New York Times: Winning with Leaky Paywall

The New York Times is an example of a digital “winner” amidst rapid declines in revenue and circulation for most in the newspaper industry. In 2011, The New York Times effectively introduced a paywall and in 4 years has signed up over 1 million subscribers. Last year, the digital subscription business generated nearly $170M, up 13.5% percent from the year before.

The New York Times is an example of a digital “winner” amidst rapid declines in revenue and circulation for most in the newspaper industry. In 2011, The New York Times effectively introduced a paywall and in 4 years has signed up over 1 million subscribers. Last year, the digital subscription business generated nearly $170M, up 13.5% percent from the year before.

The New York Times was able to do this partially because it has a widely recognized brand name and global scale, but also because of the way it gradually and transparently introduced a paywall for digital users, and stayed relevant to readers by encouraging sharing articles across sites (i.e. a leaky paywall).

In a letter to readers in 2011, The New York Times announced the introduction of digital subscriptions. However, rather than blocking all access to content without a subscription, they provided access in a number of ways. 1) Home delivery subscribers and International Herald Tribune subscribers would continue to have full and free access to the site; and 2) all readers would be allowed to view 20 articles per month (after 20 articles, they ask users to become digital subscribers – this has since been reduced to 10 articles per month). This allowed casual consumers to continue using New York Times as their news source and created a low entry price point for the most avid readers.

The New York Times also creating an intentional work-around to their paywall. It was communicated in a letter from the publisher in March 2011 as: “Readers who come to Times articles through links from search, blogs and social media like Facebook and Twitter will be able to read those articles, even if they have reached their monthly reading limit.” This work-around allowed New York Times articles to continue to be shared on other sites and social media, maintaining its readership and relevance.

Today, pricing plans begin at 99 cents for the first month and depending on the level of access you need, vary from $3.75/week for web + smartphone access to $9.00 for week for home delivery + all digital access. With an introductory price of 99 cents for a month, New York Times was accessible to most people, and was an effective mini hurdle in changing consumer behavior – to get people to start paying for news. And, by offering different subscription options – it differentiated customers based on use and willingness to pay – and allowed the company to capture maximum revenue. Rather than building a hard paywall – and preventing anyone from the site unless they bought a subscription – the New York Times created a leaky paywall and a tiered pricing program, which resulted in increasing numbers of subscribers. Some hypothesize that people signed up for the convenience, out of duty, or appreciation – but whatever the motive, the point is people signed up, rather than abandoning the site.

It will be interesting to see where the Newspaper industry goes from here. As effective as New York Times’ paywall has been, it is still struggling to make up for the decline in print advertising revenue and is forcing the company to consider other sources of revenue or opportunities to expand their readership.

To reach an expanding pool of new users, New York Times partnered with Starbucks to make certain articles available free to members of Starbucks loyalty program. As part of the agreement, members earn reward points if they purchase a Times subscription. The New York Times is also one of only 9 news outlets that agreed to let Facebook directly host “instant articles” – allowing Facebook users to seamlessly read articles that news outlets post to individuals’ Facebook feeds. The Times has recognized the growing use of Facebook as a news-source and is using that trend to find new readers rather than defensively protecting its content behind its paywall. In other words, the Times is using changing consumer behavior and digital growth to its advantage, rather than fighting it.

Even if the newspaper industry still struggles with declining advertising revenue and print readership, most agree that the New York Times paywall has been one of the most successful paywall models in Newspaper history. Especially when you compare it to examples like the Dallas Morning News that started a hard paywall (no free content), then moved to metered paywall (some free articles per month), and ultimately removed all paywalls by the end of 2013. Or the daily British tabloid The Sun, which introduced a paywall in 2013 and saw monthly traffic reduced by 45%.

Sources:

http://www.theverge.com/2015/5/11/8581801/nyt-now-2-update-download-released

http://www.nytimes.com/2011/03/18/opinion/l18times.html?_r=0)

http://www.nytimes.com/2015/05/13/technology/facebook-media-venture-to-include-nbc-buzzfeed-and-new-york-times.html

https://openforum.hbs.org/challenge/understand-digital-transformation-of-business/business-model/the-new-york-times-effectively-monetizing-digital-content

http://www.poynter.org/news/mediawire/142936/why-would-anyone-pay-to-read-the-new-york-times-online/

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1 thought on “New York Times: Winning with Leaky Paywall

  1. As an avid NYT reader and digital subscriber, I was excited to read this post. I definitely agree that the NYT digital subscription model has worked out relatively well for the company. However, as you noted, the NYT is still struggling to compensate for lower circulation and print advertising revenue. The share price has lost nearly 2/3 of its value in the past 10 years, and I fear the NYT’s internal digital innovations like paywalls and mobile apps won’t be enough to protect the company from the external trends that are transforming the industry. I hope time proves me wrong!

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