The New York Times' Unsustainable Paywall

The New York Times has finally released the details of their paywall, and they confirm that the model is not sustainable. Click here to read the NYT's letter relaying the details. Looking at those details it seems to me that the NYT designed its paywall around two assumptions:

1. We need to raise more revenue.

2. Restricting access to our content on blogs and social media would be counterproductive.

These are very reasonable starting assumptions. I'm totally sympathetic to #1, as a NYT fan, and #2 is quite true. But the details of their paywall reflect the very real tension between those two assumptions: Readers who come to Times articles through links from search, blogs and social media like Facebook and Twitter will be able to read those articles, even if they have reached their monthly reading limit. For some search engines, users will have a daily limit of free links to Times articles.

This is tantamount to saying that if you're a power-user, or even just someone heavily immersed in social media and the blogosphere, then the paywall won't apply to you. Which is basically admitting that a paywall isn't sustainable.

I wouldn't be surprised if the NYT can raise some revenue from this in the short term from people young enough to have canceled their paper subscription but not so young to be heavily into social media, at least as a means of getting news. (Age isn't the only relevant factor here, but it's one.) But that already limited demographic will shrink over time. Put another way: the number of users interested in NYT content but not already reliant on social media -- or even just capable of using it -- to access news is shrinking and will continue to do so.

So long as the NYT holds its ground on #2 (and they should, because it's true), I suspect the revenue they raise from the paywall will drop over time.

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Walter Frick is an associate editor at Harvard Business Review.

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