Parsing the Times Paywall

In a new paper (abstract; PDF), psychologists Jonathan Cook and Shahzeen Attari surveyed users about the hotly debated New York Times paywall:

Participants were surveyed shortly after the paywall was announced and again 11 weeks after it was implemented to understand how they would react and adapt to this change. Most readers planned not to pay and ultimately did not. Instead, they devalued the newspaper, visited its Web site less frequently, and used loopholes, particularly those who thought the paywall would lead to inequality. Results of an experimental justification manipulation revealed that framing the paywall in terms of financial necessity moderately increased support and willingness to pay. Framing the paywall in terms of a profit motive proved to be a noncompelling justification, sharply decreasing both support and willingness to pay. Results suggest that people react negatively to paying for previously free content, but change can be facilitated with compelling justifications that emphasize fairness.

In short, telling people that the Times was likely to go bankrupt without the paywall bolstered their support, while explanations emphasizing financial stability did not. The authors conclude that “content providers could benefit from more thorough attempts to justify price structures.”

(HT: Marginal Revolution)

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  1. Bobby G says:

    Interesting… but will this encourage all companies to seek pity instead of always just being truthful , and in turn dilute that “if we don’t get payments we will go out of business” plea?

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  2. CK says:

    or you could just clear your NYT cookies after reading your 10 stories. google for an easy javascript button.

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  3. Enter your name... says:

    I keep reading about their paywall, but they’ve never asked me to pay. Maybe I’m not reading as much as I thought I did? Maybe it only works on certain browsers or computers? It wouldn’t be the first time that someone has programmed a Windoze-only website.

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    • Quentin says:

      It depends on how you’re getting to articles. If you go directly to the NYT website and click on articles, you’ll hit the paywall after 10 articles. If you get there through third party links, including RSS feeds and search engines, you don’t. (This is how I think it works based on my experience–it sounds like others here know the technical details better than I do).

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      • James says:

        You do hit the paywall on at least some articles accessed through third-party links. In particular, articles linked on Google News often hit the paywall. Which seems a problem two ways: how are Google’s web crawlers seeing content that its readers can’t, and why on earth doesn’t Google offer an option to skip paywalled (or otherwise inaccessible) content in searches?

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      • Enter your name... says:

        I type “nytimes.com” into the browser window and click links to the stories I want to read. I’m not doing anything deliberately to bypass anything there, but maybe the privacy settings are killing cookies or blocking javascript or something.

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  4. afh;u says:

    This isn’t surprising. Passing NYT’s paywall is as easy as deleting their cookies or disabling javascript.

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  5. Clancy says:

    Since it’s so easy to get around the paywall, I see it as a voluntary contribution, like giving to public radio or public television. I think as online content continues to grow, we will see more websites take on a “reader supported” business model where readers voluntarily contribute to keep their favorite website from going away or downsizing.

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  6. Mike B says:

    The real problem is that the difference in price between the physical copy and the digital copy is very slight…perhaps like $40 or even less. I find it hard to believe that dropping a physical copy of a newspaper on my front door costs only $40 a year so the only conclusion I can draw is that the digital only subscription is a high margin ripoff. The price the NY times charges is unbelievably high in comparison to the marginal cost of my viewership, this is essentially zero or even negative due to their ad revenue. This isn’t even taking into consideration the available of all sorts of close substitutes.

    The funny part is that I actually really wanted to pay a little for the NY Times, sort of like how I give a good deal of money to Public Broadcasting. For 2011 I managed to get a complimentary subscription and for most of 2012 I chained together a number of promotions to pay someone on the order of $45 for 9 months. At that point I just gave up trying to be nice and went with a script that blocked their paywall. Economics demands that I take a stand and not pay until the times brings the price of its digital product more in line with its MARGINAL costs. For example if I could pay what I wished it would be about $50 a year.

    If newspapers want to claw their way back to profitability I suggest that they try to expand their base instead of trying to wring a large amount from a smaller and smaller number of people. Lower the price to the point where most people end up paying more, instead of getting pissed off and substituting. Sort of like the Laffer Curve for news consumption. Perhaps a national newspaper alliance where you pay once and get access to all newspapers across the country and revenue is distributed based on readership levels from the subscription pot.

    News gathering is both a public good (non-rival, non-exclusive) and does a public good. Perhaps the best way to encourage it is an individual mandate for media akin to the UK’s television license fees that fund the BBC. Just put a check box on the old 1040 form that asks the taxpayer which news organization(s) they want their mandatory $50 news excise tax to go to.

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    • Ruth says:

      As a laid-off newspaper employee, I can explain the high price of a digital subscription. I’m surprised Freakonomics didn’t lay out the details.

      Printed newspapers cost money to print and distribute, but the cost is subsidized by print ads. Advertisers pay for exposure, but the ad rates have been inflated over the years when many newspapers had monopolies. During that time, subscription rates were kept low so the number of subscriptions increased. Newspaper advertising rates are partially based on the number of subscriptions because the more people who could potentially see the ad, the more clout the ad will have. Advertisers paid for exposure, not guaranteed views.

      Subscriptions don’t pay for the cost of providing news. Advertising revenue subsidizes the newsroom.

      As ad revenue in the print product falls off, newsroom employees like me have been laid off. That makes the amount of content in the paper fall off, so in many papers there’s a constant juggling act between keeping enough print advertising coming in to pay for the high cost of newsgathering while trying to obtain as many efficiencies as possible in the newsroom so subscribers don’t drop the paper.

      Digital advertising, with the ability to pay based on response (not to mention the ability of advertisers to cream off and then reach customers directly without a newspaper or other middleman), doesn’t provide the revenue stream that print does. Craigslist stripped out a lot of classified ad revenue. Real estate tanked and so that ad revenue went away. Auto and real estate sales sites also sprang up online to compete with newspapers. The print paper pays for newsgathering and the online readers don’t bring enough ad revenue to pay for the newsgathering they benefit from.

      A print subscriber appears to be more costly, but is more profitable — indirectly because of the ads — than an online subscriber is. When online subscriptions and casual views, perhaps with some inspired mining of archives, generate enough ad-and-subscription revenue to support the newsgathering operations of newspapers, then newspapers may be able to stabilize employment and subscription costs.

      At a digital start-up without a history of print, the economics are somewhat different. The newsgathering is often as low-budget as possible because ad revenue is low. There’s less paid content (as at the Huffington Post, which doesn’t pay most contributors). So the site doesn’t have to pay to print news, but in general the sites, such as Patch, don’t have nearly the breadth and depth of news that a widely distributed print newspaper can provide, and (based on comments of former Patch employees) the work hours are long so the pay per actual hour worked is low.

      For newsroom workers, free online content has been a disaster. Many of us have lost jobs. When we do get rehired, salaries are lower. Outside metropolitan areas, where newroom employees weren’t paid generously to start with, the pay cuts have been painful. Being a reporter has gone from being a job with the chance to move up into middle-class salary ranges, to being a job that barely pays a living wage. Consider the ads for an online operation in a suburban county outside NYC, where the county’s median salary was $75,000 and the cost of living was high. The job did offer benefits, but salary was in the high $20s.

      The NYTimes newsroom employees are currently in the middle of renegotiating their union contract. The paper wants cuts, mostly because online isn’t bringing in a lot of revenue or promising future revenue good enough to support the cost of living in Manhattan or the metro region. The employees are seeing their value plummet before their eyes. I don’t know if you’re sympathetic or unsympathetic, but the road to a decent middle class in the U.S. isn’t down the path that tells employees whose experience brings increasing skills that the harder they work and the more they learn, the more costly and less valuable they are.

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      • James says:

        I have to wonder, though, why for instance television news networks can (apparently) be profitable. Their ad space is strictly limited (by time), their content is linear – that is, viewers can’t choose which articles to access, but must either watch or not watch the stream, there’s little if any potential for revenue from past content…

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      • Stephen says:

        And public institutions like the BBC are great, but even they, like many newspapers played along with the band on the Iraq War. Oh and the thing about that BBC casting a blind eye towards the sexual abuse of hundreds of children by one of their main stars…

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      • Don says:

        Thanks, Ruth, for your insight.

        One thing that is often (if not always) absent in the discussion of declining newspaper readership is the fact that the NYT and other major newspapers are perceived by conservatives to have a liberal bias. Whether the bias is real or not is somewhat irrelevant. The fact that the perception is there already puts the industry on a negative footing with a significant portion of the population.

        You see, conservatives who read the NYT and other periodicals such as Times and Newsweek believe that they constantly receive a barrage of messages that they’re racist, Neanderthalic, medieval, science haters, warming deniers, clueless, willing to poison the air and water, greedy, heartless, Nazis, religous zealots, polar bear haters, grandma haters, criminals, etc… This view is not only prevalent in the news and editorial pages, it also shows up in the book review, religous, culture, and other sections.

        So how can one get these constant messages and not get turned off? Don’t the people running these papers realize that the things outlined above are demotivators? Ruth has it right that what gives life to a newspaper is advertising. And advertisers hope to influence people by changing people’s perceptions on the advertised product. Hundreds of millions of dollars are spent just on the (very) slim hope that a (very) small percentage of consumers could have their perceptions altered enough to buy enough product to at least make the endeavor profitable/successful. So imagine, then, on the devastating impact that a negative perception from at least 33% of a paper’s prospective readership has on the bottom line.

        Sadly, though, I don’t know if it’s already too late. I for one could never imagine me going back to subscribing the the LA Times anytime in next few decades or so. It would be nice for Ruth and her colleagues to have their old jobs back, but it’s doubtful because I really don’t think the people in the media realize how badly they’ve destroyed their brand.

        Pity.

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      • Mike B says:

        I always found it odd that advertisers somehow believe that people are somehow more susceptible to print adverts than they are digital ones. I can ignore both equally well, at least when I am not outright blocking the digital ones. Anyway, the future of journalism lies in the business model perfected by things like Public Broadcasting, the Humble Bundle and Louis C.K. If you ask your content consumers to contribute and do not set the bar prohibitively high, they will want to contribute.

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    • Danny says:

      Mike – I agree. I’ve been reading the NYT for several years and would pay a reasonable amount for a subscription. However, their asking price is too high. Something in the range of $29 to $49 makes sense to me and might vastly increase their online subscriber base. I will say this for the NYT, it is worth something, unlike so many of the other online publications experimenting with a paywall.

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    • Danielle says:

      Because I can get a student discount, the paper copy actually costs less than an online subscription. Unfortunately, as a student, I’m poor enough that I don’t actually have the money for a subscription.

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  7. John Pilge says:

    I love it when the obvious is proven. There is another step. My friends called it “begging mode.” When a commercial enterprise tries fund raising. I remember a local printer that — for a fee — customers could be a “sustaining friend of the 3050.” (A Xerox machine able to do large prints; the only one in the county.) Recently a Capitola, California, bookstore will put a plaque of support and dedicate a shelf to contributors of the”Survive & Thrive” campaign.

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  8. Jeff says:

    Does anybody believe that newspapers like the NYT won’t go out of business without a successful paywall, and digital advertising rates that are commensurate to print advertising rates?

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