New York Times Paywall Strategic Considerations
1. Is the New York Times paywall working?
According to Chairman Sulzberger the goal of the paywall was to “build the Times’s digital subscription base and develop a new robust consumer revenue stream, while maintaining its significant digital advertising business.” Secondary to the constraint of maintaining the ad business was the requirement to maintain social buzz and branding.
To begin, the NYT wanted to increase future revenues for the paper and offset the inevitable decline of its print revenue. This, in the short run, was a success. As described in Question #2; this added over $81 million in previously unexploited revenue in just the first year, indicating significant potential for future growth in digital subscription revenue.
To maintain the ad business, the paywall could not significantly decrease the digital advertising revenue. For NYT Media Group, and by extension NYT, digital advertising increased by 5.3% in 2011, suggesting that the implementation of the paywall did not reduce digital advertising revenue in the short run. However, the NYT quarterly reports (shown in Appendix C) showed the paper’s digital ad revenue decreasing through much of 2012 and early 2013. Additionally, the paywall should not lead to a loss in readers or impressions. According to Exhibit 13 in the case, (and explained further in Question #2), the page visit drop equates to a 21 page per visitor ratio before the paywall to an 18.5 page per visitor ratio after the paywall, roughly a 11% drop in impressions. If the NYT has a pay-per-impression contract with its advertisers, this can mean up to a 11% drop in ad revenue in the long run, calling into question the overall success of the paywall.
Finally, the NYT wanted to maintain the social buzz and branding for the paper. They did this by allowing unlimited access to articles if visitors came to the website via search engines or social media. This allowed people to read and be aware trending articles coming from the paper
According to Chairman Sulzberger the goal of the paywall was to “build the Times’s digital subscription base and develop a new robust consumer revenue stream, while maintaining its significant digital advertising business.” Secondary to the constraint of maintaining the ad business was the requirement to maintain social buzz and branding.
To begin, the NYT wanted to increase future revenues for the paper and offset the inevitable decline of its print revenue. This, in the short run, was a success. As described in Question #2; this added over $81 million in previously unexploited revenue in just the first year, indicating significant potential for future growth in digital subscription revenue.
To maintain the ad business, the paywall could not significantly decrease the digital advertising revenue. For NYT Media Group, and by extension NYT, digital advertising increased by 5.3% in 2011, suggesting that the implementation of the paywall did not reduce digital advertising revenue in the short run. However, the NYT quarterly reports (shown in Appendix C) showed the paper’s digital ad revenue decreasing through much of 2012 and early 2013. Additionally, the paywall should not lead to a loss in readers or impressions. According to Exhibit 13 in the case, (and explained further in Question #2), the page visit drop equates to a 21 page per visitor ratio before the paywall to an 18.5 page per visitor ratio after the paywall, roughly a 11% drop in impressions. If the NYT has a pay-per-impression contract with its advertisers, this can mean up to a 11% drop in ad revenue in the long run, calling into question the overall success of the paywall.
Finally, the NYT wanted to maintain the social buzz and branding for the paper. They did this by allowing unlimited access to articles if visitors came to the website via search engines or social media. This allowed people to read and be aware trending articles coming from the paper