Commentary: The New York Times Paywall Is … Weird
• By Felix Salmon
• March 17, 2011 |
• 7:34 pm |
• Categories: Commerce, Mobile Internet
http://www.wired.com/epicenter/2011/03/nyt-paywall-is-weird/all/1
The NYT paywall has arrived: it’s going up in Canada today, and then worldwide
on March 28. The most comprehensive source for the gritty details is this FAQ,
which does things like explain the difference between an item and a pageview.
(A slideshow or a multi-page article is one “item,” no matter how many slides
it contains.)
The NYT has decided not to make the paywall very cheap and porous in the first
instance as people get used to it. $15 for four weeks might be cheap compared
to the cost of a print subscription, but $195 per year is still enough money to
give readers pause and to drive them elsewhere. And similarly, 20 articles per
month is lower than I would have expected at launch.
Rather than take full advantage of their ability to change the numbers over
time, the NYT seems to have decided they’re going to launch at the kind of
levels they want to see over the long term. Which is a bit weird. Instead, the
NYT has sent out an email to its “loyal readers” that they’ll get “a special
offer to save on our new digital subscriptions” come March 28. This seems
upside-down to me: it’s the loyal readers who are most likely to pay premium
rates for digital subscriptions, while everybody else is going to need a
special offer to chivvy them along.
This paywall is anything but simple, with dozens of different variables for
consumers to try to understand. Start with the price: the website is free, so
long as you read fewer than 20 items per month, and so are the apps, so long as
you confine yourself to the “Top News” section. You can also read articles for
free by going in through a side door. Following links from Twitter or Facebook
or Reuters.com should never be a problem, unless and until you try to navigate
away from the item that was linked to.
Beyond that, $15 per four-week period gives you access to the website and also
its smartphone app, while $20 gives you access to the website also its iPad
app. But if you want to read the NYT on both your smartphone and your iPad,
you’ll need to buy both digital subscriptions separately, and pay an
eye-popping $35 every four weeks. That’s $455 a year.
The message being sent here is weird: that access to the website is worth
nothing. Mathematically, if A+B=$15, A+C=$20, and A+B+C=$35, then A=$0.
Meanwhile, at least where I live in New York, a print subscription which gets
you the newspaper only on Sundays costs $19.60 every four weeks — and it comes
with free access to the web and tablet versions of the newspaper. Which creates
the slightly odd proposition that if you want to use the NYT’s iPad app, you’re
marginally better off subscribing to the print newspaper on Sundays and
throwing it away unread than you are just subscribing to the app on its own.
The pricing structure is also a strong disincentive to use the iPad app at all,
of course. If you’re already paying $15 every four weeks to have full access to
the website, why on earth would you pay extra just to be able to read the paper
on its own dedicated app rather than in Safari? I, for one, prefer the
experience of reading nytimes.com on the web on my iPad, rather than reading an
iPad app which has no search, no links, no archives, no social recommendations,
etc etc. If the NYT wanted to kill any incentive to read and develop its iPad
app, it’s going about it the right way.
What does all this mean for the New York Times Company? I can’t see how it’s
good.
By my back-of-the-envelope math, the paywall won’t even cover its own
development costs for a good two years, and will never generate enough money to
really make a difference to NYTCo revenues
The paywall is certainly being set high enough that a lot of regular readers
will not subscribe. These are readers who would normally link to the NYT from
their blogs, who would tweet NYT articles, who would post those articles on
Facebook, and so on. As a result, not only will traffic from these readers
decline, but so will all their referral traffic, too. The NYT makes more than
$300 million a year in digital ad revenue, so even a modest decline in
pageviews, relative to what the site could have generated sans paywall, can
mean many millions of dollars foregone. On top of that, the paywall itself cost
somewhere over $40 million to develop.
Against all that, how much revenue will the paywall bring in? A very large
number of the paper’s most loyal readers are already print subscribers, and get
access to the website at no extra cost. So the new revenues from the paywall
will only come from people who read the website a lot but who don’t subscribe
in print.
How many of those people are there? Emily Bell reckons that the number of
people who’ll even hit the paywall in the first place is only about 5% of the
NYT’s 33 million or so unique visitors. That’s 1.6 million people — compare the
1.3 million people who already subscribe to the paper on Sundays. The former is
not a perfect superset of the latter, of course, but there’s a big overlap;
let’s say that realistically the NYT is going after a universe of no more than
800,000 people that it’s going to ask to subscribe. And let’s be generous and
say that 15% of them do so, paying an average of $200 per year apiece. That’s
extra revenues of $24 million per year.
$24 million is a minuscule amount for the New York Times company as a whole;
it’s dwarfed not only by total revenues but even by those total digital
advertising revenues of more than $300 million a year. This is what counts as a
major strategic move within the NYT?
As Ken Doctor notes, the Times Select fiasco, which was unceremoniously killed
in 2007 to no one’s regret, was bringing in a good $10 million per year. This
new paywall is much more elaborate and expensive, and it’s being introduced
into a website which is currently something of a cash cow as regards ad
revenues.
So by my back-of-the-envelope math, the paywall won’t even cover its own
development costs for a good two years, and beyond that will never generate
enough money to really make a difference to NYTCo revenues. Maybe that might
change if the NYT breaks its promise to offer full website access for free to
all print subscribers. But that decision would be fraught in all manner of
other ways.
For the time being, though, I just can’t see how this move makes any kind of
financial sense for the NYT. The upside is limited; the downside is that it
ceases to be the paper of record for the world. Who would take that bet?
Update: Turning upside-down the conventional wisdom that consumers will only
pay for financial information and porn, the NYT has decided that Dealbook will
remain completely free, outside the paywall, at least for the time being. Which
I guess explains why the Business and Dealbook sections are so clearly
separated from each other online.
_______________________________________________
Infowarrior mailing list
[email protected]
https://attrition.org/mailman/listinfo/infowarrior
