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
    Patty, 22 Mar 2011 @ 8:53am

    NY Times Paywall

    At maybe $24 a year they could have brought in more subscription revenue worldwide. The Times had an opportunity to be,like the BBC, one of the first global news sites. But at $195 they lose retirees like myself, they lose students. They have chosen a small, well heeled audience, Gucci rather than Gap.

    Long term I think this diminishes the paper. It breaks the 'habit' in us older folks, prevents it from ever developing in the young. The NYT has always aspired to be a powerful voice, an opinion shaper and it can't be this is hardly anyone reads it. Which also brings up the problem noted on Techdirt with Murdoch's efforts and his writers jumping ship. Journalists want their stories to be read, to matter, to shape events and they can't do this behind a moat.

    I think that the pricing is all wrong and that they should have been more democratic in their advertising which I imagine would involve rate changes as well. They went with closing the door when they should have opened it wider.

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