NYT reveals its paywall hopes

By Felix Salmon
March 21, 2011
Jeremy Peters reports on the NYT's internal paywall math:

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Jeremy Peters reports on the NYT’s internal paywall math:

The Times will not say publicly how many online subscribers it hopes to get. But company executives have said privately that the goal for the first year is 300,000. And Mr. Sulzberger and Ms. Robinson insist that the plan is not intended for short-term gain.

“This is not a bet on this year,” Mr. Sulzberger said. The question that remains to be answered is whether that bet pays off in 2015, 2020 or ever.

300,000 subscribers paying on average $200 per year (some will pay more; others will not renew every four weeks for a whole year) works out at $60 million — or less than 20% of the NYT’s digital advertising revenues. It’s a big enough number that I can certainly see why the NYT spent a long time considering this move. But it’s not so big as to be a no-brainer.

That said, if the NYT can get 300,000 paying subscribers — not including people from the Lincoln dealand it can do so while maintaining online ad revenues, then I think the paywall will have worked. One huge unanswered question here is whether advertisers will be willing to pay a premium for reaching readers behind the paywall — if they are, then it’s conceivable that ad revenues might even go up. (And that would also explain why Dealbook is free: it already gets premium ad rates.)

Still, that’s a lot of ifs. Which is where I take issue with David Carr:

The Web was built on collaboration, open networks, and a friction-free flow of information. And the Times attempt – however considered, however nuanced – is an offense against that theology.

And that’s what it is: a theology. One need only read many of the bloggers and commentators in the wake of the announcement to see that what the Times is being accused of is not greed, but heresy.

In reality, the theology comes in statements like this:

“I believe that our journalism is very worth paying for,” said Jill Abramson, The Times’s managing editor for news. “In terms of ensuring our future success, it was important to put that to the test.”

There are two theological statements here, which I hear a lot from NYT journalists. The first is the idea that if you can charge for certain content, then obviously you should. And the second is the idea that charging for content will automatically “ensure future success.” Neither is exactly self-evident. Nor, for that matter, is Arthur Sulzberger’s idea that if the NYT suddenly turns the meter to zero in the wake of a big event like 9/11, then the readers will come flocking back the minute they’re able to. They won’t: once you become habituated to avoiding the NYT, and learn to get your news elsewhere, you’ll continue to do that no matter where the meter is set.

But for the record: I’m skeptical that the NYT will be able to get to 300,000 paying digital subscribers this year. If it does, then the paywall will definitely be more successful than I anticipated, and I’ll happily eat a little bit of crow. Here’s hoping!

8 comments

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I (or my family) have had a subscription to the NYT almost continually since 1954. What bothers me is that when I read an article about something I know, it is biased, short sighted, incomplete, and untrustworthy. I have learned to read all articles with a jaundiced eye. Two games I play when I read an NYT article is qui bono and where’s the lede.

This is more of an issue to me than paywalls.

Posted by msobel | Report as abusive

Times should be charging $10 per year. Based on 30 million viewers per month, it would have to retain 20% of its current traffic to generate the same revenue as the new subscription plan.
And it would be easier to ratchet up that $10 per year charge than the new scheme. Charge $10.50 next year and you’ll gain 5% on revenues, and the customer won’t notice the difference (his cost went up 50 cents a YEAR – big whoop)
Another thing the Times doesn’t understand is why its information is valuable. The Times writing about Japan quake isn’t inherently, automatically more valuable than what, say, the BBC says. So why would I pay more for it?
The Times’ value is its function setting the agenda for discussion. An article on say, education, will spark debate that a similar article in the Chicago Tribune won’t – because it’s in the Times.
It used to be that an article would appear in the Times, then the newsmagazines would pick it up, then the TV networks. And it would work its way down through the regional dailies, to the small-town papers.
But think for a second – how will a Times story start a discussion in the internet era? A bunch of bloggers will link to it – precisely what the Times WON’T be charging for.

Posted by RZ0 | Report as abusive

I’m surprised at the price. I’m not one who thinks everything should be free on the web, but I think they could do a lot better with a ~$5/mo. and then ratchet it up a little over time. Making people jump over that high pay wall right off the bat seems like bad strategy.

Posted by JimInMissoula | Report as abusive

NYT is a top-notch paper despite the routine bashing they receive from the Right. I am a fan and I want NYT to thrive. Charge me a reasonably price and I will gladly pay.

Posted by andiman1 | Report as abusive

The NYTs had a shot at being one of the first truly world papers but has instead chosen to address a very small, well off audience, people who click on Gucci ads rather than Gap ads. They have told most Americans such as myself (retired, fixed income) to F off. I wonder how influential the paper will be with such a small audience, even one as well off as its target. And how the journalists will feel about reaching such a small and insular group.

I rarely pay for anything digital but I would pay $48 per year for a Times subscription. At $24 a year they could have had a worldwide audience. Now I will have to content myself with the BBC and NPR and watching Slashdot and Reddit for word on how to breach the paywall.

Posted by pat30068 | Report as abusive

Marketing strangulation leads to sensationalism leads to loss of journalistic relevance. For a crummy $60M a year. The news they peddle is available elsewhere just for the searching. They’re in it for the long term? Settle in and watch the long, slow tortured demise of what was once a good rag ..

Posted by Woltmann | Report as abusive

I still think the critical metric for the paywall is how well it props up the print subscription base.

The paywall is deliberately porous to keep up the online pageviews they are well aware that long term their future lies in being able to generate more online revenue. But it’s seems pretty clear that online revenues aren’t large enough to prop up an infrastructure built in another era.

The prices of the paywall are deliberately competitive to subscription prices so that subscribers who are thinking of going online only hesitate and instead renew the print subscription. If the Times can stem the loss of their circulation base or even grow it, while maintaining most of their online page views then they win for the short term. At that point the issue becomes one of how does the pricing discrepancy between print and online level out. If online prices rise to meet print prices then the NYT is golden, but if print sinks to current online prices they’re stuck with the same problem they have today, an infrastructure too expensive to maintain on their revenue.

No matter how it slices though the revenue from the paywall itself is mainly bonus money, the core revenue to prop up the Times is expensive ad rates. They have it in print but not in web yet. The strategy seems to be a short term shoring up of the print side, and likely a longer term bet that web rates rise for what the Times sees as premium content…

Posted by AbeB | Report as abusive

Now that the “Gucci Set” has solidified it’s grip on the American media and geopolitical landscape, and the middle class has joined the bread lines, it is inevitable the war-justifications and spin offered by the NY Times will appeal only to a vanishing cross-section of society. They have completely lost all journalistic credibility to those who have been victimized by the Times’s whitewashing of 9/11, pandering to every proposed military intervention and generally elitist editorial stance. Soon only Hedge fund managers and Billionaires will read it so they don’t have to admit the Emperors wear no clothes.

Posted by Greenfelder | Report as abusive