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 @ 9:07am

    besides, generally, the more $$$ earned, the more reading is done...

    RE # 37 & 38 (above):

    "There is an app for that. It is called Google Reader. I can use Reader in a desktop browser or use the Reader app on my Android phone. So what added value does NYT provide exactly, besides cutting you off from your RSS?"

    [ Not everyone has or wants "Reader", esp when they have a different device already. The point is the "offers" cover the range of what people could have and use. ]

    "Ah, but now you've just highlighted another problem. If you subscribe to the print paper the "digital paper" is included. There is no extra revenue in that model."

    To both, my intended point precisely concerning this elite set of readers is that, indeed, while they aren't counted in the millions, there are these people--more apt, it seems to me, by the way, to read newspapers in the first place than the average person--who don't think about this cost. It's too far below the sums they consider important enough to worry over. Hence, I placed it alongside the $100+ wine. And, yes, they do get something: the Times, which counts for them, is readily accessible on all their little high-tech toys(--which, again, don't necessarily include "Reader"). That's what they want, and the additional cost doesn't phase them. (They're wealthy.)

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