"Finally, a note about why we will not be concentrating very much on the fate of the New York Times. A remarkable amount of what has been written about the fortunes of American journalism over the past decade has centered on the question of what will happen to the Times. We believe this focus has been distracting.
"In the last generation, the Times has gone from being a great daily paper, in competition with several other such papers, to being a cultural institution of unique and global importance, even as those papers—the Washington Post, Chicago Tribune, Los Angeles Times, Miami Herald, among others—have shrunk their coverage and their ambitions. This puts the Times in a category of one. Any sentence that begins “Let’s take the New York Times as an example ...” is thus liable to explain or describe little about the rest of the landscape.
"The Times newsroom is a source of much interesting experimentation—data visualizations, novel partnerships, integration of blogs—and we have talked to many of our friends and colleagues there in an effort to learn from their experiences and make recommendations for other news organizations. However, because the Times is in a category of one, the choices its management can make, and the outcomes of those choices, are not illustrative or predictive for most other news organizations, large or small, old or new. We will therefore spend comparatively little time discussing its fate. While the Times serves as an inspiration for news organizations everywhere, it is less useful as a model or bellwether for other institutions."
I think that's a really valid point and fair observation but perhaps too simplified. Put another way, had the Times failed at creating a successful paywall then all others could be assumed to be doomed to failure. Now that the Times has proven it's successful, can others borrow some or all of their approach? The answer is partially in your quote above I suspect. Just whacking up a paywall is likely not the answer. However, using your deep resources (relative to other sites and bloggers) to create a superior experience can create a sustainable business. Just as the Internet threatened their traditional business it also dramatically increased their reach in other ways.
I think people are doing it a disservice by calling it a paywall. There is no wall. Bypassing it is trivial. What it is is an effective donation drive the likes of Wikipedia: You go to the site, you get the content for free, and you get a notice that says "hey, somebody has got to pay for this stuff you're reading, how 'bout you pay your share?"
An actual paywall would be a lot less likely to work, because when people get to a paywall, they can't see what they're supposed to be buying, so they just go away and never come back. By contrast, this "works" because it gives people what they want unconditionally and then having accepted it without paying, guilts them into making a donation. Nonprofits have been running on this model forever.
But the real question is whether it's actually "working" -- the conversion rate to paid subscribers is evidently around 2%. That's pretty bad. And then they call it a success because it makes up 50% of their revenue instead of 20% as was traditionally true, but is that because subscriptions are up or because print advertising has been falling for so long? They only quote the most recent rate of change rather than the long-term numbers, and there may be one of these going on: [http://xkcd.com/605/]. When you first open a new revenue model, you can pretty well expect the first couple of years to have a higher growth rate than the ensuing years. Once everyone is subscribed who wants to subscribe, you have a hard time achieving any more subscription growth. And if subscriptions stop growing faster than advertising is falling, they're right back into the death spiral of cutting costs to save money which reduces readership which loses revenue which induces cost cutting.
The porous New York Times paywall works because it effectively segments the market. 
The first segment consists of customers with a higher willingness to pay that aren't aware of the paywall workarounds or enjoy accessing the Times without futzing around. Who are these readers? Readers with high disposable income, older readers, and heavy readers.
The second segment consists of customers with a lower willingness to pay, who have identified the workarounds, and are willing to deal with the additional steps involved in bypassing the paywall. Who are these readers? Readers with lower disposable income, younger readers, and light readers.
The result of this segmentation is that the New York Times has been able to attract a significant number of online paying subscribers (segment 1), without decimating its overall readership figures (segment 1 + 2). By maintaining its overall readership figures, the New York Times has been able to preserve its online advertising revenue.
 Since the product is nearly the same for both segments, aside from the steps involved in bypassing the paywall, you might consider this as an example of price discrimination.
I never identified any workaround. In fact, I never even identified this paywall. I just have my browser set to throw away cookies on exit, except for a small whitelist of sites I want to stay logged in to (Opera can keep per-site preferences, but even before I found out about that feature, I preferred not to keep my cookies around forever). Assuming that's the "workaround", it appears that I have never read more than 10 NY Times articles per browser session, since they started doing this.
I also keep a rather extensive blocklist of URL-patterns I don't need my browser to load, ever. It took quite a while before I noticed (on a friend's computer, about 1.5y ago) that YouTube makes you watch ads before a video. I actually have no idea how that particular URL-pattern got into the blocklist, since I honestly hadn't seen those ads before. I suppose I was messing around with the webdev tool one day, noticed some resources that seemed unnecessary, I disabled them, videos continued to work fine, and forgot about it.
I realize this places me securely in the second segment, of course.
You're absolutely right, and it is related to the way in which disruptive innovation works.
Currently, the New York Times is to the news world what mainframe computers were to the computer world. People still pay money for mainframe computers, but only the people at the very top end of the market, given that a mainframe computer is feature rich and expensive.
Similarly, NYT is the most feature rich, extensive and wealthy masthead in the entire news world. People will continue paying for it in the same way that people pay for mainframe computers, but this doesn't mean they haven't been disrupted. The market for other news is far, far bigger and in the coming years will make NYT look like a drop in a vast ocean.
There was a recent NY Times story I took a look at. I didn't read it, only scrolled through it, but I was impressed at how immersive the experience was. It had full screen animated backgrounds that scrolled in, with beautiful white titles overlaying. It reminded me vaguely of a graphic novel, I wish I could find it again. It was something about mountains and snow, possibly some kind of rescue story.
I also wondered this. In this particular case, the story came out a good 10 months after the initial incident, so they clearly put some thought and time into it!
I have seen a lot of links/comments on that story in a wide variety of different communities, including those that are less traditionally interested in internet/multimedia design than HN, so it certainly did generate some good publicity for them.
If I were to hazard a guess, in this particular case the the 'expense' was mostly time(to interview everyone involved, write a riveting narrative, and produce graphics that tie in with the story as you read). I see this as the future of journalism - mixing in a variety of media and interactive elements with a story. In a sense it's already been done for quite some time, but this story really shows off what can be done.
I have a theory that big interactive pieces like that are Googleesque 20% time for the journalists and/or interactive folks that work there. I can't speak for the Times because, as another comment points out, they stand alone in journalism; however, every outfit I've ever worked at did not have enough hours in a day to pull off pieces like that with the workforce at employ.
There's at least one person from the digital side of the Times that contributes to Hacker News, the person that wrote the fantastic Emphasis. (I've been looking for a chance to use it.) Wonder if he'll -- forgive the ambiguity, I've forgotten his username -- show up in this thread and shed some light on our speculation.
There's a whole bunch of us (Times employees) who read/submit/comment on HN from time to time.
I didn't have anything to do with Snow Fall, but I did frequently walk past the people who were working on it late at night. We don't have anything formalized like 20% time, but these projects are definitely a labor of love.
Thanks for chipping in. You guys do absolutely great work, and I'm sorry that these discussions usually turn to avoiding paying your employer for that work.
I know a couple people that are getting picked up by newsrooms for "startuppey" digital lab work, data visualization, that kind of thing. Your publication is definitely setting the pace for the field at large these days, and it's a good thing.
Times might be attempting to build durable online content from time to time instead of the daily news stories that fade away quickly. Interesting durable online articles can last a long time on the web and will generate a lot more eyeballs down the road. One advantage the online media has that the paper media cannot replicate easily.
They can afford to put in a bit more expense in building an impressive article.
The paywall is extremely simple to bypass using Google as the referrer (just Google site:article URL and click over from it). They do the Google thing to avoid a potential cloaking penalty which would get them de-indexed altogether.
So the interesting part of all of this is that people choose not to bypass it and pay. The reminder that they need to pay alone seems to be working.
I think (and I have no professional knowledge) the pay wall is more about establishing the concept that the content is worth money. If you don't want to pay for it then you'll find ways around whatever NYT implements- it's not worth the effort.
As long as you establish that the content is worth money, a lot of people are more than happy to pay for it.
Exactly. Even if you're honoring the rule in the breach, you're still honoring it. An that, by itself, represents a major win for the NYT.
As time goes by and the unsustainability and injustice of the "all content should be free" mantra becomes widely recognized, a much clearer line between contet that is and is not worth paying for will crystallize—and with it, the social attitudes that work with or against payment for publishers, depending on the surrounding expectations.
The Times has done a solid job of positioning itself. Pity those that lack the resources an foresight to do the same.
In this case, I like the modern take, because it provides us with words for a real phenomenon. I dislike some other modern takes, such as the literal "beg the question", that deprive us of precise meaning (petitio principii, http://en.wikipedia.org/wiki/Begging_the_question ).
Or you know, maybe many readers of the Times want to support the great journalism that the paper produces, since they realize that without their subscriptions, the paper could not exist in its current form.
It's intentional, but not because of that. In order to be indexed, they have to show the content to google. It is against googles TOS to show them content and not display it to visitors referred by their index.
There's also a simple way to modify the URL once the paywall kicks in after you've viewed the total number of free articles for the month. Despite the workarounds, I'm still one of the people that pays for the content.
This article, and many other similar to it, completely miss the point. (Or perhaps, beg the question we are all waiting for an answer to).
I don't know if anyone ever debated the notion that paywalls will produce revenue, and it's great that the NYT earns more from its paywall than many industry analysts expected.
But the fact is, even at the revenue levels that it may produce in upcoming years, it still costs more to produce that content than people are willing to pay for it. This is the big hold-up with journalism. Even if people will spend a billion dollars a year purchasing your newspaper, if it costs you two billion dollars to produce it you're screwed.
The thing is that "begs the question" has such nice ring to it even when used incorrectly.
I'd say most people mean "the question remains..", "...fails to answer the initial question" or "...leaves the question X unanswered" when they say "...begs the question". Unfortunately, none of these more correct phrase have the same flourish. What to do...
Attention is being paid to this story in the news world because the NYT has a model to sustain their business. With recent announcements that Newsweek is going out of print and the publishing arm of News Corp lost $2B in the last year, the industry outlook is still bleak. Although the paywall success is good news in the short run, the NYT is not growing. They recently announced more staff cuts, their 2-yr EPS outlook is flat, and they have $0.7B in debt on a $1.2B market cap.
The NYT has existed for a sufficiently long enough time that they could not possibly have been losing money. Now, their revenue from subscriptions is apparently going up after than their revenue from advertisements is falling. Shouldn't that indicate that they are still cash flow positive? Alternatively, are you saying their costs are going up dramatically to compensate for this increase in revenue, and that, in fact, they are now losing money and will soon die?
So, to verify: you believe that the NYT has managed to go over 150 years in the red? Maybe propped up by an insanely large funding round, with an extremely low burn rate? austenallred's contention is that somehow the NYT costs more to produce than people are willing to pay, and that this is an endemic problem with journalism, not just some recent problem with a website (and, as I point out, it can't be, as with the website NYT's subscription revenue is up in over-compensation to the amount their advertising revenue is down).
No one is contending that the NYT has never generated a profit. It has been very, very successful on the past, however with the advent of the Internet came a lot of cheap and free content, making the average consumer less willing to pay for content, while simultaneously creating cheaper, more targeted avenues for advertising.
Nearly every newspaper in the United States sees that by switching to free, digital content, they only earn a small fraction of the revenue that they did from the more heavily based subscription model. The response to this was to erect "paywalls," or requiring a subscription at some point online, in order to recoup done of the lost revenue.
What we are finding (and the NYT is the 600-pound gorilla in journalism and arguably the most important case study) is that some people are willing to pay for access to digital content.
The problem, however, is that the cost to produce this digital content is currently still greater than the revenue it brings in. Yes, the New York Times loses money every year - it's publicly traded and its profit and loss statements are publicly available, so there's no assumptions being made; they are losing money. A lot of it. They're publicly traded and have a lot of retained earnings, so they can afford to do this for a while, but they are losing money every year nonetheless.
Can you justify this position? I ask because it contradicts the article, which is stating that all subscription revenue, being buffeted by the web subscriptions that now make up 12% of this, are making up for falling advertising revenue.
Hence why I specifically asked:
"""Alternatively, are you saying their costs are going up dramatically to compensate for this increase in revenue, and that, in fact, they are now losing money and will soon die?"""
Is your claim that the costs this content digital (developers, designers, etc.) are drastically higher than making physical papers(which are sufficiently expensive that papers normally take a loss on sales)?
One other possible option (although from the same "alternatively"): are you saying that the digital content is much more expansive, not by a little (the online blogs and image rolls) than the paper content that their costs went up?
I specifically left the outs regarding the costs increasing, and no one is arguing that: I got back a fairly useless "what?" followed by your argument that doesn't seem to be informed by the scant numbers in the article. :(
Obviously, though, you aren't going to do that, because you didn't even use the numbers from this article, so I went and pulled New York Time Company's SEC filings and some historical expense reports.
It is clear from their filings that 1) advertising revenues are decreasing, but not by much, 2) as the article states, circulation revenues are increasing enough to compensate, and 3) their costs have not increased in the last 4 years.
Why, then, do you make this assertion that their product costs more to make than to sell? Again: either 1) that means their income is down (it isn't, per the article), 2) they were never profitable in the first place (not true, by common sense), or 3) their costs are up.
#3 is the only plausible option, and neither the person I responded to not the responses to me are justifying that position, and it really doesn't seem justifiable from the data they release on their financials.
I work for a niche newspaper that also employs a paywall - in short, it works great for us. Used correctly, the concept works well for anyone who produces compelling content rather than simply regurgitating the content of others.
Looking forward, Google's attempt at replacing paywalls seems compelling and definitely a step in the right direction(I'd like to give away all of our content for free), but it needs to be refined. There is no guarantee the surveys will deliver accurate results.
While the porous nature of the paywall makes it pretty brilliant, I'm having a hard time actually hitting it at all.
See if you can reproduce this. Go to nytimes.com and just start clicking on different stories. After about 10 I got a little popup saying "This is your last free article of the month", but the next few articles still displayed with no problem, with the exception of a single full-page click-through ad at one point. Have clicked on about 50 articles now with no impediment. Pretty curious. Does it only count clicks coming from external sources? If so, why does it tell me that I'm on my "last free article" after clicking around for a bit?
Running Firefox on Linux, with no funny business except Ghostery, which I have configured to let ads through.
What's remarkable is the solution to the paywall is "cmd-L, cmd-C, cmd-shift-N, cmd-V, enter". This will get you through the paywall 100% of the time. Replace cmd with ctrl on a PC. I want a T-shirt that says this. I've tried to teach some less-tech-literate friends but they just can't remember the commands. They don't understand that just pasting the link into incognito mode in chrome or firefox will give them the content, so they pay.
How do I pay without providing my True Name? Unless anonymous digital payment becomes commonplace and widely understood, paywalls are one of the biggest threats to privacy. At least with the dead tree edition, they didn't know exactly which articles most interested any subscriber.
I can't answer for anonymity- to me that's a separate question. I'm referring to the spreading of information that I've trusted one seller with. For instance, I'll give the NYT my true name and email, but I don't want them to give that information to real-estate developers in FL because they've profiled me to be an old fart.
i have no problem paying. i have no problem that they pay. i am struck by how low the barrier is to not having to pay, but it still might as well be a 40 foot wall to the technically illiterate. my attitude is more one of marveling at how different non-technical and technical folks look at the world.
"marveling at how different non-technical and technical folks look at the world"
I've felt that way before, too. There are times I show someone something that is technically simple (to me) but, when I try to show it to someone, I see a glaze go over their eyes.
Part of the problem is that what I think is technically simple, really isn't because it requires background knowledge that I forget they don't have. Even if it's a basic technical knowledge that's lacking, it's still one more thing they need to learn before they learn this "simple" task I'm trying to show them.
Another issue is disinterest. If they really aren't interested in the solution, they won't give it much effort. In your case, people seem to be comfortable paying for the Times subscription, so they're probably not interested in learning about how to get around it.
Or simply by disabling cookies for the nytimes.com domain. And the fact that the paywall can be circumvented so easily is most definitely a feature -- it's brilliant customer segmentation
(edit: Because it allows students and tech-literate people to get to the content for free. So NYTimes content will do very well on social media sites, which in turn keeps the NYTimes relevant for younger people. Who will get a subscription when they graduate and become professionals.)
Wait.... this article makes no sense. So subscription revenues are going up, and subscription revenue as a percentage of total revenue is going up. That's great. But why is this an indication of success of the paywall? Seriously...
I don't understand your confusion. The only legit way around the pay wall (the pay) is to subscribe to the Times. Since the pay wall more people are subscribing to the online and dead tree versions of the paper. These extra subscribers pay money, which is more revenue for the Times.
Paywall limits access to people who pay (subscribers) => more people pay => Times gets more revenue. What's not to understand?
True, but unless Im mistaken there is an online only subscription, the sole purpose of which is admission past the Paywall. If nothing else, every dime generated from that is related to Times decision to sell an online product.
Additionally, in print media, subscriber revenue surpassing advertiser revenue is huge and not something that would be likely to happen without a successful digital product for a couple reasons.
Beyond that, yes, there's nothing here but correlation. However I think there is enough in the first two paragraphs to make a case.
As a former publishing professional, no - there isn't. If the article were to differentiate between online subscription revenue and print subscription revenue, and were to control for other factors that ALSO drive switch to subscription, then you could make the case that the paywall is "working."
You have to take into account the enormous amount of money the NYT is spending to advertise their paid online service. I've seen countless ads on television and other types of media. Anyone can build a subscriber base with that kind of ad blitz.
The question is, how long will these subscriptions take to pay for themselves, and will paid users stick around that long?
The fun part is that the paywall is extremely porous. There has never been a case that I could not access a nytimes content because of the paywall. Sadly their pricing is above what I would consider good value for money so I am not a converted subscriber yet.
I am glad that this is working model/experiment. To not alienate much of the eyeballs while putting effort to make the paying subscribers experience better.
So, I subscribed for a couple years, but cancelled six months ago when I left the country for a sojourn in Europe. I am returning to the States next week and I fully intend to re-subscribe to the Times.
I'm curious what price you would be willing to pay for access to all of the Times content.
Personally, I find that 15 USD a month is a fair price for an abundance of news that seems high quality (perhaps I've been duped?). There's all the multimedia, the arts section, the magazine, and, of course the news (both world and US).
Do you not enjoy as many sections as I do? Or do you share my interests but find 15 USD too steep a price for the content?
I also wonder, does means affect your choice? I recognize that the value of money is sometimes inversely related to how much you have.
I'm not interested in reading all of that the Times.
$15 per month is too much for a bunch of content that I'm mostly not interested in.
In theory I'm paying £200 per year for Wall Street Journal; £270 for Financial Times (standard, not premium); £117 for the Economist - well, these three are nearly $1,000 per year. Add in a UK daily paper (because that's where I live); and Private Eye, and something like Monocle and the costs are easily over $1,000 per year.
So, I gently write to newspapers and ask them to include tipjars on articles (so they know how much people actually value good writing); and I leave ads turned on but ask for single-article payment systems to allow me to view ad-free articles; and I hope that something gets done to implement micro-payments because it'd be awesome.
I don't want all of it. I want a couple of articles a week. Those articles are worth $0.50 at most to me; but probably much less. (I have no idea how much they'd get for ads for my view for any articles I want to read).
I mention those other journals because there is so much good journalism that buying all of it for a whole year is not practical for most people. People will pick and chose. At the moment they chose to include one paper for a year and exclude other papers for that year. But it'd be better if they could just pick and chose and pay for any individual article they wanted to read.
My price point is somewhat close to 4-5 USD per month. Since the only things that are really irreplaceable there for me are the Krugman, Collins and Dowd columns. For other stuff there are more tightly focused news outlets that serve my needs better.
Also I have never been fan of the subscription model when it is about consuming content and not providing service.
Agreed with this - all it checks is whether you've redirected from a NYTimes page to get to the article you're trying to get to, so it's very easy to spoof...
But I believe that NYT reporters are providing a pretty important public service, especially in this day and age of many "journalists" not taking the time to do more than parrot official talking points. Not saying the Times never does this, but they do have some of the better reporting in the industry in my experience.
When I step past a public lawn and it has a sign up saying "please don't step on the grass" my first thought is not "gee, this is an insult to my intelligence, they could have at least put up a fence."
The NYT paywall is meant to be a deterrent or an annoyance, not an iron curtain.
Nor is it my first thought. But, nobody's asking me to pay to use the lawn in that case, so I don't find it a particularly compelling analogy. If the sign said something like "Please pay $1 to use the lawn" I might find it similarly insulting, or at the very least, I would question the intelligence of the person who put it up.
The paywall is not much of a deterrent and circumventing it isn't terribly annoying, either. While I am sure there are plenty of people who pay for a subscription because they feel the content is worth the money, I would guess that there are far more who pay because they lack the computer literacy to know how to edit the address bar in their browser. I find it distasteful to make money off of others' ignorance, and i find it insulting because the success of the business model hinges on the hope that we are all that ignorant.
> I would guess that there are far more who pay because they lack the computer literacy to know how to edit the address bar in their browser.
It's probably a mixture of people that would cheat if they knew how and people who simply choose to be honest. It's hard to ascertain how big each of those categories is.
Compare the NYT with Adobe here. They both have lousy protection against piracy because they see piracy as the lowest tier in a price discrimination scheme. Poor student who can't pay? Sure, go ahead and circumvent whatever barriers we've put up. Can pay? Then do.
In any case, I don't find "if only people were smarter, they could cheat more" to be a very compelling argument.
Proof that paywalls are bullshit: "the company is expected to make more money from subscriptions than from advertising — the first time that’s happened."
In other words, they're charging so much, and the cost of digital distribution is so low, that they're making a ton of money from this paywall. They shouldn't be. Advertising should be the bigger source of revenue. It's like the government running at a massive surplus - time for a tax cut.
I don't see why that conclusion follows. It seems that they've found that people are more willing to pay to read their content than advertisers are willing to pay to have ads alongside the content. There is nothing wrong with that model if it works.
Where does this opinion come from? You wouldn't get in a taxi and say "you're making more money from customers than advertisers, stop overcharging me", what makes you think that with digital publishing advertising ought to bring in the most revenue?
This is an article glorifying one exception in a sea of rules. This article gives the false impression that a paywall is a good idea for news sites, (and perhaps some will extend this to any kind of site, pointing to the success of the NYT).
The NYT can rely on its name: we all know it's good, and its been around forever. Their target audience is the educated middle-upper-class. Many will pay, and they'll make money.
But very few existing news organizations could successfully implement a paywall, and zero new organizations could. The only really successful business model on the internet has been "freemium", and free, but ad-based: Google, Facebook, etc. So this one exception occurs; great. But I'm saying lets not all get excited and start suggesting that next tech startup launch with a paywall. "But the NYT did it successfully" will be their last words.
If that is working, then it is because they did a great job in content creation, not because of some fancy business strategy.
I was trying to subscribe to NYT months ago because a wonderful piece they did and I thought I should offer my share of respect. Unfortunately I tried with Paypal many times for about one hour and still couldn't get the payment through. Then I gave up.
A paywall can work for the same reason iTunes works. Most people aren't thieves and are willing to pay for quality things. In short, make something good and charge for it. That business model has worked for a long time and will continue to work for a long time.
The biggest "problem" is that it will be harder to build as many giant media companies around general news distribution. On the other hand, a bunch of smaller players will have a chance to flourish. A lot like modern digital music.
It's an interesting reflection on the Hacker News community that a not-insignificant portion of these comments are about circumventing the paywall. (I count 13 of 53 as I write this.) There are a number of conclusions to draw from that, some of them thin, some of them interesting, some of them depressing.
I pay $20/month to read the Times in bed on my iPad. I mean, it's five trips to Starbucks/Peet's/whatever, guys. The majority of you are programmers clearing high-five or even six figures for, in the grand scheme of things, easy work (not exactly breaking rocks, are we?). Don't forget, those of us who even know how to edit cookies or alter referrers are a small minority; the Times doesn't care if you bypass it because they know you will no matter what.
I don't think it's reasonable to consider that a stereotypical HN reader - after all, the discussion started with an observation of how many people apparently do not read a paid Times subscription, on an iPad or otherwise.
And I can only speak for myself when I say I consider Starbucks coffee prohibitively expensive. In that respect, the comparison is apt.
I think beyond anything else, it reflects a community which is interested in tinkering with systems and figuring out how they work. I don't think it's because the community is fundamentally interested in stealing access. Most people on HN are extremely well compensated (or could be, if they weren't doing a startup), and $20 isn't going to break the bank for most of us.
The interesting thing about the New York Time's paywall is that it, by design, bypasses itself. When you are reffered by sites like facebook, you do not hit the wall. This means that the majority of people hitting the paywall would got to the Time's directly, making the oppurtunity cost in terms of network effects much lower.