The paywall around thetimes.co.uk has driven away readers and brands.
When the first edition of The Times was published on 1 January 1785 it relied on the technology of the printing press.
Its current editor, James Harding, claims that, in erecting a paywall around its website, the newspaper is, similarly, simply taking advantage of the latest innovations.
Life at The Times was much simpler before the advent of the internet, when customers would happily hand over the cover price in return for that day's issue.But, as circulation of print titles has fallen, it has created a test case for how media may be consumed in the future by introducing charges of £1 a day or £2 a week for online access.
As well as raising subscription income, News International (NI) wants thetimes.co.uk to remain an essential part of advertisers' online marketing plans. It hopes to achieve a position where high-end readers result in high prices for ads, but that requires it to attract a loyal wealthy audience.
It should surprise no one that since the introduction of its paywall The Times has lost two-thirds of its online audience, according to analysts Experian Hitwise. It is, however, the breakdown of those abandoning the site that should make the commercial team at NI sit up and take notice.
Exclusive research carried out for Marketing by UKOM/Nielsen reveals that even those for whom the access charges are small change, have been put off by the requirement to register to read The Times online.
This is bad news for NI in two respects. First, ads that are behind paywalls often target a wealthy audience and therefore brands are charged a premium to place them. Second, if the less well-off readers who have remained faithful to The Times online are having to scrape together the money to pay for their subscription, they are unlikely to upgrade to The Sunday Times Wine Club and other added extras, critical for the company's wider financial success.
Moreover, a quick glance at the advertisers on the site reveals that few prominent names have been tempted so far. Accenture, Lloyds TSB and The Holiday Place are the main brands to have ventured behind the paywall.
Compare The Times website with that of The Guardian or The Telegraph and the differences are marked. While the former has a few banners for non-sexy brands and house ads, Mercedes, O2 and Virgin Media are using its rivals to run high-profile digital campaigns.
One reason is a shrinking audience; another is that, according to sources, the price of running ads on thetimes.co.uk has doubled to £30 CPM (cost per thousand users).
Dan Clays, managing director of media agency Arena Quantum, claims those rates could be putting brands off. 'NI is going to have to work really hard to make thetimes.co.uk a brand vehicle,' he says. 'With that sort of CPM, it will struggle to attract direct response and branding campaigns.'
Nonetheless, this does not necessarily mean that the paywall will act as an overwhelming barrier to big-brand advertising. Charlie McGhee, head of digital at media agency Carat, believes that campaigns will run on The Times website, but it could take a long time before this becomes widespread.
'[NI is] never going to get breakfast cereals advertising, but luxury goods and automotive companies like access to this sort of premium content,' he says. 'The challenge is getting critical mass and then presenting some targeting solutions to advertisers and agencies.'
McGhee further contends that while there will be an inevitable period of uncertainty, by offering bundled deals with its other properties, such as Sky, NI could make it work. However, he adds: 'If you line up all the newspapers in a row, you probably wouldn't choose the one with the paywall.'
While NI, which declined to make a comment to Marketing, may be sticking to the view that it is too early to draw definitive conclusions, it is clear that, for now at least, thetimes.co.uk has fallen off the media plan; this poses the question: how can it get back on?
Alex Burmaster, vice-president of online at The Nielsen Company, says: 'We expect the average activity to increase as the site becomes the preserve of the core, paying readers making the most of their subscriptions.'
Should that prediction come true, NI may be able to get the big brands back on board. Yet, despite the technology being in place and 225 years' worth of brand equity, it could take a long time and a lot of hard work to make a success of it.
This article was first published on marketingmagazine.co.uk
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