is also taking hold at several notable non-profit publications, including the American Medical Association's online newspaper, the AMA News. The AMA recently announced its plan to restrict access to the organization's online newspaper to the group's membership.

While the AMA's newspaper is not supported by advertising, it is funded by the group's membership dues. Here, the move toward blocking access to the online newspaper's content appears to be an attempt to convert its non-member readers into members of the AMA.

This move is being opposed by an online coalition of bloggers organized by Michael Ostrovsky, MD, a member of the AMA who also authors the MedGadget blog. Arguing that the online AMA News is a "publication of public policy and health issues," Dr. Ostrovsky strongly advocates that the AMA should keep providing its online newspaper to the public at no charge. Ostrovsky is encouraging his blog's readers to provide online feedback at AMA's web site to support maintaining free access to the online newspaper.

Segmenting the Internet

It's too early to tell if the move to a subscription-based revenue model as opposed to an advertising-based model will be effective at being able to sustain the New York Times' financial margins in the face of the challenges which it faces. Likewise, public interest groups like the AMA need to balance the interest of public policy against their ongoing costs of operation in deciding what course to set. In the near term however, it appears that a trend toward creating online media fortresses has been clearly initiated, changing the dynamics of how information will be transmitted across the Internet by raising barriers to prevent its unrestricted flow.


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