

How the NYT paywall is working - senthil_rajasek
http://blogs.reuters.com/felix-salmon/2011/08/12/how-the-nyt-paywall-is-working/

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jeremymims
Newspapers have historically earned about 80% of their revenue from
advertisers and about 20% from subscriptions. However, newspapers typically
lose money on these subscriptions since the cost of producing and delivering
paper outstrips the revenue. It is advertising that subsidizes most of what
people think content and delivery costs.

\- The true unburdened cost of a yearly New York Times subscription in paper
is north of $1000. Advertisers cover 70-80% of this cost.

\- Uniques to nytimes.com are down approximately 20% since paywall
implementation. This wasn't supposed to be the case. A porous paywall should
lower pageviews but not uniques. This suggests that users are being trained to
assume that they cannot access the Times even when they can. This is certainly
a harbinger of a decline in influence.

\- Pageviews are down significantly as well.

\- Most of the nytimes digital subscribers are print subscriber dollars that
they've allocated to the digital product.

The problem is that newspapers with paywalls are now optimizing their business
to run on the 20% of revenue they never actually used to have instead of
advertising which has historically paid the bills.

While some may believe this is necessary, I think there are better solutions
(especially on the local newspaper level).

~~~
tsunamifury
I've worked with NYT.com on some of their pre-paywall strategies and have
several friends who work there currently.

All these points aside, the only significant issue is that Newspapers we're
propped up on an ad-based bubble that was based on keeping ad-buyers in the
dark.

Real-time analytics proved that advertising was not as effective as it was
sold to be, ad-buyers only had (relative to todays) made up metrics that
inflated the value.

Now when ad-buyers can see the true value of advertising through real metrics,
they are far less willing to pay top dollar for it. Rupert Murdock foresaw
this very clearly when he told the founders of Google "... you're going to
ruin this for everyone" in reference to allowing ad-buyers to see metrics and
bid on performance.

To make a very broad conclusion, marketing divisions were allowed larger
budgets when they could tell executives they 'took out full page add in the
New York Times' vs far less dramatic and less visible campaigns with targeted
online markets, conversions, and engagement ratios.

The market become less useful when the total audience of an ad turned out to
be far less than 100% of the distribution.

~~~
w1ntermute
That's a very grave statement. You're essentially saying that the entire
newspaper industry has been propped up on the basis of misinformation
regarding the effectiveness of advertising. While this was a lucky flaw that
allowed the Fourth Estate to remain afloat, it doesn't look like it'll last
much longer. We're really going to be fucked as a society if the journalism
industry falls apart.

~~~
podperson
Perhaps it's more of a transition.

In the old world we had centralized media -- paper is expensive, printing
presses are more expensive, typeset articles more expensive still, then
there's distribution, etc. -- so we need to optimizes the quality of the
material that gets printed and distributed.

Today you can set up a wordpress or blogspot account for free. So the question
is how do we get from a world of edited news written by professional
journalists to a new world where a lot of the content is provided more-or-less
for free, but we still need reliable places to go for news?

We have parasitic sites like Huffpost and Business Insider which essentially
SEO content created by professional news organizations -- what we need is
something that assembles equivalent stuff from citizen journalists, bloggers,
and so on.

~~~
w1ntermute
> a new world where a lot of the content is provided more-or-less for free,
> but we still need reliable places to go for news

That's a wonderful sentiment, one that I'd love to see come true. But until
someone can make it happen, we must consider the possibility that it cannot
happen.

I mean, just take a look at _The Verge_. They have an enormous amount of
accurate and in-depth tech coverage, both text- and video-based. They are far
and away better than just random bloggers posting gadget reviews - they have
actual lawyers explaining the Samsung v. Apple trial, and they create
wonderful video features[0] on niche communities that we'd never know about
otherwise. Even though their articles and videos are plastered with ads, I
just don't understand how they can become profitable, even in the long run. In
any case, they had to hire the best of the best in the online tech journalism
industry to build the site they have today.

0: [http://www.theverge.com/2012/8/8/3177438/cyborg-america-
bioh...](http://www.theverge.com/2012/8/8/3177438/cyborg-america-biohackers-
grinders-body-hackers)

~~~
podperson
I think that we're heading in that direction whether we like it or not. The
classic newspaper is in essence a "middleman" between writers and readers who
makes money by picking writers who will be popular and selling ad space.
Whether or not there are publishers or an audience, there will always be
writers -- it's the middleman who is being rendered unnecessary.

We're seeing the same phenomena in the music industry and television, and it
happened in radio long ago (which is why most radio content is completely
disposable, public radio being the exception).

What does the end-game look like? Probably something like Google News or the
App Store.

It's possible that entities such as the New Yorker or the NY Times or The
Economist can survive if they figure out how to switch from their middleman
model to a "make good stuff and sell it to people" model, but it's problematic
-- switching business models is very hard.

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gacba
That article is a year old.

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danielweber
Some people will try to steal anything, even if it's nailed down.

And some people will respect the sign that says "limit 1 free, otherwise
please drop $5 in this slot."

Sometimes you have to help the second group by not making them feel like
suckers, but they are a much easier group to rely on to pay your rent.

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btown
Has there ever been an industry-wide study of this? i.e. which/how many
startups saw increases in revenue/signups after putting more content behind a
paywall?

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h1srf
I pay for it and I think it's worth it for the quality of reporting.

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zwtaylor
If you delete the entirety of the URL past the ".html" on a blocked NYT
article you can bypass the paywall.

~~~
cheddarmint
Yep. I wonder if they track stats on how many people do that.

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SeanDav
WSJ and FT caster to a more exclusive and professional audience who generally
have to read their articles in order to stay current, therefore they can
easily have a subscription only business model.

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poblano
I think the explanation is much more simple: it's working because most people
aren't tech-savvy enough to figure out the loopholes and feel comfortable
using them on a regular basis.

Kind of an interesting form of freemium business model, actually...

~~~
potatolicious
I'm tech savvy enough to dodge the paywall, but I'm also a paying NYT
subscriber. I do it because traditional journalism has nearly completely
collapsed, and I don't want to see a world that's solely dominated by
TechCrunch, Engadget, Gizmodo-style, he-said-she-said bloggery.

In the last year I've made a concerted effort to subscribe to media sources
that have quality reporting and/or writing.

~~~
poblano
That's wonderful, truly noble -- seriously -- but you, OP, and people like you
are probably a very small group, at least compared to the masses of people who
are paying simply because they don't know how to jump the paywall (or find it
unpleasant to). If the paywall is "working", aka "making money for the NYT,"
it's mainly because of the techno-illiterates.

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djahng
One site, I think the LA Times, would show your the entire article but then
redirect you to their pay page after a few seconds. I just turned off
javascript and it solved that issue...

