Why do companies go into business, they are either in the business for profit or for humanitarian services. Can a company be in the business for both reasons? Or a better question will be what is New York Times (NYT) main purpose of doing in the business?
NYT is a well known newspaper company; it has made its global name through its quality, timely and free access news online. This has attracted millions of readers to this newspaper and because of this numerous companies have advertised their products and companies in this publication thereby generating revenue.
So the question is why a company like NYT would want to restrict their news to only readers that can afford to subscribe to read the news online all in the name of making more money or is this new trend for all newspapers. In the real sense, I believe this will reduce their revenue and the end result might be catastrophic for the company. One, this will greatly reduce the number of readers therefore reducing the number of adverts in the paper which in turn will affect their revenue. Two, limiting the free access of online news to millions of readers will only generate more funds for their competitors because these readers that cannot afford to subscribe online will eventually look for another media that is easily and readily available. Also, if this new development fails and I believe it will fail, the investment made to develop the restriction will be a waste and gaining back their former customers will almost be impossible. Lastly, this is not the first time NYT will take such an approach and failed in the attempt. Why do they believe this time it will be a success?
http://news.cnet.com/8301-10784_3-9780063-7.html
I also wonder why companies can just decide one moment to change the way they do business. I strongly believe a law should be enacted that unless the change is going to be beneficial to both the company and their customers, then the change should not be allowed. Because I believe this can be used as a marketing strategy to get global recognition and customers and eventually change when they know people are well aware of their presence.
The only way this new development can work is if other publications follow this trend.
I believe that the aim of NYT is not to restrict readers who are incapable of paying but rather to try to survive in their market. I see this as a survival strategy more than one attempting to make more money. I also do believe that all newspapers are going to follow suit. If you look at the latest statistic of the hard copy newspaper industry, all companies' profits are decreasing due to the decline in ad revenue, due to the much greater use and efficiency of the Internet. All these companies in this industry are going to have to find ways to survive, and might even try to form an oligopoly in the future.
ReplyDeleteAlso, their first attempt at it did not work. But this does not mean that they should never try again. If they do their research well (which I hope they have done or are doing) and realize there is a chance of still acquiring great profits, the plan would seem feasible.
I understand your reasoning but I have to disagree with you about having a law for businesses and changing their strategies. The US is a "free market economy" and trying to implement a law like that would be agaainst running a business in the free market where businesses own and control themselves.
I have to side with Karina on this issue. The whole point of charging a pay-per-read subscription fee is not to deter future customers or try to make as much money as possible. It is merely a way to survive the tumultuous recession affecting the newspaper industry.
ReplyDeleteThe problem has become multidimensional in recent times. First, the fact that just about every newspaper in the world allows free access to its readers makes it extremely difficult for these companies to suddenly start charging subscription fees for their content. Secondly, combined with our global recession and the use of printed newspapers, ad revenues which is what these companies rely heavily on has severely plummeted. Lastly, the classifieds section which traditionally brought in good revenue streams has been nearly eliminated due to a service called craigslist which is entirely free.
The paid subscription attempt has been unsuccessful before in the 1990s when a partnership called the New Century Network which included the cooperation of many publishers to band together and charge these subscription fees because they saw the future problems their companies would realize.
Therefore, I believe that these recent actions by the NYT is performed merely out of survival and not to sabotage the industry. I also agree with Karina as far as the law goes because this is a free country and a company can practice whatever policy and business model as long as it is within our constitution.
Damilola, I agree with you very much in the analysis of this strategy and how it could represent a huge mistake for the New York Times and any other major media who decides to follow this trend. They should reconsider and identify what is their main purpose in the business, to make a little more money or staying as one of the leading news companies recognized in all over the world, with more readers than any other paper within the U.S.
ReplyDeleteHowever I also disagree with you in the part of enacting a law to regulate those changes in the business and their decision to charge customers or not to access their online sites, since this would go against any single law of the free market and capitalism system that rules the United States, and could in fact make more damage than any of those possible changes made by the mentioned businesses.