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, 23 Mar 2011 @ 6:12am

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

    "One problem with your set of packages, and it's the reason they are nonsensical. It doesn't go A, then add a bit to get B, then add a bit to get C. It goes:

    "A - $15 - web and smartphone access
    "B - $20 - web and ipad access (smart phone TAKEN AWAY for more money)
    "C - $35 - all three"

    Yes, I see that. I also used to discover that, as often as not, when I browsed over the vinyl 33 rpm albums of my favorite rock 'n roll groups, somehow they (or, more likely the recording companies' marketing departments) had discerned with a devilish cleverness how to put just one of my favorites of their hits on an album, another favorite of mine on a different album, and so on, such that, in order to get all my favorite hit songs, I had to practically buy every album, rather than one which conveniently contained all the hit songs I wanted.

    I believe this is called "marketing."

    And, if you resent it I not only entirely understand, but I also agree—up to a point. I find something just a little peculiar about people who apparently readily submit to being fleeced by wily merchandisers in some regards while, in other cases, they resent it strongly.

    The machiavellian business/marketing management (not exactly a new thing) at the Times marketing department seems to have noticed that since i-Pad ® users are by definition able and willing to pay more than the bottom-rung of the market for their digital toys, it’s eminently reasonable that they’d be susceptible to be charged more for the service which is adapted to those more expensive toys. As the character “George Costanza” would ask, “Is that wrong (of them)? Should they not have done that?”

    Or, in short, it may not be, indeed, perrhaps isn't at all, a "fair" strategy, but it is hard to argue that it isn't "reasonable" one.

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