I'm not disagreeing with you, Robert. Clearly (in the short term, anyway) this is not going to have much impact on the NYT's financial concerns at all. My hunch is that it may have more to do with long term strategies & the possible rationalization of print & online resources.
That's exactly what they think but I think they have the long term quite wrong too. In shorthand:
1) They used to be gatekeepers of information and the only real game in town for local advertising (yellowbooks showed up eventually), classifieds etc.
2) With each new technology that supports information sharing and advertising they lose their significance in society. This is simply inevitable and there's no "fix" to it. Radio eats at their advertising and information sharing dollars, TV does and the internet eats at all of the above.
3) The money in this all along has been advertising
. It's never been about the end user paying and even if you succeed in getting them to pay the most they really will it just won't add up to yesterday's media empire dollars. So the problem, for them, is that online advertising is wide open. You can buy through one agency like Google, Yahoo, Microsoft, and thousands more, and reach up to hundreds of thousands of publications and have your ad delivering in minutes. The end result of this is that this is a much
cheaper medium of advertising and the publishers get a lot less per eyeball than they do offline right now.
4) Publishing on the internet is so relatively cheap and the barrier to entry is so low (think about it, a2k was reaching millions while I was still making minimum wage and brand new to the internet myself, that just won't happen in any other publishing medium as easily) that paid content is going to have to be unique, and news has great difficulty being unique. Even if you get a scoop others can report on your scoop right after you break it. Your uniqueness in news lasts minutes. So you need huge differentiation to get away with being able to charge at all. Think about how much paid content you have consumed on the internet versus how much free content you've consumed.
The willingness to pay will increase, but it will forever be dwarfed by free content because the economics of free content make sense through advertising. So if you make people pay, you will lose traffic because there is no switching cost to just surf to a free source. This is why all these paywalls can easily be circumvented, there are perverse interests here where they want to charge but want to still be part of the free open web. So if you just visit from another site it's still free and I could make a browser extension to get you a free pass using their own loopholes that they made to try to keep free search traffic.
5) The ad market online is a baby. There's still very little branding dollars being spent online but the market is growing like a weed and eating into all other forms of advertising. It's not going to stop till the next medium eclipses the internet and Google doesn't make money by being a search engine. They are the new media powerhouse ad agency.
So these companies get mad that their content is in Google, that Google is the new ad king and they finally aren't going to take it now that they finally get the internet's impact. But they can't turn back the clock, and trying to charge search engines for allowing them to index their content (this is also being explored now) or charge users to read their content is to shoot themselves in the foot.
What they need to do is fight for their advertising relevance, and for that they need all the eyeballs they can get. Instead of trying to nickel and dime their readers they need to be trying to establish a viable alternative to Google advertising online and by charging their readers they are reducing the eyeballs for a pittance. The long term is where they will pay the most for it. Right now they can balance this game so that they can make a bit more money by trying this or lose a bit. But they can't get the growth they lose back 5 years from now when the online ad market is that much bigger and they are that much further behind.
It's sad for me to see the NY Times do this, because they are the most internet-savvy big newspaper around (they even have an API). From what I can tell their old-world execs were for it while their internet execs were against it in very heated internal debates.