It's the moment free-loading news consumers have dreaded for years. The New York Times has announced it's erecting a $15 per month pay wall for its most frequent users. The new payment system begins March 28 and will allow users to read 20 articles per month for free. After that, a pay wall will prompt users to select one of three payment plans: $15 for a month of access with a mobile phone app included, $20 for a month of access with an iPad app included or $35 for a month of access to both the iPad and mobile app.
There are several holes in the Times' fee barrier, however: clicking on a link to a Times story from a social network like Facebook or Twitter will not count towards the 20-article limit. Neither will visits from search engines like Google, however, there will be a five-article daily limit.
“A few years ago it was almost an article of faith that people would not pay for the content they accessed via the Web,” , chairman of . "This move is an investment in our future. It will allow us to develop new sources of revenue to support the continuation of our journalistic mission and digital innovation, while maintaining our large and growing audience to support our robust advertising business. And this system is our latest, and best, demonstration of where we believe the future of valued content — be it news, music, games or more — is going.”
The wisdom of erecting a pay wall has been fiercely-debated amongst media observers for years.
"NYT paywall plan seems reasonable to me," tweets The Daily Beast's Howard Kurtz. "Newspapers can't keep giving it away online forever, but you don't want to shut out nonpaying types."
"*If* paywalls succeed (I'm skeptical, but...) a byproduct cud be stronger reader loyalty," tweets journalist Adam Penenberg. "You'd only pay for a few. So you'd stick w them."
Megan Garber at Nieman Lab asks the tough questions. "Do people care enough about the Times, as a brand, to pay for content that they can generally get somewhere else? Given the myriad side-door options for article entry, do they care enough about convenience to pay a premium for a friction-free news experience?"
Meanwhile, her colleague Ken Doctor crunches the numbers. The Times has 32 million monthly unique visitors in the U.S. If one percent of readers purchase digital-only subscriptions that's about 300,000 subscriptions. Two percent yields 600,000 and three percent yields 900,000:
Let’s take the $20 price point as an average sales price, figuring both that tablets will drive sales and that smartphone-only and all-access digital subs will balance themselves out. At $20 per month, that’s about $78 million a year in digital circulation revenue — a new line item. Double it and you have $156 million a year.
Let’s put that number in perspective. The New York Times Media group — essentially the Times — took in $683 million in circulation revenue in 2010. So a one-percent digital success rate would yield a 11 percent increase in circulation revenue, if print revenue stays flat (which it won’t). Not bad, but not world-beating. Two percent, or a 22 percent increase on the print base, would be something to shout about — and a great platform for growth. Three percent is an almost magical number: $230 million a year.
Felix Salmon at Reuters is more skeptical. "The paywall won’t even cover its own development costs for a good two years, and beyond that will never generate enough money to really make a difference to NYTCo revenues," he writes. "Maybe that might change if the NYT breaks its promise to offer full website access for free to all print subscribers. But that decision would be fraught in all manner of other ways."
All Things Digital's Peter Kafka notes that print delivery subscription is a bargain. "Crucially, the plan gives free access to all platforms for subscribers who get the Times delivered, in paper and ink format, to their homes," he writes. "Those subscribers, for now, are the papers’ most treasured resource, and it wants to hang on to them for as long as it can."
Over at TechCrunch, Erick Schonfeld hates how the pricing system discriminates by device. "If you are shelling out $20 a month for the iPad subscription, and you want to also be able to read it on your iPhone, you basically have to pay the full smartphone subscription price, or an additional $15 a month. That seems like a rip-off."
And then there are the loopholes. Business Insider provides a "guide" on how to keep reading the Times for free (which is essentially that you can type Times headlines into Google and read five articles a day "and who reads more than 5 NYT articles per day?"). Forbes media reporter Jeff Bercovici says "I’ll be amazed if someone doesn’t attempt to game this by setting up a 'New York Times Indexed' Twitter feed with links to every story. And I’ll be even more amazed if the Times’s legal department doesn’t already have its cease and desist letter drafted."
The Times' FAQ page has more details. Here's what the pay wall looks like
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