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 @ 9:43am

    "dots " left unconnected... 'It's the TECHNOLOGY, stupid!' ...

    Here, in my view, is a prime example of how and why things are (as I contend) going so very badly for the future of reading and publishing in general:


    the PewResearchCenter Publications ( http://pewresearch.org/ )

    United We Stand ... on Technology

    by Jodie T. Allen, Senior Editor, Pew Research Center
    May 5, 2010

    You may take some whacks at Goldman Sachs but don't lay a hand on my PCs or Macs! That at least is the message one might take from a perusal of Americans' judgments about who and what are having positive or negative effects on the way things are going in the country today.

    A March Pew Research Center survey found public satisfaction with the state of the nation continuing to decline while anger and frustration with the federal government mounts. Nor are the feds the sole target of public distrust. Numerous other institutions share in its opprobrium. On the scale of positive judgments by American adults, banks and other financial institutions, large corporations, labor unions -- even the news media and entertainment industry -- all score in the 20s or low 30s.

    [emphasis added]

    In other words, in general, the public is a long way (and a long time?) from grasping the intimate, all-important relationship between the general decline as they see it in "the state of the nation" and the continuing march of high-technology. And this "disconnect," this failure to grasp the relationship portends more of the decline that supposedly worries so many.

    by John W. Aldridge

    excerpt from

    The Trashing of America, (1970) first published in The Devil in the Fire , from a lecture given at Cornell University, 9 May 1970 under the auspices of the College of Architecture, Art and Planning.

    ..."I take it for granted that when we speak of the environment, we speak not only of our natural surroundings but of the created world of artifact. And when we speak of the environmental problem, we speak not only of what we have done to ravage and deplete nature, but even more cruelly and stupidly, what we have done to ravage and uglify with our structures the whole quality and appearance of our world. I assume further that when we speak of appearance, we speak not simply of attractive or unattractive forms. We are not asking that our surroundings be beautiful rather than ugly, nor are we holding out for some kind of frivolous or elitist adornment which we value for its own sake. Rather, it seems to me that what our eyes look out upon from day to day not only determines the quality of our aesthetic experience but profoundly affects the character of our moral and metaphysical assumptions. It may be that we have created our physical environment in the shape of our view of ourselves and of mankind as a whole. But our physical environment also works to shape our view of ourselves and of mankind." (p. 330)

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