The New York Times Is Shutting Down
Unless the Times fundamentally changes it’s approach to digital pricing they are doomed and the title of this article will be prescient rather than baiting.
My first mentor gave me a single piece of advice that worked out well:
If you focus on big margins you’ll always be small.
Right now the New York Times is suffering from a paralyzing fear of margins for their digital only subscriptions. They are proving to be a company that creates compelling editorials but doesn’t “get” the web. One of the great promises of the Internet is global reach and low cost delivery of content, yet the Times continues to price their digital products as though they are local and delivery is expensive.
Here is the Times’ current pricing as of this writing:
Those 99 cent trials and weekly recurring billings are pretty at first, but lets do the math on what it really costs if they were less deceptive about their pricing.
Here is the Times’ pricing, normalized to the actual monthly billing.
The very fact that they display the pricing in weekly increments means that they are aware that their pricing would be perceived as too high. When your prices are great, you can display even longer time periods. Take for example two leaders in recurring billing, Netflix and Amazon Prime.
The Netflix Home Page displays pricing as “plans from $7.99 per month” and the Amazon Prime landing page shows pricing as “Just $99 per year”. Why? Because those prices are awesome and anybody can quickly see it, no conversions necessary. Unlimited streaming of a huge catalog of movies and TV for 8 bucks a month? That is insanely low. Free two day shipping plus a lot of discounts and other freebies through Amazon Prime? That’s insanely low. It’s so low it seems almost unbelievable.
Lets compare monthly normalized pricing for a handful of popular content providers.
It doesn’t take a brain surgeon here to see that the New York Times is by far the most expensive content you can subscribe to. One could have a lot of fun with other charts such as “Cost per hour of content consumed” and then it would get ugly… Oh hell, while we’re beating a dead horse, why not.
For this chart, lets assume an average entry tier paying New York Times customer reads 40 articles online that take 5 minutes each per month (3.33 hrs/mo) and that an average entry tier Netflix subscriber watches two hours of shows each night (60 hrs/mo.)
Unfortunatley this cost-per-unit type of calculation IS in fact the fast mental calculation that every single average consumer is making when they are prompted to buy the New York Times after clicking a few links on Twitter or Facebook. Time is limited and we are constantly making trade off decisions about value and time.
If you accept this proposition that people make decisions based on a unit of time/value and you’re into pricing and business, then the logical conclusion would be that the New York Times needs to either price their content on a monthly basis in a way that doesn’t make users balk or they need to try micro billing.
Bad news though. Microbilling doesn’t work. It has been tried over and over and over and over and over and over and over and over and over and over and over again.
You know that guy who is always nickle and diming you over every little part of a deal. You know how irritating that is? That is how people react to micro billing. I’ve tried it. The only way micro billing works is if the friction is so low that people don’t really even realize they are being billed, and that? Well, that’s probably criminal.
So what is the New York Times to do assuming that billing for access is a necessity? Simple. Get rid of these idiotic device bound tiers, fire whoever came up with that, and offer content level tiers so that free users can get a few articles per month because 10 is too high. By article number 10, a lot of people have gotten through an entire month. By article number 10, a lot of people feel entitled and have been trained that the content should be free.
Here is my proposed pricing. If the New York Times implemented this pricing, they would not only survive, they would thrive. Their subscribership would go up to 1000x, their margins on digital would shrink, and they would stop bleeding red ink.
3 articles free per month and then…
What do you think?
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Also Read: Silicon Valley’s Dirty Secret & Defensibility Excuse
