NYT's subscription plan: A good formula is a good start

The New York Times has come up with a good formula for a subscription model - if it can find the right numbers into that formula.
Written by Sam Diaz, Inactive

I was once a subscriber of the New York Times. It used to land on my driveway every morning and I'd read as much of it as possible. It was a pricey investment, compared to the local paper, but the time I spent with it made it worth it.

These days, I get most of my news online - and the NYT is just one of my many news sources. I still get the print edition of the San Jose Mercury News, the local paper. But the only time I ever really pick up a NYT is when I'm traveling - something to read on the plane or keep in the hotel room. So the Times no longer gets a subscription check from me but they do get a few bucks here and there - and I'm OK with that. It works for me.

That's why I'm also OK with what the Times is planning to do with the new subscription model it announced yesterday. Give the readers a limited amount of free content so the occasional visitors won't feel completely locked out. But when the regular reader reaches that limit, he's got a choice to make - either cough up a credit card to gain unlimited access for the rest of the month or click away to another site.

Granted, NYT execs will spend the next year hammering out the details - such as the number of articles that are free - so it's too early to give the plan a standing ovation. But it feels right to me, largely because it gives me a choice, without locking me out from Day One. I'll read a story here or there online - just the way I can still pick up a print edition when the urge strike. And then, when I reach my limit, I can determine for myself whether I'll read enough stories for the rest of the month to make it worth the investment.

The NYT will have to be smart about the pricing structure so it doesn't turn too many readers away. Yet it also has to be savvy enough to maximize the number of readers who agree to a subscription. It won't take long for readers to determine the value. Bundled pricing or long-term subscription will likely come into play, as well.

There are a lot of questions remaining but, for now, it looks like the Times may have developed a formula for coming up with alternative revenue sources. Subscriptions alone won't offset the lost ad revenue, but it's a good start.

Speaking of formulas, here's one final thought about determining the value of a NYT subscription. A blog post yesterday by Reuters' Felix Salmon had the headline, "The Economics of the NYT paywall." The piece stars off with a reference to a tweet by Preston Austin that contains a mathematical formula for determining the value of a NYT subscription. Through some cross-promotional link love, Austin posts the formula while Salmon tries to explain it in easy-to-understand English. Here's the tweet:

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