Circle me on Google+The New York Times has decided that direct consumer payments for content must be a part of its online revenue mix. The metered paywall plan announced today was envisioned as a safe way to test the waters, keeping a mix of free ad-supported traffic and paying subscribers. But the model actually is a big gamble — with the best chance of working, but also the biggest damage from possible failure.
Begin with an admission, as David Carr notes in an insightful and honest post, that no one knows for sure how the high-traffic visitors will react in 2011 “hit the wall.” But it will be one of two outcomes: Stay and pay, or flee to free.
This is why it is such a big gamble, because the NYT is wagering its most loyal users. Yes, they are the more likely to pay than anyone else — but turning them away in large numbers would be devastating.
The costs vs. benefits are certainly questionable. There are many unknown variables at this point, but Shafqat at NewsCred makes some good estimates that NYT will be “giving up $10M-$15M (in lost ad revenue) to make $9M (in subscriptions).”
