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, 24 Mar 2011 @ 6:12am

    Re: Re: Re: Re: people won't read electively, that's what...

    I guess that's a joke (and one I don't grasp since I don't know to whom you're referring by 'Team Edward or Team Jacob).

    But since that's the case, the answer is likely "neither one nor the other." And I don't understand why you should need to know this in order to read my comment.

    Maybe 'Team Edward' is a reference to the primary campaign of John Edwards; if so, i grant that there are some things about his public policy statements which lead me to think he'd be marginally better in certain respects than I expected either Obama or H. Clinton to be---and better than they've proven to be. In preferring Obama over H. Clinton, we wound up getting Mrs. Clinton for many practical purposes. Too bad that Obama didn't explain the liklihood of that possibility to voters before the primaries had determined him the candidate.

    But John Edwards, in my opinion, is only very slightly preferable to either Obama or H. Clinton. He claims to defend a stronger populist set of principles but whether he would in fact do that if elected to the White House is the all-important question for me. Obama has now proven that much of his marvelous rhetoric was that and nothing more.

    That the electoral system we have (and have had for many many generations) gave us such candidates as those is ample proof that our real troubles are very deep and systematic and that Teams Edwards, Jacob, Clinton, Obama, McCain or Palin, etc. are distinctions with too little difference. We're offered phony choices by a system which is by design rendering electoral politics empty and useless as a means to reliably and meaningfully translate popular opinion and desires into effective public policy.

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