An Intelligent Paywall

AUTHOR'S NOTE: This post was migrated from a former home. Its contents are all but forgotten, but are kept for posterity's sake. 

Today The New York Times finally unveiled their digital subscription plans and set a date for launch. After more than a year of vague assurances and discussions that it would be coming, I had begun to refer to it as the Vaporwall, but I’m glad to say that the time spent perfecting the model seems to have paid off. 

This isn’t the first foray into digital subscriptions for The Times. From 2005 to 2007, TimesSelect offered online access to what The Times considered its most premium content: The Op-Ed section and the archive, among a few other things. The issue was that it put up a complete paywall, offering zero access to non-subscribers. In practice TimesSelect only served to hurt online readership for Times columnists, and in some cases they openly criticized it for that reason. The other issue with TimesSelect was that it attempted to charge for premium digital content that primarily appealed to their analog audience — readers who were likely already print subscribers, or wouldn’t be interested in a digital subscription.

The problem with paywalls for online content that it goes against the basic structure of the web, where hyperlinks allow users to go from page to page. With a complete paywall like that of TimesSelect, a hyperlink would lead to a dead-end. Further, the wall would block search engines from accessing, indexing and making content available to those interested. While I have no definitive figures, it’s easy to speculate that a good portion of web traffic to sites like nytimes.com comes from search engines like Google, so a complete paywall on every piece of content would be devastating to The Times’ online readership, and therefore would hurt online advertising revenues.

To address this issue, The Times has put a lot of thought into how their paywall works. First, it won’t act as a complete wall on all content. Every reader is given a 20 article limit per month for free. This would cover casual readers who don’t read the paper regularly, but may come to the site when prompted by a friend or for another reason. Secondly, links from social media and search engines will not be counted against the limit, with the caveat that a reader may be limited by the number of articles they reach from certain search engines in a given day. This second rule is important because it shows that The Times understands the importance of social media and the web’s basic structure in disseminating news and bringing in readership. Any rule that could block readers linked from Twitter, Facebook and Google would make a significant dent in web traffic.

The most impressive aspect of the digital subscription packages is that The Times appears to have figured out the different demographics that they serve. For one, they haven’t made the same mistake of TimesSelect where they’re charging the wrong audience for another audience’s content. The Times has an entire group of readers who love their coverage, appreciate quality journalism, and would be willing to pay for the most convenient access. In the past, these were the people who received home delivery and read the full paper. They’ve also got the casual reader that I alluded to earlier, who reads a Times article when prompted, but won’t spend much more time on the site than that. Those would have been the people who bought a copy on the corner a few times per month.

For specialized newspapers like The Wall Street Journal and The Financial Times, the majority of their readership is the first group, so a complete paywall does less damage, because more of their audience is willing to pay. For a paper such as The Times, the casual reader makes up the majority of their web traffic, and cutting them off with a complete paywall would mean less advertising revenue.

The metered digital subscription system that The Times will begin to offer this month is the best online model for the print circulation system of yesterday that I have seen. According to Neiman Journalism Lab, the traditional breakdown for newspaper revenues was 80% advertising, 20% circulation. A complete paywall would severely cut down on the potential advertising revenues, and attempt to make up for it with a relatively static income from subscribers. In The Times’ model, the potential for advertising revenue hasn’t been hurt because the majority of their traffic will still get through unhindered. Meanwhile the digital subscriptions will augment that revenue with income that was previously $0. Whether the new breakdown will be an 80/20 split, or skewed a bit more is yet to be determined.

Needless to say, I don’t think anyone at The Times is under the illusion that this model alone is enough to save the news industry. Print advertising revenues are still falling, and online advertising hasn’t made up the deficit. This alone isn’t going to make up for it either. Until online advertising evolves into a more effective system, and can therefore justify a greater cost to advertisers, the news industry is still going to struggle. Fortunately, with an intelligent digital subscription system like this, The Times will have revenue where it had none before.