Is the NY Times paywall proving everyone wrong about online subscription models?

New York Times

Most industry experts (AKA Tech Bloggers) thought that when the NY Times website went to an online subscription model in March, 2011, that it was the beginning of the end for the once proud media giant. It was called a desperate move that would not yield the results that they were expecting. The general opinion was that a free and open internet was the way to go and embracing it by generating revenue through online advertising made much more sense than asking people who were used to free news to suddenly pay up to read what they can find on other sites.

Everyone who felt this way was apparently wrong. The paywall that goes into effect after the tenth article in any given month seems to be working according to a recent story on Bloomberg.

Digital subscriptions will generate $91 million this year, according to Douglas Arthur, an analyst with Evercore Partners. The paywall, by his estimate, will account for 12 percent of total subscription sales, which will top $768.3 million this year. That’s $52.8 million more than advertising. Those figures are for the Times newspaper and the International Herald Tribune, largely considered the European edition of the Times.

Nearly a hundred million dollars. That’s not exactly a number that points to failure. In fact, it will likely open some eyes and have other major publications wanting to go down the same road, particularly with the challenges faced in the online advertising business that include revenues dropping and advertisers leaving.

What does this say about the business model? Perhaps the better question to ask is what it says about the consumers of news. Granted, if there’s any publication with the clout and history to pull off these types of numbers, it would be the NY Times. They represent journalism itself and many seek it out as the primary source of their daily news intake. Still, there are other publications that are rising that could possibly pull off similar results if they followed the same path.

There are two very important components of their model that make it work. On one side, you have the differentiation between the casual web browsing person and the one who craves NY Times stories. Ten freebies a month is plenty for most, which means that they’ll still be coming to the site and bringing the eyeballs that are necessary to have the types of traffic numbers they have. Second, they did not shut off social media links like others have. It doesn’t matter how much you’ve read – if you click through from Facebook or Twitter, it will not block your entry.

This second component is extremely important and makes those of us who sift through news to share on social media still willing to share their stories. Others, such as FT.com, block social media links once their paywall threshold has been met. I definitely would not be sharing those links as they will not appear properly for everyone.

The NY Times is a model, but can it be duplicated easily by others? Is it a one-off, a premium that only they and publications like the Wall Street Journal can truly enjoy, or is it possible for smaller publications to boost their own revenues? It’s a question worth exploring, and it will likely be answered this year as more publications give it a shot. We’ll be watching.

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Erika Cross / Shutterstock.com

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Written by Sal McCloskey

+Sal McCloskey is a tech blogger in Los Angeles who (sadly) falls into the stereotype associated with nerds. Yes, he's a Star Trek fan and writes about it on Uberly. His glasses are thick and his allergies are thicker. Despite all that, he's (somehow) married to a beautiful woman and has 4 kids. Find him on Twitter or Facebook,
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