How the New York Times Trained Us to Pay For News

I’ll admit it. I’ve stolen from the New York Times. It was so insanely easy. So easy, I’ve done it even as a paying customer. Why risk having your credentials keylogged on a public machine when all you had to do was delete some characters off the end of the URL? But those days are over: the Times finally closed its HTML "hack" that let users circumvent its paywall. For freeloaders everywhere, life just got harder, if only a teensy bit.

The Times has understandably gotten its fair share of flack for a $40 million “semi-permeable membrane” that would be more aptly called a payfence or even paychalkline. This was, as one commentator noted, the Emperor's New Paywall. The Grey Lady wasn't robed at all.

Snark aside, how can you feasibly start charging people for something that anyone can easily access for free? It was risky business, easily interpreted as lacking technical nous or simply wishful naivete.

Here's the crux of the problem: The Times is dealing with a generation of consumers who grew up with Napster and BitTorrent and every major newspaper was readily available online. We were trained to expect all of this stuff to be free, but it's really not. It's totally unsustainable. Now we have to be trained back, but we're already hooked on a bad habit, junkies for online content we never had to pay for that's propped up by ads no one looks at.

We know how the RIAA and Hollywood are dealing with this, adopting the punitive and often callous approach of suing unwitting grandmas, overreacting to dudes like Kim DotCom, and conspiring punishment schemes like the six-strikes program. Along the way they managed to bog down YouTube and nearly ruined the internet with bills like SOPA. It hasn't worked. We resent them for it and pirates continue their merry ways. Worse, while they were busy protecting the past, Apple, Netflix and Spotify built business models for the future--which we pay for.

Of course, unlike music and movies, the Times was actually legally free online for a while and so either by accident or ultimate design, they ended up adopting a path of rehabilitation. If the music and movie studios are the U.S. and its War on Drugs, the Times is Portugal and its policies of harm reduction and drug treatment. Instead of sending us to jail, they're weaning us off slowly. You can still read 25 free articles a month (now reduced to 10). If you're linked from social media, it doesn't count. And if you really want to, you can easily circumvent the paywall.

In that sense, this week's minor loophole closing was the Times lowering the dosage of our Nicorette gum.

“When we launched our digital subscription plan we knew there were loopholes to access our content beyond the allotted number of articles each month,” Times spokesperson Eileen Murphy said in a statement, explaining their rehabilitation strategy. “We have made some adjustments and will continue to make adjustments to optimize the gateway by implementing technical security solutions to prohibit abuse and protect the value of our content.”

So they'll continue to monitor our dosage and when we're ready, we'll take another small step. It seems to be working. Two years later, the digital subscriber base has doubled and is now growing faster than ad sales are falling. Digital sales now not only represents a significant chunk of revenue, it appears to be the financial engine for the company's future. As Bloomberg reported in December:

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.

Which is all good news for the Times, but the company isn't home free yet. Pageviews remain flat and revenues are still falling. The Times remains reliant on the brand in many respects, and still needs to innovate with regards to its delivery platforms. The paper still has some of the best reporting in the country, but it must figure out how to get readers to engage with that content, as well as feel like paying for it is worth it.

Ars Technica premium members are allowed to download articles in PDF format. Over at The New Republic--which took down its paywall after it was acquired by Facebook co-founder Chris Hughes--only subscribers get to comment. Has the Times done enough to make paying customers feel special (or cool)? Has it earnestly tried to provide additional value? Addressing those issues will require further reinvention. But even so, the paywall is working out much better than expected.

Not that the Times's success, however, settles the Great Paywall Debate for everyone else. Just as experiments by Louis CK and Radiohead (and even Andrew Sullivan) were impossible for lesser artists to follow, nothing that the Times does extrapolates to other news organizations. Those who do make the paywall jump generally fail. We know that ads aren't the answer. But we also know that people will pay for premium content. There's a business model in there somewhere.

Given the current state of the porous Times paywall, it's more of a glorified donation program anyway. In fact, if the Times was more direct and up front about its needs, the company could probably generate a lot more money. (Has the Wikimedia Foundation ever missed a funding goal?) So it's entirely possible that, despite all the paywall success, the idea of the paywall is still holding back the Times. Whatever the truth may be, it's still good to see that something is kind of sort of working in this business.

@sfnuop