Everyone in the media industry is going to be interested in today's New York Times earnings report that features a 6.5 percent increase in circulation revenues, reflecting an important success of the company's paywall strategy. At the same time, print advertising revenue declined 13.3 percent and digital ad revenue fell 4.0 percent. That means that overall earnings per share fell from $0.05 to $0.04 at the company as the shrinking elements continue to shrink faster than the growing elements grow.
I've been skeptical about digital subscription models for a long time, but I'm turning into a believer. A key change has been the development of technological means of making the paywalls actually pretty porous, which turns them into more a form of price discrimination than anything else. A well-designed paywall attracts revenue from hardcore fans of a website while still making it possible for casual fans to read the occasional article and thrifty people to sneak around it. The Times Company is announcing a "New Strategy for Growth" today that seems largely focused on developing finer-grained forms of price discrimination, such as making it possible to buy a cheap subscription to just a sub-set of the overall NYT content. It's a promising idea. The challenge with this sort of thing is to try to create a seamless user experience, so that despite your complicated walls and loopholes and discrimination tools people feel well-tretaed.