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 @ 8:23am

    Re: Re: Sigh...

    Well, I think the answer they would offer is: The New York Times.

    I agree, this is the answer they would give and it shows an astounding level of arrogance considering the sheer quantity of AP and Reuters stories that are re-printed on the NYT's website.

    I also agree that the NYT was able to build a lot of brand loyalty when they were breaking major stories and really pushing the boundaries on reporting. How will they get credit for breaking stories if they're behind a paywall? Or, a better question, when was the last time the NYT broke a major story? I can't think of the last time a newspaper had an "exclusive" story. They may be the first "real" newspaper to publish something but most of the time the story was broken by a blogger, independent journalist, or foreign paper.

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