by Mike Masnick
Thu, Apr 21st 2011 7:06pm
by Mike Masnick
Tue, Apr 5th 2011 2:04pm
from the just-a-suggestion dept
This raises another danger of "charging" for things that might otherwise be free. When you put up a price on things, you also increase expectations. If you fail to meet those expectations, you could face some serious backlash (not to mention customer service costs). It's really quite amazing that in those 14 months and with that $40 million, it appears that the NY Times didn't really spend all that much money on actually making their smartphone and tablet apps work well.
by Mike Masnick
Fri, Apr 1st 2011 12:50pm
from the let's-come-up-with-some-ideas dept
by Mike Masnick
Wed, Mar 30th 2011 3:10pm
Saying That The NY Times Paywall Is Dumb Does Not Mean That We Don't Want The NY Times To Make Money
from the this-is-real? dept
Dumenco's demented argument appears to be "the NY Times does real journalism, the people complaining do not, and thus mocking a paywall is bad." But that completely and totally ignores the very point that people are making about the paywall. We're not mocking the paywall because we don't like news organizations doing real journalism, or we think they don't deserve to make money. We're mocking the paywall because it won't help the NY Times actually make that much money. It's a bad idea not because it'll help the NY Times continue to do serious reporting, but because it won't actually help them do that. That's the point that many of us -- including Doctorow -- were making. But instead of responding to that, Dumenco made up a complete straw man that somehow people against the paywall are against the NY Times doing reporting at all.
Even worse, he compounds the ridiculousness of the argument by then mocking Doctorow's support of business models that include "free" as a part of the business model by noting that Doctorow sells physical books, even as he gives away digital copies of all of his books. It's as if Dumenco's brain can't comprehend rather simple concepts. When people talk about the use of free as a part of a business model, it doesn't mean that everything must be free. For example, I read Dumenco's ridiculously stupid article online for free. Does this mean that Dumenco also doesn't believe that the NY Times should make money? That seems to be the logical conclusion of his illogical argument.
We see this kind of brain-dead logic all too frequently in discussions of business models in the digital age. I tend to think of it as the mental divide-by-zero error, wherein otherwise intelligent people simply stop thinking, the second someone mentions "free" as a part of a business model. Suddenly, they think that this means "absolutely everything must be free and no one should make any money at all." And yet, no one argues that. They're arguing about what things should be free, and what it doesn't make sense to charge for if you actually want to make money. For example, charging for a paywall online is probably not a very good business strategy to make money. Saying that doesn't mean I don't want the NY Times to make money. It means that I think they could make more money by putting in place an alternative business model -- such as by getting people to pay for added scarce value, rather than abundant content.
by Mike Masnick
Thu, Mar 24th 2011 5:55am
from the say-what-now? dept
In the meantime, we've got plenty of stories of other paywalls out there that suggest that people aren't particularly eager to sign up for paywalls. Some will. Perhaps a fair number will. The NY Times has the kind of brand that will certainly lead a bunch of people to just subscribe, perhaps without realizing they really don't need to do so.
However, consider ourselves confused and scratching our heads to hear that an analyst at Citigroup, Leo Kulp, is making the rather shocking prediction that "Revenue generated by an annual digital subscription will likely dwarf the advertising revenues generated by even heavy users." Say what? The only way I can see this happening is if the NY Times has the world's worst online ad sales force, which I doubt. And, of course, we already have some data on a NY Times subscription plan, back from the last time they tried a paywall. It generated some money -- about $10 million per year. Not chump change, but hardly a huge number for a publication like the NY Times, which was why they did away with it. They knew that expanding ad revenue was a much better plan.
So can anyone explain the math by which the NY Times' digital subscription revenue will "dwarf" ad revenue? I've been plugging numbers into spreadsheets, and unless the online ad market totally collapses, I just can't see the math making any sense.
Tue, Mar 22nd 2011 4:15am
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.
by Mike Masnick
Thu, Mar 17th 2011 11:36am
from the maybe-we-can-confuse-people-into-giving-us-money dept
For starters, the plan is confusing. You get 20 page views for free. You can also get around the paywall five times per day if you come via a search engine. Or are reading one of their blogs. Or come via a link from another site, which might mean I can link to NYT stories, but why risk it? Top news is sorta free and certain stories might be free. Maybe. Then, if you're a paper subscriber you get the website for free. Okay, so what's the paywall. For $15 for every four weeks (not every month), you get access to everything on a laptop/desktop or a smartphone. But not an iPad (um, unless you use a browser, I guess). For $5 more you lose the smartphone access, but gain iPad/tablet access. Huh? Exactly. For $35 every four weeks you can get the NY Times on both a smartphone and the iPad. Oh, and if you pay, you still see all the ads. And, finally, this is the introductory pricing. Who the hell knows what the final pricing is. So sign up and expect to have to pay more later. Isn't that appealing?
They spent 14 months and over $40 million on this?!?
It feels like something that was completely developed by committee group-think. It's one of those things where they're sitting around and someone timidly suggests a dumb idea ("I know, for $5 more we take away their smartphone access") and, because they have to come up with something, someone else says "sure" and then they think there's validation of a good idea. But there's no one brave enough in the room to say: "Guys, the newspaper is digital. Charging different amounts based on the hardware is like charging people different prices for listening to the same music on headphones vs. speakers." But no one did that. And because they had a committee, who kept making bad suggestions like this, and 14-months to keep upping the stupid, they spent over $40 million on it.
And here it is. Well, if you're in Canada, that is. Why? Who knows? The NY Times apparently decided to see if they could set off the mocking bomb in a remote area by launching in Canada first, where perhaps they hoped people would be too polite to say "this is dumber than putting gravy on french fries." If you're in the US, you have a few more weeks to get your life in order and to stop reading the NY Times.
Digging into the economics, I'm having trouble seeing how this helps at all. Obviously, some people will pay. But it's not going to be nearly enough to overcome the costs of this program and the likely massive cost in customer service to deal with putting forth the most confusing paywall possible. On top of that, it will decrease people going to the actual website, meaning fewer ad impressions, meaning that they're killing off ad revenue at a time when ad revenue has been going up significantly. Last time the NY Times did a paywall (for just its columnists), many of the columnists got annoyed that their work was hidden away, which made them significantly less relevant. In the last few months I've spoken to a bunch of journalists at newspapers who are considering paywalls, and all those journalists seem to be considering finding a non-clueless publication to work for.
Oh, and missing from all of this? Any attempt to add value. There's nothing new of value to pay for. Just a paywall. Which takes away value.
Perhaps I'll be proven wrong, but I can't see how something like this succeeds. It's like a giant experiment in wrongness. It gets the user motivation wrong. It gets the economic model wrong. It gets the pricing wrong. It gets the value proposition wrong. It's the perfect combination of wrongness, which they now want you to pay for. I think I'll pass.
by Mike Masnick
Tue, Mar 15th 2011 6:57pm
from the into-the-lifeboats dept
by Mike Masnick
Tue, Feb 15th 2011 12:42pm
from the seems-like-a-better-question dept
Turow, along with Authors Guild executive director Paul Aiken and Authors Guild board member (and apparent Shakespeare expert) James Shapiro, have an op-ed piece in the NY Times that a whole bunch of you have been sending in, in which they assert that Shakespeare might not have been able to survive the web era, because of all of this "piracy." The argument is quite a bit stretched, but see if you can follow me: because playwrights had physical scarcity, in that they could keep people out of the playhouses unless people paid to enter, it allowed playwrighting to flourish. They call this a "cultural paywall." Then there's some sort of bizarre leap about how copyright is really the same thing. It's not. And, then it leaps to something about how stricter copyright laws are, ipso facto, better. The evidence for this? Shhhh, don't bother the Authors Guild bosses with logic! And, of course, the inevitable punchline is the idea that Shakespeare wouldn't have survived in this online era with all this piracy and stuff.
Of course, it's difficult to think of a worse example than Shakespeare for this argument (and sort of bizarre that Shapiro would sign off on an op-ed that so thoroughly misrepresents Shakespeare). Of course, as most of you know, an awful lot of Shakespeare's works are copies (sometimes directly) of earlier works. Sometimes they're derivative, but other times, he copied wholesale from others. So the bigger question might not be if Shakespeare could survive all the file sharing going on today, but whether or not he'd be able to produce any of his classic works, since they'd all be tied up in lawsuits over copyright infringement.
Furthermore, the reason Shakespeare was able to make money by selling tickets was because seats in a theater are a real scarcity, and selling real -- not artificial -- scarcities is still a damn good business model today. Shakespeare could still make a killing on Broadway. Or he could go into the movie business and sell tickets to seats in theaters. There are plenty of real scarcities he could focus on. Jumping from real scarcities to artificial scarcities such as copyright, suggests that Turow and the others at the Authors Guild still don't even quite understand what they're arguing for.
Separately, it's disheartening to see Turow -- who really should be seeking out actual evidence -- dismiss anyone who has that evidence by writing them off as "a handful of law professors and other experts who have made careers of fashioning counterintuitive arguments holding that copyright impedes creativity and progress." First of all, it's not just "a handful," and these folks aren't just coming up with "counterintuitive theories," they're often looking at what the actual data says -- something Turow apparently refuses to do.
Paul Friedman, who isn't just a law professor, but also has a long history practicing law, has a nice response to Turow in which he cites the always entertaining Judge Alex Kozinski in warning folks of the dangers of overly fetishizing stronger intellectual property laws as something that must be good. What makes it even more amusing is that Kozinski uses Turow's most famous book to make his point.
That said, a growing percentage of the population is realizing that this obsession with "stronger copyrights must be good" makes less and less sense. And as the Authors Guild continues to have out-of-touch, fact-challenged people lead it, it's only going to serve to drive younger authors away from the Guild. Smart authors today recognize the maxim that obscurity is a much bigger threat than piracy, and many have come to figure out that piracy is nothing to fear if you have a smart business model.
If Turow and the Authors Guild really wanted to help authors, they'd focus on helping them understand new business models, rather than supporting ever more draconian laws that will do nothing to help and plenty to hurt.
by Mike Masnick
Wed, Jan 12th 2011 12:21pm
from the ny-times,-we're-looking-at-you dept
"We have north of 800,000 subscribers paying north of $700 a year for home delivery," Marzorati said. "Of course, they don't seem to know that."Of course, another explanation (which is much more favorable to the NY Times) is just one of general price inelasticity to a newspaper like the NY Times. If that's the case, where the price rises and most people keep subscribing, it suggests that most of those people continue to value the subscription more than the price, and the newspaper might even be able to get away with raising the price further. What's odd, however, is this assumption by Marzorati, that it's the general ignorance of their subscribers that keeps them in business. We're in an age when assuming ignorance on your customer base is a very dangerous position to be in.
As evidence that Times subscribers don't realize how much a subscription costs, he pointed to what happened when the paper raised its home-delivery price by 5 percent during the recession: Only 0.01 percent of subscribers canceled. "I think a lot of it has to do with the fact that they're literally not understanding what they're paying," he said. "That's the beauty of the credit card."
If the company's guy in charge of new media and strategic initiatives seems gleeful over ignorant readers, rather than focusing on ways to make sure they continue to get more value out of their subscription than they pay for it, it makes you wonder how long this sort of setup can really last. There are all sorts of ways that a publication with the reputation of the NY Times can make lots and lots of money. But betting on the ignorance of subscribers does not seem to be like the best overall strategy.