10 ms·

How did the New York Times manage to spend $40 million on its pay wall?

246 points by leoc 16y ago

orijing 16y ago
Does this include the cost of assessing various options, or how to design the pay wall? I'm sure that involved lots of meetings and manager man-hours. But 40m is ridiculous even given those managerial/administrative costs.
gooddelta 16y ago
Strippers, blow, and enterprise software.
- minikomi 16y ago
  are you hiring?
dandelany 16y ago
Yikes. Probably $10k worth of code, and $39,990,000 worth of strategizing, consulting, Powerpoint presentations, and general hand-wringing about the "death of the news industry". All I know is, if I'd spent $40mil on a paywall, I'd be damn sure it was written to filter on the server-side, not with a client-blockable overlay like they have supposedly implemented.
- natrius 16y ago
  There are plenty of reasons why a client-blockable overlay could lead to more profit than more foolproof implementations. Some of that strategizing was probably worthwhile. Criticizing is easy, but while I have my concerns with the details of the Times' decisions, I'd bet that after a few tweaks, their paywall will be seen as a success in three years.
- patio11 16y ago
  I would certainly love to slag on excessively top-heavy project management and the New York Times, but I think you're being a little unfair here. Many of those "What do we build?" discussions are critical and non-obvious. To just look at one little piece, this decision has massive SEO implications. I have some notion of what people qualified to comment on them cost. I'm not nearly the caliber of firm the NYT would stake their future livelihood on by engaging for this kind of work, but even absent that, the minimum possible scope for that SEO engagement blows $10k out of the water.
  - elliottcarlson 16y ago
    Indeed, however even with SEO consultants brought in, and even a Snake Oil Consultant or two, the $40 million pricetag is insane. Obviously $10k is no where near realistic when it comes to all the planning between however many stakeholders there are in the site, as well as figuring out ads management and what not. Realistically, we would all still be shocked if they had paid $2 million total.
    - Retric 16y ago
      Considering how important this is to the future of the NYT 10 million would have been completely reasonable. Don't forget sometimes a 1% better solution can really be worth 100 million.
      - elliottcarlson 16y ago
        I'm not denying that regardless there will be a hefty price point on accomplishing something like this in a major organization such as NYT - but there are still limits on how much seems fiscally responsible. Even at $10 million being a possible reasonable number, it's still a fraction of the $40 million spent.
      - shpxnvz 16y ago
        It's only reasonable if that $10M actually buys you something more valuable than what you get for $2M, even by 1% as you state. I think many of us are questioning whether that could possibly be the case. I'm genuinely interested in hearing some ideas of what $8M of extra investment could buy in this case?
    - wisty 16y ago
      OK, answer me this: who in the organization has the technical know-how to decide how to solve all the SEO and usability issues; and the authority to do so? If there's nobody even close, then they will have massive spec churn.
      - krschultz 16y ago
- mbesto 16y ago
  Management Consultants, Management Consultants, Management Consultants There needs to be a Steve Ballmer at McKinsey.
- ultrasaurus 16y ago
  I was on NPR today talking about this [1], and while I was the least insightful guest, I think that a lot of it boils down to still thinking like a business with 35% margins and huge headcount, rather than a scrappy underdog (that for some reason has a huge paper-distribution network in the Metro NY area tacked on). [1] http://onpoint.wbur.org/2011/03/28/paywall-debate http://onpoint.wbur.org/2011/03/28/paywall-debate
- projectMY 16y ago
  I make software. We use an AGILE development process at our firm. In determining cost there are 3 determinants: Scope/$$$/Time. Typically, a client can control one. When you think of the name (NYT), the image and brand, and aspiration they have to be the most read english news source, 40M on a paywall, seems fair. But what seems strange is the 14 months of work that they took, to create something thats inferior. The fact of the matter is that the news industry model is ripe for a Tipping Point (@MalcolmGladwell). It wasn't prudent for the NYT to make a dollar amount public. It only puts a target on their head.
kondro 16y ago
Quote: $39,990,000 Result: before_filter { redirect_to :controller => :accounts, :action => :login unless current_user.subscribed? }
- marcamillion 16y ago
  I am just learning Rails, and am completely stoked that I understand this. Dumb, I know...but nerdly exhilarating.
- phamilton 16y ago
  It's a little more complicated than that. From the Bloomberg article: "Developing the technology for paywalls is challenging because publishers are trying to strike the most profitable balance between charging some online readers and letting others in free to generate advertising and attention. Though Times Co. has said it will charge visitors after they’ve read a certain number of stories, for example, the company plans to let people coming to the website from social networks such as Facebook Inc. view an unlimited number of those stories for free." I suspect that almost all of that budget went into market research. This isn't quite an A/B testing scenario. If you drive away potentially paying customers 50% of the time (in a worst case A/B test) then you are losing money. The potential for lost revenue in a "release early, release often" iteration approach may justify such a big budget. With so many factors, quite a bit of strategizing and research need to happen before putting things to the test.
  - rayboyd 16y ago
    Indeed, a bunch of New York executive wages over an 18 month period start to add up. Khoi Vin (former art director) pondered this on his blog a few weeks ago [1], citing it as one of the reasons he resigned his post. [1] http://www.subtraction.com/2011/03/18/what-the-nyt-pay-wall-really-costs http://www.subtraction.com/2011/03/18/what-the-nyt-pay-wall-...
- patio11 16y ago
  This is not what was actually implemented, and would have finished the Times, due to SEO effects alone. (There are numerous other issues, but that's the one that will crater their revenue tomorrow.) Seriously, while I appreciate the desire of programmers to think that we're smarter than the average bear, this is like saying StackOverflow is a clone-it-in-a-weekend site. It betrays a fundamental lack of understanding as to what is actually going on with the business model.
maqr 16y ago
It can be very expensive to build a solution for an unsolvable problem.
- deleted 16y ago
  [deleted]
- noonespecial 16y ago
  Plus, at this level of management, "what color should the bike-shed be" may well indeed be unsolvable.
bsiemon 16y ago
I believe they might have used the same stuff the Washington Post used[1]. The post quoted a lower ( 7 million ) but still unreal figure in another paywall related article [2]. [1] http://www.eidosmedia.com/EN/Page/Uuid/83c5a8b2-ae9f-11de-9d72-8e8f18867204/Web_CMS.xml http://www.eidosmedia.com/EN/Page/Uuid/83c5a8b2-ae9f-11de-9d... [2] http://www.washingtonpost.com/opinions/behind-the-posts-redesigned-web-site/2011/03/25/AFC3GXYB_story.html http://www.washingtonpost.com/opinions/behind-the-posts-rede...
Seth_Kriticos 16y ago
There was an elaborate article about this on TechDirt a few days back: http://www.techdirt.com/articles/20110317/10393913530/it-took-ny-times-14-months-40-million-dollars-to-build-worlds-stupidest-paywall.shtml http://www.techdirt.com/articles/20110317/10393913530/it-too...
holman 16y ago
For those of you in a different country that doesn't use the Dollar: The New York Times just blew almost an entire Color on their paywall.
- andjones 16y ago
  indeed... see: http://news.ycombinator.com/item?id=2363697 http://news.ycombinator.com/item?id=2363697 http://news.ycombinator.com/item?id=2367132 http://news.ycombinator.com/item?id=2367132
- notahacker 16y ago
  They also could have paid these staff for at least another four years. http://blogs.reuters.com/mediafile/2009/10/19/new-york-times-job-cuts-read-the-memo/ http://blogs.reuters.com/mediafile/2009/10/19/new-york-times.... Past experience at an old media company (who would have loved to have had a spare £40 million to spend delaying project launches) suggests the redundancies were people too busy doing productive work to produce job-saving Powerpoint presentations on how they were enhancing stakeholder value by synergising workflow processes.
  - coolgeek 16y ago
    To be fair, it was only £25 million
- wging 16y ago
  I'm sorry, what's a Color?
  - jacques_chester 16y ago
    A wavelength of light, as spelled by Mr Noah Webster during the Great Vowel Shortage of 1783.
    - leoc 16y ago
      Worst. Spelling reform. Ever.
danilocampos 16y ago
Imagine if they'd instead invested that money in restructuring themselves for a viable, 21st century business model. I mean, it's a big ship to turn and you probably need a lot more than $40m. But at least they'd be closer to cracking it than they are now.
- natrius 16y ago
  Your assertion is based on faith, not facts. You believe that there's some mythical "21st century" business model that will save journalism with no evidence to back that up. If asking readers to pay for news doesn't qualify as sufficiently modern, I'm really not sure what you have in mind. Please elaborate. (Personally, I think donations sought by non-profits are a better way to fund journalism, but that is decidedly pre-21st century.)
  - danilocampos 16y ago
    Saving journalism and saving The New York Times Company are two very different things. I'm focused on the latter in the above comment. The fact that businesses exist and make money producing digital content after 1999 is effective proof that survival is possible.
    - davidw 16y ago
      We're in a transition phase. Doubtless, buggy whip manufacturers survived a few years past the introduction of the Ford Model T as well. Whether that's an apt comparison for producers of information goods is too early to say - I don't think it's likely to be accurate, but I don't know what the future holds either, and I think things are still changing.
      - rhizome 16y ago
        Thing is, there are still buggy whip manufacturers that have been in business since then. I don't know if Jedediah's Buggy Whips could have planned to survive the automobile, but they have. The New York Times I'm sure would like to be the buggy whip of journalism. The Gray Lady is casting about wildly (probably before it really matters) in hopes of avoiding an uncertainty on par with the 1908 whip market.
aeontech 16y ago
So, let's say a wildly over-staffed (for this kind of project) team of 10 programmers for a year, on an average salary of $120K. That's still only 1.2M. Let's say another 800K on hardware. Does that mean the other 38M went to corporate, management, kickbacks to ensure that the right company got the contract? If that's the case, it's even more depressing if the vast majority of the money didn't even go to people who had absolutely nothing to do with the actual implementation. Can the shareholders of the NYT demand an investigation into this? Seems like this kind of ridiculous overspending should be something that would concern them.
- rorrr 16y ago
  You are very wrong about the size of the team that was involved. My guess would be 1) 10 to 20 developers 2) 2 to 3 sys admins 3) 10 to 30 managers 4) 15 to 20 executives, from low level, all the way to the top. 5) Outside consulting design team that billed them at $500/hour. Q: How did they get so spend that money? A: Endless meetings. Executive salaries add up very very quickly. Executives and managers absolutely loooove meetings, that's how they can pretend to do anything useful. In reality they spend hours discussing the color and the thickness of the line under the logo and bullshit each other, while developers are half-asleep from boredom or are wondering - "WTF, did this dude just discover the internet? and why is he in charge?"
  - maigret 16y ago
    UX specialists and UI architects/designers discuss things like thickness of lines. Also don't discount the sheer size of their website, making "simple" changes a whole different thing than on a private small website. You also forget testers, project managers, and lawyers etc. Blaming execs and managers is just too simple I think. That would be easy to fix.
    - rorrr 16y ago
      > UX specialists and UI architects/designers discuss things like thickness of lines You wish. I'm yet to see a company where (often clueless) executives don't override decisions of professionals. I know a huge company where the CEO spent five weeks changing the curve of one of the letters in the logo, there were something like 25 iterations. Want to calculate how much that cost?
nazgulnarsil 16y ago
the traditional news agencies make more sense when viewed as a branch of the civil service. especially NYT.
mkramlich 16y ago
I had the exact same reaction. I think it's a classic case of there being no upper bound on how much time or money can be consumed by a large organization trying to achieve some effect. They have amazingly labyrinthine and absurdly bloated ways of doing whatever they want. Like that saying that work expands to fill the time allotted for it. A given task generally can not be performed any faster than some specific lower bound. But there's no upper bound, and all you have to do is add more people, opinions, meetings, committees, processes, rules, laws, approvals, reversals, fights, dead ends, legacy architecture appeasement, technical debt, alternative explorations, dead time, vacations, etc. and you can blow up the time/dollar cost to whatever level you want. Related note: I bet if some news organization used an off-the-shelf CMS like WordPress or Drupal, they could add a "paywall" to their site in less than a week, using mostly the services of a single engineer, and perhaps a designer. Let's call that a total project cost in the $400 to $4000 range. ps. If any news organization decision-maker is reading this, I do indie contracting and would gladly add a paywall to your site for a mere... (pinkie in mouth) one million dollars!
jsz0 16y ago
It's a fairly complex problem. They probably wanted to model a bunch of different systems to 'prove' they were making the right choice. Ultimately that will determine who to congratulate or blame in 6 months so you can imagine everyone involved in the process was interested in staking a claim to success or evading the blame of failure. So take every facet of the paper's expenses/revenue and figure they ran the numbers dozens of ways for each minute part of the operation factoring in all their partnerships, ad buys, etc. They are a news gathering organization so they probably approached the problem in some depth. Plus they probably had good expense accounts so you know.. no need to rush it.
tokipin 16y ago
perhaps upkeep and renovation for n years is included
iantimothy 16y ago
It seems like everyone thought the goal was "How do we charge for content" instead of "How do we provide value that people are willing to pay for content".
- pbhjpbhj 16y ago
  I'd have thought the goal was "how do we stop people getting content without getting charged".
- Choire 16y ago
  You're making an assumption the paper does not believe it does that already. But the paper does believe it provides value. News-gathering is, after all, its business model, and a proven one financially. As a model, providing things that people want to read and see is a very good one.
ugh 16y ago
Well, if you are a hammer everything looks like a nail. Getting people to pay for a newspaper on the web is actually not a programming problem and Bloomberg does not say that they spent $40-50 million on writing code. They spent that money “on the project”. I’m not claiming that they succeeded or will succeed or that $50-50 million is an appropriate amount of money for such a project. All I’m saying is that the actual technical implementation of a pay wall is by far the tiniest challenge of the project.
- groks 16y ago
  What are the greater challenges of the project, that account for the majority of the $50 million?
  - ugh 16y ago
    I don’t know whether you have to spend a large portion of $50 million on it but market research seems like the most important part of such a project to me. Are there pay walls that work well? What design patterns do these share? Is it possible to work together or meet those who built successful pay walls? What about SEO and advertising? (The next questions are best answered with an already existing firm knowledge of the possible alternatives:) What are current and potential New York Times readers willing to pay for online content? How do they want to pay? What online services are they currently paying for and how much? Something that will (likely inevitably) also cost much is tying it all together. Meetings among high-level management are expensive but changing the business model is critical. My suggestion would be to have a small low-level independent team – preferably people who are working on the research or will be working on the implementation – come up with (very few) alternatives and to pitch those to management, limiting management’s involvement in the details. If possible the developers should probably also implement several alternatives and A/B test those. It’s pretty clear to me that actual coding is only a small part of it. (Saying that it is a “tiny” part was a bit of an exaggeration.)
  - usedtolurk 16y ago
    We don't know the full scope of the project so it's impossible to tell. Other costs may have included: market research (predicting uptake pricing and income), several failed experiments, fallback plans, advertising budget, internal restructuring, redundancy payouts.
kprobst 16y ago
I guess it's possible I might be missing something here, but I can't for the life of me understand how this is so complicated and expensive. Is there a technical explanation somewhere? Are they adapting a non-adaptable proprietary CMS or something like that?
jschuur 16y ago
That's at least $40 million you have to make back in subscriptions until you're out of the red.
- egor83 16y ago
  From NYT page [1], the most expensive option: "All Digital Access: $8.75 per week (billed every 4 weeks at $35.00)" 40e6 / (35*12) ~ 95000 yearly subscriptions (but 35$/month is revenue, not profit) On the other hand, their circulation is: 876,638 daily 1,352,358 Sunday [2] _________________________________________________ [1]: http://www.nytimes.com/content/help/account/purchases/subscriptions-and-purchases.html#purchasesq01 http://www.nytimes.com/content/help/account/purchases/subscr... [2]: http://en.wikipedia.org/wiki/The_New_York_Times http://en.wikipedia.org/wiki/The_New_York_Times
andjones 16y ago
thank you for quoting a source (bloomberg). I'd like to see more journalism/rants that quote some source for reference.
nhebb 16y ago
That's almost as much as Thomas Friedman's travel budget for the year. Seriously, though, the New York Times is on one end of the left <-> right media polarization spectrum (w/ Fox on the other end). You'd think the easier path to increased revenues would be adding content that appeals to the other half.
- alnayyir 16y ago
  > Seriously, though, the New York Times is on one end of the left <-> right media polarization spectrum (w/ Fox on the other end). Comically untrue from the perspective of someone disconnected from that spectrum.
  - nhebb 16y ago
    What's comical about it?
    - alnayyir 16y ago
      It's a canard. Most should know better.
      - nhebb 16y ago
        It's not canard. I'm talking about this from a business standpoint, not a political one. Regardless of whether you think that the NYT is liberal or FNC is conservative, most conservatives think the NYT is left-leaning and most liberals think Fox is right-leaning. So if a business is appealing to only part of the potential market, it seems the obvious thing to do would be to broaden your appeal.
        krschultz 16y ago
        And what if by broadening your appeal, you alienate your current readers without actually attracting any that you don't currently have? Almost anytime a layman throws out an "obvious" solution for a problem, it is not the stupidity of the experts trying to solve the problem that has kept them from using the "obvious" solution. This was horribly evident when people this summer kept coming up with terrible ideas for capping the BP oil well based on junk science and engineering, but it is often evident on business matters as well.
nextparadigms 16y ago
With expenses like these, it's no wonder the old print media can't survive on revenue from online advertising and such. They're just too used to the old way of spending money and having huge costs tied to the delivery of news.
shadowsun7 16y ago
I think there's an understandable case to be made for the spending (when your future hinges on your digital properties, you can't really blame management for being scared and wanting outside advice - and lots of it.) But it's hard to see how the Times can work this out, and it's worth remembering that the paywall is a desperate attempt to do this. Desperate people tend to pay more for even the simple things. There aren't any models worth using - if the Times is to get this right, it has to invent one on its own dollar. Is there hope? Monday Note's Frédéric Filloux thinks that the NYT can be a digital-only enterprise: http://www.mondaynote.com/2011/03/27/the-nyts-melting-iceberg-syndrome/ http://www.mondaynote.com/2011/03/27/the-nyts-melting-iceber... Let’s stop a moment and behold the printed New York Times’ true gem: its Sunday edition. It changes everything in our look at the paper’s digital equation: - Sunday circulation is 54% higher than on weekdays (1.35m vs. 877,000). - It’s an expensive package: $5.00 in New York, $6.00 elsewhere in the country. - Sunday copy sales bring five times more money than any weekday. - Advertising-wise, some analysts say the Sunday NYT accounts for about 50% of the paper’s entire advertising revenue. He suggests that it cuts out its daily paper, keeps the SundayEedition cashcow, and switch everything else to digital-only. But it takes a lot of courage to do something so drastic. Till then, $40 million seems regrettably understandable - the price of being scared and unsure of one's future.
- pkteison 16y ago
  csmonitor.com made this digital leap. Would be interesting to see what it did to their finances.
dr_ 16y ago
Print isn't dying - it's killing itself.
by 16y ago
That is trivial compared to the $10,000 million the Harvard endowment fund lost. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a99iobGRQye8 http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a... http://www.nacubo.org/Documents/research/2009_NCSE_Public_Tables_Endowment_Market_Values.pdf http://www.nacubo.org/Documents/research/2009_NCSE_Public_Ta...
- nl 16y ago
  They "lost" $10B as a result of their investment strategy when the global financial crisis hit. They are far from the only people to lose money then. In any case that value was unrealized assets, so it's not like they actually had $36B in cash - as I hope you realize if they ever had to liquidate their assets quickly they'd get less than that - especially given they it liquidating that much would probably move the market. They didn't spend the money wastefully, which is what the NYT seems to have done. Your trite comparison is so far from useful it's not even wrong.
  - by 16y ago
    "In any case that value was unrealized assets, so it's not like they actually had $36B in cash" I could equally say that if they liquidated that $26B quickly they would get less than that. I would hope the $36B and $26B were fair estimations of the asset value at the time.
    - nl 16y ago
      Yes, exactly. Both are fair, market valuations, but (as in any case when you have illiquid assets) a valuation and what you get if you were to liquidate (quickly) are very different things. Cash is King for a good reason!
Tpsoc 16y ago
I used to work for work for a decent size newspaper company in a large metro area and they spent over 6 months to come up with a redesign for a home page that involved at least 4 or 5 different execs or managers in constant meetings, talks with an outside design agency about once a week. Oh, the 6 months only involved coming up with the mock ups not actual dev. That was a while another story with how much time was wasted on that. So i imagine in a larger company, you would have more execs having constant meetings over a paywall, studies with how much profit they can make with pretty graphs to show how the stock price will jump because of the increase in earnings.
DanielBMarkham 16y ago
To the author, this is very simple. Yet we programmers and hackers continue to have a hell of a time with it. The amount of code involved, the value of the solution, and the cost of change are completely different things. It's like saying "I paid too much for my haircut last week. They only cut a small amount of hair!" You're confusing things that are not related. Let's say you had a magic wand and there was zero programming involved. It still could easily take 40 Mil to fix up a paywall -- and it might not be wasted money. There are lots of folks involved who need to sign off on the project, and changing parts of a business model isn't a trivial thing (nor should it be) Yes, seems like way too much to me too, but that's because of my judgment on the business risks and evaluation of change involved, not because of how hard it might be to code up in a weekend. If anything, it tells the story of an organization that is not nimble and that is very unsure of how to proceed, not an organization that spends too much on software. You're reading the wrong lesson into this.
scott_s 16y ago
I'm skeptical that the number is actually $40 million, but no one has pointed out the NY Times is not implementing a simple no-pay, no-content paywall. That's a known quantity. What they're implementing is a semi-porous wall that allows people to read 20 articles a month without paying, and I assume allows web-crawlers to index the content. They're trying to toe the line between something that lets the world get to their content, but still gets them revenue. I am unaware of a similar system, nor have I ever tried to design one.
mncolinlee 16y ago
In my perfect world, they'd spend that money producing high-quality investigative journalism that makes people WANT to pay for it and lower the paywall.
deleted 16y ago
[deleted]
timodonnell 16y ago
I've been getting most of my news from the Times for the past few years, but I'm not sure I'll subscribe now. I'd have to at least consider other pay newspapers like WSJ first. Or maybe I'll try to switch to Huffington post. What other online news sources (free or pay) do you guys think I should consider as Times alternatives?
supercanuck 16y ago
Would it help to know that the NYT runs SAP?
deleted 16y ago
[deleted]
dutchrapley 16y ago
The flaw is that they've spent way too much time trying to figure out how to possibly squeeze the most revenue, before launching the digital subscription pay wall. The New York Times prematurely optimized profits. Software development doesn't start with the last line of code written, it starts with the first user. They should have look to optimize as they go. The problem with the online subscription for newspapers is that there is no standard baseline to base price off of. Yet, they won't fall short. It's relative. They dropped $40 million on the pay wall. They don't have to pay to create content, per se, it's already there (or will be there as it is written). At the cheapest subscription ($15/mo.), it would take 2.67 million subscribers to pay it off in one month. That's very liberal. Or a 1/2 million subscribers over 6 months to pay it off. In the end, they will very quickly the $40 million spent.
rmason 16y ago
They spent $40 million to knee cap themselves! You and I know that in less than six months the paywall will come down. They have built a pay wall that can be defeated with three lines of javascipt. This is so sad on many levels.
- rjkuyvenhoven 16y ago
  I bypass the pay wall on my browser simply by going to the url address bar, removing the “&gwh=[long-alphanumeric-code]” at the end of the address and hitting enter
MebZor 16y ago
>>There are plenty of free (paper) newspapers that are funded by advertising revenue. I don't see any reason in principle why it couldn't work for the online newspapers, who have lower overheads. (a) IMHO free news is generally crap (b) you'll need some facts to support the "low overhead/online advertising" argument. Empirical evidence suggests that is not the case. There are too many advertising destinations for online ads where there are (or were) relatively few destinations for print ads.
krschultz 16y ago
So the NYT spent 1% of their revenue on a project to define their entire future business model? Sounds cheaper than most "lean" startups.
- LostInTheWoods2 16y ago
  If they have that much revenue why do they need a paywall?
  - jtheory 16y ago
    Revenue != profit.
- MichaelApproved 16y ago
  So then why not spend 2% or even 3%? By your logic it would probably still be cheaper than most lean start ups and still make sense. You can't run a business by comparing what you spend simply as a percentage of revenue or as to other, unrelated, models.
ctide 16y ago
Maybe Color raised 41m so they could build a paywall.
sixtofour 16y ago
Q: How did the New York Times manage to spend $40 million on its pay wall? A: They had $40 million (+) available. Money abhors a wallet.
crikli 16y ago
It's silly to us hackers that the paywall can be defeated with Firebug/CSS/JS, etc... But does that mean that the NYT has failed in their mission to monetize their content? I'm not sure it does. I still have conversations with lots of folks people where I have to explain the difference between a browser, the internet, and that blue "e" on their desktop. The NYT probably has solid demographics on their target market, and I'm betting that folks like us that know enough to laugh at their paywall implementation are in the very low single digits percentage-wise. I'm just spitballing here, but I could see someone standing in front of the client saying, "Look, your demos say that 1.1% of your target market is going to be able to circumverent the paywall. The oooold reach around. That represents X dollars in lost revenue. The other 98.9% of your target demo is going to use the system as designed because they're not even going to understand what the nerds are talking about. However, our content is still going to get indexed by Google, which as we know drives X percent of our traffic. We're still going to serve ad impressions and content to that 98.1% of users, resulting in the X% conversion rate bizanalytics is projecting." My point is that the solution might be technically laughable but still meet the business objective.
rohnjaymiller 16y ago
I was SVP Product + Technology for Knight Ridder when we built our e-publishing platform for 32 daily newspapers. The total, including internal hours + resources + vendors was $16 million. That included 3-Tier architecture, custom CMS and content migration of all 32 newspapers and 32 city sites. Where did this $40 million price tag come from? It sounds apocryphal...
cyrus_ 16y ago
Worth noting that the NYT already had a registration wall for articles. It seems that all they needed to do was add a couple of database columns and a bit of simple logic to make sure the user had paid after 20 articles were served. Only slightly more complicated would be bypassing the wall for referrers that they had whitelisted (e.g. Facebook shared links) and the Google bots. No, it can't have been technical costs. I'm sure the money went into expensive consultants who made $20,000 powerpoints about what this would do to revenue and what the future of publishing is.
throwaway40m 16y ago
I wouldn't read establishment media if they paid me (and they do). geez. pay you to serve up propaganda and the usual war mongering in guise of humanitarian concerns? none of this is going to save the establishment media (code word "print"). the eye balls aren't there because the eyeballs on your content leads directly to stomach and mind getting quite upset. take this post from mr harvard.edu. where does he get $40Million figure from? oh, the other "reputable" news outlet reported it? where did they get it? .... "anonymous source"/"a source close to the idiot CFO of nytimes"/etc. now that is irony. love that.
davegan 16y ago
Yes, and Facebook was built by a few nerds in a house in San Francisco. And yet they've now spent hundreds of millions. Proving a concept is cheap, but taking into account all the threads that are involved in building out a large scale application is expensive. My guess is that the $40m quoted for just the paywall is also inaccurate. They probably looked at this as an opportunity to update their platform to be more flexible to take advantage of further business needs for the next decade. Whether it's a good investment is debatable. But as someone who works in the technology and media sector, I appreciate them taking the plunge.

246 points by leoc 16y ago

Does this include the cost of assessing various options, or how to design the pay wall? I'm sure that involved lots of meetings and manager man-hours. But 40m is ridiculous even given those managerial/administrative costs.

gooddelta 16y ago

Strippers, blow, and enterprise software.

minikomi 16y ago
are you hiring?

dandelany 16y ago

Yikes. Probably $10k worth of code, and $39,990,000 worth of strategizing, consulting, Powerpoint presentations, and general hand-wringing about the "death of the news industry". All I know is, if I'd spent $40mil on a paywall, I'd be damn sure it was written to filter on the server-side, not with a client-blockable overlay like they have supposedly implemented.

natrius 16y ago
There are plenty of reasons why a client-blockable overlay could lead to more profit than more foolproof implementations. Some of that strategizing was probably worthwhile. Criticizing is easy, but while I have my concerns with the details of the Times' decisions, I'd bet that after a few tweaks, their paywall will be seen as a success in three years.
patio11 16y ago
I would certainly love to slag on excessively top-heavy project management and the New York Times, but I think you're being a little unfair here. Many of those "What do we build?" discussions are critical and non-obvious. To just look at one little piece, this decision has massive SEO implications. I have some notion of what people qualified to comment on them cost. I'm not nearly the caliber of firm the NYT would stake their future livelihood on by engaging for this kind of work, but even absent that, the minimum possible scope for that SEO engagement blows $10k out of the water.
- elliottcarlson 16y ago
  Indeed, however even with SEO consultants brought in, and even a Snake Oil Consultant or two, the $40 million pricetag is insane. Obviously $10k is no where near realistic when it comes to all the planning between however many stakeholders there are in the site, as well as figuring out ads management and what not. Realistically, we would all still be shocked if they had paid $2 million total.
  - Retric 16y ago
    Considering how important this is to the future of the NYT 10 million would have been completely reasonable. Don't forget sometimes a 1% better solution can really be worth 100 million.
    - elliottcarlson 16y ago
      I'm not denying that regardless there will be a hefty price point on accomplishing something like this in a major organization such as NYT - but there are still limits on how much seems fiscally responsible. Even at $10 million being a possible reasonable number, it's still a fraction of the $40 million spent.
    - shpxnvz 16y ago
      It's only reasonable if that $10M actually buys you something more valuable than what you get for $2M, even by 1% as you state. I think many of us are questioning whether that could possibly be the case. I'm genuinely interested in hearing some ideas of what $8M of extra investment could buy in this case?
  - wisty 16y ago
    OK, answer me this: who in the organization has the technical know-how to decide how to solve all the SEO and usability issues; and the authority to do so? If there's nobody even close, then they will have massive spec churn.
    - krschultz 16y ago
mbesto 16y ago
Management Consultants, Management Consultants, Management Consultants There needs to be a Steve Ballmer at McKinsey.
ultrasaurus 16y ago
I was on NPR today talking about this [1], and while I was the least insightful guest, I think that a lot of it boils down to still thinking like a business with 35% margins and huge headcount, rather than a scrappy underdog (that for some reason has a huge paper-distribution network in the Metro NY area tacked on). [1] http://onpoint.wbur.org/2011/03/28/paywall-debate http://onpoint.wbur.org/2011/03/28/paywall-debate
projectMY 16y ago
I make software. We use an AGILE development process at our firm. In determining cost there are 3 determinants: Scope/$$$/Time. Typically, a client can control one. When you think of the name (NYT), the image and brand, and aspiration they have to be the most read english news source, 40M on a paywall, seems fair. But what seems strange is the 14 months of work that they took, to create something thats inferior. The fact of the matter is that the news industry model is ripe for a Tipping Point (@MalcolmGladwell). It wasn't prudent for the NYT to make a dollar amount public. It only puts a target on their head.

kondro 16y ago

Quote: $39,990,000 Result: before_filter { redirect_to :controller => :accounts, :action => :login unless current_user.subscribed? }

marcamillion 16y ago
I am just learning Rails, and am completely stoked that I understand this. Dumb, I know...but nerdly exhilarating.
phamilton 16y ago
It's a little more complicated than that. From the Bloomberg article: "Developing the technology for paywalls is challenging because publishers are trying to strike the most profitable balance between charging some online readers and letting others in free to generate advertising and attention. Though Times Co. has said it will charge visitors after they’ve read a certain number of stories, for example, the company plans to let people coming to the website from social networks such as Facebook Inc. view an unlimited number of those stories for free." I suspect that almost all of that budget went into market research. This isn't quite an A/B testing scenario. If you drive away potentially paying customers 50% of the time (in a worst case A/B test) then you are losing money. The potential for lost revenue in a "release early, release often" iteration approach may justify such a big budget. With so many factors, quite a bit of strategizing and research need to happen before putting things to the test.
- rayboyd 16y ago
  Indeed, a bunch of New York executive wages over an 18 month period start to add up. Khoi Vin (former art director) pondered this on his blog a few weeks ago [1], citing it as one of the reasons he resigned his post. [1] http://www.subtraction.com/2011/03/18/what-the-nyt-pay-wall-really-costs http://www.subtraction.com/2011/03/18/what-the-nyt-pay-wall-...
patio11 16y ago
This is not what was actually implemented, and would have finished the Times, due to SEO effects alone. (There are numerous other issues, but that's the one that will crater their revenue tomorrow.) Seriously, while I appreciate the desire of programmers to think that we're smarter than the average bear, this is like saying StackOverflow is a clone-it-in-a-weekend site. It betrays a fundamental lack of understanding as to what is actually going on with the business model.

maqr 16y ago

It can be very expensive to build a solution for an unsolvable problem.

deleted 16y ago
[deleted]
noonespecial 16y ago
Plus, at this level of management, "what color should the bike-shed be" may well indeed be unsolvable.

bsiemon 16y ago

I believe they might have used the same stuff the Washington Post used[1]. The post quoted a lower ( 7 million ) but still unreal figure in another paywall related article [2]. [1] http://www.eidosmedia.com/EN/Page/Uuid/83c5a8b2-ae9f-11de-9d72-8e8f18867204/Web_CMS.xml http://www.eidosmedia.com/EN/Page/Uuid/83c5a8b2-ae9f-11de-9d... [2] http://www.washingtonpost.com/opinions/behind-the-posts-redesigned-web-site/2011/03/25/AFC3GXYB_story.html http://www.washingtonpost.com/opinions/behind-the-posts-rede...

Seth_Kriticos 16y ago

There was an elaborate article about this on TechDirt a few days back: http://www.techdirt.com/articles/20110317/10393913530/it-took-ny-times-14-months-40-million-dollars-to-build-worlds-stupidest-paywall.shtml http://www.techdirt.com/articles/20110317/10393913530/it-too...

holman 16y ago

For those of you in a different country that doesn't use the Dollar: The New York Times just blew almost an entire Color on their paywall.

andjones 16y ago
indeed... see: http://news.ycombinator.com/item?id=2363697 http://news.ycombinator.com/item?id=2363697 http://news.ycombinator.com/item?id=2367132 http://news.ycombinator.com/item?id=2367132
notahacker 16y ago
They also could have paid these staff for at least another four years. http://blogs.reuters.com/mediafile/2009/10/19/new-york-times-job-cuts-read-the-memo/ http://blogs.reuters.com/mediafile/2009/10/19/new-york-times.... Past experience at an old media company (who would have loved to have had a spare £40 million to spend delaying project launches) suggests the redundancies were people too busy doing productive work to produce job-saving Powerpoint presentations on how they were enhancing stakeholder value by synergising workflow processes.
- coolgeek 16y ago
  To be fair, it was only £25 million
wging 16y ago
I'm sorry, what's a Color?
- jacques_chester 16y ago
  A wavelength of light, as spelled by Mr Noah Webster during the Great Vowel Shortage of 1783.
  - leoc 16y ago
    Worst. Spelling reform. Ever.

danilocampos 16y ago

Imagine if they'd instead invested that money in restructuring themselves for a viable, 21st century business model. I mean, it's a big ship to turn and you probably need a lot more than $40m. But at least they'd be closer to cracking it than they are now.

natrius 16y ago
Your assertion is based on faith, not facts. You believe that there's some mythical "21st century" business model that will save journalism with no evidence to back that up. If asking readers to pay for news doesn't qualify as sufficiently modern, I'm really not sure what you have in mind. Please elaborate. (Personally, I think donations sought by non-profits are a better way to fund journalism, but that is decidedly pre-21st century.)
- danilocampos 16y ago
  Saving journalism and saving The New York Times Company are two very different things. I'm focused on the latter in the above comment. The fact that businesses exist and make money producing digital content after 1999 is effective proof that survival is possible.
  - davidw 16y ago
    We're in a transition phase. Doubtless, buggy whip manufacturers survived a few years past the introduction of the Ford Model T as well. Whether that's an apt comparison for producers of information goods is too early to say - I don't think it's likely to be accurate, but I don't know what the future holds either, and I think things are still changing.
    - rhizome 16y ago
      Thing is, there are still buggy whip manufacturers that have been in business since then. I don't know if Jedediah's Buggy Whips could have planned to survive the automobile, but they have. The New York Times I'm sure would like to be the buggy whip of journalism. The Gray Lady is casting about wildly (probably before it really matters) in hopes of avoiding an uncertainty on par with the 1908 whip market.

aeontech 16y ago

So, let's say a wildly over-staffed (for this kind of project) team of 10 programmers for a year, on an average salary of $120K. That's still only 1.2M. Let's say another 800K on hardware. Does that mean the other 38M went to corporate, management, kickbacks to ensure that the right company got the contract? If that's the case, it's even more depressing if the vast majority of the money didn't even go to people who had absolutely nothing to do with the actual implementation. Can the shareholders of the NYT demand an investigation into this? Seems like this kind of ridiculous overspending should be something that would concern them.

rorrr 16y ago
You are very wrong about the size of the team that was involved. My guess would be 1) 10 to 20 developers 2) 2 to 3 sys admins 3) 10 to 30 managers 4) 15 to 20 executives, from low level, all the way to the top. 5) Outside consulting design team that billed them at $500/hour. Q: How did they get so spend that money? A: Endless meetings. Executive salaries add up very very quickly. Executives and managers absolutely loooove meetings, that's how they can pretend to do anything useful. In reality they spend hours discussing the color and the thickness of the line under the logo and bullshit each other, while developers are half-asleep from boredom or are wondering - "WTF, did this dude just discover the internet? and why is he in charge?"
- maigret 16y ago
  UX specialists and UI architects/designers discuss things like thickness of lines. Also don't discount the sheer size of their website, making "simple" changes a whole different thing than on a private small website. You also forget testers, project managers, and lawyers etc. Blaming execs and managers is just too simple I think. That would be easy to fix.
  - rorrr 16y ago
    > UX specialists and UI architects/designers discuss things like thickness of lines You wish. I'm yet to see a company where (often clueless) executives don't override decisions of professionals. I know a huge company where the CEO spent five weeks changing the curve of one of the letters in the logo, there were something like 25 iterations. Want to calculate how much that cost?

nazgulnarsil 16y ago

the traditional news agencies make more sense when viewed as a branch of the civil service. especially NYT.

mkramlich 16y ago

I had the exact same reaction. I think it's a classic case of there being no upper bound on how much time or money can be consumed by a large organization trying to achieve some effect. They have amazingly labyrinthine and absurdly bloated ways of doing whatever they want. Like that saying that work expands to fill the time allotted for it. A given task generally can not be performed any faster than some specific lower bound. But there's no upper bound, and all you have to do is add more people, opinions, meetings, committees, processes, rules, laws, approvals, reversals, fights, dead ends, legacy architecture appeasement, technical debt, alternative explorations, dead time, vacations, etc. and you can blow up the time/dollar cost to whatever level you want. Related note: I bet if some news organization used an off-the-shelf CMS like WordPress or Drupal, they could add a "paywall" to their site in less than a week, using mostly the services of a single engineer, and perhaps a designer. Let's call that a total project cost in the $400 to $4000 range. ps. If any news organization decision-maker is reading this, I do indie contracting and would gladly add a paywall to your site for a mere... (pinkie in mouth) one million dollars!

jsz0 16y ago

It's a fairly complex problem. They probably wanted to model a bunch of different systems to 'prove' they were making the right choice. Ultimately that will determine who to congratulate or blame in 6 months so you can imagine everyone involved in the process was interested in staking a claim to success or evading the blame of failure. So take every facet of the paper's expenses/revenue and figure they ran the numbers dozens of ways for each minute part of the operation factoring in all their partnerships, ad buys, etc. They are a news gathering organization so they probably approached the problem in some depth. Plus they probably had good expense accounts so you know.. no need to rush it.

tokipin 16y ago

perhaps upkeep and renovation for n years is included

iantimothy 16y ago

It seems like everyone thought the goal was "How do we charge for content" instead of "How do we provide value that people are willing to pay for content".

pbhjpbhj 16y ago
I'd have thought the goal was "how do we stop people getting content without getting charged".
Choire 16y ago
You're making an assumption the paper does not believe it does that already. But the paper does believe it provides value. News-gathering is, after all, its business model, and a proven one financially. As a model, providing things that people want to read and see is a very good one.

ugh 16y ago

Well, if you are a hammer everything looks like a nail. Getting people to pay for a newspaper on the web is actually not a programming problem and Bloomberg does not say that they spent $40-50 million on writing code. They spent that money “on the project”. I’m not claiming that they succeeded or will succeed or that $50-50 million is an appropriate amount of money for such a project. All I’m saying is that the actual technical implementation of a pay wall is by far the tiniest challenge of the project.

groks 16y ago
What are the greater challenges of the project, that account for the majority of the $50 million?
- ugh 16y ago
  I don’t know whether you have to spend a large portion of $50 million on it but market research seems like the most important part of such a project to me. Are there pay walls that work well? What design patterns do these share? Is it possible to work together or meet those who built successful pay walls? What about SEO and advertising? (The next questions are best answered with an already existing firm knowledge of the possible alternatives:) What are current and potential New York Times readers willing to pay for online content? How do they want to pay? What online services are they currently paying for and how much? Something that will (likely inevitably) also cost much is tying it all together. Meetings among high-level management are expensive but changing the business model is critical. My suggestion would be to have a small low-level independent team – preferably people who are working on the research or will be working on the implementation – come up with (very few) alternatives and to pitch those to management, limiting management’s involvement in the details. If possible the developers should probably also implement several alternatives and A/B test those. It’s pretty clear to me that actual coding is only a small part of it. (Saying that it is a “tiny” part was a bit of an exaggeration.)
- usedtolurk 16y ago
  We don't know the full scope of the project so it's impossible to tell. Other costs may have included: market research (predicting uptake pricing and income), several failed experiments, fallback plans, advertising budget, internal restructuring, redundancy payouts.

kprobst 16y ago

I guess it's possible I might be missing something here, but I can't for the life of me understand how this is so complicated and expensive. Is there a technical explanation somewhere? Are they adapting a non-adaptable proprietary CMS or something like that?

jschuur 16y ago

That's at least $40 million you have to make back in subscriptions until you're out of the red.

egor83 16y ago
From NYT page [1], the most expensive option: "All Digital Access: $8.75 per week (billed every 4 weeks at $35.00)" 40e6 / (35*12) ~ 95000 yearly subscriptions (but 35$/month is revenue, not profit) On the other hand, their circulation is: 876,638 daily 1,352,358 Sunday [2] _________________________________________________ [1]: http://www.nytimes.com/content/help/account/purchases/subscriptions-and-purchases.html#purchasesq01 http://www.nytimes.com/content/help/account/purchases/subscr... [2]: http://en.wikipedia.org/wiki/The_New_York_Times http://en.wikipedia.org/wiki/The_New_York_Times

andjones 16y ago

thank you for quoting a source (bloomberg). I'd like to see more journalism/rants that quote some source for reference.

nhebb 16y ago

That's almost as much as Thomas Friedman's travel budget for the year. Seriously, though, the New York Times is on one end of the left <-> right media polarization spectrum (w/ Fox on the other end). You'd think the easier path to increased revenues would be adding content that appeals to the other half.

alnayyir 16y ago
> Seriously, though, the New York Times is on one end of the left <-> right media polarization spectrum (w/ Fox on the other end). Comically untrue from the perspective of someone disconnected from that spectrum.
- nhebb 16y ago
  What's comical about it?
  - alnayyir 16y ago
    It's a canard. Most should know better.
    - nhebb 16y ago
      It's not canard. I'm talking about this from a business standpoint, not a political one. Regardless of whether you think that the NYT is liberal or FNC is conservative, most conservatives think the NYT is left-leaning and most liberals think Fox is right-leaning. So if a business is appealing to only part of the potential market, it seems the obvious thing to do would be to broaden your appeal.
      - krschultz 16y ago
        And what if by broadening your appeal, you alienate your current readers without actually attracting any that you don't currently have? Almost anytime a layman throws out an "obvious" solution for a problem, it is not the stupidity of the experts trying to solve the problem that has kept them from using the "obvious" solution. This was horribly evident when people this summer kept coming up with terrible ideas for capping the BP oil well based on junk science and engineering, but it is often evident on business matters as well.

nextparadigms 16y ago

With expenses like these, it's no wonder the old print media can't survive on revenue from online advertising and such. They're just too used to the old way of spending money and having huge costs tied to the delivery of news.

shadowsun7 16y ago

I think there's an understandable case to be made for the spending (when your future hinges on your digital properties, you can't really blame management for being scared and wanting outside advice - and lots of it.) But it's hard to see how the Times can work this out, and it's worth remembering that the paywall is a desperate attempt to do this. Desperate people tend to pay more for even the simple things. There aren't any models worth using - if the Times is to get this right, it has to invent one on its own dollar. Is there hope? Monday Note's Frédéric Filloux thinks that the NYT can be a digital-only enterprise: http://www.mondaynote.com/2011/03/27/the-nyts-melting-iceberg-syndrome/ http://www.mondaynote.com/2011/03/27/the-nyts-melting-iceber... Let’s stop a moment and behold the printed New York Times’ true gem: its Sunday edition. It changes everything in our look at the paper’s digital equation: - Sunday circulation is 54% higher than on weekdays (1.35m vs. 877,000). - It’s an expensive package: $5.00 in New York, $6.00 elsewhere in the country. - Sunday copy sales bring five times more money than any weekday. - Advertising-wise, some analysts say the Sunday NYT accounts for about 50% of the paper’s entire advertising revenue. He suggests that it cuts out its daily paper, keeps the SundayEedition cashcow, and switch everything else to digital-only. But it takes a lot of courage to do something so drastic. Till then, $40 million seems regrettably understandable - the price of being scared and unsure of one's future.

pkteison 16y ago
csmonitor.com made this digital leap. Would be interesting to see what it did to their finances.

dr_ 16y ago

Print isn't dying - it's killing itself.

by 16y ago

That is trivial compared to the $10,000 million the Harvard endowment fund lost. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a99iobGRQye8 http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a... http://www.nacubo.org/Documents/research/2009_NCSE_Public_Tables_Endowment_Market_Values.pdf http://www.nacubo.org/Documents/research/2009_NCSE_Public_Ta...

nl 16y ago
They "lost" $10B as a result of their investment strategy when the global financial crisis hit. They are far from the only people to lose money then. In any case that value was unrealized assets, so it's not like they actually had $36B in cash - as I hope you realize if they ever had to liquidate their assets quickly they'd get less than that - especially given they it liquidating that much would probably move the market. They didn't spend the money wastefully, which is what the NYT seems to have done. Your trite comparison is so far from useful it's not even wrong.
- by 16y ago
  "In any case that value was unrealized assets, so it's not like they actually had $36B in cash" I could equally say that if they liquidated that $26B quickly they would get less than that. I would hope the $36B and $26B were fair estimations of the asset value at the time.
  - nl 16y ago
    Yes, exactly. Both are fair, market valuations, but (as in any case when you have illiquid assets) a valuation and what you get if you were to liquidate (quickly) are very different things. Cash is King for a good reason!

Tpsoc 16y ago

I used to work for work for a decent size newspaper company in a large metro area and they spent over 6 months to come up with a redesign for a home page that involved at least 4 or 5 different execs or managers in constant meetings, talks with an outside design agency about once a week. Oh, the 6 months only involved coming up with the mock ups not actual dev. That was a while another story with how much time was wasted on that. So i imagine in a larger company, you would have more execs having constant meetings over a paywall, studies with how much profit they can make with pretty graphs to show how the stock price will jump because of the increase in earnings.

DanielBMarkham 16y ago

To the author, this is very simple. Yet we programmers and hackers continue to have a hell of a time with it. The amount of code involved, the value of the solution, and the cost of change are completely different things. It's like saying "I paid too much for my haircut last week. They only cut a small amount of hair!" You're confusing things that are not related. Let's say you had a magic wand and there was zero programming involved. It still could easily take 40 Mil to fix up a paywall -- and it might not be wasted money. There are lots of folks involved who need to sign off on the project, and changing parts of a business model isn't a trivial thing (nor should it be) Yes, seems like way too much to me too, but that's because of my judgment on the business risks and evaluation of change involved, not because of how hard it might be to code up in a weekend. If anything, it tells the story of an organization that is not nimble and that is very unsure of how to proceed, not an organization that spends too much on software. You're reading the wrong lesson into this.

scott_s 16y ago

I'm skeptical that the number is actually $40 million, but no one has pointed out the NY Times is not implementing a simple no-pay, no-content paywall. That's a known quantity. What they're implementing is a semi-porous wall that allows people to read 20 articles a month without paying, and I assume allows web-crawlers to index the content. They're trying to toe the line between something that lets the world get to their content, but still gets them revenue. I am unaware of a similar system, nor have I ever tried to design one.

mncolinlee 16y ago

In my perfect world, they'd spend that money producing high-quality investigative journalism that makes people WANT to pay for it and lower the paywall.

deleted 16y ago

[deleted]

timodonnell 16y ago

I've been getting most of my news from the Times for the past few years, but I'm not sure I'll subscribe now. I'd have to at least consider other pay newspapers like WSJ first. Or maybe I'll try to switch to Huffington post. What other online news sources (free or pay) do you guys think I should consider as Times alternatives?

supercanuck 16y ago

Would it help to know that the NYT runs SAP?

deleted 16y ago

[deleted]

dutchrapley 16y ago

The flaw is that they've spent way too much time trying to figure out how to possibly squeeze the most revenue, before launching the digital subscription pay wall. The New York Times prematurely optimized profits. Software development doesn't start with the last line of code written, it starts with the first user. They should have look to optimize as they go. The problem with the online subscription for newspapers is that there is no standard baseline to base price off of. Yet, they won't fall short. It's relative. They dropped $40 million on the pay wall. They don't have to pay to create content, per se, it's already there (or will be there as it is written). At the cheapest subscription ($15/mo.), it would take 2.67 million subscribers to pay it off in one month. That's very liberal. Or a 1/2 million subscribers over 6 months to pay it off. In the end, they will very quickly the $40 million spent.

rmason 16y ago

They spent $40 million to knee cap themselves! You and I know that in less than six months the paywall will come down. They have built a pay wall that can be defeated with three lines of javascipt. This is so sad on many levels.

rjkuyvenhoven 16y ago
I bypass the pay wall on my browser simply by going to the url address bar, removing the “&gwh=[long-alphanumeric-code]” at the end of the address and hitting enter

MebZor 16y ago

>>There are plenty of free (paper) newspapers that are funded by advertising revenue. I don't see any reason in principle why it couldn't work for the online newspapers, who have lower overheads. (a) IMHO free news is generally crap (b) you'll need some facts to support the "low overhead/online advertising" argument. Empirical evidence suggests that is not the case. There are too many advertising destinations for online ads where there are (or were) relatively few destinations for print ads.

krschultz 16y ago

So the NYT spent 1% of their revenue on a project to define their entire future business model? Sounds cheaper than most "lean" startups.

LostInTheWoods2 16y ago
If they have that much revenue why do they need a paywall?
- jtheory 16y ago
  Revenue != profit.
MichaelApproved 16y ago
So then why not spend 2% or even 3%? By your logic it would probably still be cheaper than most lean start ups and still make sense. You can't run a business by comparing what you spend simply as a percentage of revenue or as to other, unrelated, models.

ctide 16y ago

Maybe Color raised 41m so they could build a paywall.

sixtofour 16y ago

Q: How did the New York Times manage to spend $40 million on its pay wall? A: They had $40 million (+) available. Money abhors a wallet.

crikli 16y ago

It's silly to us hackers that the paywall can be defeated with Firebug/CSS/JS, etc... But does that mean that the NYT has failed in their mission to monetize their content? I'm not sure it does. I still have conversations with lots of folks people where I have to explain the difference between a browser, the internet, and that blue "e" on their desktop. The NYT probably has solid demographics on their target market, and I'm betting that folks like us that know enough to laugh at their paywall implementation are in the very low single digits percentage-wise. I'm just spitballing here, but I could see someone standing in front of the client saying, "Look, your demos say that 1.1% of your target market is going to be able to circumverent the paywall. The oooold reach around. That represents X dollars in lost revenue. The other 98.9% of your target demo is going to use the system as designed because they're not even going to understand what the nerds are talking about. However, our content is still going to get indexed by Google, which as we know drives X percent of our traffic. We're still going to serve ad impressions and content to that 98.1% of users, resulting in the X% conversion rate bizanalytics is projecting." My point is that the solution might be technically laughable but still meet the business objective.

rohnjaymiller 16y ago

I was SVP Product + Technology for Knight Ridder when we built our e-publishing platform for 32 daily newspapers. The total, including internal hours + resources + vendors was $16 million. That included 3-Tier architecture, custom CMS and content migration of all 32 newspapers and 32 city sites. Where did this $40 million price tag come from? It sounds apocryphal...

cyrus_ 16y ago

Worth noting that the NYT already had a registration wall for articles. It seems that all they needed to do was add a couple of database columns and a bit of simple logic to make sure the user had paid after 20 articles were served. Only slightly more complicated would be bypassing the wall for referrers that they had whitelisted (e.g. Facebook shared links) and the Google bots. No, it can't have been technical costs. I'm sure the money went into expensive consultants who made $20,000 powerpoints about what this would do to revenue and what the future of publishing is.

throwaway40m 16y ago

I wouldn't read establishment media if they paid me (and they do). geez. pay you to serve up propaganda and the usual war mongering in guise of humanitarian concerns? none of this is going to save the establishment media (code word "print"). the eye balls aren't there because the eyeballs on your content leads directly to stomach and mind getting quite upset. take this post from mr harvard.edu. where does he get $40Million figure from? oh, the other "reputable" news outlet reported it? where did they get it? .... "anonymous source"/"a source close to the idiot CFO of nytimes"/etc. now that is irony. love that.

davegan 16y ago

Yes, and Facebook was built by a few nerds in a house in San Francisco. And yet they've now spent hundreds of millions. Proving a concept is cheap, but taking into account all the threads that are involved in building out a large scale application is expensive. My guess is that the $40m quoted for just the paywall is also inaccurate. They probably looked at this as an opportunity to update their platform to be more flexible to take advantage of further business needs for the next decade. Whether it's a good investment is debatable. But as someone who works in the technology and media sector, I appreciate them taking the plunge.