Big Media To Innovative App Maker: Stop Innovating Without Our Permission!

Is The NYT Paywall Just A Ploy To Sell More Print Subscriptions?

from the or-are-they-just-crazy dept

Thu, Mar 31st 2011 7:46am — Marcus Carab

There are so many strange and problematic aspects of the New York Times' ersatz paywall plan that sometimes the big and obvious one doesn't get discussed enough: it's really really expensive. A year of full access on all devices comes out to $455 (or $421 if you count their paltry four-week introductory discount). That's more than the Wall Street Journal - way more. In fact it's more than a lot of things, as this chart by Michael DeGusta illustrates nicely:

But it gets even crazier when you compare that price tag to a New York Times print subscription. A year of weekday home delivery only costs $285 the first year, and $322 after that (with some variation by location). That's right: over $100 cheaper than a digital subscription - and a print subscription includes full digital access. Perhaps one of the economists who writes for the New York Times can correct me on this, but that doesn't make any goddamn sense. If you're going to charge $455 a year for a website, you better not tell me I can get the same thing plus a few hundred pounds of free kindling for two-thirds that. If I pay you $150, will you also mow my lawn?

I can think of only two explanations for this. One is that I am severely misinformed about the nature of the internet, and websites are in fact delivered to my computer by truck while system administrators dump barrels of ink in the sewer. The other is that, in the long run, the paywall is just a giant ploy to get their print subscriber numbers up. Some believe that the print prices are purposely obfuscated, but I think this is a temporary situation. I predict two things will happen before the year is out: readers who hit the paywall will start being greeted with home delivery offers alongside the digital packages, and digital subscribers will begin to receive offers to "add on" a print subscription at no "extra" charge.

If I'm right about the New York Times' motives, I'll be pretty disappointed. Their strategy is so confusing that everyone is having a hard time figuring out exactly what they hope to accomplish, but at least it seemed to be an acknowledgement that the economics of news distribution have changed (even if they reacted in an entirely backwards fashion). Now it is beginning to seem like nothing more than an attempt to prop up the same legacy model that has been holding them back this entire time.

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Filed Under: business models, paywall, print
Companies: ny times

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blaktron (profile), 31 Mar 2011 @ 7:57am

Hmmm
Can we trust an organization so irrationally managed to deliver us rational evaluation of other managers?
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Matthew (profile), 31 Mar 2011 @ 8:00am

Apparently...
Apparently the convenience of computer access is not a selling point, it's a premium feature.
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Dark Helmet (profile), 31 Mar 2011 @ 8:07am

A thought....
Is there anything behind the concept of aggregated value to the NYT in the form of dual readerships? Get the paper and the online for less, but that doubles "views" for advertisements since they can claim to get people looking at both? Would it then be worth it to the NYT to charge less for both because of the added benefit of double counting readers?
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coldbrew, 31 Mar 2011 @ 8:07am

When you take into account the fact that advertisers are willing to pay so much more for print ad placement it makes more sense. I wonder if there are studies that show the effectiveness of print ads is greater than that of digital ads.
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Spaceboy (profile), 31 Mar 2011 @ 8:11am

I predict that by the end of the year there will be a EULA published in the back of the NYT stating that if you pick up a discarded newspaper out of a trash bin or off the floor of a city bus, and read more than 10 items, then you are in violation and are stealing their content. However, if a friend hands you the paper when they are done with it then everything is okay.
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Marcus Carab (profile), 31 Mar 2011 @ 8:15am

Re: A thought....
I suppose that's possible, but I'm not sure it would make much sense... The focus must be increasing print numbers, since the paywall is obviously going to reduce their pageviews. The way the industry economics work right now, print readers are worth a lot more than digital readers - so I really think their goal is to "trade" some of the latter for the former. If their goal was just overall readership growth, they wouldn't put up a paywall since the numbers lost online are going to dwarf the numbers gained in print on a person-by-person basis.
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Garrett, 31 Mar 2011 @ 8:15am

My guess its more a consequence of a policy derived by the apocryphal suits sitting in a boardroom trying to manage a process they only assume they understand.

In talking about the wierd pricing (extra for phones and tablets) to my father he mentioned that it just sounded like a way to maximise profit by offering different levels of product. I think thats how the NYT views it as well. The website is the "Online NYT", the smartphone app is the "Mobile NYT", for the go-getters on the move!

What they refuse to realize is that they only have one product....information. And that now a "computer" doesn't need to be a large black box sitting on a desk.
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Capitalist Lion Tamer (profile), 31 Mar 2011 @ 8:17am

A few hundred pounds of free Kindles might be worth that...
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Marcus Carab (profile), 31 Mar 2011 @ 8:21am

Re:
It makes sense from a very short-term perspective (and that's assuming it works). But for a newspaper to truly revolutionize itself, it has to acknowledge that print revenue is going to play a smaller and smaller role. Denying that is just postponing the inevitable.

As far as the effectiveness of print/online ads, I think you are probably right when it comes to pure display advertising: a quarter-page ad in a newspaper is more effective than a leaderboard on a website. But digital presents all sorts of opportunities for more engaging and targeted advertising strategies, rather than the "cast a wide net, with some vague demographic adjustment" approach that rules print.

Google has demonstrated that innovative advertising which takes advantage of the strengths of digital can be a massive cash cow. Newspapers just need to figure out how that can work for them, because I'm entirely confident that it will. Where there are eyeballs, there is opportunity for profit - it just might take some creative thinking, and the guts move beyond the privileged stranglehold on distribution that newspapers have enjoyed for so long.
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lavi d (profile), 31 Mar 2011 @ 8:30am

FYI
...websites are in fact delivered to my computer by truck...

Email is delivered by truck.

The internet is delivered by a series of tubes.

(I thought everyone knew that)
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Brett (profile), 31 Mar 2011 @ 8:33am

Now it is beginning to seem like nothing more than an attempt to prop up the same legacy model that has been holding them back this entire time.

That's almost certainly what it is, particularly since they're likely figuring that online viewer numbers will drop with the meter. They can charge higher prices for advertisements in print, so they're trying to inflate their print numbers even if most of the new print subscribers throw the paper into the recycling bin upon delivery.
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Nina Paley (profile), 31 Mar 2011 @ 8:53am

Exactly
Mike, I haven't been following comments on all your posts lately (get me out of the spam filter!) but I assumed you already thought this. This is exactly the NYT's business plan; someone who works for the NYT told me this himself last week. They get by far the most advertising $$ for print ads, so their incentive is to sell as many print subscriptions as possible. That's it; that's all they want. More print subscriptions, so they can get more print ad revenue.
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Nina Paley (profile), 31 Mar 2011 @ 8:55am

and...
and of course they'll get the print advertising revenue whether people read the print version or just throw it directly into the recycling bin. It makes sense for them to send more print copies into peoples' homes, for the print circulation numbers.
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Michael, 31 Mar 2011 @ 9:06am

Re:
The problem with that theory is that they seem to hide all of this.

You are going to get a lot of people that buy the paper version because they want the paper version - and they will accidentally become digital subscribers (many who will not use it).

You are going to get a lot of people that didn't read all of this confusing stuff about the pricing and subscribe to the digital subscription because they are digital people and want it (and will probably pay again in ink and paper because lots of these twits will probably print the articles they want to read).

Then you will find the small number of people that want just the digital version, were not dissuaded by the cost, saw the cost of the paper version, saw that the paper version came with a digital subscription, and went "hmmm...since I already have a trash bin, that's the way to go". I don't think this will be a very big group. Who price shops their newspaper? If you are frugal enough to, and you want digital news, you probably get your news for free already.

This all stinks of a series of bad corporate decisions by people that do not understand technology - and have a very poor grasp on economics.
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Anonymous Coward, 31 Mar 2011 @ 9:13am

I have to wonder here Mike, are you upset because they are selling what people really value (the content) as opposed to some artificial scarcity like t-shirts or "personal time"?

I know it doesn't line up with what you like, but perhaps they have long since CwF, and thus there is always a reason to buy, even if it is attached to an older, more developed brand.
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HM, 31 Mar 2011 @ 9:15am

Re: FYI
only visionaries and genius can understand

http://en.wikipedia.org/wiki/Series_of_tubes
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Dark Helmet (profile), 31 Mar 2011 @ 9:19am

Re:
Mike didn't write the article there, genius...
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Michial Thompson, 31 Mar 2011 @ 9:32am

NYT's Paywall is their choice
little mikee;

I find it funny that you harp on NYT all the time, and all they are doing is making their own business choices. Right or Wrong it's their choices and their mistakes to make. I've never seen where your annimosity comes from towards them.

I especially love how you reference the $40 million it cost to create it, and seem to believe that the entire $40 million was spent on the java scripts for blocking access.

Most likely the $40 million was for a full system which included all the backend work for the reporters to publish/update to the wall, all the stuff to manage any advertising, all the user access and billing modules, maybe the hardware for hosting and so on and on and on. $40 million sounds about on par for what a big company like NYT would spend.

Sure the actual coding probably cost far below $500k in India somewhere, but the entire project, all the labor, all the meetings, all the research, all the design etc woudl total out somewhere near there.

One of my competitors claims to have spent $1.5 million developing a software product to compete against mine. I initially laughed at the number because I run my entire company on far below that number. I was talking to a CPA friend of mine and joked about it, and he took the time to actually show how my own product's real world development cost would probably be close to if not much higher than that $1.5 million had I not provided all the labor myself without paying myself.

It's easy for people to quickly dismiss software as being cheap or free to sell, and when it is strictly a hobby it's true, it is cheap/free to work with. BUT you cannot build a business, and expect that your time is free.

I have more than 10k hours invested in programming in my products, with about 3k of those hours being invested before I even started my business. Most of my friends look at the prices I charge for a new customer installation, and freak at a $20-50k installation cost because "it's just software" and "you already owned it" and "it only costs a few pennies to burn a CD" and so on and on.

I turn around and simply ask if they would do their jobs if they didn't get a paycheck? When they say "of course not" then I ask then why should I work for free? The time I invested into starting the company is just as valuable to me as my time now. I invested the time with the expectation that I would be paid for it in the future.

I have a potential maximum customer base of around 3800 customers nationwide, I must consider the fact that I will NEVER have 100% of the market so I have to somehow spread the cost over what I expect to receive in market share. Then I have to figure in the cost of time and efforts and investments to keep doing a good job and to maintain those customers and so on.

Software distribution is cheap, but software creation is no where near cheap. If you disregard the cost of development when you look at sales and distribution you will NEVER have a business model that lasts long term. Development is only free as long as your company is small enough that only you are developing. Once you hire someone to do development your costs before going to market far exceed the costs of distribution, sales and even long term maintenance.

For you to claim you have multiple financial and echonimic related degrees, these should have been the first things you were taught.

You have asked me in the past why I insist on calling you "little mikee," and the facts are you disrespect myself and every legitimate business owner and serious content creator by your insistance that our costs to get a product to market is irrelivant. You disrespect all of us by claiming that we should find "alternative business models" to make money because the digital age makes our costs negligible. You disrespect all of us by trying to force your entitlement ways on us and force us to give our work away for free.

I am in the software business, Hawking t-shirts and coffee mugs and stationary and posters will NEVER sustain the costs of my primary business of software development. I do work in the SAAS world, so I DO live and die by the quality of both my software, and my support after the sale. BUT I do NOT need to give my software away, or allow ever pirate out there take it and do whatever they want with it.

My edge in the market is a combination of the Quality of my SOFTWARE and my Service. My customers do make their decissions based on price and service, but in most cases in todays echonomy price the higher priority. If I allowed anyone to copy my product and build a business model around my product I would be out of business in months, no matter how good my service was.
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Ben Buchwalter, 31 Mar 2011 @ 9:33am

I'm all for free access to news. But I think it makes sense that the NYTimes would want to sell more subscriptions. Depicting this as a "ploy" makes this seem like a sinister endeavor when its really just an attempt at a business strategy.

That said, I hope they go back to free access soon!
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Ben Buchwalter, 31 Mar 2011 @ 9:33am

I'm all for free access to news. But I think it makes sense that the NYTimes would want to sell more subscriptions. Depicting this as a "ploy" makes this seem like a sinister endeavor when its really just an attempt at a business strategy.

That said, I hope they go back to free access soon!
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sta303 (profile), 31 Mar 2011 @ 9:39am

Re:
Advertising is one of the most researched fields; there are a gazillion studies. Pricing for advertisements is a science all to itself. A company's marketing budget isn't spent based on whim and fancy. I would much rather place an advert in the print version of the NYT than on her web site. If they can drive print subscription numbers with this paywall, they will have done well. I have no doubt that driving subs to print was a major consideration when defining the structure of the paywall. My hats off to them. I, for one, took the bait. I get a free copy mon to fri at the office. I now subscribe to the Sunday to get the paper and access to the web site. I had cancelled the sunday over a year ago to save a tree. Now I will save a couple of dollars.
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Marcus Carab (profile), 31 Mar 2011 @ 9:45am

Re: NYT's Paywall is their choice
That's a great story and all, but a few things:

1) I'm not Mike - might want to check that before launching into a page-long tirade

2) The business decisions absolutely are theirs to make. And they are ours to criticize when they don't make sense. I love newspapers - I work at a newspaper - I want to see them succeed. I think this move will hurt the new york times more than it helps it, so I point that out in the hopes of spurring more discussion and playing my own (extremely tiny) role in shaping the future of the industry.

3) Yeah, sometimes I'm hard on them, and I crack jokes, or question their sanity. That's because they are a company in the public eye that has developed a very weird plan that is confusing a lot of people. I'm sure the NYT is strong enough to withstand a couple of critical jokes.

4) Nobody actually believes the $40-million was spent entirely on JavaScript - that's another joke (we like those here on Earth). Nonetheless, it seems like a lot of money to spend on something that is unlikely to bring in anywhere near that much revenue. If you believe the paywall is worth $40-million in development, fine - but from a pure business perspective, it's pretty hard to see how it is possibly worth that much.

5) Nobody tries to force anything on anyone. Techdirt tries to help businesses make more money by explaining what they think is an effective strategy and explaining why that strategy makes sense. If you feel disrespected, it's probably because you are obsolete.

6) If you still can't get beyond the "t-shirts and coffee mugs" mentality then you have really failed to grasp the entire concept of selling scarcity. Nobody said kitschy merchandise is the only option (though in certain industries it happens to be a highly effective option). In fact the CORE POINT of "CwF+RtB" is to not just copy what has worked for someone else, and figure out what works for you and your customers.
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Marcus Carab (profile), 31 Mar 2011 @ 9:53am

Re:
I only call it a "ploy" because, for the time being, they are not making it obvious that the print prices are lower, nor has any NYT representative mentioned that in any of their discussions about strategy. Their PR communications would have us believe that this is their attempt to revolutionize digital news and has nothing to do with the print side.

I also call it a ploy because there is some inherent dishonesty. Emblazoned on their access page is "ALL DIGITAL ACCESS - BEST VALUE" when in fact it's not the best value at all, it's a significantly worse deal than becoming a print subscriber.
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Marcus Carab (profile), 31 Mar 2011 @ 9:54am

Re: Re:
(that last part being the thing I think will change - print prices WILL start showing up on that access page, probably shortly after the intense media coverage of their paywall has died down a bit)
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blaktron (profile), 31 Mar 2011 @ 9:55am

Re: Re: NYT's Paywall is their choice
To this point, he mentions SAAS (Software as a Service to those that dont know), which is ALREADY CwF+RtB. You arent just selling the product, but managing that product in a customized fashion for your customer to give them EXACTLY what they need. Thats good, and exactly what Techdirt is about. Thats not what the NYTimes is offering. If as part of that 455 / yr cost you received additional access to round table discussions etc (ie: An NYTimes premium forum account) or whatever, i imagine that would be a worthwhile expenditure for some people, especially bloggers.

Marcus is right, Michial. You created a straw man and couldnt even blow id down.
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HM, 31 Mar 2011 @ 9:58am

Re: Re:
He would have to read to figure that out which would interfere with his ability to find new ways to say the same thing over and over again
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Anonymous Coward, 31 Mar 2011 @ 10:08am

Re: Re: NYT's Paywall is their choice
5) Nobody tries to force anything on anyone. Techdirt tries to help businesses make more money by explaining what they think is an effective strategy and explaining why that strategy makes sense. If you feel disrespected, it's probably because you are obsolete.

There is the Techdirt attitude we know and love. "No, sweetheart, I hit you because I love you and I want to help you to be a better person!"
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wnyght (profile), 31 Mar 2011 @ 10:16am

"Their strategy is so confusing that everyone is having a hard time figuring out exactly what they hope to accomplish"

I tend to wonder if the NYT even knows what it's trying to accomplish.
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Tim H, 31 Mar 2011 @ 10:24am

They are treating their digital content as value-added to their print material, which is completely backwards. Regardless of which medium brings in more money today, ultimately the best strategy is going to be the one that gives the consumer the best value for the product they want to consume. For the NYTimes, that is and will continue to be digital content.

The longer they incentivize consumers to purchase print news when they really only want the digital access, the more likely this "strategy" will fail.
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Brad, 31 Mar 2011 @ 10:26am

Realistic Pricing
I was just curious why no one has challenged the implication that $455 is the sole price. Perhaps I am reading an implication where none exists, but it seems irresponsible to report that the price is $455 when the basic subscription for computer and smartphone access is only $180.

While I think certain elements of the decision are odd or even arbitrary--why differentiate tablet and cell phone readership at different tiers--I'm also curious to see if it will work, and part of me sincerely hopes it does. Good, in-depth investigative journalism requires significant resources, and I would hate to see that go away. There are very few papers left with the resources and structure to support that kind of reporting. I'd like to see them stick around and keep doing such reporting.
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Marcus Carab (profile), 31 Mar 2011 @ 10:32am

Re: Realistic Pricing
Personally I refuse to consider their prices below the top one, because the fact that those tiers exist is ridiculous. Full access is the only access that counts, and all the prices compared in that graph are for full access across devices as well.

The middle tier comes out to about the same as a print subscription. Only the lowest tier is cheaper. And frankly, the fact that these prices are even in the same ballpark is ridiculous. Newspapers are printed on giant rolls of paper with gallons of ink, using building-sized industrial equipment operated by multiple trained technicians, then loaded into trucks and driven all over the country. Pricing a website at the same level is, frankly, insulting to the consumer.
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Fabio, 31 Mar 2011 @ 10:43am

NYT
Leave the NYT alone. Cant you wait 6 months for the result and post about it when there's anything to post about? Why do you have to make one or more posts about the NYT every day ? I like techDirt, but this subject is getting old fast because you just cant let go.
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bob, 31 Mar 2011 @ 10:52am

bogus chart
The subscription price is $15/month not $495/year. Michael de Gusta is obviously in the same free-man-creator-hater club as you because he's butchered the truth by comparing a cadillac plan from the NYT with the Chevy plans from others.

First off, Netflix continues to lose films from their direct download option because the content companies can't afford to take part any longer. If you want the newer stuff-- the kind of content that the NYT includes in their plan-- you've got to get DVDs. And if you want to have a decent stream, you need to get three or more. Remember you want to be able to watch on three devices simulataneously. That pushes the price well above $20/month. And Netflix doesn't serve the newest content. That requires pay-per-view which is much more expensive.

I could go on and on. Most people who buy cable get monthly bills well above $50-70 and they often pay more if they want to watch on three screens separately. But old deGusta doesn't include that option on purpose because that would make the NYT look cheap.

Software? It's easy to buy two or three things on your iPad and spend more than $15 a month. But again, he only wants to compare it with online backup services. Geez, why doesn't he compare it to grains of rice. That will make the NYT look infinitely expensive.
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bob, 31 Mar 2011 @ 10:55am

Re: Re: Realistic Pricing
Actually Marcus, delivery is the cheapest part of the equation. Creating the content is the most expensive. And while industrial presses aren't cheap, neither are programmers.
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Ben Buchwalter, 31 Mar 2011 @ 10:57am

Re: Re:
Very good point about the "ALL DIGITAL ACCESS - BEST VALUE." They should make it more clear that a print subscription is less expensive and comes with digital.
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bob, 31 Mar 2011 @ 10:58am

Re: Realistic Pricing
Why hasn't any challenged it? Most people have better things to do with their time. Every once and a bit I take a few minutes to contribute a bit and I'm invariably insulted and called a "troll." But I think it's important to add a few new notes to the echo chamber just to make everyone aware that Mike is not the only opinion in this world.
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bob, 31 Mar 2011 @ 11:01am

Re: NYT
It is surprising. It's like those old movies where the characters slag each other off and then end up marrying at the end. I wonder what would happen if the NYT offered to hire him?
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Marcus Carab (profile), 31 Mar 2011 @ 11:03am

Re: Re: Re: Realistic Pricing
Actually Marcus, delivery is the cheapest part of the equation

Ummmm, no, it's not. It's actually pretty funny that you would attempt to claim that.

And while industrial presses aren't cheap, neither are programmers.

The cost of the necessary infrastructure to deliver news digitally is only a tiny fraction of the cost to deliver it physically. Are you really trying to deny that?
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bob, 31 Mar 2011 @ 11:05am

having reporters in libya is a scarce commodity
It's just not the scarce commodity that you want.

So tell us. What should they be selling if it's not t-shirts and coffee mugs? What is the scarce commodity? Personally I'm happy to pay for the news because that's what I want. But you want them to give that away for free and sell soemthing else. What is that something else?
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Marcus Carab (profile), 31 Mar 2011 @ 11:09am

Re: having reporters in libya is a scarce commodity
You have it all backwards. You think that a newspaper's clients are its readers. That is not true. Readers are the scarcity that is being sold - to advertisers.

You are aware that newsstand and subscription prices do not, and have never, covered the cost of producing and delivering the news, right? Advertising is and always has been the lifeblood of the industry. Eyeballs are the product, advertisers are the client.
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Anonymous Coward, 31 Mar 2011 @ 11:10am

Re: Re: Realistic Pricing
Marcus, I think we can safely say that, once again, you tried too hard to make a point, and didn't check the numbers.

At $15 a month for "cross platform web access", the NYT online is sitting at $180 a year. That is right in line with other players.

If you want consider the print version as "part of the deal", you would first have to consider the different newsstand prices, as well as number of distribution days and such to really figure out what is going on.

I think you are trying to make excuses for the fact that the numbers presented are misleading, a hard slam against the NYT when it isn't merited.

Don't you have a real job for another newspaper? Could it be that you are trying to save your own job by making the competition look bad?
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Marcus Carab (profile), 31 Mar 2011 @ 11:17am

Re: Re: Re: Realistic Pricing
I think you should work on checking your own numbers. For example, it's actually $195 a year for that package (the monthly fee is for four-week increments, so you have to multiply by 13). See, I actually DID go over these numbers in great detail, catching all sorts of errors like that being made on other blogs and correcting them. Nice try though.

And that package is not truly "cross-platform" because it blocks their native iPad app, which in my mind is indefensible and ridiculous, so I made the conscious decision to ignore that number and focus on the only one that matters (and the only one that should exist): the price of true full access.
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Anonymous Coward, 31 Mar 2011 @ 11:30am

Re: Re: Re: NYT's Paywall is their choice
How is explaining something the same as physically hitting them? Are you that dumb?
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blaktron (profile), 31 Mar 2011 @ 11:49am

Re: bogus chart
Ok, so you've touched on inane pricing schemes from other industries to support the inane pricing scheme of this one? Netflix offers everything and more for 8.99 a month, INCLUDING dvds.

Also about netflix losing streams? Source please? All I see is an ever-increasing number of studios clamoring to keep their content relevant by putting it up on netflix:

http://netflix.mediaroom.com/
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Any Mouse (profile), 31 Mar 2011 @ 11:49am

Re: bogus chart
'The subscription price is $15/month not $495/year. Michael de Gusta is obviously in the same free-man-creator-hater club as you because he's butchered the truth by comparing a cadillac plan from the NYT with the Chevy plans from others. '

You failed to realize that all plans listed are the most expensive ones, not the cheapest. The $15/mth is only for web and mobile app. It's another $20 for iPad.
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Ben (profile), 31 Mar 2011 @ 11:54am

Re:
Their right to sell it (or profit from their labour) is not in doubt.

What's in doubt is the stupid way they're packaging their offerings
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Ben (profile), 31 Mar 2011 @ 11:56am

Re: NYT's Paywall is their choice
TL:DR
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Ben (profile), 31 Mar 2011 @ 11:57am

Re: Re: Re: Re: NYT's Paywall is their choice
Maybe. Ask if he equates copyright with theft
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Nom du Clavier (profile), 31 Mar 2011 @ 11:59am

Re: Apparently...
That or they ask $100 for the convenience of not having to throw tons of paper out.
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Ben (profile), 31 Mar 2011 @ 12:01pm

Re: bogus chart
" the content companies can't afford to take part any longer"

How the hell does it cost them money to take part? Or are you implying that taking part costs them (expensive physical media) sales they would have made were their product not available to (cheaply) stream
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Anonymous Coward, 31 Mar 2011 @ 12:03pm

Re: NYT's Paywall is their choice
You're litterasie skilzz asstowned me!
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coldbrew, 31 Mar 2011 @ 12:03pm

Re: Re:
I agree that Google has shown great ways to innovate on advertising. I also think Groupon has done a great job in popularizing the idea that one can subscribe to a feed of relevant (in their case, by your location) advertising offers (though I think local should only be their primary filer, with 2ndary or tertiary filters as well), but still putting a "wall" up blocking corporations form abusing the merchant/ consumer relationship (in this case, spamming the email address).

There is an opportunity in advertising related to the concept of Vendor Relationship Management (VRM)

What if you subscribed to an advertising company that had a focus on consumer privacy and relevance through the consumer revealing their purchasing habits and preferences, but with the understanding that the merchants didn't have access to more info about the consumer than that in which they opt (e.g. FB security settings). The free product through which the valuable consumer data is gotten is the free receipt scanner with OCR (Could the Evernote platform be used for this?).

[Sorry for the ramble, it was longer :-]
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bob, 31 Mar 2011 @ 12:04pm

Re: Re: Re: Re: Realistic Pricing
Uh no. I didn't compare digital delivery to print delivery. I said that they're both small parts of the entire bill. The salary costs for the NYT were half a billion alone in 2010.
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Marcus Carab (profile), 31 Mar 2011 @ 12:08pm

Re: Re: Re:
Don't be sorry! This kind of brainstorming is exactly what newspapers need!

Interesting idea on the privacy-based advertising: it's always bugged me how people have a kneejerk reaction to sharing any data about their habits, even though sharing that data could actually make their lives better by putting them in touch with products and services they might actually need while cutting back on the amount of totally irrelevant advertising they are bombarded with.
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bob, 31 Mar 2011 @ 12:11pm

Re: Re: bogus chart
First of all, I didn't come up with the idea of comparing apples to oranges. That's the esteemed Mr. deGusta. I'm just saying it's bogus to compare fresh, hot news with warmed over streams of pixelated content.

Source? I watch my queue and on March 1st I got cut off from a movie that I paused in February. My instant queue got shorter. As it is, only about 20-30% of the films in my DVD queue are available for instant download and they're almost all very old ones.

And your price of $8.99 is not right at all. It's $8 for online only and $10/month for one dvd. But since the chart insists on finding the most expensive NYT option it could, it's only fair to use the 3 disk version of Netflix which is $20/month. That's what you need to be able to watch DVDs on three different devices.
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bob, 31 Mar 2011 @ 12:14pm

Re: Re: bogus chart
I have no idea how or why they make their decisions but I know that the number of available movies in my Netflix instant download queue continues to drop. Plus I've started to see little notes along side movies like, "Until Feb 28."

My guess is that the DVD sales are important. DVD sales have been falling and the studios are probably realizing that they made more money with DVD sales than with streaming. That's why they're pulling films from the Netflix queues.
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bob, 31 Mar 2011 @ 12:20pm

Re: Re: having reporters in libya is a scarce commodity
This is an old myth that is often true for some publications at some times, but it's one that's not really true any longer for publications for the NYT. They charge $2 a copy for the daily paper because that's what it costs to produce. Advertising pays a smaller fraction than ever.

But you're right that it is part of the equation. The only problem is that it's just not working. The advertisers want eyeballs and they won't pay enough of a premium to be next to expensive content in the NY Times. It's just as easy to buy an ad at BoingBoing who will push the edge of fair use and deliver the same eyeballs. And BoingBOing isn't even the real competition. User generated content like Facebook is even cheaper to generate and so the advertisers will flock there.

If we're going to have professional content, we're going to need to pay for it and it's increasingly clear that advertising will only pay for the cheapest content of interest to the widest possible audience. Think TMZ not sending reporters to Libya.
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Marcus Carab (profile), 31 Mar 2011 @ 12:25pm

Re: Re: Re: Re: Re: Realistic Pricing
The salary costs for the NYT were half a billion alone in 2010.

You realize that a bunch of those salaries go to the pre-press, distribution and subscription sales departments, right? It's not all editorial. A big chunk of that half-billion number is directly tied to print.

In reality, their newsroom/editorial costs are only about $200-million, while printing and distribution is somewhere between $600-million and $1-billion. Actually to be fair those numbers are from early 2009, but the ratios hold true.

Where are you getting your numbers?
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Damon Kiesow, 31 Mar 2011 @ 12:28pm

Don't forget the mobile web
Marcus -

I agree generally on the pricing - but I argued last week that it is designed to drive audience to the mobile Web as much as it is to protect print:

http://dmk.im/dHZRFz
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bob, 31 Mar 2011 @ 12:28pm

Re: Re: bogus chart
And so what if it is? Most people don't have iPads. I don't.

The market is still working through the right packaging. Many of the cable channels are blocking watching on the iPad altogether. They're working out the price.

It's just unfair to add up as many prices as possible to create this graph for the NY Times and not do the same to the other packages.
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Marcus Carab (profile), 31 Mar 2011 @ 12:35pm

Re: Re: Re: having reporters in libya is a scarce commodity
So you're saying that, since their content is having trouble competing with BoingBoing and other blogs, they should raise the price on that content to help them better compete? Or are you just saying they should give up on competing for eyeballs and try to replace all of their advertising revenue with subscription revenue instead?

If we're going to have professional content, we're going to need to pay

Funny, because I pick up a free print newspaper every morning. I guess that's impossible. Maybe I've been dreaming.
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Skrl Fowl, 31 Mar 2011 @ 12:38pm

the paywall
Keep in mind NYT already setup the pay wall 4 years ago with TimesSelect. This is just an extension of that. This was confirmed to me by current NYT programmers. So ecommerce and backend were already in place. 40K ????

None of this work was outsourced NYT has a pretty large programming group.
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Anonymous Coward, 31 Mar 2011 @ 12:53pm

Re: Re: Re: Re: Realistic Pricing
Ahh, you dismiss the lower price because you don't like it.

Nice move. Mike has taught you well. When you don't like something, ignore it.

Don't you have a real job to do?
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bob, 31 Mar 2011 @ 12:57pm

Re: Re: Re: Re: having reporters in libya is a scarce commodity
You make raising prices sound like it won't work. Many of the comments about the NYT sound strangely like the naysayers who condemned cable TV because people would never pay for what they're getting for free over the air.

Selling a premium product at a premium price is a valid business model that works in almost every business. The tricky part is figuring out how much more people are willing to pay for how much perceived quality.

And finally, if you're going to quote me at least quote the entire sentence. I explicitly included the possibility that free sources like TMZ or your daily rag will continue to exist. But the proportion of ads to content will be maddeningly high.
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Marcus Carab (profile), 31 Mar 2011 @ 12:58pm

Re: Re: Re: Re: Re: Realistic Pricing
And you dismiss me pointing out a math error you made (in the middle of accusing me of doing the same) because you are incapable of admitting you are wrong and a hypocrite.

Don't you have any job to do? Or is your only goal in life to be a pain in the ass? (If so: job well done, friend, job well done)
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bob, 31 Mar 2011 @ 1:00pm

Re: Re: Re: Re: Re: Realistic Pricing
A real job? You haven't been paying attention to the meme that continues to drive most of the echos at this site: give it away for free and lotto-sized piles of cash will fall out of the sky.

Personally I'm just happy to see that Mike has found someone else willing to write for this. My only question is whether he's actually paying him in cash. Mike could be using the Arianna Huffington approach of convincing him that he's getting "exposure". Then Mike can keep the astroturfing cash for himself.
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Marcus Carab (profile), 31 Mar 2011 @ 1:03pm

Re: Don't forget the mobile web
Hmm... that's a very interesting angle. I'm not sure I entirely see how such an approach benefits them yet but I'm definitely going to think more on that. Thanks!
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bob, 31 Mar 2011 @ 1:10pm

Re: Re: Re: Re: Re: Re: Realistic Pricing
My numbers are from the 2010 annual report. While I'm sure that they pay the print employees and the truck drivers well, I doubt they're that big a part of the equation.

Also, it's not just the news and editorial that are part of the digital bill. The web site takes programmers and system administrators and hardware and electricity. Ad sales are also a cost for both.

Regardless of the exact percentages, the problem is that ads just aren't paying the freight online. They may get 30-40m visitors to the web site, but the advertisers will not pay enough to generate the content. And the Kindle idea is cute but the Kindle screen can't display nice ads like the paper and that's the crux of the problem.
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Marcus Carab (profile), 31 Mar 2011 @ 1:27pm

Re: Re: Re: Re: Re: Re: Re: Realistic Pricing
My numbers are from the 2010 annual report. While I'm sure that they pay the print employees and the truck drivers well, I doubt they're that big a part of the equation.

I'm not sure how you're reading that report, but I'm sorry, the distribution cost is not smaller than the editorial cost. I've never heard anyone claim that about any newspaper ever, and I'm a little astonished that you are claiming it here.

As far as the issue with ads not paying the freight online, yeah, I know that's the problem - but I don't think that problem will be solved by making your website less appealing to advertisers and pretending that print revenue is going to continue to carry the industry. I mean, do you really believe that's true? So you really think that newspapers can continue to thrive while print readership shrinks across the board without figuring out how to make advertising work online? Just how many people do you expect to sign up for this paywall? Because it would have to be a hell of a lot to be more than drop in the bucket of their overall revenue.
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Any Mouse (profile), 31 Mar 2011 @ 1:33pm

Re: Re: Re: bogus chart
It's unfair to compare similar packages? If you exclude the iPad (The Economist and WSJ do not), then yes, NYT would be much cheaper. The do not, however, and to truly compare the pricing, you need them to be equal in what they offer.
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Marcus Carab (profile), 31 Mar 2011 @ 1:36pm

Re: Re: Re: bogus chart
If you bothered to click through to Michael's post and scroll down a bit, you would see that he has already provided his justifications for choosing the prices he did. They make sense to me. Not sure what you are complaining about.

http://theunderstatement.com/post/4019228737/digital-subscription-prices-visualized-aka-th e-new
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Anonymous Coward, 31 Mar 2011 @ 8:44pm

Re: Re: Re: Re: Re: having reporters in libya is a scarce commodity
People pay for Cable TV because it has stuff they DON'T have on the free air.

The NYT could do the exact same thing...IF they had the content that people desired. What has been said repeatedly on this site, and all over other places, is that the NYT is basically a generic rehashing of the same information.

The issue at hand is simple: for the vast majority of NYT readers, the value of the content is not worth paying for. You need the premium content BEFORE you make an about-face with your revenue scheme.
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Michael Avery (profile), 31 Mar 2011 @ 8:47pm

Rationality
"in the long run, the paywall is just a giant ploy to get their print subscriber numbers up."

You nailed it, Mike, and there is nothing crazy in the NYTimes' logic.

In Dan Ariely's book, "Predictably Irrational", in the first chapter entitled "The Truth About Relativity", nearly the exact same situation is used to illustrate the industry's "sleight of hand" technique (his real world example was taken from an actual Economist.com subscription scheme). Its purpose is to set up a situation where the act of comparing prices from a given set will adjust the perceived value of the products in the set. The trap is set when a person is not rational enough to step outside of the price scheme to think about the real value of the products in question (I imagine that most readers/writers here are rational enough, or we'd not be having this discussion).

Those who peruse the new price scheme that the NYTimes has set up are induced to believe that the best subscription plan is going to deliver the most savings. Most interestingly, the set we're given by nytimes.com doesn't even mention the route of print+online that is being discussed here. Instead, what you see there are three choices: online+smartphone, online+tablet, all digital access. According to Ariely, an extra choice added to the mix (particularly a third) will function as a "decoy" by adding perceived value to one or more of the others. Nytimes.com helps us out by pointing to the all digital access plan as the one with the "BEST VALUE", in gold lettering.

If the NYTimes had added the fourth choice of print at this point, they may have sweetened the milk by adding a choice which, in that particular set, would have been perceived as having the most value. And there isn't so much value for the NYTimes if it purposefully sets itself up to spend more by offering print. However, in the long run, they will probably have no other choice than to openly add the fourth choice to the mix as a less profitable way to bolster the paywall, as enticement to new customers and incentive for old.

Except I disagree with Mike's statement that "everyone is having a hard time figuring out exactly what they hope to accomplish". I think their hopes are obvious: that the old models continue to work. That anyone would do the work to compare print price to digital, NYTimes probably had hoped wouldn't happen, but we've still played into their game of comparing a set of prices and then noting that one of them screams "$100 savings". And I'm willing to bet that quite a few have decided to cash in on that. But the NYTimes' continued belief that the old models will continue working, that people are going to fall into the well at all, does seem a penny wish wasted.
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Anonymous Coward, 31 Mar 2011 @ 8:49pm

Re: Re: Re: bogus chart
Or, like with all newer technologies, the studios are being stupid. They pulled the same stunts with television, then VHS, then DVDs...

Better to assume they just want to protect DVD sales because that's what they know, not because of revenue.
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Andrys, 4 Apr 2011 @ 10:11am

The actual web-combo pricing
I just tweeted you a reply but you may not check those. This was what I sent:

"@marcuscarab NYTweb+mobile =$192/yr. NYTweb+(iPad or Kindle) =$240/yr. Less-$ than print still. ? http://bit.ly/kwnytwall "

Well, I do have more space here so it's:

1. NYT web + mobile phones = $15 every 4 wks (not a month)
I used $16/mo. then. Total $192/yr.

2. NYT web + iPad OR Kindle = $20 per month = $240/yr.

3. Only if you wanted NYT web AND a variety of devices would it cost $35/mo.

So you and Mike should probably feel better about it...
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