Nytimes.com to require subscriptions

[Arthur Dent]

Starting March 28:

http://www.nytimes.com/2011/03/18/opinion/l18times.html

This is how it will work, and what it means for you:

• On NYTimes.com, you can view 20 articles each month at no charge (including slide shows, videos and other features). After 20 articles, we will ask you to become a digital subscriber, with full access to our site.

• On our smartphone and tablet apps, the Top News section will remain free of charge. For access to all other sections within the apps, we will ask you to become a digital subscriber.

• The Times is offering three digital subscription packages that allow you to choose from a variety of devices (computer, smartphone, tablet). More information about these plans is available at www.nytimes.com/access.

• Again, all New York Times home delivery subscribers will receive free access to NYTimes.com and to all content on our apps. If you are a home delivery subscriber, go to http://homedelivery.nytimes.com to sign up for free access.

• Readers who come to Times articles through links from search, blogs and social media like Facebook and Twitter will be able to read those articles, even if they have reached their monthly reading limit. For some search engines, users will have a daily limit of free links to Times articles.

• The home page at NYTimes.com and all section fronts will remain free to browse for all users at all times.

[JackofDiamonds]

I'll treat it like I treat Pandora. I'll use it up to its free limit, then I'll find my music/news elsewhere.

The NYT paywall has arrived: it’s going up in Canada today, and then worldwide on March 28. The most comprehensive source for the gritty details is this FAQ, which does things like explain the difference between an item and a pageview. (A slideshow or a multi-page article is one “item,” no matter how many slides it contains.)

The NYT has decided not to make the paywall very cheap and porous in the first instance as people get used to it. $15 for four weeks might be cheap compared to the cost of a print subscription, but $195 per year is still enough money to give readers pause and to drive them elsewhere. And similarly, 20 articles per month is lower than I would have expected at launch.

Rather than take full advantage of their ability to change the numbers over time, the NYT seems to have decided they’re going to launch at the kind of levels they want to see over the long term. Which is a bit weird. Instead, the NYT has sent out an email to its “loyal readers” that they’ll get “a special offer to save on our new digital subscriptions” come March 28. This seems upside-down to me: it’s the loyal readers who are most likely to pay premium rates for digital subscriptions, while everybody else is going to need a special offer to chivvy them along.

This paywall is anything but simple, with dozens of different variables for consumers to try to understand. Start with the price: the website is free, so long as you read fewer than 20 items per month, and so are the apps, so long as you confine yourself to the “Top News” section. You can also read articles for free by going in through a side door. Following links from Twitter or Facebook or Reuters.com should never be a problem, unless and until you try to navigate away from the item that was linked to.

Beyond that, $15 per four-week period gives you access to the website and also its smartphone app, while $20 gives you access to the website also its iPad app. But if you want to read the NYT on both your smartphone and your iPad, you’ll need to buy both digital subscriptions separately, and pay an eye-popping $35 every four weeks. That’s $455 a year.

The message being sent here is weird: that access to the website is worth nothing. Mathematically, if A+B=$15, A+C=$20, and A+B+C=$35, then A=$0.

Meanwhile, at least where I live in New York, a print subscription which gets you the newspaper only on Sundays costs $19.60 every four weeks — and it comes with free access to the web and tablet versions of the newspaper. Which creates the slightly odd proposition that if you want to use the NYT’s iPad app, you’re marginally better off subscribing to the print newspaper on Sundays and throwing it away unread than you are just subscribing to the app on its own.

The pricing structure is also a strong disincentive to use the iPad app at all, of course. If you’re already paying $15 every four weeks to have full access to the website, why on earth would you pay extra just to be able to read the paper on its own dedicated app rather than in Safari? I, for one, prefer the experience of reading nytimes.com on the web on my iPad, rather than reading an iPad app which has no search, no links, no archives, no social recommendations, etc etc. If the NYT wanted to kill any incentive to read and develop its iPad app, it’s going about it the right way.

What does all this mean for the New York Times Company? I can’t see how it’s good. The paywall is certainly being set high enough that a lot of regular readers will not subscribe. These are readers who would normally link to the NYT from their blogs, who would tweet NYT articles, who would post those articles on Facebook, and so on. As a result, not only will traffic from these readers decline, but so will all their referral traffic, too. The NYT makes more than $300 million a year in digital ad revenue, so even a modest decline in pageviews, relative to what the site could have generated sans paywall, can mean many millions of dollars foregone. On top of that, the paywall itself cost somewhere over $40 million to develop.

Against all that, how much revenue will the paywall bring in? A very large number of the paper’s most loyal readers are already print subscribers, and get access to the website at no extra cost. So the new revenues from the paywall will only come from people who read the website a lot but who don’t subscribe in print.

How many of those people are there? Emily Bell reckons that the number of people who’ll even hit the paywall in the first place is only about 5% of the NYT’s 33 million or so unique visitors. That’s 1.6 million people — compare the 1.3 million people who already subscribe to the paper on Sundays. The former is not a perfect superset of the latter, of course, but there’s a big overlap; let’s say that realistically the NYT is going after a universe of no more than 800,000 people that it’s going to ask to subscribe. And let’s be generous and say that 15% of them do so, paying an average of $200 per year apiece. That’s extra revenues of $24 million per year.

$24 million is a minuscule amount for the New York Times company as a whole; it’s dwarfed not only by total revenues but even by those total digital advertising revenues of more than $300 million a year. This is what counts as a major strategic move within the NYT?

As Ken Doctor notes, the Times Select fiasco, which was unceremoniously killed in 2007 to no one’s regret, was bringing in a good $10 million per year. This new paywall is much more elaborate and expensive, and it’s being introduced into a website which is currently something of a cash cow as regards ad revenues.

So by my back-of-the-envelope math, the paywall won’t even cover its own development costs for a good two years, and beyond that will never generate enough money to really make a difference to NYTCo revenues. Maybe that might change if the NYT breaks its promise to offer full website access for free to all print subscribers. But that decision would be fraught in all manner of other ways.

For the time being, though, I just can’t see how this move makes any kind of financial sense for the NYT. The upside is limited; the downside is that it ceases to be the paper of record for the world. Who would take that bet?

Update: Turning upside-down the conventional wisdom that consumers will only pay for financial information and porn, the NYT has decided that Dealbook will remain completely free, outside the paywall, at least for the time being. Which I guess explains why the Business and Dealbook sections are so clearly separated from each other online.

[Arthur Dent]

the paywall itself cost somewhere over $40 million to develop.

Say what?

[slide_into_first]

I can be lied to for free elsewhere.

[greenback44]

Meanwhile, at least where I live in New York, a print subscription which gets you the newspaper only on Sundays costs $19.60 every four weeks — and it comes with free access to the web and tablet versions of the newspaper. Which creates the slightly odd proposition that if you want to use the NYT’s iPad app, you’re marginally better off subscribing to the print newspaper on Sundays and throwing it away unread than you are just subscribing to the app on its own.

The pricing structure is also a strong disincentive to use the iPad app at all, of course. If you’re already paying $15 every four weeks to have full access to the website, why on earth would you pay extra just to be able to read the paper on its own dedicated app rather than in Safari? I, for one, prefer the experience of reading nytimes.com on the web on my iPad, rather than reading an iPad app which has no search, no links, no archives, no social recommendations, etc etc. If the NYT wanted to kill any incentive to read and develop its iPad app, it’s going about it the right way.

I don't know why Salmon has been quite so interested in NYT's paywall, but it sounds like he's put more thought into the process than NYT has.

[JackofDiamonds]

Meanwhile, at least where I live in New York, a print subscription which gets you the newspaper only on Sundays costs $19.60 every four weeks — and it comes with free access to the web and tablet versions of the newspaper. Which creates the slightly odd proposition that if you want to use the NYT’s iPad app, you’re marginally better off subscribing to the print newspaper on Sundays and throwing it away unread than you are just subscribing to the app on its own.

The pricing structure is also a strong disincentive to use the iPad app at all, of course. If you’re already paying $15 every four weeks to have full access to the website, why on earth would you pay extra just to be able to read the paper on its own dedicated app rather than in Safari? I, for one, prefer the experience of reading nytimes.com on the web on my iPad, rather than reading an iPad app which has no search, no links, no archives, no social recommendations, etc etc. If the NYT wanted to kill any incentive to read and develop its iPad app, it’s going about it the right way.

I don't know why Salmon has been quite so interested in NYT's paywall, but it sounds like he's put more thought into the process than NYT has.

I believe that's the point.

[greenback44]

Then maybe NYT should offer a bike lane subscription.

[Arthur Dent]

I'll treat it like I treat Pandora. I'll use it up to its free limit, then I'll find my music/news elsewhere.

I'm a fan of Pandora and happily started paying their tiny subscription fee ($36/year) before there were any restrictions on the free version. I read a ton of nytimes.com, but feel significantly less charitable about them; I might still be willing to pay as I've kind of considered getting a limited print subscription for some time now. The side door loophole seems crazy. I can already see a browser add-on that converts links on the site to twitterized versions to transparently bypass the paywall.

It's kind of annoying that it's the wealthy New York Times exploiting its pseudo-monopoly position as the national newspaper to extract money from web consumers. Professional local news gathering is what's really threatened by the web, and there's no way your local paper is going to get people to pay for their site.

Edit: And paywalls dramatically reduce the utility of websites. One of the major benefits of the internet is that it reduces the cost of copying/sharing information to $0. Paywalls destroy that. A good system for supporting journalism has to be one the preserves the benefits of the technology. (A similar piece of nonsense is going on with library editions of ebooks that self destruct after a certain number of checkouts.) I've always thought you could work out some kind of system on the model of public libraries (everyone pays for the library so the books are free).

[G. Keenan]

the paywall itself cost somewhere over $40 million to develop.

Say what?

I'm don't know how the NY Times went about developing their system but if the IT consultants I've met recently are any indication I'm not surprised it costs $40 million. These guys basically go to big companies where IT is necessary but that lack both the desire and in-house resources to develop systems themselves. Enter the IT consultants who take advantage of their naivete and bill the [expletive] out of them.

I'll use the NY Times for free for as long as I can get away with. If it starts to become annoying I'll probably break down and pay for it.

[heyzeus]

If I recall, salon.com once went behind a paywall with disastrous results, before giving it up. Granted, salon isn't exactly the Grey Lady. But I do wonder if online readership will drop to an extent that makes the loss of ad revenue greater than the revenue generated by the subscriptions.