New York Times Paywall Hangs On iPad App

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.