How the NYT paywall is working

By Felix Salmon
August 12, 2011
wrote about the success of the NYT paywall last month, I got a lot of pushback in the comments and on Twitter. Here's a sample:

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When I wrote about the success of the NYT paywall last month, I got a lot of pushback in the comments and on Twitter. Here’s a sample:

“The fact people pay speaks more people’s average techno-illiteracy/laziness about how to change a link address in their browser than anything else.”

“Add ?ref=fb to the base link of any NYT article and the paywall drops, and Felix thinks this is “working”? Huh?”

“After seeing how many ways you can get by the pay “wall” I would say it isn’t working at all.”

But of course the paywall is working — with the emphasis very much on the “pay” rather than on the “wall”.

Yes, the NYT paywall is porous — but that’s a feature, not a bug. It allows anybody, anywhere, to read any NYT article they like. That makes the NYT open and inviting — and means that I continue to be very happy to link to NYT stories. (If you follow a link to the NYT from this or any other blog, you’ll never hit the paywall.)

I’m in England right now, home to both of the sights above: the polite request to “please keep off the grass”, accompanied by tiny iron hoops; and the forbidding walls surrounding the gardens of Buckingham Palace. The former encapsulates everything which people like about England; the latter is the dark and regrettable side of things.

Now imagine that both of the gardens above were open to anybody paying an annual membership fee. The gardens on the left would have many more freeloaders — people who just saunter onto the grass and enjoy the sunshine without paying. The ones on the right would be much more effective in keeping such people out.

But here’s the thing about freeloaders: if they value what they’re getting, a lot of them will end up paying anyway. What happened when the Indianapolis Museum of Art moved to a free-admission policy? Its paid membership increased by 3%. When the Minneapolis Institute of Arts did the same thing, paid membership increased by 33%.

Sales people and business-side executes tend to believe as a matter of faith that if people can get something for free, they won’t pay for it. But all they need to do is look at their own behavior to see how that isn’t true: when they go to a restaurant in a distant town that they’ll never visit again, they still leave a 20% tip. A large segment of the population feels that it’s only proper to pay for something if you’re getting value from it — and if you invite as many people as possible onto your lawn, that’s a great way of maximizing the number of people who get value from it. Especially in a world where your own enjoyment of it doesn’t impinge on anybody else’s.

The fact is that no one subscribes to the WSJ or the FT because of their exclusivity. As a result, the smart thing for both papers to do is to maximize their paying readership by maximizing their overall readership. Instead, both have taken a scared and defensive approach to digital subscriptions, fearing that if their readers can get their content for free, then they won’t pay.

Wonderfully, the NYT seems to have disproved that idea. It’s no philanthropy: it’s a publicly-listed for-profit corporation, run for the financial benefit of its shareholders. But its paywall marks a new model and very promising in getting consumers to pay for content. It’s not a completely free pay-as-you-wish approach: the NYT nudges people quite hard to pay quite a lot of money. But I’d wager that the majority of people buying digital-only subscriptions to the NYT are doing so only after bypassing the paywall at least once or twice. If you hit the paywall on a regular basis and barge past it, eventually you start feeling a bit guilty and pay up. By contrast, if you hit the FT or WSJ paywall and can’t get past it, you simply go away and feel disappointed in your experience.

Historically, when people paid for news, they paid for a newspaper — a physical object which had value to them. That model is still highly lucrative for the NYT, WSJ, and FT. But they’re taking very different approaches when it comes to the digital world. The WSJ and FT are taking a spines-out approach, on the theory that the pain of not reading their content will force people to pay. The NYT is taking a more open-door approach, on the theory that the pleasure of reading its content will be enough to persuade a large number of people to pay. It’s a far more attractive model, and one which is much more likely to attract new young subscribers over the long term.

Nick Rizzo has collated some thoughts on the NYT paywall from people in the key demographic between 25 and 30 years old, all of whom are paying for the digital-only version of the NYT. Here’s one:

I don’t want to have to deal with the dead trees. There are easily a dozen sections in the weekend edition I don’t have any interest in. It just seems wasteful.

The New York Times is my number one source for news and I appreciate the service it provides. I don’t mean to sound like a total goody-goody, and I certainly get around paywalls when necessary, but I think $15/month is a pretty good deal for the amount of enjoyment and information I get from the Times.

If they took the paywall away completely I guess I’d stop paying. I’m not really interested in skirting it, though. I also buy a lot of music, because I like the product, understand the incentives involved, and want its production to continue.

And here’s Rizzo himself:

I’m on the Times website literally all day long. Any work-around to avoid the paywall would still cost me precious minutes. Plus, I feel that maintaining a quality NYT is immensely important to the country as a whole, and I’m happy to play my part. I subscribe to the Weekender (indeed, to the slightly cheaper Sunday-only edition), which is the cheapest possible way to give myself online access. I subscribe to the New Yorker (which has a semi-paywall) and give to WNYC (which, of course, doesn’t) for similar reasons.

It’s worth noting here the way in which people often end up paying for the NYT largely in proportion to their ability to pay. Those who can’t pay, don’t. Those who can afford only the cheapest subscription buy that. Those with comfortable incomes subscribe to the seven-day paper product. It’s a great way of maximizing both audience and goodwill.

Paying for something you value, even when you don’t need to, is a mark of a civilized society. The NYT treated its readers as mature and civilized adults, and outperformed internal expectations as a result. Meanwhile, the WSJ and FT are still treating their readers with mistrust, as though they’ll be robbed somehow if they ever let their guard down a little. It’s a sad and ultimately self-defeating stance, and I hope in future they learn from the NYT’s embrace of the open web, even in conjunction with a paywall.

24 comments

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interestingly enough the nyt has recently tightened its paywall. previously you could bypass the pop up that prevented access to an article with the nyt clean bookmark. this is no longer an option because the article is now truncated and not on display behind the pop up. has anyone figured out a way past this yet?

Posted by Worsel | Report as abusive

Yes. In the address bar, delete everything beginning with the ? then hit enter.

Example link
http://www.nytimes.com/2011/08/13/busine ss/daily-stock-market-activity.html?hp&g wh=E40B668BAE3E640A267B86872A471E0B

Delete
?hp&gwh=E40B668BAE3E640A267B86872A471E0B
and hit enter to reload the page.

Posted by dm1csg | Report as abusive

Once I found a hard copy of the NYT on the subway and picked it up, as millions have done for a hundred years before me. Do I feel guilty? No. I already paid for the subway.

And the real question is who’s bringing in more money: the WSJ or the NYT? Or do we need to look at the long-term payback?

Posted by jesse1 | Report as abusive

I have no problem paying for digital access to the NYT, but I just don’t understand why they charge less for a M-F print subscription, which includes unlimited access to the digital versions, than for just the digital version alone. They have to print and deliver the paper version, yet they charge less for it. I don’t want them to deliver a paper to me 5 days a week just to save a little on a web subscription, but I don’t think there should be a penalty for saving them that expense. So I avoid paying altogether by just using different browsers and devices to read the NYT.

While I say I don’t understand why they do that, I have a guess – they are willing to pay for the printing and delivery so they can claim a paid subscriber for setting advertising rates. The advertising industry needs to value web readers as much as print readers, and when they do that, we won’t have to waste trees and oil delivering something that goes straight to recycling.

Posted by KenG_CA | Report as abusive

KenG, if that’s the reason (and I have no idea), it’s an odd one, because advertisers are increasingly demanding much more information about the reader than any print medium can provide. Even for a subscriber, a print publication can only reasonably know an address for delivery. For an online subscriber, you can know what they read, how much time they spend reading it, if they click on an ad, and so on. At least in tech business and tech publishing, marketers are no longer comfortable *not* having this data.

Posted by Curmudgeon | Report as abusive

Two words about the NYT paywall: RSS feeds.

I would subscribe to NYT, were I able to afford it. In my case the inability to afford a subscription is a problem that is not due to the frequently given response of “I am a college student”.

Posted by gabelr | Report as abusive

So it’s a donation system!

If that’s true then might there be a better architected system that:

1) doesn’t cost $40M to build so that the rest of the internet producers could also participate

2) is networked — e.g. works across all websites, blogs, UGC channels such as on YouTube

3) gives the contributor a visible pat on the back for making a donation

4) is inexpensive enough that at least half of the world’s 7B people could participate

5) is trivial, or even no work at all, to implement and costs nothing for the producers

?

Posted by Kachingler1 | Report as abusive

Interesting. Maybe it’s a function of the corporate worldview, informed by personal worldviews. NYT=liberal, trusting. WSJ and FT=conservative, distrusting.

Posted by etarini | Report as abusive

The paywall at the NYT is so permeable that it is an obvious deliberate decision; it took me about 5 minutes from cold to figure out how to get around it. Same at the Economist. Simply open a private browsing window in Explorer (not sure if it works with other browsers, the privacy model for Explorer seems stronger than for Safari, for instance). I think the difference between the Economist and the FT is interesting, since they both belong to Pearson – but the Economist has the more savy marketing people.

Problem with the NYT and me is that I only read Krugman and the book and movie reviews for the most part. I certainly don’t read David Brooks or Thomas Friedman or Freakanomics or Stanley Fish or (actually that isn’t quite true, I did read Stanley Fish recently, to check that he really is like I remember). I might pay for them all to go away.

Posted by seanmatthews | Report as abusive

Curmudgeon, I agree with you, but then again, we come from a different world than the NYT. They want $3.70 per week for M-F delivery and unlimited web access, and all digital access package. the digital package is $3.75/wk. Since I have to sign in to get digital access with the print subscription, they will get all that information you mentioned, but why would they want to incur the expense of a print version when I don’t want it is beyond me.

I’m not convinced the Times is the culprit, I think it’s advertisers who will pay more for print ads than temporary web ads. I have never thought advertisers were all that smart, and this renforces that belief.

Posted by KenG_CA | Report as abusive

@etani, I don’t know if you have read the FT lately, but it is anything but conservative, especially for what passes as conservative these days. Nixon used to be called conservative, and he would be crucified by the right as a socialist, as he was to the left of Obama. Even Reagan would be called liberal by today’s conservatives, for he signed off on many tax increases.

Posted by KenG_CA | Report as abusive

I think it would be really helpful to understand how much of this is driven by people who simply want access through apps.

It seems the apps are actually the real wall If you want access through an app, there’s no easy way around that.

Yep, you can fire up your web browser, but apps make it easy to have the whole package.

My guess — which is purely a guess — is that many of the new subscriptions aren’t from people who hit the on-site paywall (and I’d really love if you dug, so we could know) but rather people who wanted the app access.

Consider also that $193 for M-F print access gave you ALL digital access, whereas buying just smartphone/web app access on its own (not tablet) was $2 more.

Basically, they’ve tossed in the print paper for free. That’s an attraction right there (even if I, having taken this deal, only flip through it maybe twice per week).

I’m sure some people have hit the completely porous 20 per month view limit that’s easily gone around, if you know how. But many of the non-tech savvy don’t and think uh oh, I’d better pay. Many of even the tech savvy might think, too much hassle (this is why I have a WSJ subscription, among other reasons). Time is money; it’s not that much money for some regular readers on the web not to have paywall hassle.

But I’d really, really like to see those breakdowns. My guess is that this the apps that are making the paywall work better than in the past.

Posted by dannysullivan | Report as abusive

The WSJ paywall is only marginally harder to get by and most people I talk to realize that just as well. Just Google the headline and click the link. Plus a lot of the content (half perhaps?) is free to everybody without even having to google or tweak the url or anything.

Disclaimer: I work for the WSJ.

Posted by albertsun | Report as abusive

The paywall encouraged me to subscribe to the Sunday paper. That’s the driver: they generate additional paper subscriptions, generate cash from digital subscribers, generate eyeballs at the website and then they sell ads in both paper and digital. They price the Sunday paper subscription – at least in the East – so it’s the most attractive option, which makes a ton of financial sense because that is the big money maker for ads. If they can sell more newsprint with those ads, still generate eyeballs for digital ads, drive people to the highest profit editions, etc. then they are doing well.

Posted by jomiku | Report as abusive

Spot on Felix. I never went to the IMA until it was free. After going once, free, I realized what a great treasure it was and have since contributed.

Posted by david3 | Report as abusive

Were I back in Boston, I’d subscribe to the print edition, but here in Tokyo, paying more and getting less grates. But there’s not much other than Krugman there any more (see above on Brooks, Fish, et. al.) and Krugman’s not behind the paywall, if I understand correctly. (And you can just read the other econ blogs to see what Krugman’s up to.)

So the bottom line here is that the NYT isn’t providing enough content to justify the bother of signing up and making sure they can deal with a non-US account.

Posted by David239 | Report as abusive

Well, Felix, I’m certainly glad to see that your readers, most of them apparently, are gainfully and happily employed, but I would remind those of you who are so snugly living in your privileged and rarefied worlds that outside that bubble there is a recession going on–and, indeed, if we are to believe people like Floyd Norris and Paul Krugman, may very well be rapidly closing in on RECESSION REDUX–and that some of us who find ourselves consigned to living in the lower rungs and have as a result not held a job, literally for years, find even $5.00 a month, let alone $15.00, a not exactly inconsiderable sum to be tossing out to the venerable Grey Lady for the honor of staying informed. I know, I know, I realize that there are some who find that hard to believe and think nothing of sneering at those forced to work around that blasted paywall, but I can assure you, sad to say, that it’s all too true. Please read the national and financial sections of that paper a bit more conscientiously and try not to be as smug as those appalling Republican clowns we see every night on tv who seem hell-bent on making our lives a living nightmare.

Posted by SSDependent | Report as abusive

“(The NYT is) a publicly-listed for-profit corporation, run for the financial benefit of its shareholders.”

Ah, urban legend strikes again. To quote from “Why We Should Stop Teaching Dodge v. Ford,” by Lynn A. Stout, in the Spring 2008 issue of the Virginia Business & Law Review:

“Dodge v. Ford is indeed bad law, at least when cited for the proposition that the corporate purpose is, or should be, maximizing shareholder wealth. Dodge v. Ford is a mistake, a judicial “sport,” a doctrinal oddity largely irrelevant to corporate law and corporate practice. What is more, courts and legislatures alike treat it as irrelevant. In the past thirty years, the Delaware courts have cited Dodge v. Ford as authority in only one unpublished case, and then not on the subject of corporate purpose, but on another legal question entirely.

Only laypersons and (more disturbingly) many law professors continue to rely on Dodge v. Ford. This Essay argues we should mend our collective ways. Legal instructors and scholars should stop teaching and citing Dodge v. Ford. At the least, they should stop teaching and citing Dodge v. Ford as anything more than an example of how courts can go seriously astray.”

Further down in the article we find:

“What about state corporation codes? Do they perhaps limit the corporate purpose to shareholder wealth maximization? To employ the common saying, the answer is “not just ‘no,’ but ‘hell no.’” A large majority of state codes contain so-called other-constituency provisions that explicitly authorize corporate boards to consider the interests of not just shareholders, but also employees, customers, creditors, and the community, in making business decisions. The Delaware corporate code does not have an explicit other-constituency provision, but it also does not define the corporate purpose as shareholder wealth maximization. Rather, section 101 of the General Corporation Law of Delaware simply provides that corporations can be formed “to conduct or promote any lawful business or purposes.””

So the NYT *might* be run for the financial benefit of its shareholders… but there’s no necessity for it.

Posted by hbobrien | Report as abusive

I think you are making a false assumption though. You are assuming that a majority of those 200 000 plus users are paying out of choice and that they see the choices that they have. But I think the first comment on this post illustrates the opposite. It isn’t necessarily the fact that people are considering both options realistically and choosing to pay. We don’t know who makes up those 200 000 people. Techsavviness and psychology play a really big role here. If a majority of those paying are somewhat older and less techsavvy, they might think the paywall is harsher than it is and harder to get around. When I shared this video on Facebook showing the workaround (http://www.youtube.com/watch?v=N5R4CgDw FX), several otherwise intelligent college grads were very thankful and had not realized how easy it was, just like the commenter above and simply believed that because the marketing painted the idea of a paywall, that one really existed. The NYT doesn’t market this as a low paywall. They emphasize that one still get in through links on blogs/social media, but believe it or not, most people don’t realize that one can also in matter of seconds create such a link in their address bar. If hypothetically, the Times created such a video as posted above, this would be a very different story. There was a really great comment in the German Frankfurter Allegemeine Zeitung that unfortunately has been translated. But it had this key sentence. “The only people who pay are the ones who are too dumb, too lazy or too nice, or those who want to read the paper on an iThingy”. And these are the people the advertisers want to reach? How about the young techsavvy people who aren’t repelled from reading the Times by a non-existing paywall? http://www.faz.net/artikel/C31013/zeitun g-im-internet-die-dummen-die-faulen-und- die-netten-30480810.html

Posted by newsjunkie247 | Report as abusive

“the WSJ and FT are still treating their readers with mistrust, as though they’ll be robbed somehow if they ever let their guard down a little.”
Given the WSJ and FT’s customers are mostly bankers/finance-type and the recent experience of regulators, politicians, customers “letting their guards down” to bankers, it seems to me perfectly sound of the FT/WSJ to not trust its customers…

Posted by fxtrader14 | Report as abusive

Wonder if NYT considered the NPR model of voluntary subscription?

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