The New York Times and how online has made traditional media obsolete

The New York Times, America's most popular newspaper website, has announced that the era of free online journalism is drawing to a close. But paywalls won't work for general news sites and free content is here to stay.


It seems that many businesses believe that when you've been around for long enough whatever it is you have been successful at can't possibly ever become obsolete. This is despite the fact that there are countless examples of how business models die off as our culture and technologies evolve.

Consider the horse business. Many people thought cars would never supplant horses. In fact, in 1903 Henry Ford's lawyer, Horace Rackham, was advised by George Peck, the president of the Michigan Savings Bank, not to invest in Ford Motor Company. Peck told Rackham, "The horse is here to stay but the automobile is only a novelty, a fad." Just 16 years later, Rackham's $5,000 investment in Ford became worth $12,500,000.

What brings this to mind is the New York Times just announced that, starting sometime in 2011, its content will no longer be free for customers who consume a lot. What the paper plans to do is allow people to read a few articles at no charge and, should they then want to delve into the Times archives or read more articles "below the fold", they'll have to put their hands in their pockets.

Obviously the Times hopes to build a large enough group of dedicated readers who will pay enough for content that it will more than offset the lost Web site traffic lost and associated advertising revenue.

Sounds good but it won't work. Here's why.

Already the amount of news available online is staggering and I'm not just talking about content from wire services such as the Associated Press and Reuters, which are, at least for the moment, free.

Next down the rung is a huge amount of top quality content, all of it for free, from the likes of the BBC (which takes a rather more global view than most news organisations, reporting, for instance, that "Prisoners in the Indian state of Madhya Pradesh are being freed early if they complete yoga courses" … who knew?).

At the other end of the publishing spectrum, there are thousands of local papers and other periodicals that provide regional news. Add to that the millions of bloggers and citizens who blog, tweet and post on their Facebook walls, and it is obvious that across the entire range of geographic scope there's no shortage of news to be had.

It is the sheer scope and volume that has changed the game for the news media. The New York Times is simply no longer unique. Its online market can be inexpensively addressed by its major competitors and trying to create a walled garden limited to those who want to pay for what they can get elsewhere for free will be an exercise in futility.

The problem for the Times is very similar to the one that the music industry has been wrestling with: Its product has morphed from being highly differentiated to being a commodity.

Once this kind of shift happens there's no going back and no amount of wishful thinking will ever change that. George Peck was wrong, the music industry is wrong, and the New York Times will be wrong. No matter how much the Times tries to disbelieve that the world has changed, reality isn't going to go away.

Gibbs realizes in Ventura, Calif. Your reality to [email protected]

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