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 @ 8:01am

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

    How many others are there like you?

    And, alas, as wonderful as they *might* be, my posts by themselves, and even all of the posts at this "wonderful" site of insightful discussion, taken together aren't enough.

    The internet offers crumbs (which lie around for the picking-up, practically effortlessly). If you want more than that, you have to invest some effort. And maybe you do, in which case, good for you. Again, how many are there like that?

    In other words, your example, being anecdotal, does not belie the larger general statistically-demonstrated trends of little or no elective reading. After all, I didn't claim that no one ever reads anything electively any more. I contend, instead, that the differences between today's elective reading, in both quantity and quality (both being very important) and what used to be common only sixty years ago, are immense and a damning indictment of what passes for intelligent reading today.

    Thank you, though, for reading and replying, Liz.

    Remember what (a perhaps apocryphal story has Adlai Stevenson replying to the supportive voter who is said to have exclaimed, during his 1956 presidential campaign,

    "Senator, you have the vote of every thinking person!"

    "That's not enough, madam, we need a majority!

    In that election, the thinking people proved to be outnumbered by roughly 1.366 voters to 1.

    http://en.wikipedia.org/wiki/United_States_presidential_election,_1956

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