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
    proximity1, 22 Mar 2011 @ 6:38am

    who will defend this crumby paper?

    For me, the Times is a third-rate paper--third-rate having been bumped up in the general dumbing-down of things. Despite that, I’m going to defend what I think is the sense in their pricing strategy with this paywall, taking as our starting point the three facts noted at the top of this thread:



    • “ 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.



    I think the management reasons soundly when fixing the entry barrier at 20 “items” per month without charge. That’s an average of one article every day and a half -- light use of their paper, it bespeaks a reader who is not very likely to be willing to pay anything significant per month to read more. So those readers, who, with continued access might one day decide to become paying readers, “get in free”—if one doesn’t count the obnoxious assaults of the invasive advertising.

    For those who require more, the price being asked of them is far below what even a fifth-rate newspaper typically charges for its daily printed edition. At fifty cents a day, you aren’t going to find a daily worth picking up anyway. So, while in my view, it’s a crappy paper to begin with, at least it becomes a cheap crappy paper at fifty cents per day.

    Similarly, the management figures rightly, I think, when they conclude that offering access to users of additional “platforms”—mobile applications—means they giving those readers “added value” and so, the extra charge isn’t out of line. The offer will likely bring sufficient takers to have been a sound decision. People who really find an advantage in having access on their stupid i-Pad device will pay the extra without begrudging it; after all, they’ve paid through the nose for the “privilege” of being Apple © customers. By the same reasoning, it makes sense to think that there are also a certain number of readers, the “BMW”, “Mercedes Benz” class, who won’t bat an eye at paying $ 35 USD per month for the web + mobile + i-Pad—and even, why not?—the printed paper on their doorstep or office desk. Those readers, who surely wouldn’t have felt guilty about reading the web version even if they hadn’t been paying the NY Times in one way or another, are the ones who don’t have to think twice about such an expense any more than they have to hesitate about spending over a hundred dollars on a bottle of wine at a restaurant.

    I think regular reading of the NY Times is positively harmful and people would be doing themselves a favour by skipping it altogether—just like they would by skipping the television but that’s another, and much more important, issue than the matter of how much to pay for access to the crappy New York Times.

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