New York Times Paywall Case

Case: The New York Times Paywall

Introduction of digital technologies have impacted the newspaper industry positively as well as negatively. Due to digital technologies, the need for printing got reduced thereby reducing the suppliers and ultimately leading to job reduction. At the same time, it opened job opportunities in areas like web designing and IT. The expansion into the digital era also helped customers to view dynamic contents like video clips, suggestion of related articles or news and access the news at anytime from anywhere. It also provided feedback and views from customers about the news. The New York Times (NYT) earns their revenue mainly from advertisements and subscriptions. Using Porter’s five forces Model:

• Suppliers: The Main suppliers are the material providers of paper and ink. NYT can switch suppliers easily. So, the switching cost is low thereby decreasing the bargaining power of suppliers. Hence, it positively affects NYT.

• Customers: By looking at the main source of revenue, we can categorize the customers as advertisers and subscribers. Advertisers and subscribers have low switching cost because advertisers have multiple sources to advertise their product and subscribers have many options to get the news. So, bargaining power of customers is high, thereby negatively affecting NYT.

• Rivals: There are numerous other existing companies that compete with NYT. Hence, presence of existing rivals negatively affects the NYT.

• New Entrants: The level of threat of new entrants depends upon whether the new entrant is a print media or social media. For Print media, the initial setup cost is high. Hence, there is low threat of new print media. But, if it is an established social media, which is coming into the business of news, then to cost is very low, thereby increasing the threat.

• Substitutes: There is a high threat of substitutes due to the presence of a variety channels like television, radio, magazines, social media and blogs.

Implementation of paywall has following merits. The content is legitimized. The important information is kept behind the paywall in order to maintain the regular customer base. There is steady revenue coming from subscribers. At the same time, it has pitfalls also. The information behind the paywall might be available free on some other website. Hence, customers get reduced since the casual customers prefer to use websites, which provide free information. From Exhibit 12, the paid digital subscribers increased throughout the year from 100,000 in Apr 2011 to 390,000 in Dec 2011. Furthermore, the number of unique visitors increased from 31.5 millions in February 2011 to 33 millions in January 2012 (Exhibit 13). All these