There has been a lot of virtual ink spilled on the topic of the NYT pay wall. Just visit Daring Fireball for a run down of some of the better comments on this.
The short of it is this, the pricing model is confusing and complicated, and subscribing to a print edition (either weekdays or Sunday only) will net you the full digital which costs more than your subscription per annum… (Some sort of tax on people that can’t do math?)
But we must assume that the Times business people can do math quite well. And this whole thing doesn’t make any sense until your remember one very important thing, ads in the print edition of the times are worth a hell of a lot more than the ones in the online edition, so anything that suppresses print subscriptions even a little cost them millions, and anything that pushes that up even a little grosses millions of dollars. Even if you throw the paper away, the NYT gets to count you in their circulation numbers they provide to advertisers. You are worth a lot of money as a print subscriber; that’s why they chase you like a jealous and clingy ex whenever you try to cancel your subscription. And you continue to be worth a lot of money until the print advertisers realize everyone is just throwing the paper in the recycling bin, un-read, along with the phonebook.
In other words, what if the Times doesn’t want anyone to subscribe to the digital edition? What if they want everyone that reads more than 20 articles a month to just subscribe to some form of the print paper? Even if you are just throwing that paper away, even counting the money it costs to deliver it to you, it drives up print circulation and thus print advertising revenue, and thus goes rather a long way to keeping them in business.
What if the millions they plan on making to recoup the supposed 40 + million bucks they spent developing this labyrinthine pay wall isn’t really going to come from digital subscribers at all (most of the math I’ve seen people do, even being rather nice about it, show that over the next 5+ years, the NYT will be lucky to break even on the investment, and probably will loose online advertising revenue in the process, making break even even harder). But instead will come from keeping print on life support for just that little bit longer. And keeping print alive and well just that little bit longer is worth hundreds of millions of dollars, not measly little tens of millions.
We’ve got to assume that of the 15% of visitors NYT thinks will hit the pay wall whatever percentage that are not going to just circumvent the pay wall are just those people that have been canceling subscriptions lately, are just those people that will know what the math is on that subscription, are just those people that will decide, what the heck, I’ll re-subscribe and if I read it I read it if not, it’s no loss, after all I get the digital for free, which I do read… (After all, my dad was thinking of canceling his 7 day a week NYT subscription and buying an iPad with the annual savings, and just reading the paper that way. Lots of people doing that is a massive financial hit, if the pay wall makes him and people like him decide to hold onto at least the Sunday paper, well the pay wall really is paying for itself… just not directly)
Now there is one very obvious problem, print is indeed on life support I won’t presume to estimate how much longer that is, but I’m guessing the relevance of print media will rival that of this years yellow pages by the end of the decade. Which is to say quite important to a very small number of people, and completely useless to everyone else. And as print continues to fade I imagine we will see the pay wall structure simplify and become more reasonably priced and streamlined. The’ve more or less come out and said the system was developed to be insanely flexible… But in the short term they cannot cannibalize the print paper, or they will basically go out of business overnight.
Print papers are fading, the Times subscription rates are dropping and coming up with convoluted plans like this one isn’t going to make people jump back on as paper subscribers in droves. Its going to convince people to get their news elsewhere. You have a lot of people who want to be able to read the times content on their digital devices, and they are willing to pay for it, but not at the levels the times is asking, and not with the complications they’ve put in place.
Here’s the nice graph showing how far out this pricing model is compared to everyone else.
http://theunderstatement.com/post/4019228737/digital-subscription-prices-visualized-aka-the-new
David, you’ve focused on the wrong part of the equation. What the Times has done is made it fiscally attractive for print subscribers to not go digital only. That alone is probably worth close to a billion dollars to the Times in the next few years.
True, but is that penny wise and pound foolish? (Ahhh, British sayings!)
Basically, I agree that after looking at this, it is a way to keep people from going digital only. But the Times still needs a plan for the digital only (or at least mostly digital only) future. Sure, this helps them now. But without some sort of idea of how they are going to make money with digital only subscribers, this is not going to help them at all.
Its the classic move of a company that has no idea how to revitalize their dying business: entrench on what is left of the old business, and don’t bother with the new. Its the opposite of Apple’s approach to things. Apple tries to see where the market is going, and sabotages their own products now rather then be left with a legacy product line that is going to cost them later. I don’t know how the TImes should do this. But from their recent moves, it seems obvious that the Times doesn’t have a clue how they should do this either. And that is worrying if one likes the product of the New York Times.
Yes, they make it less attractive to go digital only, meaning as they lose paper subscribers they aren’t picking up digital only subscribers. Great plan!
B. I’d agree that in the long run it might well be penny wise pound foolish. And the Times faces a massive problem. The more I was thinking about this the more the only way it seemed to make sense is as an effort to stop the hemorrhaging as it were. And move print people to digital at a high, premium brand, dollar amount.
If you look at the math, the Times is loosing print subscribers (especially when they started this project) at a rate that will put them out of business before they can successfully launch an new business plan. The first thing they have to do to stay a float is to keep the presses running long enough to make the transition to digital without going out of business first.
As an odd analogy, say you are walking in the forest and some how you break your leg so badly that it is going to need to be amputated. Even though you know for sure the leg is coming off in the woods you are going to try and splint it up and get out of the woods first. The problem for the Times is, they are also being chased by a bear.
There is also another thing to keep in mind, NYTimes is also positioning themselves as a premium brand in the digital news space. While their pricing structure is wonky, there are a lot of consumers that will pay more for it because it costs more.
David, you are mapping your thinking onto the thinking of those that subscribe to the paper edition of the Times. Which I think is quite likely to be completely wrong. You are simply a casual consumer of the Times website, and honestly that’s not worth that much to them or their advertisers. The Times is a premium brand, with a lot of premium ads for stuff you simply aren’t going to buy. The NYT did more market research on this before launching than any other company has, and they actually did it twice.
Times print subscribers tend to be fiercely loyal to the brand, think Apple people, these are people that are not going to go to Microsoft just because it’s a few dollars cheeper, afterall they can both afford it and want to project that the are Times people in the same way someone projects they are a Loui Vuitton person when they buy a hand bag that costs several times what it should. This move will delay a lot of their print subscribers going digital only. It will also get people that have gone full digital but are still fierce Times people to come back to print, or they’ll be willing to pay the digital subscription for the content that they want, at least for a while. The only way this makes sense if the Times thinks that will stop enough of the hemorrhaging that they can make the transition.
Lets do some math, there are four paper subscription types that the Times offers: Daily, Weekender, Sunday, and Weekday. The intro prices for these are: $7.40, $5.20, $3.75, $3.70. After 12 weeks these prices go up to: $14.80, $10.40, $7.50, $7.40. I’ll use the higher number even though you could probably hold onto that intro rate indefinitely by saying you’ll cancel if they up your rate. So per year that works out to: $769.60, $540.80, $390, $384.80. In contrast USA Today will charge you as little as $195.00 a year for their print paper. That’s equivalent to weekday NYT which costs nearly twice as much (in re David’s graphic). The Print WSJ costs $119.08 for your first year and $363.48 for subsequent years, and doesn’t come with digital. Digital for the first year is an extra $16.50 but jumps to $441.48 per annum after that. Again, this is all comparable to the NYT Weekday rate.
Now, NYT digital costs, per year: $195 (web+phone), $260 (web+tablet), $455 (the full monty).
We’ve already identified that the Times is the most expensive newspaper you can buy in this country (confining ourselves to general interest products). It stands to reason then that to preserve their brand they will be the most expensive digital paper as well. And yes David, up to twice as much. How much better do you really thing a Loui Vuitton bag is than Coach? People will in fact simply pay more for something that costs more and for no other reason it happens all the time and it’s how marketers make a living.
But the prices work out thusly.
If you are a full monty print subscriber, the new Digital subscription plan effectively means you pay an extra $315 to also get the paper in print. If you are a weekender it means the print weekend editions now cost you just $85.80 a year. That’s not bad, especially since I think a lot of people like the romantic idea of curling up with their paper on the weekends but would be just fine with the tablet edition through the week. Sunday subscribers, can get the Sunday paper free, plus about $65 a year. But then these are not the premium folks, so it’s probably more like pay an extra $130 or $195 a year and you get the Sunday edition. Weekday only folks, it’s fairly attractive to move to tablet only.
But here is the deal, the digital price structure is set up for people that consume a premium brand. And looking at the math, it’s set up in a way to get people that are already use to paying a crap load of money for the Times each year to transition from paying that money for a paper version to a digital version, at least psychologically if not actually.
For the time being the paper version is basically a bonus for these people, as time goes by I would guess the Times hopes to slowly move these people to the high price digital subscriptions and off the paper version, as they also move themselves off of the need for in print advertising to digital advertising.
But by being able to market that premium brand even more I would guess they hope to drive up the cost for the advertisements. I would presume their goal is to get the tablet adds up to a price point that is more comparable to a double spread in the print edition. An amount of money to which no digital ad can come close at the moment.
For my part? I might well resubscribe to the Sunday edition because of this, I’m not sure yet, but I like the crossword puzzles witch already cost $35 bucks a year digital only and I haven’t been able to tell if it comes with the other digital subscription, but it is free with paper. My wife and I can read whatever we want on the computer or the iPad, and occasionally we might have a lazy enough Sunday where we can sit and read the paper. And that’s exactly the kind of thinking the Times want’s people to have. The Content is the expensive part, the paper is a bonus, and eventually paying for the content only on the web will seem perfectly reasonable. (And the advertisers will want to get to those people willing to pay a premium and will pay a premium for that access. Also, using the print editions in just this way helps them navigate around Apple’s digital subscription rules a little. After all, they are offering a discount if you buy thorough them, but not directly, so they aren’t violating the rules… directly)
Looks like crosswords are still extra for digital only subscribers… Just incase anyone else cares…
Nothing wrong with being a premium brand and charging a premium price if people are willing to pay it, but from the decline in subscriber numbers it doesn’t look like people ARE as willing to pay it as they used to be.
And fine, if you want to push a digital rate thats higher than paper+digital on the assumption that paper subscribers cost less because they are subsidized by ads, fine, thats a possibility. However, when you start charging different rates to view the SAME CONTENT on a tablet vs a smartphone? Now you are making it harder on your potential customers. In addition your rates are leaps and bounds beyond what everyone else is charging (and being succesful at).
The Times has long charged double what others were charging for their print service, it isn’t particularly surprising that they would start as high as possible.
I agree with you that the three different price tiers thing is wonky they might change it they might not. But remember this isn’t being aimed at technophiles this is being aimed at your average Times paper subscriber.
I do get that the NYTimes is positioning itself as a premium brand, but this rate is just…crazy. I have very little belief that users are going to agree to pay more for just the NYTimes than it costs for getting both the WSJ and The Economist. Trying to hold onto the print subscribers for a handful of years — because, let’s be honest, the print edition as it exists now is not going to hold on for long — at the cost of alienating the digital only subscribers strikes me as a very poor long term strategy. The demographic pattern of the print subscribers will continue to age and decline, and the up and coming generations used to entirely digital information sources will likely not hold the same sort of romantic notions of curling up with a newspaper by a fire, Dane.
“this is being aimed at your average Times paper subscriber.”
So either the average subscriber isn’t interested in accessing the Times digitally (in which case it makes no sense to charge digital only subscriptions MORE) or they are interested and you are making it harder on them by having a tiered pricing scheme based solely on the size of the screen you plan to view it on.
Earlier you argued that these are likely affluent people, and frankly those affluent yet not technophile people are pretty likely to also be iPhone/iPad users too.
okay, let me make this simple because this is the same thing that bothers me about people that complain about their iPad and iPhone being a closed system and you can’t install whatever you want on it and yada yada yada. If you think the iOS concept is too closed don’t buy it. If you think the New York Times digital subscription is too expensive don’t buy it. If you say it’s too closed and then buy it anyway it wasn’t too closed, if you say it’s too expensive or convoluted but buy it anyway then it wasn’t either of those things.
Text messages seem insanely over priced for what they are. do people pay it anyway? yes. so are they really over priced? technically no.
If nobody is willing to pay the price the Times has picked, they will change the price. If enough people pay it they won’t. Just like if subscription based apps abandon the iOS ecosystem because 30% of subscription fees is to much to pay then Apple will lower the price.
The Times is banking on the their premium brand and trying to avoid sinking the presses too quickly. Because to be 100% clear, if the presses stopped tomorrow for the New York Times they would be out of business by the end of the month.
The future is digital and everyone knows it, the Times would like to be around for that future, and they can’t get there from here without he income from the print paper. It is simple math. So they can’t put in a digital subscription path that actively encourages the whole sale abandonment of print. And if making it fiscally sound to buy the paper version instead for some folks is a by product that nets more advertising revenue then that really is a win for them. If this means that people cancel print a little less frequently and go all digital a little more slowly over the next 5 years, this is a big win for them. A print subscriber is worth an order of magnitude or more more money than someone that casually browses the site or even subscribes, even with their new price structure.
You’re right Dane, no one should ever be critical of anything ever. How stupid I was to do that.
You’re right Dane, no one should ever be critical of anything ever. How stupid I was to do that.
Just for the record, I’m saving this for future use……….
I’m shocked I tell you, SHOCKED that gahrie intends to take something out of context and twist it to suit his own needs.
How can that sentence ever be out of context?
gahrie – #15 deserves classic status, too …
The question now becomes – will our resident davidkian go for a trifecta ?
Here’s a sentence for you Alasdair, and one you can use anytime you wish: Die in a fire.
I’m so glad the Left has followed through on their demands for more civility………
I’m not, per say, saying you shouldn’t criticize something. Simply pointing out that there are a lot of people that say Apple shouldn’t be doing XYZ with iOS the iPhone or whatever and then but it anyway and act surprised that Apple is doing XYZ. Either it’s a reason not to buy it or it isn’t. There are a number of things that bother me about the iOS ecosystem but I can’t say they make it unusable for me because that’s simply not true and all of the shortcomings I knew about when i bought the device in the first place. Me being annoyed by certain things does not make the business model inoperable unless or until it is sufficient to make me not want to buy the gizmo.
Likewise, the Times strategy, which my main point is you are looking only at one facet of their business and not how this integrates into the rest of their business and how those decisions may or may not impact the long term profitability of the entire company not just the digital subscription division. And correct me if I’m wrong, but the argument you and everyone else is making is that the business model is inoperable, not that it’s annoying. I won’t argue with you that it’s not annoying but I don’t think that it is necessarily strategically a bad move, again, when one considers how this impacts the rest of the business.
Mike, nobody reads by the fire anymore, just like very few people get to enjoy the “freedom of the open road” in their car (professional driver, closed track) that doesn’t stop marketers from using these romanticized notions to sell you stuff you don’t really need. The idea that you could or you might or whatever. Trust me, you can sell the Sunday paper on the nostalgic notion of a family sitting around a living room reading the paper together. Mom, apple pie, and Norman Rockwell, emotion sells things.
oh and david. #NewTone please…
Anyone want to start a pool on how long it will be before the Times asks the government for a bailout or subsidy?
gahrie and dcl – that *is* our resident davidkian’s “New Civility” …
gahrie #22 – and what leads you to believe that the Times hasn’t *already* asked for a bailout *and* a subsidy ? Either of ’em – LAT or NYT … the only one not likely to have asked for government help is the Washington Times …
If the NY Times wants to prevent their print subscribers from going digital, then why does the NY Times even HAVE a digital subscription?
LOL … good question.
Because giving it away for free really undercuts their print subscriptions and devalues the content? You could of course then ask why they have a website. But then, even the Times sees the writing on the wall for print. Seems more of an effort to buy a little time as anything else…
I never suggested giving it away for free. I’m saying,
If the NY Times:
1) Wants to set themselves up for digital media because they see the writing on the wall for print, then they should have a lower pricepoint on their digital subscription to attract a subscription base, build loyalty among internet readers, and secure their future in digital media.
2) Are trying to hold onto print subscribers, then they shouldn’t have a website that lets people access their full news stories. The website could allow people to sign up for the print edition, but it shouldn’t have full stories on there.
For either goal, the existence of an expensive digital subscription is completely unnecessary and only opens your organization for being mocked as “behind the times” or “not tech savvy.”
In short, they can “buy a little time” by not having full stories on their website for now. When they decide it’s time to jump ship to digital, THEN they can activate their website with a saner pricepoint and pricing model.