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 @ 6:59am

    people won't read electively, that's what...

    ..."but what happens in 10 or 20 years when the young people who won't pay are now the old people and the old people that were paying are dead?"

    We already have a good idea of what happens then: it's what has been happening already as these people die off---people (in particular, the English-speaking world, because and only because they are such a large part of the highest of "high tech" societies), read less and less or, to put it more bluntly, they read practically nothing which is elective reading. Today and for some time, even college graduates don't read even a single elective book per year. I've forgotten the proportion just off hand but it's stunning--or, it used to be seen that way.

    The really significant issue goes beyond the matter of 'youth' wondering why they should pay for access to the New York Times (or any other daily newspaper) to the matter of youth wondering why they should bother to read anything which they aren't required to read.

    And, then, of course, "reading a book" for many people comes to mean nothing more demanding than reading Stephenie Myer, Stephen King, Robert Ludlum, J.K. Rowling, and on and on. Internet culture which asks the least possible from its habituants, encourages an ever-declining definition of "effort".

    In such circumstances, how does anyone expect people to retain any sense of proportion or discrimination in their critical faculties? Today, we have Barack Obama, the "thinking-person's" George W. Bush, as president. And our "choices" were, at length, between Mrs. Clinton, Mr. Obama, and, on the other hand, John McCain and Sarah Palin, or, in other words, really no choice at all, just the illusion of choice between what's really awful and what's simply unthinkable.

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