Since the New York Times introduced its new paywall in 2011 (its first attempt, TimesSelect, ended in 2007), a number of other news sites have followed suit. One of two approaches is generally chosen: Making all content subscription-based or allowing a limited amount of free content before a subscription is required. The second approach, known as a “metered paywall,” is the strategy the Times implemented.
A 2011 paper from Columbia Business School and the University of Zurich, “Optimal Sampling of Paid Content,” explores two questions about the metered-paywall model: How many free articles a publication should offer; and, what the cost of content behind the paywall should be. The researchers did this by constructing a thought experiment that looked at consumer expectations of quality, demand, subscription price and projected ad revenues.
Key findings conclude:
While the paper is a logical exercise rather than a data-driven study, the researchers believe that their model has been confirmed by anecdotal evidence. “Our predictions are consistent with casual observations from the media industry,” they state. “Once online advertising rates are high enough, our model predicts that the publisher should offer its entire content for free. This might explain why the New York Times abandoned its online subscription program, TimesSelect, in 2007 when online advertising revenues were soaring. Likewise, our model predicts that the publisher should introduce digital subscriptions and offer a limited number of free samples when online advertising revenues decrease. This might be an explanation of why the New York Times re-introduced digital subscriptions in 2011.”
Tags: consumer affairs, news, technology