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Saturday, March 19, 2011

The Economist's timely analysis of NYT's paywall market strategy

Why would a paper want to punish its most loyal readers, who are more likely to live in the country and are thus worth more to advertisers, while letting casual, low-value readers snack on its content without paying?

The answer is that newspapers such as the New York Times have come to see the web in a different way. Although digital advertising revenues at the Times’s News Media Group grew by a healthy 18% between 2009 and 2010, to $212m, overall ad revenues fell by 4% and subscription revenues also fell. The New York Times has concluded (as the Wall Street Journal and the Financial Times concluded some years ago) that online advertising cannot possibly grow quickly enough to counteract the decline in paper advertising and readership that newspapers, by putting the content online for free, are almost certainly speeding. The web is great—but it is great not so much as a source of revenue but as a cheap way of attracting paying subscribers. It’s a shop window, not a business. Heavy users get the requests for money because they are most likely to become subscribers.

For the entire article: http://www.economist.com/blogs/newsbook/2011/03/grey_lady_builds_paywall

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