Opinion

Felix Salmon

Will the NYT paywall be set at $10/month?

By Felix Salmon
February 17, 2010

Ryan Tate has an interesting piece of gossip about a turf war at the NYT over iPad pricing:

On one side, a Times source explains, you have print circulation, which thinks it should control the iPad since it’s just another way to distribute the paper. They’d like to charge $20 to $30 per month for the Times’ forthcoming iPad app, basically the product already demonstrated on stage with Steve Jobs, the source said. Why so much? Because they’re said to be afraid people will cancel the print paper if they can get the same thing on their iPad. Nevermind that iPad distribution comes with none of the paper or delivery costs associated with print, or that there’s already a free electronic edition available to subscribers who cancel.

On the other side, you have the Times’ digital operation, which is pushing to charge $10 per month for the iPad edition and is said to be up in arms over print circulation’s pricing. The digital side will provide interactive content for the iPad no matter what happens, but does not want print circulation to have control of pricing, marketing and other facets of the product. It’s something of an uphill battle since print circ has had control of other e-editions, for example for the Kindle, which are also seen on the digital side as overpriced.

The digital side is right, here: if you want to make a splash in a new medium, you can’t start out at a premium price. The NYT could more or less own news content on the iPad if it made its app free, at least to begin with. But the Print Guys don’t care about that — and since they still bring in the lion’s share of revenues, they still have an enormous amount of clout.

I’ve said in the past that the decision to install a paywall on nytimes.com has much less to do with getting new money from digital properties — indeed, the move might well be revenue-neutral on that front — so much as shoring up the print subscriber base and all the ad revenue associated with it. Essentially, if you can make it a bit more expensive and annoying to read the paper in non-print form, then at the margin some people will either move to a print subscription or will fail to cancel their existing subscription. And those people are very important for NYT revenues.

If you charge $20-30 for the iPad app, however, no one will use it. (Except maybe print subscribers if they get it for free with their print subscription, and I don’t think that the NYT and Apple will let that happen.) The iPad is designed to make surfing the NYT website an absolute joy, so really the fee for the app is only for the marginal extra benefit of having a different way to navigate the paper — it’s not for the content at all.

Once the NYT paywall goes up, however, that changes. So at the very least I think it would make sense for the NYT iPad app to be free until the paywall goes up, and then at that point it can be priced at paywall levels. And if I’m thinking along remotely the same lines as the NYT digital team, that would imply that the paywall is likely to be priced at around $10 per month.

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The app doesn’t even need to be free, just a lowish fixed cost, so long as it provides some value beyond access to the website – downloading articles/multimedia content for offline reading, for instance. The Guardian launched its app in December at £2.39 and went straight to the top of the paid app charts, selling 70k units in one month. It’s still in the top ten news apps chart in the UK (and some other countrues), which is dominated by free apps.

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The source may still be gossip but, if it contains even a grain of truth, this rumour spotlights great divergence at a time when internal conceptual unity is of the essence to the very survival of the newspaper.

Between the print circulation and digital departments at NYT no unified concept, not even a sense of joint purpose appears to exist, other departments meanwhile appearing to have no say in the issue at all.

It’s bad enough that they can’t agree on a pricing model but: how are they supposed to come up with actual benefits to the end-user, without which an NYT customer experience is unlikely to be worth paying – anything – for?

I’m not a big fan of the AT&T model or of anything AT&T does, but NYT could easily co-brand with Apple and build next-generation news cred or, at the very least, outreach to younger readers as Apple’s default news source of record. NYT could function in legacy market penetration in much the same way as Disney does when it distributes on behalf of Apple’s Pixar Studios. The NYT could also do what Google will almost certainly do, and deliver discount coupons as LED barcode to iPad, iPod, iWhatever users for targeted local redemption. There ought to be an immense escalation of values behind an (inevitable?) paywall that so far haven’t been properly singled out, out of apparent lack of self-confidence in the NYT product itself.

Above all, within its own four walls, there are many types of cross-media collaboration between NYT print and digital editions that have yet to be even superficially explored.

The longer NYT clings to its old-economy way of thinking with fragmentation between departments, the greater the risk of failure and rapid extinction. In isolation from a value-added user experience, arguments regarding how much to charge for NYT’s online edition are increasingly moot.

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