The New York Times Paywall

I - Brief Case Situation

Facing significant challenges with both subscription and advertising revenues declining, The New York Times (The Times) management designed a new paywall and chose a metered system that allowed users to read up to 20 articles a month without paying. Arthur Sulzberger and some experts in the industry considered The Times paywall a success. However, many commentators were highly skeptical about its pricing. Could paywall be a savior for the declining newspaper industry?

II - Critical Issues

First of all, the rise of the Internet provided new opportunities for the newspaper industry. However, it posed serious challenges as well. A significant problem that The Times faced was advertising revenue. The new source of revenue through online advertising did not compensate for the revenue decline from print. Also, online advertising rates were significantly lower than the print advertising rates. Another major concern was the potential drop in website traffic because a loss of readers means a loss of revenue. Last but not least, would the paywall provide a sustainable business model for The Times?

III - Analysis

Context Analysis

In this technological age, the introduction of high-technology products, such as the iPad, smartphones and tablets, allow people to consume news in a different way and share them easily with other people. A survey by the Reynolds Journalism Institute revealed that 99% of iPad users consume news on their devices. However, if consumers use these devices to access not in-depth news but quick news updates, it could be a serious concern because no one will pay for quick news updates.

Customer Analysis

Generally speaking, younger people are more likely to access online news more than print news because they spend more time online and on handheld devices. On the other hand, older groups spend more time on traditional media, such as print news and television news.

Income may play another important role in influencing a consumer's likelihood to pay for news. High-income individuals tend to update international events instantly through their smartphones or tablets. In contrast, low-income individuals tend to seek out a form of free news.

Competitor Analysis

Commoditized news does not create economic value because there are no reasons for anyone to pay for similar free online news. In addition, if high-quality online news are provided free by newspapers or broadcasters in a market, there is a reduced demand for paid news services. Nicholas Carr, a technology writer at The Times, remarked:

Because most common cultural goods consist of words, images, or sounds, which all can be expressed in digital form, they are becoming as cheap