New York Times Pricing Project

"What's black and white and re(a)d all over?"

"A newspaper" is the traditional response to this children's joke. But with today's digital-savvy reader more likely to be found scrolling through Twitter than perusing a broadsheet, perhaps the more accurate answer is a newspaper's financials.

Over the last two decades, advances in technology have led to an increasing number of methods for the delivery of news, and with it, both threats and opportunities for the news industry. Unfortunately, it has been more of the former than the latter: With online and mobile versions of the news cannibalizing more lucrative print circulation, in 2012, the US newspaper industry grossed only $38.6 billion, a little over half of its 2000 revenues.

Like the recording industry before it, newspapers have begun experimenting with new models to monetize digital distribution. "Pay walls," methods of charging readers for online content, are one popular avenue. Today more than a quarter of newspapers have a pay wall in place and most remaining publications intend to start charging for digital access. As newspapers consider how to charge for their content online, they must strike a delicate balance between print and online versions, as well as a balance between generating online subscription revenues and keeping their readership large enough to command premiums for digital advertising.

This paper explores how the pricing policies of one newspaper— the New York Times— have evolved since it implemented a metered pay wall in March 2011. Because of its national scale, the New York Times (NYT) is not representative of the whole newspaper industry, which is largely composed of smaller-circulation regional papers. One thing is sure, however: Given the high-profile turmoil the industry has faced in the last few years, if the NYT is able to find a sustainable business model, it will make headlines.

Product

The New York Times is the highest circulation general interest (non-business) daily newspaper in the US, and the second-highest circulation paper after the Wall Street Journal. It is the crown jewel of the New York Times Company's media and information-services empire, whose revenues topped $2B in 2012. Although the Company owns several other news properties and holds investments in related assets, such as paper mills, for this analysis, we will focus exclusively on the costs and prices associated with NYT's print and online versions.

The NYT's core product is a set of content, refreshed daily, that primarily reports and comments on the day's news. On Sundays, the paper also includes vastly expanded lifestyle content, and a special "magazine" section. A reader can consume this content in print, or via web, smartphone or tablet. Several factors influence the market demand for the New York