What the NYT Pay Wall Really Costs

The New York TimesFinally delivering on a long held promise, The New York Times announced yesterday that it would debut a ‘pay wall’ around its digital products, first immediately for users in Canada and then at the end of the month for the U.S. and other countries. This is the culmination of a process that began in the dark days of the so-called Great Recession; I remember first hearing of it while employed at The Times in late 2008, I believe. There was much debate about it the next year, and an exploratory team, including myself, began putting together plans for it in the summer of 2009. By the time I left my job there in July 2010, the project was still evolving, and lots and lots of work remained to be done.

Whether the pay wall succeeds or not is an open question and I won’t pretend to know the answer. To be completely frank I was never a proponent of this concept and it was among the reasons I decided to leave my job there last year. Now that it’s upon us I hope it does succeed, actually, because The Times generates tremendous value for the public good and it would be terrific if we could find a way to continue to reward its talented journalists and staff for their hard work. Still, I can’t help but look at the effort that went into constructing this new revenue model and think that it has exacted an unfortunate opportunity cost on the company.

What Could Have Been

Depending on when you mark the start of the pay wall effort, it took The Times roughly eighteen months to get to this point, where they have a viable, launchable new product. That’s a long time for any company, but it’s a painfully long time to spend on a product that’s really for an audience that isn’t growing. The people who will open their wallets and subscribe will be the hard-core Times loyalists, and it’s generally understood that those folks fall into an older demographic, and that there are fewer and fewer of them every year.

There’s nothing wrong with building products for that audience, of course. But the world doesn’t stop while The Times gets its books in order. Newer, younger audiences are growing up into a world where The New York Times is an afterthought, and they’re forming patterns of news consumption that barely incorporate The Times if at all.

Just think what else could have been done with the time and resources that the company devoted to the pay wall: entirely new news products could have been developed, products that could engage a wholly different kind of audience and expand the company’s reach by several orders of magnitude. Flipboard was born in roughly that same time span; The Daily, for all of its imperfections, was conceived and launched within less than half that time; Groupon skyrocketed to prominence and tremendous revenue in that time, and over the course of the past eighteen months any number of other information-based startups and new products debuted and captured the public’s imagination. It’s exactly those kinds of innovations that The Times has needed for a very long time, frankly, but by focusing on the pay wall for most of the recent past, they effectively paused on that front for a dangerously long spell.

Ghosts of TimesSelect

The effects of this decision probably won’t be seen in the immediate future, but the long-term damage to the brand may be significant. The amount of notoriety that this new endeavor will receive is sure to be tremendous, but all the subtleties — and complex mathematics — of this new pay model are likely to be lost on most news consumers. Its many rules and semantics are simply too complex to be communicated effectively, and what’s more the marketing tends to use blatantly tricky language (e.g., “$15 every four weeks” — just tell me what I have to pay, already). I’m willing to bet that what most people will understand about this new development is that now you have to pay to read The New York Times. Period. With that misunderstanding, it wouldn’t surprise me if users start staying away in droves.

I saw something like this effect in action just last fall, at a dinner party held by some friends here in New York. Some of the other guests happened to be well-educated, high-income residents of Manhattan’s Upper East Side; exactly the kind of demographic that forms loyal attachments to The New York Times brand and that the company values dearly. And yet these people were under the impression that The Times’ Opinion content — widely-read Times columnists like Maureen Dowd and David Brooks — was restricted online to everyone but subscribers.

What they were referring to of course was TimesSelect, an earlier attempt at a different kind of pay wall that restricted only a subset of The Times’ online content to subscribers. The company shuttered that effort in the fall of 2007, and yet there we were, three years later, living with its lasting effects: at least a handful of The Times’ prime customers were under the impression that The Times was not 100% free when in fact it unambiguously was.

What a shame, I thought then. Now I wonder what people are likely to think this time around, when it seems like the entirety of the site is subject to the pay wall, and all of the reasons why it’s actually not as bad as that are being communicated in such a convoluted fashion? Not only has the company missed an opportunity to build something for new audiences, but they may also be signaling an entirely counter-productive message to their existing audience, and in a very lasting way. I worry.

  1. I love the NYT-site, visit it multiple times every day, but this ‘pay wall’ model is just too much and will put me off…
    Why not go for a micro-payment model: show an excerpt of an article, with a (micro) price for reading the real thing and charge that?

    I don’t like subscriptions — magazines are not very consistent in quality like they used to be; I want to be able to opt out (which is a good thing for the publishers, because that IS a signal to improve).

    But the moment someone like Khoi or Gruber suggests I SHOULD read an article, I will, and I will pay a fair amount (and a kick back to the referrers is implied, of course).

  2. Khoi, please correct me if I’m wrong, but it seems to me that the pay wall is structured to subsidize an expensive product for a dying audience (the paper edition) by taxing a cheap product for a growing audience.

    I would gladly subscribe to the iPad app for the Daily’s 99б a week (or double or triple that). I think we all understand that it’s not “free” to create great content, but $35 for access to that content on the iPad is laughable, given the alternatives available via RSS.

    This model seems to me just a great way to inspire reposting services. As you say, loyal NYT subscribers will pay, but everyone else will probably either look elsewhere, share passwords, or game the system (e.g. How to Read The New York Times Online for Free). I don’t expect it’ll be long before someone simply comes up with a repost hack that works via RSS.

  3. “Just think what else could have been done with the time and resources that the company devoted to the pay wall: entirely new news products could have been developed, products that could engage a wholly different kind of audience and expand the company’s reach by several orders of magnitude.”

    I really like that and it got me thinking, should the NY Times created some side projects first?

    Not that Murdoch has come close to getting it right yet, but he has had the luxury to try out new methods without putting all of his eggs in one basket. The Times has tried different options from within the paper and now they’re trying this out with the entire publication. Do you think that it would have benefitted them to have maybe tried some different options with some smaller start ups like a Daily or something like that, or is it just a dead end no matter how you look at it?

  4. Jay: I actually think not a lot of people will go through the trouble of gaming the system. Only a very small subset of the user base is technically adept enough to figure out the intricacies of the wall. For the most part, I think people will turn pursue an even worse alternative: they just won’t read The New York Times.

    Tim: I absolutely think experimentation would have been a benefit to the company. To their credit, they have made a few efforts like News.me, and we’ll see where that goes, but they have the resources — and the need — to try and build their own ‘Times killer’ before the rest of the Internet does it for them, I would say.

  5. groupon? the times is supposed to innovate like groupon? the times has been producing journalism of the first order for a century. the way that journalism is delivered has changed, but good journalism hasn’t. I don’t want the times to invent new products that appeal to gen z, I want journalism of the first order. and what is confusing about 15 dollars for 4 weeks?

  6. Great post Khoi. My view on subscription models changes from week to week but what I’ll offer here is food for thought from my own personal perspective, at this point in time. On a much smaller scale but probably a shared experience with the majority of news sites that fall underneath a masthead.

    News websites were always an afterthought for most papers. They were free for users because the content was thin. They couldn’t offer what the paper offered simply because there were not enough resources to publish the content. Not enough resources because unfortunately display ads online didn’t bring in the revenue that the golden child did to justify new hires and technology. So the online business was carried by the paper. At the same time, the immediacy of the web couldn’t be ignored. Breaking stories could be published in minutes, long before a late edition could be sent to press. So the benefits were clear but still the business model couldn’t justify the need to spend money when they weren’t making money. So what we’re witnessing now, is free websites that repurpose paper articles and wire stories interspersed with breaking news. If you’re lucky maybe you can also see some video content, great interactives and photos not restricted to mono. My point is that maybe if online could generate enough revenue we could see just what the medium is truly capable of. More money would equal more resources, more content and a better product. Readers could still get the same news they always did free but if there was more to offer – then maybe there wouldn’t be an aversion to paid content. There’s a massive need for innovation in this space but sadly there’s never much time within an online newsroom to foster this kind of thinking. But I think that will change. The real challenge is in the marketing. Like you mentioned, the payment model is crucial. At least initially. The paywall strategy most likely has the scope to produce more content. It has to be communicated in a way for people to understand they’re getting more. Freewall was your free teaspoon of gelati. Paywall could be the whole scoop. (Pun not intended!) The younger generation may be consuming their news in other ways, but there will always be a need for authority on a subject and in-depth analysis. I think people will pay for quality regardless of their age and reading habits.

    I don’t know if subscription is the only answer, but it is an answer that could see online news stand on it’s own and offer more.

    I also could be completely wrong but regardless, it’s an interesting discussion as most news sites start to roll-out their game plans. I guess time will tell.

  7. I have never subscribed to the NYT, but growing up we always had it in the house. I know of its reputation, and i often read resposts on Twitter and other blog venues. For me, the option of subscribing online is almost more attractive than getting it free, and this is my reasoning. As I think Tara was sort of saying, when we pay for something we expect the quality to be worth what we’re paying, and when something is free, I frankly don’t care. I’m not terribly disapointed if the article is well written or even well researched, because I haven’t made any investment other than time, which i’m most likely trying to kill anyway. And, as Tara also pointed out, in the beginning of this it was hard copy newspapers that were supporting their web alternatives, and the web alternatives were pretty crappy.

    I would like to see the paper become the alternative to the web – being supported by the web-based version. By paying a subscription rate I am more committed to the brand, to the journalism, and I am more likely to read and take the content seriously. I am more likely to work to make the investment worthwhile. The subscriptions will hopefully bring in more real revenue for the journalists and improve content shared online. This is a great experiment, and I plan on becoming a first-time subscriber to the NYT with the advent of their web pay-wall.

  8. I love to read the NYT but to pay $20 every four weeks to read on the iPad is too high. Maybe $3-5 I might do.

  9. I was (briefly) a subscriber to the Times (of London) when it disappeared behind its pay wall. Although I now live in Australia, back in England I had been a regular reader for about 20 years.

    The main problem that I saw with the subscription model was that it almost forces you to find value in the journalism due to the financial cost you bear to access it. Alas, most of the value associated with journalism has been diluted by the plethora of ‘free’ journalism available online. I can only foresee this increasing in the future. Even if most newspapers resorted to a pay wall, there will always be a news desk somewhere happy to produce for ‘free’ and support itself via adverts, which, if we’re brutally honest is just how newspapers have been produced for decades.

    An allied but secondary problem was that having a paid vs free model also heightened an awareness of just how much journalism is recycled or traditional ‘filler’ content on slow news day. Nothing infuriated me more than reading syndicated press releases behind the pay wall. Not a huge amount can be done about this, and all publishers have to resort to it if the news is a bit thin otherwise, but it is very noticeable and hardly welcome.

    Positive points to draw were that the standard of comments went from sociopathic to readable once the pay wall was up and the lack of adverts was refreshing.

    After a month of two of subscribing I cancelled my subscription for a combination of the above reasons and a major technical deficiency (possibly) unique to the Times pay wall. This was the obfuscation technology required to run the pay wall meant there was four or five URL redirects every time you clicked a link as it checked your login status and subscription status before forwarding you to the requested story. If you’re competing with free, a 2-5 second delay with each link clicked just doesn’t cut it.

    Things that could improve a pay walled site to my eyes would include a much simpler – buy once, read anywhere rule. One magazine I subscribe to here in Australia – The Monthly – seems to have almost got it right. My magazine subscription entitles me to both a delivered magazine and an epub version.

    To conclude, nothing particularly original to report, but just my experiences of a similar pay wall technology.

  10. NYT is a dinosaur. Their backward market thinking has cost them the evolutionary step they needed to make and now it’s too late. They’re already dead; they just don’t know it yet.

    Nobody under 40 pays for news anymore. There are just too many sources available, and the top stories are just a news aggregator click away.

  11. “Just think what else could have been done with the time and resources that the company devoted to the pay wall…”

    Unfortunately, coming from someone who worked as a lead developer and architect for one of the giant media companies (Hearst Newspapers) I don’t think they would have been able to accomplish anything at all. I saw millions or dollars and month after month spent on failed ideas. Old world thinking applied to new world models that strangled the creativity, productivity and innovation from the projects. There just seems to be a fundamental disconnect between the people managing these companies and the real world. The real world seems to be passing them by at light speed and they’ll never catch up.

    They want so badly to have a revenue model that can sustain their dying industry but I think the truth is that they must innovate new products and find a new medium by which to deliver entertainment, and separate it out from the news that they have been delivering for decades. I find a scary trend in these pay wall schemes, as mentioned above, is for people to start looking for value in the journalism they are paying for. Often times this is interpreted as some sort of entertainment value, and what inadvertently happens is the quality of the journalism as a whole diminishes as the journalist start to write to satisfy their audience instead of bringing just the news.

    I think there’s still plenty of great models that could be implemented where the focus is on bringing together high quality journalism with relevant and targeted advertising that would appeal to both consumers and advertisers that would be a win for everyone involved.

    As sad as it is to say, none of this will happen until the elderly running these companies die off and a younger generation takes the reigns.

  12. All newspapers want the New York Times to succeed, only because they want to try a pay system themselves. As for me, I’ll stay away from the NYT. There’s the BBC, NPR and other great alternatives. Apple managed to pull off the iTunes store in a time paying for music was the last thing on the public’s mind. They did it by keeping a simple flat fee of 99 cents. You may remember how record companies openly protested the flat fee, and preferred the subscription models of Apple competitors. Those competitors bit the dust while iTunes is the authority in the music industry. The lesson to be learned here is, if your competition is free, keep it simple, keep it cheap, and make it accessible. Now ask yourself if the NYT pay wall is on the same track.

  13. Hmm. Over the past few months, I’ve sometimes encountered a message on the NYT site to the effect “you’ve reached your maximum number of free articles.” I’m a US-based reader, and I do have a print subscription, but the NYT site doesn’t acknowledge it. In turn, I seek out the articles I want on my iPhone or use a workaround to get to the same article, or just find a similar article elsewhere.

    I completely agree with your thoughts about this pay wall. I feel like I’m the sort of [younger, more tech savvy] demographic that the NYT should be courting, but I don’t feel courted. I feel a bit alienated by the changes. I would really appreciate more robust and exclusive online features if I’m to pay.

    For what it’s worth, the new Sunday Times Magazine really doesn’t take advantage of its format [print as opposed to online; long-form journalism as opposed to breaking news]. I’m really disappointed by the change.

  14. I would totally pay to subscribe, given how much I read it. But, BUT, the convoluted tiered cost-by-device quantity (I would cross between my Mac, Macbook Air, iPhone, and iPad) blows my mind and pisses me off. My device diversity-as well as my family’s-will only increase along with my animosity towards a scheme that ties subscription to device type.

  15. Another new product created in that 18 months was Google One Pass which seems much friendlier than the hefty fees Apple is going to charge for mobile content. If the NYT had worked something out with Google with regards to the Pay Wall they wouldn’t be going it alone. It would remain more seamlessly connected to the rest of the internet. I can say I’d be inclined to pay a subscription to a myriad of websites under One Pass just because it represents a greater movement of paying for access. But to put so much money investing into one publication, no matter how great, is out of step with the behavior of the majority of content consumers.

  16. Here’s the interesting thing: I’ve long been a Sunday-only subscriber because this rate entitled me to download the crossword puzzles. Plus there’s something about holding the Sunday paper in my hands that I can shake (even after they shrank the Times). As best I can tell, being a Sunday subscriber gets me ALL of the various digital editions behind the paywall and would appear to be about the best deal. For the princely sum of $360 per year (which I was paying anyway), I get the Sunday Times that I love, the iPad edition, the iPhone edition, and access to the website. All in all, we should pay for the things we care about, right?

  17. It’s simply too expensive. $15/4 weeks for web-only access isn’t something most people will be willing to spend. That’s more than a Netflix subscription, and Netflix gives you thousands of unlimited movies to choose from. Great as the New York Times is, it’s not more content than Netflix. It’s not even in the same ballpark.

    I would pay $30/year for a subscription to Times online. Even maybe $50/year. But $195/year? Give me a freaking break.

  18. $25 a year for a single subscription/login on any number of devices. $50 a year for a “family plan” under one roof.

    Paper subscribers get a free login as long as they’re paper subscribers.

    The fact that both the NY Times and The New Yorker have blown incredible opportunities to transition large numbers of devoted readers into into subscribers says worlds about how great content has no relation to great management and creativity on ways to share that content. It also adds to the idea that both institutions are run by “elitists” breathing way too much of their own exhaust and paranoid to the point of self-destruction.

    Keller’s remarks on aggregation say worlds about his closed minded and wrongheaded worldview on online content.

    I say this as a long time (40 years) New Yorker subscriber and a long time reader of The New York Times.

    This is clearly a failure of management, not editorial.

  19. There are some interesting thoughts here. Personally, while I agree there are problems with the subscription model and its marketing (I would like a cheap text- and smartphone-only option, which I’d then be able to supplement by the paper version of the newspaper whenever I wished) I will pay the subscription rate so I can access what I consider high quality and authoritative journalism. I personally am not looking for “brand experience”, but rather considered perspective, good writing, and professional journalism.

    I consider the subscription fee more of a donation to a product and endeavor I believe in. Comparing the New York Times to an aggregator reflects an absence of standards. Aggregators and blogs lack wide appeal as an authoritative voice (or in branding parlance, “equity”). The New York Times is still a city newspaper, and one of the few examples of a content source that globally transmits a sense of locality and place. Regardless of their problems in transitioning to a more transmedia age, NYT is still one of the best producers of content in the country.

    Echoing others on this thread, I think faulting NYTimes for not being a business incubator that creates a Groupon is really short-sighted and misses the point about what their offering is. That’s like asking Groupon to create a Pulitzer Prize-winning copywriter, and I don’t see that happening in the next 18 months.

  20. You’re commenting here about what you think is fair. I (and I think others) are commenting on what is realistic and what will work.

    The vast majority of people simply aren’t going to pay $200/year, which is close to the normal subscription rates for the New York Times, for web-only access. It’s more expensive than Netflix, about as expensive as buying a big screen TV, it’s just not a reasonable deal.

    If I want paper home delivery I expect to pay more since there’s printing and delivery costs involved. For electronic delivery, it just isn’t going to fly for me or for most people, in my opinion. Whether it is “fair” or not isn’t the point: I don’t think it will work.

  21. Your thoughts are spot on. It has always amazed me that despite getting a huge number of readers, the NY Times could not figure out how to make their online operations profitable. I wonder if they would have done better partnering with a company that knows how to make money with online advertising and ditching their internal ad group.

    Charging in a business where eyeballs are key seems to be a slow path to irrelevance. The Times’ web site isn’t just competing with other papers; it’s competing with Google, Yahoo, and Facebook for attention, and all of those would never dream of charging users because they have online advertising that works.

  22. Sometimes you need to just build/prototype, stick your neck out and get your work out in the world. All the talk/meetings usually only amount to more of the same.

    I will pay for quality. I expect, and receive mediocre or less for free.

  23. I think the NY Times will find that traffic will be down from all users, not just ones who reach the 20 article limit. First because people might get confused and think it costs money, as you said. But also because people who are planning to limit themselves to 20 articles will want to “conserve” their clicks for important stories that may happen later in the month. Why take a chance on an intriguing headline when it will cost you 1/20 of your NY Times article budget? What if there are major developments in Libya and you can’t read about them because you clicked on too many stupid style stories?

    Second, I used to read the opinion page online every day — it was one of the pages I mindlessly clicked on over and over when I was procrastinating. Then when TimesSelect happened, I got out of the habit of reading the columnists and never went back. I never actually thought about it until now, but that’s exactly what happened. I knew TimesSelect ended, but the habit was gone. The same thing may happen to the rest of the newspaper as people get into the habit of reading BBC News and the Washington Post instead of the Times.

  24. I was one of those people that didn’t realize the op-ed page was open again – I probably didn’t click on those links for a year after, because I assumed I would hit the login page. And when I did go back, I realized I didn’t miss David Brooks or Dowd. I had discovered more interesting bloggers to follow.

  25. I was nytimes junkie to say the least. I am a college student however (just the demographic they want!) and this system is just too expensive for me, there is no way I am going to pay all of that money when I have The Washington Post, BBC and The Daily Show to keep me informed for free.

  26. Ditto what others have said about old habits formed during the Times Select days dying hard. I’ve only recently started revisiting the Opinion section.

    I did want to stand up for people my age though (I’m 26); everyone I know is a devoted NYTimes reader, and countless dinner conversations have revolved around all of us reading the same article in the paper. Some of us even subscribe and loyally do the crossword as much as possible. We’re all perhaps over-educated and underemployed Brooklynites, but we’re out there!

  27. I found a site that provides a Twitter feed of the NYTimes TimesWire. At https://twitter.com/timeswiretap

    Now the Times has announced today that it will go after a different aggregator by asking Twitter to get rid of it for copyright infringement.

    But as the the foundation of the Internet is the use of hyperlinks, I don’t see how the NYTimes can expect Twitter to end what is the one of the best things about it, the provision of links to other sites.

    If the NYTimes doesn’t want to accept social media links, it should not have announced its intention to do so.

  28. Great to hear an insider’s take on the Pay Wall.

    I was slightly concerned until I lucked out: as a “heavy user,” I just won one of the Lincoln-sponsored subscriptions for 2011. Nice to know that people who read the NYTimes online sometimes get a break, even if the sponsored set-up applies to only 200,000 people.

  29. The NYTimes should develop Groupon, instead of developing a system so some folks actually pay for their product? What a non-idea. My standard response to a blog post now is… instead of spending all this time on this blog, why didn’t you just go invent Groupon?

    BTW, happy to pay $0.55 a day for a good newspaper. No big deal. Seems like the right amount – less than the newstand price, but NYTimes doesn’t have to pay for the printing.

  30. I subscribed to TimesSelect at the time. I value the times, and have no qualms about supporting it with my hard earned money. Also $50/yr for premium content was something that I could afford at the time. That said, Im not willing to pay anything for something. They actually invested $40million on this thing?? I agree with the Apple model: If you basically have fixed cost, and are more or less committed to it. Offer you product cheaply, at an easy to understand rate. A lot of business run this model an are successful at it. Apple (music) just being one of them.

  31. I love the Times but let’s see – $420 a year and I don’t get the Crosswords? Someone is living in a different Universe than I. $40 a year would get them 100 times the subscribers. Now they are set to go the way of Encyclopedia Brittanica – and all for naught. They could charge and be profitable. Are they truly this insulated from the reality of today’s digital economics? It’s as though they’re trying to protect their meager print base at the cost of alienating a potential billion subscribers world wide. Unbelievable. Really.

  32. Bye Bye NY Times
    I might be willing to pay what NYT wants to support access to a group of papers, but not for one paper – however good it is.
    To get away from the beltway mentality and get a better diversity of opinion, I have turned to Propublica, McClatchyDC, Der Spiegel, BBC, The Guardian, Haaretz and even Al Jazeera. Thus I cannot understand why anyone would pay NYT for on-line access.
    NYT management hubris is likely to shrink the paper to the point where Duncan Murdoch can buy it cheaply. Then by combining it with his on-line subscription to the Wall Street Journal he can make a big profit, and turn the NYT into a newspaper form of Fox News.

  33. What is most dissapointing is that there are mindless people out there, like you guys, who consider The Times good journalism or even fulfilling a public duty by publishing. I think you are nostalgic for an era of The Times that passed a dozen years ago or you simply subscribe to it because of desiring social status, without really caring for quality content and expertise. The truth is sadly that most ‘good content’ that The Times produces is medicore at best, contrary to the myth, the web has raised the standards of journalism in both quality and speed, ease of delivery as well as comfort of reading and The Times is falling behind. Another thing is you mistake the core target group of The Times: it is neither the Manhattan crowd nor the young tech addicts but aspirational middle and upper middle class folks on the coasts from The North East to down to Raleigh and from Seattle down to North California.

Thank you! Your remarks have been sent to Khoi.