Why The NY Times Paywall Business Model Is Doomed to Fail (Numbers)

from the dude-where's-my-math dept

Not considering technical details (every wall can be brought down), even by its own business model the New York Times' paywall is doomed to fail.

Last Friday's Financial Times had some interesting numbers.

  • Fact 1: According to analysts, the New York Times only needs to convert 1 to 10 per cent of the online visitors in order for the model to pay off.
  • Fact 2: NY Times chief executive Janet Robinson has stated that they only expect about 15 per cent of visitors to encounter the paywall, since visitors can read 20 articles per month for free.
  • Fact 3: Full website access and the mobile app are bundled for $15 per month. For the iPad app + web you pay $20 per month. $35 for all three.
  • Fact 4: One analyst argues that the NY Times could earn $66m per year if it converted just 1 per cent of the visitors. This would mean they go from paying nothing, to paying (at least) $195 a year.

There is no way these numbers add up. Consider fact 1 and fact 2. First of all only 1 per cent might actually not be all that easy, let alone 10 per cent. Secondly, the 1 per cent is misleading, as they'll actually have to convert 1 to 10 out of every 15 visitors to encounter the paywall. So they actually have to convert 6 to 66 (!) per cent.

Next, the pricing might be too high. $15 per month is a lot for consumers who are not used to pay for news online, especially since there's no additional value as Mike commented last week. I'm not saying nobody will pay, but dragging in the 6 to 66 per cent of the visitors will be challenging, to say the least.

I cannot imagine this paywall to be successful. They can probably kiss the $40m investment in the development goodbye.

Filed Under: math, paywalls, predictions, subscriptions
Companies: ny times

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  1. identicon
    Anonymous Coward, 22 Mar 2011 @ 6:33am

    Re: Dont count the NYTs out

    I'm going to assume you're one of these "older people" and by your arrogant statement "Just the fact that it's the Times (and not some third rate paper) that's doing this means its got a chance." have some ludicrous obsession of loyalty akin to sport fans cheering on a team that failed to be relevant decades ago.

    We "super-young" do not demand everything for free, we acknowledge the reality that the exact same service the New York Times is providing can be found already for free provided by hundreds of news outlets elsewhere who're more than happy to do so. They also acknowledge the reality that charging customers for the same product they can get for free in this day in age is a failing way to conduct a business.

    Provide the news for free and in as many user friendly ways as possible, then make your profits off advertising is the way to go. Like it or not the consumers dictate how to be successful and imposing paywall's will only serve to hurt your chance of success in the long run.

    Regardless, it still boils down to a matter of competition. The New York Times once upon a time established itself as a leader in journalism, when there were very few widely distributed publications that could compete at the same level. Thanks to the digital age running printing presses and requiring distribution logistics is no longer needed. Nor is it required that as a journalist you have to work for a major publication - just because you don't work for doesn't mean your ability to do just as good of work reporting facts is somehow sub-par or less credible.

    Plenty of other businesses realize this truth and are taking the available means to capitalize on the situation to make it profitable to them. Charging the consumer for news is no longer the way to go, and never was for the airwaves, it's just finally hit home for print editions.

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