Think of a number and double/halve it: the science behind online subs pricing

Comment by Tim Dawson

Deciding whether it makes business sense putting online publications behind paywalls is increasingly like finding scientific evidence for the existence of God.  Your conclusion appears to be determined more by pre-existing prejudice than from any meaning actually extracted from data.

In the past week, Wolverhampton’s Express and Star has abandoned the paywall that it had erected around its content in April 2011, which gave access to the entire paper’s content for £2.81 a week.  The paper’s publisher did not elaborate on the reasons for the lifting of the paywall, but did announce new iPhone and iPad apps for its content.

The New York Times announced that it has seen no change in traffic to its sites, since it put up a soft paywall and Mecom, which publishes a range of European newspapers on the web, has switched from providing free content to 1.2m subscribers to requiring that customers will have to pay.

The Scotsman, too, has just launched a very attractive iPad app, which is free for 30 days but will cost £7.99 a month thereafter.

This price point is illustrative of another area in which the fog over paywalls is so thick as to make cool analysis difficult – pricing.  At the top of the tree is the Financial Times.  Full access to its content via an iPad costs £353 a year.  The Times/Sunday Times’ digital package (which is for seven papers a week compared to the FT’s six) is just £104 a year.  That makes The Scotsman’s app, at £96 a year (also for just six papers a week) looks pricey.

Check out the costs of a Kindle subscription to any of these papers, and the picture becomes more confused.  A Kindle sub to the FT will cost you just £216 a year, The Times, on the other hand, costs £120 a year.  The Guardian and Observer, usually so opposed to charges for digital content, also ask £120 a year to read their content on your Kindle.

Magazines are no less unpredictable.  The Spectator’s cover price is £3.50, but an annual, posted subscription to the actual magazine can be had for £104 a year.  A Kindle sub, on the other hand, costs just £36. A paper subscription to The Economist can be had for £102 a year, but the Kindle subscription cost £120 annually.

Does any of this matter? This is, after all, an emerging market in which established commercial practices and price norms have clearly not settled down. There is a compelling argument that the way to profit from digital subscriptions is to make the process of paying so seamless that consumers hardly notice that they have signed up at all.

However, there is surely also a risk of leaving consumers feeling cheated. Even those who have committed to paying for content at the moment face a bewildering search for the best deal.  At least most publishers allow a reasonably generous ‘cooling off’ period, in case you plump for a Kindle version, say, and then decide that you would prefer the enhancements of reading on an iPad.  Nevertheless, it would be hard to blame anyone for deciding to keep their credit cards in their pockets in the face of such apparently Chinese-menu marketing and mixed messages about the sustainability of any charging model.