Thursday, January 21, 2010

Metered Pricing and the Media

Can the New York Times profit in the long term by initiating metered pricing? That pricing strategy is currently used by Financial Times, with some success.

Here's how metered pricing works: Every time a reader clicks onto the site, the "meter" starts ticking. If the reader hasn't registered with FT, he or she can read only 1 article per month for free. If the reader has registered, he or she can read 10 articles per month. Paid subscribers receive full access to the entire news and archive sites, with no restrictions on the number of articles that can be viewed.

Does metered pricing pay off? Ad Age notes that over time, FT has made its metering more restrictive, not less restrictive, and the publication currently has more than 120,000 paid subscribers, an increase of 22% compared with the previous year.

In contrast, the Wall Street Journal provides a small portion of its content free to all visitors, but requires a paid subscription to go further than that. No metering, just pay to see the rest or click away after reading a brief preview of the content available beyond the subscription barrier.

TechCrunch crunched the numbers on the NYT metered pricing strategy and speculates that getting visitors to pay $10 each would only replace the ad revenues lost by the newspaper in the past year. "If it can charge $15 or get more than 300,000 subscribers, the numbers start to make more sense," TechCrunch says. On the other hand, if NYT visitors click to get their news elsewhere on the Web, and avoid paying altogether, metered pricing could hurt the company's long-term financial prospects. Quite a balancing act.

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