This won’t work.
That’s all fairly reasonable and forward-thinking. But there is one part of the pricing plan that is wrong-headed. It discriminates by device. Depending on what device you read the paper on, you will be charged differently for an all-digital subscription. The pricing plans start at $15 a month for Web access plus iPhone, Android, or other smartphone apps. On the iPad or other tablets, it will cost $20 a month. And if you want to switch between the Web, phone, and tablet, that will cost you $35 a month.
Felix Salmon, after estimating how much revenue the paywall will bring in:
That’s extra revenues of $24 million per year. $24 million is a minuscule amount for the New York Times company as a whole; it’s dwarfed not only by total revenues but even by those total digital advertising revenues of more than $300 million a year. This is what counts as a major strategic move within the NYT? … So by my back-of-the-envelope math, the paywall won’t even cover its own development costs for a good two years, and beyond that will never generate enough money to really make a difference to NYTCo revenues. Maybe that might change if the NYT breaks its promise to offer full website access for free to all print subscribers. But that decision would be fraught in all manner of other ways. For the time being, though, I just can’t see how this move makes any kind of financial sense for the NYT. The upside is limited; the downside is that it ceases to be the paper of record for the world. Who would take that bet?
Update: Kevin Drum:
It’s true, as Felix says, that a rough calculation suggests that the paywall won't initially generate a ton of revenue for the Times. Still, I really don’t see a business model going forward in which companies like the Times continue to lose print subscribers as they give away their product online. One way or another, news readers have to get used to paying for content that they use heavily, and they might as well start getting used to it now. After all, if the Times, which is easily the best general purpose news outlet in the country, can’t convince people to pay for their stuff, then who can?
But what is the point of making news readers pay if that doesn’t actually make you money? Pride? Most print subscribers pay less than it costs to print and distribute the newspaper, but there are sound business reasons for making them pay anyway. Those reasons may also apply to some websites, but I’m not sure the Times qualifies.
Update 2: Tyler Cowen:
Don’t ask me to explain all the details of the pay wall system (can’t people set up rotating faux blogs and tweets, rich with daily NYT links, to get around the limits?), but I know there will be an articles quota, twenty per month. So the new NYT incentive is to have more than twenty must-read articles each month. Maybe they’re hire Bill Simmons. … The NYT arguably will be running fewer cliched or predictable or easily substitutable articles. It should make the paper less comprehensive, but sharper at the edges. The incentive of NYT writers to keep blogs — so people can access their columns easily — will go up.
On that last point, the incentive for NYT writers will be to keep blogs outside nytimes.com because most of the official blogs will be behind the paywall.