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NYTimes: Consumer pay wall response 'positive'

The Times reports today that it is already seeing a positive effect on its financial performance from its digital subscriptions.

The controversial New York Times pay wall has been a success, the company said today in its second-quarter financial filing.

"The second quarter was a historic one for our company, as we successfully launched The New York Times digital subscriptions and began to see the early effect on our overall financial performance," Janet L. Robinson, president and chief executive officer of The New York Times Company, said in a statement. "The positive consumer response to the digital subscription packages is a strong indication of the value that users place on our high-quality news, analysis, and commentary.

"Our digital model exemplifies our growing ability to capitalize on secular trends that show consumer willingness to pay for content across multiple digital platforms," she said.

The New York Times launched its digital subscriptions in March. At the time, the company was charging customers who wanted access to the paper's Web site and smartphone app $15 every four weeks, and $20 for each four-week span of access to its site and tablet app. Unlimited digital access cost $35 per four weeks.

However, since then, the Times has been somewhat lenient on its subscriptions. The paper is currently offering an introductory price of 99 cents for the first four weeks across all three categories. After that, it's charging the original rates.

The Times allows readers to access up to 20 stories per month at no charge. Anyone who wants to read more stories than that will need a subscription.

When the Times first announced its pay wall, reactions were mixed, with some folks saying they would stop reading the paper, and others indicating that they understood why the publication was forced to launch digital subscriptions. For more than a decade, newspapers have been hit hard by the growth of the Internet, which offers cheaper, faster access to the latest news. The Times, among other papers, has been forced to respond.

According to the company, the Times had 224,000 digital subscribers at the end of the second quarter, in addition to 57,000 subscribers who are accessing the paper on e-readers and "replica editions." All told, the company has 281,000 paid digital subscribers.

The Times also reported that thanks to a sponsorship deal with Ford Motor Company's Lincoln brand, the paper has been able to offer free access to its Web site and smartphone apps through the end of the year to 100,000 people. About 756,000 home-delivery subscribers also have free digital access.

"In total, the Times had paid and sponsored relationships with over 1 million digital users as of the end of the second quarter of 2011," the company said today.

Even with those subscribers, the Times couldn't stem its losses. The company's total revenue hit $576.7 million during the second quarter, down 2.2 percent compared with the same period last year. The Times posted a net loss of $119.7 million, off from the $32 million profit it generated in the second quarter of 2010.

However, looking ahead, the Times says it believes the digital subscriptions will help bolster its financial performance.

"The digital subscription model is a long-term effort, and its full impact on revenues will be more evident over the course of the year as we progress past the early stages of the plan," Robinson said in the statement. "Our ability to further monetize our digital content will provide us with a significant new revenue stream in the second half of this year."