So much for the NYTimes online pricing discipline…


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We talked last week about the New York Times’ introduction of a paywall for access to their very popular website in order to increase revenue for the ailing paper.

The New York Times is about to introduce a paywall to its very popular website as part of a plan to turn online visitors into paying customers. It’s part of their latest drive to reignite revenue growth in the face of an industry decline that has seen Times revenue drop 27% over the past five years.

And while the concept of requiring customers to pay for content certainly makes financial sense for a news organization struggling to raise revenue, getting people to pay for content that they have been previously receiving for free will be a huge challenge. And the Times hasn’t helped itself because along with charging for contents, it has also introduced a relatively complex pricing model.

As an avid reader of the Times online site, I figure I’m right smack in the middle of their target paying audience. And I’m also sure the Times knows this because I’m always logged in when I go to their website. I’d been deliberating over the past couple of days last week whether I would become a paid subscriber (or not) once the paywall went up. Well, I didn’t have to deliberate very long because when I accessed the site on Saturday, I was greeted with a pop-up that offered free access for the rest of 2011 courtesy of Ford Motor Company’s Lincoln brand. And it seems I wasn’t the only one who received this ‘special’ offer. Monday’s Wall Street Journal reported that the Times’ offer for free access was sent to to thousands of others:

New York Times Co.’s efforts to charge readers to read online articles will get an early boost from one advertiser–Ford Motor Co.’s Lincoln brand.

Lincoln, an existing advertiser with the New York Times, has targeted 200,000 heavy readers of the newspaper’s website with an offer to sponsor their digital subscription for 2011.

Lincoln won’t pay the actual subscription costs for those taking part, but the car maker will increase its online ad spending with the publisher. Details of the arrangement weren’t disclosed Lincoln will make an online pitch for the free Times access to targeted customers through emails.

Lincoln and the Times expect some 100,000 subscribers to sign up for the nine-month freebie, whose retail value is approximately $150 a subscriber, or $15 million in total.

Besides offering free access to members of their target audience like myself (if you can’t get me to pay for access, then who will?), the Times has also encountered other problems relating to their new pay-to-view scheme. It was also reported that the paywall is somewhat porous (to say the least):

The Nieman Journalism Lab reports that the paywall “can be defeated through four lines of Javascript,” and a “Canadian coder” has made available a tool to do just that–one that is so simple, “it barely even qualifies as a hack.”

I’m actually more troubled by the fact that the Times is letting readers like myself–readers who are a prime candidates to become paying customers–gain free access without us even asking. If the Times thought it was going to be difficult for folks like me to begin paying for access starting today, just wait until January 2012; it will be even more difficult because now I will have had nine months of ‘free’ access. Given the ease it was for me to get free access this weekend, I think I’ll just sit back as 2012 approaches and wait for some other NYTimes advertiser to step up to give me a similar offer that Lincoln provided on Saturday. Talk about conditioning your customers to never pay full price again…

Here’s the takeway: Instituting a paywall for content that has previously been free is difficult enough, but for the Times to allow prime paying prospects like myself to gain free access (without so much as lifting a finger) is poor business judgment. If you thought it was going to be difficult to get paid subscribers today, just wait to see how hard it will be in 2012 when your best customers have been conditioned to wait for discounts.

Republished with author's permission from original post.

Patrick Lefler
Patrick Lefler is the founder of The Spruance Group -- a management consultancy that helps growing companies grow faster by providing unique value at the product level: specifically product marketing, pricing, and innovation. He is a former Marine Corps officer; a graduate of both Annapolis and The Wharton School, and has over twenty years of industry expertise.


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