NY Times Digital Pricing: It’s Strange

by havoc

As the Times rolls out its paywall, their message is that quality content should cost money. Their price segmentation undermines the message.

In theory, price segmentation can be arbitrary. In practice, consumers want it to be logical and feel that it’s fair.

  • content + phone app = 15
  • content + tablet app = 20
  • content + both apps = 35
  • content + dead trees = 30-ish

At $15 for phone and web, $20 for tablet and web, or $35 for all three, the Times has several problems.

The algebra doesn’t solve

The price structure can’t be rationalized. If the algebra doesn’t work, then it should be because of a “bulk discount” where buying more gets you a better deal.

Instead, buying more appears to charge you twice for the content. The most loyal customers are punished.

The prices imply that apps are worth more than content

If the Times wants to ask people to pay for quality content, charging $20/mo to add a second device but only $15/mo for all the content is nuts. Talk about undermining your own argument.

It doesn’t relate to costs at all

People resent paying to evade a restriction that’s unrelated to true cost structure. Failure to match costs with revenues can be a mess from a business perspective as well. Does the tablet and phone app division get credit for all the pricier subscribers? Can a competitor get an edge by pricing more sanely?

Limiting which devices can be used to read the paper is a daily annoyance for customers, but not one worth $180/year to solve.
It’s an opening for the competition.

The Times pricing may also evolve poorly as technology evolves. Tablets barely existed just a year ago!

Better approaches

Most of these ideas would be better:

  • have a single price — KISS
  • charge more for access to more sections
  • charge one-time prices for apps in app stores
  • don’t split tablets and phones; a single monthly charge for all non-web access, on top of the basic web subscription
  • have an ad-free tier that costs more
  • have a tier that ups your limit from 20 views but is not unlimited
  • have a tier that bundles some kind of third-party content or other valuable offer
  • put some content on a time lag unless you pay more

What the Times did instead is just… strange. It seems like one of the worst options to me.

My Twitter account is @havocp.
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