Cable and satellite channels, which traditionally rely on a dual revenue stream model, are eyeing YouTube’s subscription service to generate revenue from older shows and new programming, according to another person familiar with the project.

1. First off, I agree that the performance of the NY Times paywall greatly exceeded my own expectations for it. I was quite harsh in predicting it would be a complete flop. I was wrong. It wasn't a flop. I explore why below.
2. That said, I don't think that it's been nearly as big a "success" as some are making it out to be, and I still think that it wasn't the best play that the NYT could have or should have made -- and it's doubtful that anyone else following in the NYT's footsteps would find similar results. And that's a pretty big problem, because even if you think the NYT's paywall should be judged a "success" it doesn't change the fact that its revenue continues to drop (and not just its print revenue -- digital revenue is struggling too). Perhaps the paywall may have limited the revenue collapse, but it has done little to create a new and sustainable business model.

• It's not really a paywall! This was a point we realized soon after the details were released, when it became clear that the paywall was so porous that no one would ever have to pay. Ever. As we noted, it's really the Emperor's New Paywall, in that it's completely invisible. If you don't want to pay, you just don't use javascript, or you remove the text after the ? at the end of the URL, or you open another browser, or you delete your cookies, or one of the half dozen or so other tricks that means you'll never ever face the paywall. In effect, the NYT's paywall is a donation system made to look like a paywall -- sort of like some museums with their "recommended donations" at the entrance. You never actually have to pay, but many people do out of convenience.
• They don't count links/earned media: This one is big. Since so much traffic comes via links these days, one of the major problems with paywalls is that they hurt this kind of traffic. For example, we try not to link to paywalled sites whenever possible -- but we will link to the NY Times, knowing that they let in any linked traffic, and it doesn't count against your "paywall meter." That at least meant that they weren't killing off important new sources of traffic, unlike many (if not most) other paywalls out there.
• The NY Times smartly figured out a way to get a ton of people signed up for free, to boost their early numbers. They did an ad deal with Lincoln, such that right as the paywall launched, anyone could get a free subscription by test driving a Lincoln. Who knows how many people actually took this up, but it bootstrapped the early numbers, and now everyone completely forgets about this (seriously, it's difficult to find any article that mentions this point any more).
• In the end, it appears that the NY Times is a paper that many people think is indispensable, and because they haven't bothered to look around and find out that you never actually have to pay, a lot of people have just paid up for the hell of it.

• As mentioned, overall results still suck. That's a pretty big deal. While the article claims that new subscriptions have finally started to outpace ad revenue declines, it seems unlikely that this will continue.
• Despite not blocking linked traffic, overall traffic hasn't been good. It's certainly not increasing.
• Proponents of paywalls insist that one key reason for a paywall is that it allows newspapers to charge advertisers more, since they better know their audience and can charge advertisers higher rates. It turns out that this is hogwash, and the NY Times has admitted that the paywall has had no impact on the rates they can charge for advertisements.
• And part of that may be because advertisers often tend to value scale and "mindshare" over targeting. Sure, they all claim to want premium audiences backed by data, but having dealt with way too many advertisers in my life, they always always always eventually go back to the scale question. And a paywall -- even a fake one like the NYT's -- tends to limit your ability to scale.
• And then there's my biggest issue in all of this. It's been entirely based on fooling users into thinking they need to pay, but not about adding more value for the users. As we've argued for years, there are plenty of opportunities to get users to pay, but it has to be about adding additional value beyond the content. It's why we've done things like providing additional scarce value for folks who choose to pay us. We don't block our content with a paywall, but we give people reasons to buy that provide them extra value (and feel free to do so, if you'd like).

News Corporation also announced that effective immediately, Jesse Angelo, the founding Editor-in-Chief of The Daily and long-time Executive Editor of The New York Post, will assume the role of Publisher of The New York Post. As part of a digital restructuring initiative, the company will cease standalone publication of The Daily iPad app on December 15, 2012, though the brand will live on in other channels. Technology and other assets from The Daily, including some staff, will be folded into The Post.

Mr. Murdoch said: “From its launch, The Daily was a bold experiment in digital publishing and an amazing vehicle for innovation. Unfortunately, our experience was that we could not find a large enough audience quickly enough to convince us the business model was sustainable in the long-term..."

The various harmful effects of the patent and copyright systems encouraged Arnold Plant, an English economist, to publish over 75 years ago two influential articles on why England and other countries would be better off without patents and copyrights.

Many Variety reporters and editors have been frustrated that their content is less read online than that of competitors such as the Hollywood Reporter and Penske-owned Deadline, in part because it is only available to paying subscribers.

Attendees at the meeting in Variety's mid-Wilshire Boulevard office applauded when Penske said he would remove the publication's digital paywall.

Rather, the state of daily newspaper journalism only proves English majors should not be allowed to make business decisions. Only English majors could give their product away (i.e., online), then be surprised to see revenues decline.

Now, promotional giveaways are hardly a new or crazy idea, and they don't typically say anything bad about a business model—but I don't think that's really what's happening here. Certainly the Times hopes to convert some of those free readers into paid online subscribers, but there's also a clear pattern in the items they choose to make these exceptions for: huge social events that are attended and discussed by lots of people. In other words, precisely the sort of thing where blogs and social media offer the most competition to a newspaper. Why would anybody pay for Olympic reporting when the web is going to be absolutely flooded with constant updates on every little thing that happens, supplied for free by the fans and hangers-on? If the Times content is behind a paywall, it will be all but ignored.

And this really goes to show why, in the long run, paywalls are unsustainable. If the biggest, most popular topics are the hardest to control—and the ones that lose value the most when controlled successfully—while at the same, time social media and citizen reporting output is growing and expanding to new areas constantly, then the inevitable conclusion seems clear: paywalls are, at best, a temporary way of extracting a little bit of cash at the expense of long-term relevance. If your goal is to directly sell news as a product, but you discover that you have to eliminate your prices whenever product demand is highest, something is clearly wrong—you're trying to apply an old model where it doesn't actually fit, and getting kooky results. The solution is not to keep compromising the broken model, but to embrace the underlying realities (infinite content, no barrier to publishing, the huge value of share-ability) that broke it, and build new models around them.

I asked my class of 20-year-old Elon University students how many were on Facebook. All 33 raised their hands. Many of them suggested they were addicted to the social network. (It was all I could do to keep them off Facebook during class.) I asked how many would pay $1 a month for Facebook membership. All raised their hands.

“Five dollars?” I asked. A few dropped out.

“Ten dollars a month?” I asked. Nearly every hand stayed down.

“No one?” I said. “I thought you guys were addicted?”

A student piped up with an explanation: “Someone will invent something else to take its place that is free.”

I shared this anecdote with a newspaper executive when we were talking about newspaper paywalls. I said that if people wouldn’t pay for Facebook, they wouldn’t pay to get through a newspaper paywall.

"Fox Network to limit Web access to its shows."

"We are continually looking at opportunities to provide our pay television distributors with content and products that enhance the value of pay television to subscribers,"

He asked me what I think about pay walls. I told him what I always say: The main currency of news sites is attention and not dollars and that I believe that it is his job, as a publisher, to turn that attention into money to keep the attention machine running. He nodded and made the following, astonishing statement:

I can’t see pay walls working out either. But we need to do something before we lose all of our current subscribers. Sure. It’s a tough business environment, but… But the flight industry is a tough environment too, and they found ways. So tell me: Why do people fly Business Class? In the end, an airplane brings me to the same place regardless of whether I fly Economy or Business Class and the massive price-increase I pay doesn’t compare the difference in value.

He asked whether I knew of a way to apply this logic to online news. What would a Business Class news site look like?

People pay for Business Class because they don’t want to be tortured in Economy. They get faster lanes at the terror check. They get an extra glass of champagne. The stewards are more attentive. They get off the plane more quickly. They get the feeling of a higher social status.

And he added that he wished that there was a way to lead each reader through the business class to Economy again and again to show him what he misses.

One of the big issues with the “business class” metaphor, however (like the “iTunes for news” analogies that were popular not so long ago), is that news simply isn’t like air travel at all, in some pretty important ways. To take just one example, you can only fly one airline at a time, and you can only go to one destination at a time. The rise of RSS readers, and more recently, Twitter and other social-reading tools such as Flipboard, Zite and Tweetmag allows people to read multiple sources at a time, and that is one thing that the IA design approach doesn’t really take into account.

I am writing concerning your “NYTClean” bookmarklet, posted at http://euri.ca/2011/03/21/get-around-new-york-times-20-article-limit/.

As you obviously know, The New York Times Company has used its ‘The New York Times’ trademark since at least as early as 1851 and today offers numerous products and services under its famous ‘The New York Times’ trademark, including its online version of The New York Times at the URL NYTimes.com, and various blogs and electronic media products. NYTCo’s NYTimes.com website receives over 15,000,000 unique visitors each month. NYTCo owns numerous registrations for its ‘The New York Times’ trademark in the U.S. Patent and Trademark Office and Canadian Trade-Marks Office and these trademarks are among the company’s most valuable assets.

We object to your use of our famous "NYT" trademark in connection with your application and your promotion thereof, which constitutes trademark dilution and trademark infringement under U.S. and Canadian trademark law.

Accordingly, we ask that you immediately cease use of the "NYT" trademark in connection with this application. This email is without prejudice to any action that may be necessary to protect the valuable rights of NYTCo in its intellectual property.

But it gets even crazier when you compare that price tag to a New York Times print subscription. A year of weekday home delivery only costs $285 the first year, and $322 after that (with some variation by location). That's right: over $100 cheaper than a digital subscription - and a print subscription includes full digital access. Perhaps one of the economists who writes for the New York Times can correct me on this, but that doesn't make any goddamn sense. If you're going to charge $455 a year for a website, you better not tell me I can get the same thing plus a few hundred pounds of free kindling for two-thirds that. If I pay you $150, will you also mow my lawn?

I can think of only two explanations for this. One is that I am severely misinformed about the nature of the internet, and websites are in fact delivered to my computer by truck while system administrators dump barrels of ink in the sewer. The other is that, in the long run, the paywall is just a giant ploy to get their print subscriber numbers up. Some believe that the print prices are purposely obfuscated, but I think this is a temporary situation. I predict two things will happen before the year is out: readers who hit the paywall will start being greeted with home delivery offers alongside the digital packages, and digital subscribers will begin to receive offers to "add on" a print subscription at no "extra" charge.

If I'm right about the New York Times' motives, I'll be pretty disappointed. Their strategy is so confusing that everyone is having a hard time figuring out exactly what they hope to accomplish, but at least it seemed to be an acknowledgement that the economics of news distribution have changed (even if they reacted in an entirely backwards fashion). Now it is beginning to seem like nothing more than an attempt to prop up the same legacy model that has been holding them back this entire time.

The New York Times already had a credit card processing system for selling home delivery. It already had a database management system for keeping track of Web site registrants. What did they spend the $40-50 million on? A monster database server to keep track of which readers downloaded how many articles? They should already have been tracking some of that for ad targeting. In any case, a rack of database servers shouldn’t cost $40 million.

"Can people go around the system?" Sulzberger, the Times’s publisher, asked at a roundtable discussion hosted by the Paley Center for Media this morning. "The answer is yes, just as if you run down Sixth Avenue right now and you pass a newsstand and you grab a newspaper and keep running, you can read the Times for free."

"Is it going to be done by the kind of people who value the quality of the New York Times reporting and opinion and analysis? No," he continued. "I don't think so. It'll be mostly high-school kids and people who are out of work."