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If you follow the media sphere, you might have seen some news articles and blog posts recently about how the “New York Times paywall is working,” or words to that effect. They were all over the place, including a piece by Reuters media writer Felix Salmon(s tri), in which he admitted he was wrong about whether the paywall would succeed or not. Salmon has now written an update to his original post, with some of the reasons he thinks the paywall is working. But what is meant by the term “working?” Is the NYT (s nyt) getting readers to pay? Yes. But the long-term value of that is still very much an open question — and a paywall remains a fundamentally defensive strategy.
Salmon said in his original post that he had been forced to admit the NYT paywall is working because the paper has been able to attract about 400,000 paying users in a variety of forms, according to Seth Mnookin, in a piece for New York magazine about how the newspaper company has defied expectations that it would fail (although no specific expectations are ever attributed to anyone in the article). When the paywall launched, Salmon made a bet with Financial Times writer John Gapper (s pso) — whose newspaper also has a paywall, although a much less porous one — that the NYT would be able to get 300,000 paying readers within two years, which now seems pretty likely. Said Salmon:
I was very much a skeptic with regard to the paywall experiment, but I’m extremely happy that it’s working, I’m a big fan of the NYT, and I sincerely hope it has found a predictable and dependable new revenue stream in the volatile and treacherous media business.
In his follow-up post, Salmon says that some of the reasons the paywall is working are that it doesn’t take a hard line on reading the digital product, the way the paywalls at the Financial Times and other papers such as News Corp.’s Times in London do. Instead, the NYT allows readers who come in from social media such as Twitter or blogs to read articles for free (only 20
of these non-social links are allowed per month). And Salmon also notes that some people are clearly just happy to pay for the NYT, in the same way they pay for things like museum memberships, even if they don’t have to.
First we need to define what “working” means
That may all be true, but does that mean the NYT paywall is “working?” I’m not convinced yet, and I’m not the only one. Felix Salmon may have lost his bet with John Gapper, but why is 300,000 subscribers the magic number that determines whether it’s working? That may mean it’s off to a good start, but it doesn’t mean it’s a raging success. Don’t get me wrong; I agree with Salmon that it’s great to see the the NYT with a recurring stream of revenue — but by that criteria, the newspaper’s last paywall in 2005 (which inadvertently helped fuel the rise of The Huffington Post (s aol)) also “worked,” because it made money. But as Josh Benton at the Nieman Journalism Lab notes, the number of subscribers peaked quickly and never grew again, and the wall was dismantled.
What kind of growth will the NYT see from its paywall? Will it peak at 400,000 or so (some of whom were provided by advertisers such as Ford(s f), which subsidized them, and so don’t really count), or will it continue to grow? And at what rate? Those are the criteria for a successful digital strategy, it seems to me, not whether a percentage of existing subscribers pay a few dollars a month for the paper out of charity.
Will the paywall result in a single new reader coming to the New York Times? That seems unlikely at best. While it’s not impossible that someone might suddenly decide to pay for the paper despite not being a regular reader, it seems more likely that the people currently paying are die-hard NYT fans. And that’s great — although the comparison Salmon makes to a museum might cut a little close to home — but it’s hardly a forward-facing digital strategy, as I’ve argued in the past (and others have argued as well).
The bottom line is that the paywall is arguably producing about $35 million or so a year at the current rate of subscriptions — but as Salmon notes, that is a relative drop in the bucket for a corporation the size of the NYT, which has revenues of about $2 billion. And will that number grow, or will it stay the same or even shrink? Even if it doubles, that’s still a fairly small contribution to the overall business. Is it better than nothing? Sure it is. But it’s not going to make or break the newspaper.
But the biggest knock against the paywall is that it has virtually nothing to do with actually taking advantage of the digital world in any concrete way. It’s just charging people nickels and dimes for their paper, the way the NYT and other newspapers have for a century and a half or so. In that sense, it’s not really a strategy at all; it’s more like a line of sandbags designed to shore up the print business and squeeze as much money out of it as possible as it declines. A wise move? Perhaps. Something to get excited about? No.