Sometime in early 2011, the New York Times required its readers to pay for digital or print subscription of articles on its website after exceeding the 20 free article limit. This case study looks at whether consumers would still be as engaged with the NY Times website which is protected by a paywall. And how would advertisers react to such a move?
Vineet Kumar, Bharat N. Anand, Sunil Gupta, Felix Oberholzer-Gee
Harvard Business Review (512077-PDF-ENG)
February 22, 2012
Case questions answered:
- Is the Paywall working?
- How would you evaluate the current Paywall compared with the two prior ones? Do you think it is appropriately designed compared with the Financial Times or the Wall Street Journal?
- Why are newspapers in trouble? What is the goal of The New York Times in creating the Paywall?
- Should The Times actively manage its transition from print to digital?
- Does the paywall seem like a good strategy for newspapers in general?
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The New York Times Paywall Case Answers
Executive Summary – The New York Times Paywall
The New York Times Company is an American mass media company operating different business units, including New York Times Media Group, New England Media Group, Regional Media Group, About Group, and additional joint ventures.
Traditional media companies have experienced major disruptions stemming from digital alternatives. As a result, the company has consistently reported a decline in ad revenue.
Previous attempts to reinvigorate ad sales were launched in 1996 and again in 2005, but the unsuccessful attempts were shut down both times. In March 2011, The Times Company again attempted a paywall and had seen success with the revamped version.
Shifting focus towards Digitization
Print newspapers have felt the uncomfortable squeeze that digitalization has caused – a decrease in circulation and revenues due to an increase in competitors. In the few years before 2004, the industry had experienced consistent demand.
However, from 2004 to 2009, the total number of weekday papers in circulation fell 10%. The decline in sales had a big impact on the industry. Newspapers are an amalgam of different interests.
Specialized websites created more value and took print-news customers. For news firms to stay in business, a new strategy was needed, and paywalls are a popular option.
The New York Times introduced a paywall structure again in 2011 after their previous paywall attempts in 1996 and 2005 failed to increase revenues based on paid subscribers. The new paywall structure is based on a metered system and device-specific pricing model.
After the paywall was introduced in 2011, The Times has seen an exponential increase in subscribers from 0 to 390,000 in 10 months. Though the model is working well for The Times, the challenges they face are retaining this growth and lowering their attrition rate in the future.
Digital channel provides exciting opportunities for the company to expand.
The rise of the internet brought new challenges and opportunities for the newspaper industry. Considering the audience’s change in preferences on how they consume information, The New York Times needed to venture into the digital space.
Still, with other platforms such as Craigslist, Facebook, and monster.com, they face a decline in advertising revenue as their website is not getting enough website visits.
Therefore, a feature such as a paywall was essential to keep up with the declining revenues, but paywall has already failed for them twice before. They do not know the feasibility of the new paywall structure and the future risks associated with it.
Moreover, the fact that there has been a significant rise in the number of paid digital subscribers for Times (Exhibit 12) proves that paywall has the potential to create and capture economic value for the newspapers.
There will certainly be resistance among customers initially because of higher costs, which is around $450 annually. Still, if newspapers can maintain a great level of journalism, an online paid channel is more convenient and reliable for customers.
The smallest revenue stream is from online advertising as compared with other sources. However, it will increase if The New York Times has a…
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