http://www.nytimes.com/2009/08/17/business/media/17iht-ft.html?_r=1&pagewanted=print Two years ago, when other media executives were convinced that the only way to succeed on the Web was to give away their content, “we were regarded as slightly freakish,” says John Ridding, chief executive of The Financial Times.
The FT, which had charged readers for access to its Web site since 2002, stuck with that strategy, merely tweaking its system to try to draw in more readers. Now, with advertising showing few signs of rebounding from a deep slump and other publishers moving to imitate FT.com by erecting so-called pay walls, Mr. Ridding feels vindicated.
“It was pretty lonely out there for a while in paid land,” he said last week. “But it has become pretty clear that advertising alone is not going to sustain online business models. Quality journalism has to be paid for.”
Other publishers seem to agree. Rupert Murdoch, chief executive of News Corp., said this month that the company intended to charge for all its news Web sites. In addition to The Wall Street Journal, which already charges for Web access, News Corp. owns major newspapers in the United States, Britain and Australia.
Executives of The New York Times, which owns the International Herald Tribune, have said they too are considering ways to get readers to pay for online access, though they have yet to announce specific plans.
That is a big change from 2007, when The Times abandoned an online pay wall for some content, concluding that it was restricting the potential for online advertising, despite the site’s having attracted 227,000 customers. Around the same time, Mr. Murdoch was talking about dropping paid online subscriptions to The Journal, which News Corp. was in the process of acquiring.
While The FT does not lack self-confidence — one of its ads claims President Barack Obama as a fan — the paper has been hit hard by the recession, with advertising probably down at least 20 percent year on year, according to analysts. Pearson, the London-based publisher that owns the paper, does not break out separate figures for the paper.
But the paper has made up for some of that loss by raising more money in other ways, mostly by charging a premium for its content.
The FT’s Web site has not attracted a huge paying audience. It stands at about 117,000 worldwide, up from 101,000 when the newspaper adopted a new Web business model in late 2007. That is far short of the one million paying customers of The Journal’s Web site.
Yet FT.com is lucrative because of its relatively high cost. A premium subscription to the Web site, with access to all content, costs $299 a year in the United States. Adding the print version of the paper costs $100 more. A combined print and online subscription to The Wall Street Journal costs $140.
Because of rate increases by FT.com, revenue from Web subscriptions has risen 30 percent over the past year, Mr. Ridding said. The FT has also raised the price of its print editions.
In another effort to generate additional digital revenue, The FT restricted access last year to its content via databases like Factiva and LexisNexis, requiring users to buy special licenses to read archived articles. More than 600 corporate customers, with a total of about 50,000 users, have done so.
The price of a subscription to the databases “wasn’t reflecting the value of what we were producing,” Mr. Ridding said. “So we took control of the pricing,” he said, adding that the change had led to “robust revenue growth.”
Also last year, The FT acquired Money-Media, an online provider of paid-for news for fund managers. Last week, it acquired MandateWire, a digital provider of news on the pension fund business.
The FT also recently started an online newsletter for investors in China, called China Confidential, which costs £2,500, or $4,138, a year.
The growth of paid online services under the FT banner shows that the paper was right to maintain pay walls at a time when other media companies were yielding to the Silicon Valley mantra that “information wants to be free,” said Tim Luckhurst, a journalism professor at the University of Kent in England and a former editor of The Scotsman.
“It has proved, in one niche at least, that editorial journalistic endeavor does create value,” he said.
For other online publishers seeking to charge readers, the big question is whether consumers would be willing to pay for general news, rather than specialized, career-critical financial information. Some analysts doubt it, but Mr. Ridding said he thought they might.
“I sometimes think there’s too much fatalism around — people throwing up their hands and saying it’s not possible for general publishers to charge,” Mr. Ridding said. “I think it is possible, and necessary, for them to charge.”
In an effort to generate more revenue from casual users, The FT plans to fine-tune its Web business, which currently gives readers 10 free articles a month before they are required to pay for access.
Mr. Ridding said the site would add a new form of paid Web access next year involving micropayments for individual articles, something that Wall Street Journal executives have also proposed.
FT.com’s system is aimed at retaining infrequent readers who arrive at the site from a search engine, to maximize the audience for Web advertisers.
Despite the downturn, advertising remains an important revenue earner for newspaper Web sites. Rob Noss, who runs the luxury group at Mindshare Worldwide, a media buying agency, said it was still unclear how readers of newspaper sites would respond to advertising if they were required to pay for access to the sites.“My personal view is that if I’ve paid for the information, my openness to the advertising will be affected,” he said.
Not every FT digital initiative involves pay walls. This autumn, the paper plans to introduce a stand-alone Web version of its weekly magazine How to Spend It, a forum for luxury advertisers. Mr. Ridding said that at least at the beginning, access would be free.
With luxury goods companies, banks and other advertisers cutting back, ad spending has fallen sharply at The FT. Pearson said last month that operating profit at FT Publishing, the unit that includes The Financial Times, had fallen 40 percent in the first half of the year, with revenue down 13 percent.
The FT’s print circulation has also fallen, with sales in June down 7 percent from a year earlier, to about 412,000 copies, according to the Audit Bureau of Circulations in Britain.
Analysts say The FT could face a renewed threat from The Journal, particularly if Mr. Murdoch developed an innovative model for charging on the Web. Mr. Luckhurst, for example, thinks he will package subscriptions to the paper with other News Corp. content.
But The FT is not facing the “existential crisis” that confronts some other newspapers, Mr. Ridding said. “It all stems from a belief in the value of our journalism,” he said. “We are pretty happy with how things have developed.”
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