The Gray Lady Nudges

The folks at the New York Times are either super lucky, or they have a keen understanding of how to apply behavioral economics.

Earlier this year, the New York Times began putting the majority of its content behind a “pay wall” — if you want to read more than a handful of articles, you’ll have to sign up for a subscription.

And it’s worked.  Digital subscriptions are up, hitting their target ahead of time.  Maybe that shouldn’t be a surprise given the Gray Lady’s top-tier status among new outlets.

But what’s surprising is how they did it.  Rather than make their pay wall impenetrable, they’ve made it pretty easy to climb over, dig under or get around; there are several relatively easy workarounds that offer limitless access to content.

Felix Salmon at Wired offers his explanation about why people pay up despite the porous wall:

Sales people and business-side executes tend to believe as a matter of faith that if people can get something for free, they won’t pay for it. But all they need to do is look at their own behavior to see how that isn’t true: when they go to a restaurant in a distant town that they’ll never visit again, they still leave a 20% tip. A large segment of the population feels that it’s only proper to pay for something if you’re getting value from it — and if you invite as many people as possible onto your lawn, that’s a great way of maximizing the number of people who get value from it. Especially in a world where your own enjoyment of it doesn’t impinge on anybody else’s.

I’m not sure about inviting a crowd onto my lawn — although its already taken a beating from the killer Midwest summer — but I do get his point.  People generally understand the need to charge for things that offer value.  I’d add the following:

  • Social norms vs. market norms.  Readers develop an attachment with newspapers, and this relationship borders on the social.  (I tend to scan the NYT website in the morning over my coffee, and when I eat lunch at my desk.  In both cases, the door is closed… it’s just me and my browser.)  Forcing me to pay to enjoy the NY Times ruptures this relationship.  Making the wall porous allows me to maintain my friendly relationship with the Times.
  • Speed bumps work.  Those workarounds aren’t onerous, but they do require me to fiddle with extra stuff when I want to view more than my allotment of content from the NY Times.  Just as the small headache of taking my car to the shop to get an oil change causes me to be chronically 500 miles behind on those changes, requiring a little extra effort to read my NY Times does cause me pause.
  • Reciprocity.  Every time you use one of those workarounds, you’re reminded that you’re taking but not giving.

NetFlix could use a bit of this.  About half the time I mention them, people start telling me how angry they are about their latest fee hike.  The work “unfair” is slung around quite frequently.  Could they have used a speed-bump approach?

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