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 @ 9:58am

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

    Thank you for the clarifications.

    Still, you're taking two different aspects and placing them under one and the same set of critical analysis.

    It's one thing to point out that what will be charged for is going to be "free" elsewhere and something else to complain that what used to be available for free will now cost its users something to access it.

    In other words, the paywall per se is one issue, and how it's implemented is another, different, issue. My comments concern how it's implemented, not its existence per se. So, we've been discussing how people, who are apparently supposedly going to have to pay something for what previously they'd had free(er) or less restricted access to may or might choose to respond to this change of circumstances. My comments are intended to point out that, under the given that certain things are no longer offered or in fact accessible (when that's the actual case) free of charge, there are people who'll find the added value in their ability to get this now-charged-for material here, there and everywhere on their high-tech devices. Even when that might mean paying a marginally greater price to add one more device to the mix. Where they can actually get the same access included i.e. at no extra charge, then, like you and most, I agree that they won't adopt that option, but would indeed adopt it where it isn't also included.

    So, a "paper" newspaper subscriber, for example, could rationally decide under the new scheme that, in addition to the paper paper and what it includes, he also wants access via devices not already included for free. And, in their configuration, the people devising this new scheme haven't left what I consider the realm of reasonableness in deciding that there could be packages (here described as A (basic access), B (additional APPs) + C (yet other unincluded APPS of a different sort) with a graduated price from A to C.

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