New York Times Paywall Hangs On iPad App

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News Posted: Tue, Jan 25 2011 9:30 PM
One of the most significant impacts of the iPad (and of tablets more generally) has been the devices' perceived ability to alleviate the crushing financial woes currently afflicting most major newspapers and magazines. The general theory is that customers, who are used to reading web content for free, will pay a monthly charge for the privilege of reading content through an application. The New York Times has been working on its own paywall and has released some preliminary information on what the various services will cost.

For now, at least, free service isn't going away. The Gray Lady will allow occasional readers to view a certain number of pages per month and has vowed that readers arriving via search engine will always be allowed to read at least the first page of any article. Anyone who wants full access to the online version of the paper will be charged approximately $10 a month, while those who want to read the NYT via iPad app will pay $20 per month for the privilege. Paper subscribers will have full access to the digital package at no extra charge.

The idea that people will opt to read the NYT via app at $20 over reading the browser-fied version at $10 is passing strange, but the NYT may not much care. $10, after all, is still $10 and the newspaper will likely dress the app up with better story-browsing and search capabilities than it offers by default on the mobile version of its site. It's by no means certain that a significant number of customers will decide the app is inherently worth an extra $10 per month, but the NYT has already said it may adjust prices based on consumer feedback.

Newspaper readers who devour the paper from back to front as often as they can may find that the $20 monthly subscription is amply justified in terms of cost, convenience, and saving paper. For moderately serious readers, $10 a month isn't too bad. In spite of these facts there's reason to think the publishing industry—including the venerable New York Times—is in for a rude shock in the not-too-distant future. In this case, the publishing industry would do well to take a lesson from the MMO industry.

The Problem With Monthly Paid Subscriptions

The problem with monthly subscriptions is that consumers don't sign up for them ad infinitum. If a reader loves the NYT sufficiently to feel $20 a month is a good investment, he probably doesn't spend as much time reading The Washington Post or The Wall Street Journal. If, by chance, he does read and pay for a second publication, he's less likely to invest significantly in a third.  Adding more publications, in this case, lowers the perceived value of every publication and increases the likelihood that one or more subscriptions will be deemed unnecessary and be axed.

Will People pay twice as much to read the same content in a pretty wrapper?

Since the majority of current content apps are based on month to month payments instead of yearly lump sums, the financial situation of any given media company could vary wildly depending on what scoops, interviews, or original stories it managed to garner. This is one area where MMOs and newspapers differ—by nature, MMOs allow subscribers to invest characters and accomplishments with perceived value, increasing the chance that players won't abandon the game. Media companies won't have that luxury.

Is the New York Times worth $10 or even $20 to a certain group of people? Sure. Is it worth $20 on the iPad in a hypothetical future where The Washington Post is selling for $4.99 a month, Robert Murdoch's News Corps is offering a "50 percent off when you subscribe to any three publications for 12 months," and Conde Naste is running a "Buy one app, get the second one free" promotion? That's a very different question and it's one the various companies counting on iPad revenue may encounter sooner than they think.
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digitaldd replied on Wed, Jan 26 2011 9:49 AM

Wow its not like iPad users can't use the NY Times Reader website? wait they can't thats actually an adobe air app with flash. Oh well at least computer users and folks who have other tablets can use that.

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Joel H replied on Wed, Jan 26 2011 10:12 AM

I'm certain there will be a general paywall app coming for everyone. The iPad is simply first in line due to its popularity and market dominance.

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Why oh why would anyone pay for this when you can easily get everything in the paper and more for free?

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the real question is who pays for old new these days? All the new sites are free and are current day. 

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Joel H replied on Wed, Jan 26 2011 4:54 PM

Because, as more and more newspapers start trying to work with paywalls, the availability of free news could decrease significantly. The Internet is not a place where non-local news content is spontaneously generated. Everyone, blogger or journalist, reads, reports, gives analysis if appropriate.

If you love the NYT, you'll pay for it. Under the NYT's system, if you just happen to cruise in every so often, you'll be able to see what you want to see. Visit often enough, and you won't be able to read what you want to until some time has passed. If that bothers you enough, you'll pay for the privilege.

This idea that information is just going to be free in the future assumes that the newspapers (and possibly TV stations) won't move in the same direction.

Here's what a lot of people don't seem to understand: The news industry is dying. We say "newspapers," because those are the areas hardest hit for now, but technologies like GoogleTV could do the same thing to TV advertising. People love to hate advertising, but it's advertising that pays for the content you're reading online or in print. With newspaper subscription rates falling like rocks, businesses *have* to find a way pay for themselves or die. Advertising space on the Internet isn't worth 1/20th of what advertising space is worth on paper, which means traditional journalism outlets have to find ways to finance their own transitions.

The fact is, if people don't pay one way or another, we journalists don't get paid. If we don't get paid, we can't work. I'm not arguing that paywalls are a great solution--maybe they aren't a long-term solution at all--but making smug remarks about information wanting to be free ignores the long-term result that we all go out of business.

Bloggers are a joke. There's no web journalism site that packs the punch of the New York Times (an it's not the only powerful newspaper). I'll admit that I hate paywalls as much as anyone but that doesn't change the fact that journalists need a guaranteed revenue stream to do their jobs. Ad sales at 1/100 of a cent per every 1,000 impressions don't cover the costs of a foreign journalism department, or a six month investigation into Chicago's corrupt city government.

The more in-depth and widespread the coverage, the bigger ones resources have to be.

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RUre replied on Sat, Mar 5 2011 6:55 PM

@Joel H

You say "Advertising space on the Internet isn't worth 1/20th of what advertising space is worth on paper" Why is that so? Do you mean "worth" or the "price of"? Has print advertising been over-priced compared to its value?" After all the message is the message. And look at how Google has been able to tailor its advertising.

There is probably more web traffic to (good) newspaper sites than there has ever been readers of the paper versions: I have never bought the NY Times in Australia but can go there easily and regularly now. And electronic advertising can be made more valuable with all sorts of value adding features once the agencies get their heads around what is technically possible.

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