September 09, 2002
Case Study Tests Paid Content Sales, Here's What They Learned

SUMMARY: Over the past 11 months, has launched almost 30
different paid "Premium Products" such as 'Glory Days of Baseball.'
Now they reveal what they've learned, including:

- Overall sales figures for Jan-June 2002

- Which additional e-content formats buyers requested

- How price increases affected sales (surprise)
Although it is a no-cost access site, has been selling subscriptions to its archives and crosswords since
1997. Together these equaled just over a million in sales in 2000.

These numbers made the business team begin to wonder if they
could turn slices of the Times' extensive library into even more
easy-win digital products.

Deputy General Manager & Director of Operations Stephen Newman
says, "We knew we had a tremendous asset in our archives, and we
knew we could monetize that archive."

Were they sitting a potential goldmine? "We thought if there's
some way to produce it at low cost, it's almost like an annuity
income. As long as you created packages evergreen enough, they
could just sit there. It's all margin."

Last summer, the team began researching topical areas
for their first launch. They knew that the paid crosswords
product owed its success to the fact that crossword fans are
"completely fanatic" for them. They searched for more pockets
of fans.

"We go through a whole set of data. We look at what people are
searching for, what traffic patterns are, and feedback from
users. Also, the extent to which the area of content or
personality involved a pillar of the brand [matters.] All [these
factors] go into choosing whether we would build it out or not."

Starting in October 2001, launched three new types of
paid digital content offerings:

1. Editor's Picks launched two of these. First 'Glory Days of
Baseball, 1947-1957' and then 'Best Pictures: Oscar Winners in
the Times.' Each featured an easy-to-search mélange of archived
articles, photos and audio clips.

They were initially priced at $9.95. Prices rose to $24.95 in
June 2002.

2. Topics in Depth

These are classic article collections of up to nine archived
articles on a particular topic for $4.95. Some are collections
of famous name Times columnists such as Thomas Friedman, others
are topical collections such as 'Winter Desserts.'

Initially buyers could simply view their purchases in HTML for up
to 90 days on their computer screens. However, reader feedback
prompted the to add a downloadable PDF option.

Newman explains, "We listen to users. Lots of users loved the
stuff but wanted a way to hold it. People asked, is there a way
to get it in an analog form? Until people get used to consuming
pay content in a digital form, there's still going to be that
need for a tactile experience."

3. TimesTalks Online

In celebration of its 150th anniversary, The New York Times held
a series of live events, featuring celebrities such as Peter
Jennings and Jon Stewart, that readers could attend in person in
early 2002.

Newman is himself a former TV producer, so he was very interested
in experimenting in selling a video of these events online. "It
seemed like a natural opportunity," he explains.

TimesTalks Online were made available for $6.95 each. Each video
was cut into a series of five to seventeen minute segments. "You
have to do things in smaller bite-sized chunks than on TV."

Again the team learned a valuable lesson from customers. While
visitors were willing to purchase the video, they really wanted a
complete text-transcript to go along with it.

As you may have noted, none of the products above are called
'eBooks.' In fact the team debated exactly what to call them for
a long time.

Newman explains, "I think 'ebook' connotes downloading a book to
a reader and that book is there in full form that you can then
read and hold in your hand. What we are doing is much different
from that.

"One of the things we found to be a challenge actually is that if
you say 'I'm going to buy a book' everyone knows what you’re
talking about. But an Editor's Pick, what's that? It's an
online digital experience with organized archived content.
There's no word for it. It's a new thing. That's an issue
everyone's going to face in doing digital content."

Is he happy with the overarching title of 'Premium Products' the
site now uses? "We're not convinced - the jury's still out."

Nevertheless, the team plugged ahead launching and promoting
almost 30 of these products in the three categories over the past
11 months.

Prices were set deliberately low to encourage adoption by
visitors who might be unsure as to what a Premium Product is.
None of the products are refundable, because Newman felt that it
would be too expensive to handle refund processing for such a low
product price point; plus, as he puts it, "You can't return a CD
once you've opened it." already had a contextual advertising engine in place
that site editors use to plant links to stories on the site next
to related articles. It was easy enough to put marketing
messages for the Premium Products into the same pipeline.

Marketers also planted ads for products in various
email newsletters that are read by millions of opt-ins.

Newman admits Premium Products have not been the easy
home run that he and the rest of the business team had
initially hoped for. Sales for 2001 were $1.4 million but this
income was mainly due to Crosswords and Archives sales, which had
accounted for just over $1 million the year before. (The first
premium product, Glory Days of Baseball did not launch until
October 2001.)

Digital sales for the first six months of 2002 are solidly up to
almost a million ($960,000) indicating that they could hit $2
million this year. It is a number to be proud of, but not so
enormous that the team expects it to scale to
anything astronomical anytime soon.

-> Metrics: Newman says it is reasonable to expect a conversion
rate of 2-8% of buyers from core fans of any particular topic,
such as opt-in readers to a newsletter on that topic. "It's a
pretty big range," he says wryly, "and you've got to live with
the fact that you're going to be wrong 50% of the time. There's
no way to predict anything."

He bases go/no-go decisions by assuming that 1-2.5% of any core
topical fan base will purchase a product that is lowball priced.
If that percent will definitely cover costs, then he is apt to go
for it, especially if the product will be evergreen in nature or
fairly easy to update once a year.

-> Here is a number that will wow other publishers. When Newman
raised the price of the two Editor's Picks products from $9.95 to
$24.95 this June, he saw absolutely no drop in sales.

He says, "We didn't change anything else. There hasn't been a
blip in sales, no decline in purchases. So the sensitivity out
there is not as high as it used to be. A year ago I think was a
different story."

-> The ads in email newsletters were the biggest marketing winner
in terms of generating sales.

-> Production: This was much more of a chore than the team
initially expected it to be. Ultimately will probably be the
reason they limit launches to fairly obvious winners.

"Repurposing archived content is not as easy as it sounds,
especially when the content is not digitized. It takes time to
go through original and offline archives. Those repackaging
costs can start to add up pretty quickly if you're not careful."

-> Customer Service: Aside from a rise when the site switched
from the QPass system to an in-house system to collect payments,
there have been few customer service requests than initially

However, Newman notes that it is worth investing in excellent
customer service to back up your digital sales from the start,
both because the team learned such valuable lessons from buyer
feedback and also because, "we learned customer service at a
level that's higher than standard can also become a selling point
as part of the value to premium access."

Coming up, Newman predicts the site will continue to experiment
with various premium product launches over the next six-to-nine
months. "We're experimenting with looking at several models.
We'll be doing even more of this. The products on our site
represent the beginning of this journey."

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