Tuesday, March 22, 2011

The New York Times Pricing Scheme: Dumb, or Brilliant?

Among the harsh criticism heaped on the New York Times for having the audacity to introduce a digital subscription model is that the pricing tiers are confusing, or self-defeating because they leave gaping holes for readers to game the system and thus make anyone who doesn't feel like an idiot.

I'm normally sympathetic to this kind of argument. It's why I avoid roll-your-own fixed priced restaurant menus, convinced I will get screwed because I won't be able to reel in the best value from that sea of possibilities.

In other words: Complex pricing blocks the road to assessing value.

Daring Fireball's always insightful John Gruber puts it this way:
One thing many companies — in any industry — can learn from Apple is the importance of simple pricing. If you make it easy for people to understand how much they’re paying, and what they’re paying for, it is more likely that they’ll buy it. Or perhaps this is driven more by the converse: if people are confused about how much they have to pay, they’re more likely not to. The decision to purchase and the act of paying are part of the experience for any product or service, and should be designed accordingly.

Not paying is always simple.
Correct. But this is true only at the moment one is confronted with a decision to buy or not to buy. For the vast majority of the people who read the New York Times -- online and off -- the moment of truth will not come on March 28, or maybe ever.

So, with three pricing tiers, a "giveaway" web site and an all-access pass for print subscribers, is the Times making it impossible, or easy, to close the deal?

Most people will delay a decision on what to buy, or if, as they encounter impediments to their normal Times-reading lifestyle. A huge swath will never even know there is an online paywall.

The Times of London (no relation) stops you the first time you click on anything. The New York Times won't pester you until you have accessed a link on their property at least 20 times -- probably more, since a lot (if not most) traffic will come from search referrals which aren't counted against that total, rather than from a landing page (front page or section). Count in the five free clicks per day via search engines and you're talking 170 accesses a month.

So the big change for the vast majority of people will be to encounter some unexpected request for money in a month or so, or never — and only at that point will those people decide if paying something is what they want to do. In other words, the change will be invisible to many.

Those of us who routinely use Times apps will face this music sooner, of course. I have already mused on this dynamic in a couple of ways: arguing that the Times has undervalued its online storefront, and that media apps aren't really a good way to dispense and consume breaking news anyway, however potentially good they are at collecting tolls.

But if you want to use an an app, you'll use an app, or walk away in disgust. And there are only two choices here: If you don't have an iPad, you won't buy the iPad sub. And if you have an iPad and want to stick it to the man to the tune of $5, Gruber points out, you'll get a $15 iPhone subscription and access nytimes.com using your browser.

Fine. There are workarounds and hacks, and some people will always gleefully take advantage of them. But as it happens very few people actually use Skype to avoid a phone bill or jailbreak their iPhone so they can tether without paying AT&T a monthly free. This is only ever one slice of the customer base, and not a very impactful one.

I mean, is this the way you want to read the New York Times?

Rather than focus on that the Times seems to be looking for a sweet spot which:
  • Find some samplers who will now pay something on the theory that these people are so inclined, always would have and just need to be asked
  • Don't make current paying customers regret and resent
  • Allow ample social access so that participation in the link economy isn't disrupted — which is not only great branding, but good for the ad CPMs the Times will still need.
There this notion that nobody will pay for something when a version of it is free. And yet plenty of money is spent on things that are also available on bittorrent or sharing sites. That's because nothing is truly free, and sometimes inconvenience is a heftier price to pay then some coin.

It is only when the inconvenience cost is close to free that paying customers flee.

I don't know if the Times plan is nuanced enough, or in the right ways. But that it is nuanced — and porous — is necessary, and far from dumb.

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