NEW YORK - JULY 23: Copies of the New York Times sit for sale in a rack July 23, 2008 in New York City. The New York broadsheet announced it posted an 82 percent decline in second quarter profits as compared to last year. It also announced it would raise its newsstand price 25 cents to a $1.50. (Photo by Mario Tama/Getty Images)
The New York Times will start charging people for unlimited access to its website and mobile services this month, ending the free usage that online readers of the third-largest U.S. newspaper have enjoyed for most of the past 15 years.
The Times will charge $15 every four weeks, or $195 annually, to read more than 20 articles per month on its website. That fee also covers a subscription on the newspaper's software for smart phones. Readers who want unlimited access on the website and the Times' software for Apple Inc.'s iPad tablet computer will have to pay $20 every four weeks, or $260 annually. A digital pass covering the website and both mobile options will cost $35 every four weeks, or $455 annually.
Subscribers to the Times' print edition will still get digital access for free while other readers will be limited to 20 free articles on the website each month. People using mobile applications will get the "top news" section free.
The long-awaited pricing system was announced Thursday as The New York Times Co. tries to counter a steep drop in print advertising. The publisher's annual revenue fell 27 percent from $3.3 billion in 2006 to $2.4 billion last year even as higher prices for its print editions have brought in more revenue from readers. While growing, digital ad revenue hasn't been large enough to offset losses in print advertising.
The newspaper is hoping to bring in more revenue from readers without triggering a backlash that diminishes its Web traffic and slows its rapidly growing sales of Internet ads.
Finding that balance is the primary reason the Times spent more than a year studying the way readers use its website and talking to them about what they might be willing to pay. The newspaper began testing the fees Thursday in Canada and will impose them everywhere else beginning March 28.
Other newspaper publishers will be monitoring the Times' effort as they try to decide whether to charge online readers, too. The Times becomes the second major U.S. daily this month to introduce online fees, joining The Dallas Morning News, which is owned by A.H. Belo Corp.
"This is a big moment for newspapers," said Rob Grimshaw, managing director for FT.com, which introduced fees for unlimited digital access to The Financial Times in 2007. "I think this will show that people are willing to pay for high-quality, original reporting."
After the 20 free articles, craftier Web surfers will still be able to read an unlimited number for free if they can find them through search engines run by Microsoft Corp.'s Bing and Yahoo Inc. or through links posted on content-sharing sites such as Facebook and Twitter. The Times is imposing a daily limit of five articles for traffic coming from Google, which processes about two-thirds of all Internet queries.
The digital fees reflect the Times' confidence in the quality of its newspaper, which has won more than 100 Pulitzer Prizes. Executives are betting that the Times coverage is distinctive enough to persuade readers to pay instead settling for news available on hundreds of websites, including some that crib information from the Times and other newspapers.
The Times' digital fees seemed too high to newspaper analyst Ken Doctor of Outsell Inc. He expected a $10-per-month option to reduce the chances of alienating a generation of younger readers who have grown up thinking online news should be free. "They need to be cultivating readers who are going to be their customers," he said.
A recent survey of 755 U.S. adult Internet users by Pew Internet & American Life Project last fall underscores Doctor's concerns. The typical user paid an average of $10 per month for online content, with people ages 30 to 49 most likely to do so. Overall, just 18 percent of the respondents had paid for a digital newspaper, magazine or article. One-third had bought digital music or software online.
The Times has introduced digital subscription fees twice before, only to rescind them because they weren't bringing in enough revenue.
Without providing details, the Times said it will offer introductory discounts to ease the transition to digital fees.
Shares of the Times Co. rose 3 cents to close Thursday at $8.89.