The NYT’s bizarre iPad paywall

By Felix Salmon
January 24, 2011
Russell Adams has some inside dope on the price the NYT is intending to charge with its paywall:

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Russell Adams has some inside dope on the price the NYT is intending to charge with its paywall:

Under the new system, expected to be rolled out next month, the Times will sell an Internet-only subscription for unlimited access to the Times site, as well as a broader digital package that bundles the Times online with its application on the iPad…

The person familiar with the matter said the Times has considered charging around $20 a month for the digital bundle and less than half that for the Web-only offering…

Times Co. executives have said that only about 15% of the paper’s online readers are “heavy users,” meaning the vast majority probably won’t trigger a payment requirement.

This strikes me as peculiar. The idea seems to be that if you want to use the NYT iPad app at all, that’ll cost you a hefty $240 per year, over and above the cost of the iPad itself. But if you want to read the nytimes.com website on your iPad, that’s probably free — and even if you’re in the minority of power users, it’ll still be less than half the price of the app. Essentially, the NYT is doing everything it can to drive its iPad-owning readers away from the app and towards the built-in browser.

A handful of people might conceivably still choose to buy the bundle under these conditions — commuters, perhaps, who have a wifi-only iPad and want to read the NYT offline. But the fact is that the nytimes.com website is a vastly richer and more sophisticated offering than its iPad app, which doesn’t even have search or embedded hyperlinks, let alone archives.

It seems clear to me that if the NYT insists on charging significantly more for its iPad app than for full access to its website (which looks so great on the iPad that Apple uses it in its ads), then it’s essentially sounding the death knell for the chances of any further serious development work on the app. The number of people using the app will be tiny and that in turn will be used as an excuse to underfund it.

A much smarter approach, I think, would be to make the iPad app cheaper than a website subscription. The problem with website readers, from the NYT’s point of view, is that they generate a tiny fraction of the ad revenue generated by their print-edition-reading counterparts. That’s why the NYT wants to charge them a subscription fee: the old model of giving away the news and then selling the readers to advertisers no longer works.

But the iPad has the potential to change all that, with bright and glossy rich-media ads which are much more attractive to brand advertisers than a grubby picture in black and white on newsprint. The NYT should try to build up a large audience of rich early adopters who are using its iPad app and then sell that highly-desirable demographic at a premium to advertisers. Instead, it seems to be trying to keep its app readership as small as possible. Has it given up on in-app advertising before it even really started trying?

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