Digital Audio Insider -- the economics of music and other digital content

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Digital Audio Insider is David Harrell's blog about the economics of music and other digital content. I write from the perspective of a musican who has self-released four albums with the indie rock band the Layaways.

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March 30, 2011

Like It's 1998: Some Quick Thoughts on the NY Times Paywall
by David Harrell
The NY Times has flipped the switch, activating its new paywall/digital subscription model and I can't help thinking of 1998, the year that Slate began what turned out to be a short-lived experiment with a subscription model.

At the time, I was part of the small editorial team for, which had launched the previous year. While that site was (and still is) an investment research and portfolio tracking destination, as opposed to a news/opinion magazine, Slate often came up as an example when we first planned the format and design of our longer articles.

So when Slate first announced its plan to move to a subscription model, it set off hours of discussion with my co-workers about the ethics of sharing your Slate login (keep in mind, this was before the launch of Napster and the large-scale P2P exchange of digital music files). As best as I can recall, we hit upon many of the main arguments, pro and con, that would soon arise with the advent of P2P music sharing: Is it truly theft when it doesn't result in the loss of a sale?, the fact that consumers can easily share physical content such as magazines, books, and CDs (though obviously not concurrently and only with people who are nearby), the challenge of charging for online content when there are numerous free alternatives, and so on.

I held out for a month or so before I finally succumbed and paid -- there was obviously no Twitter workaround and, believe it or not, back then Slate articles frequently came up in conversations with friends. Besides, the annual subscription was only $19.95 and Slate threw in a free umbrella. Then, before my subscription ran out, Slate abandoned the pay model and refunded my balance for the year by sending me a few issues of a now-defunct Web 2.0 magazine.

Thirteen years later, the NY Times is obviously trying to thread several needles at once with its subscription plan by setting a price point that maximizes its subscription revenue while it maintains its search engine rankings by allowing a minimum number of free page views each month. And unlike Slate, the Times serves at least two distinct audiences -- those in the NYC region who would read the paper even if there were no online version, and those of us outside the region who probably wouldn't pay for a daily print subscription if that were our only option. Its digital pricing strategy has to account for the possibility of cannibalizing print subscriptions. (Assuming that those subscriptions are indeed more profitable.)

I truly have no problem with the NY Times charging for access to its website (it'd be hypocritical of me if I did, as my employer derives a fair amount of revenue from the folks who are paying $185 a year for subscriptions to the premium version of Yet the cheapest digital-only NY Times subscription, $195 a year, still strikes me as too high.

You can, of course, make a very valid argument that $195 is a relative bargain, especially when compared to a daily print subscription. And I remain somewhat amazed by how eager media consumers are to pay for their hardware (iPods, iPads, and smart phones) yet so reluctant to purchase the content they consume on those devices. But given the ready availability of other quality online news sources (The Washington Post, the BBC, etc.) and the fact that the NY Times paywall appears to be easy enough to get around, I wonder if a subscription price at the premium magazine level (the New Yorker's $40, for example) would generate more total revenue.

For now, I'm going to make do with my 20 free articles each month, plus those I can read via FB and Twitter links. But if the price drops below $50 a year and the Times tosses in a free umbrella, count me in.


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