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.