According to a recent article, The New York Times will soon be switching to a paywall approach that will basically block access to content unless the consumer pays to continue reading. A change like this, by such a prominent news source, could prove to be a very risky business decision, particularly if free quality content is still available. However, it could also symbolize the beginning of the end for free content.
The recession has caused a significant loss of ad revenues for many content sites that depend on it. This revenue gap is driving companies, news sources in particular, to re-evaluate their online business models. However, this carries many risks. First of which is a significant loss of readership. Why would consumers pay for News, when they can still get it for free? Without any added gains or benefits, it’s highly unlikely that consumers would be willing to pay a fee for news. If the readership declines considerably, then the subscription revenues will probably still not be sufficient enough to make up for the ad revenue decline. And, the decline in readerships would decrease ad revenues even further; leaving NYT in an even tougher position than they are today. In short, it’s a lose-lose situation and NYT would likely be forced to revert back to free content.
On the other hand, if the trend towards free content is in fact reversing; then consumers are left with two equally unappealing choices. They can pay the subscription fees at their favorite news websites or get information from unknown and/or unreliable sources. Unfortunately, the recession is affecting consumers just as much as it’s hurting business; so it’s not too unlikely that many, albeit reluctantly, will choose the latter. In short, quality news could become a luxury that only the affluent could afford. However, if consumers persisted in choosing free over paid content it would surely drive businesses to devise alternative methods of generating revenue from content driven sites.
So, IS free content just another "Limited Time" offer? That remains to be seen...
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NYT has a certain caliber, no doubt about it, but it is still one of many. The question is: would the other big names follow? Like you said, the trend seems to be towards free content online. I think they are taking a big chance by trying to reverse that. Now, on the other hand, common sense tells me that the decision was the result of serious market research, that could have indicated that it made business sense to follow this venue.
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