NYT paywall datapoints of the day

By Felix Salmon
February 2, 2012
Ken Doctor has a very smart and interesting take on the news that the NYT now has 390,000 paying digital subscribers -- plus another 16,000 at the Boston Globe.

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Ken Doctor has a very smart and interesting take on the news that the NYT now has 390,000 paying digital subscribers — plus another 16,000 at the Boston Globe. It’s unambiguously good news, on many fronts.

First, and most importantly, digital ad revenues went up by 10% in the area of the business with the paywall, while plunging by 26% at About Group, which doesn’t have one. The big worry about the paywall was always that it would eat into ad revenues, and that really doesn’t seem to have happened. Of course, it’s impossible to know what the NYT’s digital ad revenues would have done sans paywall. But my gut feeling is that it’s a net positive: it allows for much more targeted advertising and therefore higher ad rates.

What’s more, the NYT still has massive reach outside the paywall: it has at least an order of magnitude more unique visitors each month than it has paying subscribers. The NYT can still sell those other visitors just as it always could; they certainly haven’t become less valuable since the paywall went up.

The only possible cloud in this picture is in overall traffic growth: the NYT doesn’t give pageview numbers, but sites like Quantcast and Compete say that they see no real growth in traffic to nytimes.com, and possibly a small decline. Again, the counterfactual is impossible to know: would traffic have been bigger had the paywall not been in place? I don’t think that the paywall has reduced traffic very much, but I do think that the amount of time and money and editorial effort which went in to constructing the paywall might well have found its way into other innovations, had the paywall not happened, which would have made the NYT an even better and more popular product.

That said, the paywall has probably paid for itself already, and with luck some of the extra cashflow it throws off will be reinvested in more consumer-friendly innovations.

The other big news today is this:

Churn is less with digital than print customers: Skeptics opined that people might sign up, but then flee after sampling the paid digital product. The opposite appears true: Smurl says digital churn is less than print churn.

I didn’t expect this, but I believe it, and it’s really great for the NYT. It’s easy to cancel a NYT subscription, but by the same token it’s easy to keep one, too. And it seems that once you’ve taken the plunge and started paying for the NYT, you keep on paying — even more than with a print newspaper.

The result is that the NYT’s digital subscribers are a bit like a bank’s depositor base: although in theory they could leave at any time, in practice they’re an incredibly stable funding source. Much more stable, to be sure, than any advertiser.

But while I’m happy about this state of affairs, I still don’t really understand it. Here’s Doctor, again:

It took about 12 seconds for Times’ readers to figure out the new subscription math, when the company when digital-paid last year. When they did the math and saw they could get the four-pound Sunday paper and “all-digital-access” for $60 less than “all-digital-access” by itself, they took the newsprint. Which stabilized Sunday sales, and the Sunday ad base. Then the Times was able to announce a near-historic fact in October: Sunday home delivery subscriptions had actually increased year-over-year, a positive point in an industry used to parsing negatives. Now, Sunday is emerging a key point of strategic planning.

This is great news for the Sunday newspaper, which is highly profitable for the NYT. But it also raises the obvious question: why are 390,000 NYT readers eschewing a Sunday paper they could get for less than nothing? Some are IHT subscribers who don’t have that option; others are naturally peripatetic. And the cheapest digital subscription is actually still cheaper than the Sunday-only delivery.

It seemed to me, when I entered into my ill-fated bet with John Gapper, that NYT readers would go for the free access bundled with the paper, rather than plump for digital-only access. But increasingly it seems that readers actively dislike having to manage a physical paper, and are willing to pay for making the whole experience virtual.

If that’s the case, then the least the NYT can do is to continue to invest in its iPad app. Right now the website is still superior to the app, except for offline reading. The app desperately needs search, and it needs to retain hyperlinks from the original articles, and it needs to somehow build in the sense of serendipity and of relative importance which newspaper readers love so much. It’s hard to tell what’s important, in the app, once you move off the front page. And it’s hard to have your eye caught by a great story you didn’t know you wanted to read. But those things will come, I’m sure. If only because there’s now a very healthy income stream — Doctor estimates it at more than $80 million per year — which can pay to help develop them.

13 comments

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Felix, we hate paper, it’s bad for the environment. Why on earth would you expect digital users to want more paper? That is a silly thought for you to have had.

Posted by DoubleDeuce | Report as abusive

In my household nytimes.com traffic has gone way down since the paywall. I used to read the times online every day; now I glance at the home page and then move on to other places. And I don’t miss it!

Posted by colburn | Report as abusive

I saw the Sunday paper as a huge point for them. I subscribe to that, entertain the many offers to extend for “the weekender” but don’t, and mostly use the web access. The money they make off Sunday advertising is huge so the more papers the more they can justify spending more on Sunday content the more they have something worth getting the more advertising. They seem to be one of the few that gets the concept of a virtuous circle. Others are still subtracting content and hoping against hope to make it up with ads.

Posted by jomiku | Report as abusive

So the 390,000 are digital only subscribers? Shouldn’t we also be counting many of the Sunday + digital and Sat/Sun + digital subscribers as digital subscribers when analyzing the paywall? I would have been a digital only subscriber but when they gave the weekend paper away for less than nothing, I took it.

It’s important I think for my 2 little kids to see a newspaper. If I’m on the computer or my ipad, for all the kids know I’m playing Angry Birds. Watching my father and sitting at the kitchen table with him with the paper (or 2 or 3) spread all around is how I became interested in the newspaper.

Posted by Snyderico | Report as abusive

So much easier to justify the digital edition for me since there are so many more ways in, through the links I click on each day (and the addictive/reflexive visits to NYTimes.com to see if anything’s happened). With the paper edition, I have to steel myself for tackling it as a whole. And while I don’t get the same completist feel I would with subscribing to the paper, there is the vague sense that I’ve been on that website a whole lot this month!

Posted by gregbrown | Report as abusive

Delivery of the Sunday paper is not an option in some parts of the country.

Posted by C-Ealy | Report as abusive

@C-Ealy: Indeed; it’s not an option where I live, and snail mail delivery of the Sunday paper often comes circa Tuesday or Wednesday.

Posted by uprof | Report as abusive

I have an explanation for less digital churn: If I get a daily paper which I don’t read, I will get heaps of paper which become a burden to dispose of, and a constant reminder of paying a product I don’t use. With digital subscription the only reminder is the monthly deduction from the bank account, which might be below my threashold of care, depending on income.

Posted by owe.jessen | Report as abusive

What owe.jessen Said. One of the things about taking Sunday delivery is that you “get” to be “a NYT editor,” throwing out sections that would never be touched anyway.

That said, my current NYT relationship is the same as colburn’s: don’t use the site, and only access articles from Twitter/FB links. (Strangely, despite the claims about how the paywall runs, this still gets notices about running low/out of the “20 free” articles per month.)

Posted by klhoughton | Report as abusive

It is absurdly easy to get around the paywall. Step one: Use Firefox for your browser. Step two: Go to “Tools” and turn on Private Browsing, which prevents cookies. Step three: Go to Google News and find a Times article to enter the site. You now have the ability to read 20 articles.

If you wish to read another twenty, simply close your browser, open it again, and repeat.

Posted by VoltairesGripe | Report as abusive

I like the physical Sunday paper. There is still no comparison, in my book, to actually reading it in large format and on a tablet device. Perhaps it’s just a preference from my youth that will disappear, but while it’s here I’ll continue to enjoy it.

And the post by VoltairesGripe is interesting. You know, when I was in my teens and 20′s and not making much money I was concerned with hacking into things and getting them for nothing. Now that I’m older I’m MORE likely to subscribe to something I find valuable. And the only way I find it valuable is to sample it for a long time. So, unlike you, I subscribe because it’s worth it to me not to have to fiddle with my browser and have unrestricted access. You’re perpetuating the myth that these data refutes. It’s the same one that causes the music and recording industry to cling tightly to stupid copy protection instead of embracing the new digital world.

Posted by skyman123 | Report as abusive

Don’t count the NYT chickens before they hatch.

Some unknown but presumably large number of regular visitors were given free digital ‘scrips for the first year, followed by a 99c option for another 6 weeks before falling into the full-scrip trap. This amnesty program ends in about a week. I predict thousands of people will drop the NYT and not look back — this poster being one.

The price is ridiculous when put up against arguably better information on good news sites that is available for free. Bring the price down, or bundle it with, say, the Financial Times, the Economist, or some other worthy source. It’s the height of narcissism to expect such hefty payment for the 75% fluff that is the NYT.

Posted by RogerT | Report as abusive

Unfortunately, the Times doesn’t seemed to have plowed even a dime of this windfall back into proofreading and copy editing.

Posted by NoSix | Report as abusive