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May 05
by Andy Hagans Strategy with

The New York Time’s announcement that they would be moving to a partly subscription-based model didn’t surprise me at all.

Of course, the move ticked many bloggers off; Nick W at Threadwatch wrote "Stupid, Stupid, Stupid"
in his headline for the story. When people are used to getting
something for free, and then are asked to pay for it, it is only
natural that they would be unhappy.

But the Times reasoning made sense to me (see their full explanation here, subscription required):

Mr. Sulzberger said that while some Internet users accustomed to free
content might not be willing to pay, many others would be attracted by
the online package of columnists, archives and other material.

advertising growth on the Web has been just spectacular the last few
years," he said. "But like any business, it’s going to mature over
time, and when that happens, it will flatten and then you’ll get into
the normal cycles just like we do it on print. And at that point you’re
really going to need to have another revenue model."

advertising has seen a huge boom since the advent of pay per click, and
I expect that it will see some more growth before it declines.
Advertising is notoriously cyclical though, and there will be a point
in time when internet ad-buying takes a dip. At that point, those
publications who have diversified their revenue streams will be sitting

Furthermore, in terms of SEO and linkability, the majority of
content at NYT will still be available free of charge, and bloggers and
webmasters will continue to link to it. Really what this is is a form
of market segmentation: for those users who aren’t willing to pay for
content, NYT puts most of it out in the open. They then obtain
subscription revenue from the "diehard 5%" who are willing to pay for
the extras.

In my not-so-humble opinion this is a smart hybrid business model that has proven itself over time. For proof, see SEW or WMW ;)

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