The Breakdown

Explaining Southern California's economy

How much traffic is the Los Angeles Times willing to lose on new paywall?

The Los Angeles Times building as seen on the evening of September 20, 2006 in Los Angeles, California.
The Los Angeles Times building as seen on the evening of September 20, 2006 in Los Angeles, California. David McNew/Getty Images

It's finally happened. The Los Angeles Times has joined the New York Times and the Wall Street Journal in charging for online content. It's a paywall, but they're not calling it that. They're calling it a membership program. And the switch gets flipped March 5.

LA Observed sums it all up (and also included LAT President Kathy Thomson's memo):

Freeloaders get 15 stories for free in a month. Otherwise, it's $3.99 for a week of digital access, less if you take the Sunday paper in print, the Times story says. There's a cheaper introductory rate of 99 cents for four weeks of what the paper calls a membership program, to go into effect March 5. Print subscribers get the online paper for free.

You can compare this with the New York Times paywall, which we learned earlier this month has managed to convince 325,000 folks a month to to pay for access the online edition. The NYT also charges a 99-cent four-week intro rate, but thereafter it jumps to $15-35, depending on whether you want full online, mobile, and tablet access. For now, the LAT is keeping tablet and mobile access free — perhaps because it's reportedly pursuing a proprietary tablet that may affect how content for the device is bundled. 

Depending on how you dice and slice the numbers, the New York Times' paywall has either been very successful; or very successful but not successful enough to make up for the slide in print revenue. This issue has all been pretty well worked over in the blogosphere. Felix Salmon has covered it for Reuters. Mathew Ingram has run the numbers for GigaOm. Ken Doctor has done a deep dive.

The LAT is basically going for a discount version of the NYT model. The issue is probably related to the dwindling viability of the print product — which nevertheless still makes most of the money, but is continuing to lose subscribers — and the ascent of the digital side, which is racking up something like 17 million page views a month. My guess is that the LAT isn't pricing the paywall that high because it can only spend some of those pages views, and it has rough idea of how many. 

And of course charging $1.99 a week for digital access if you buy the Sunday paper is a good play to keep the marquee print product afloat, using a bit of leverage to get more people to bite on the subsidy so that the paywall seems like a really great deal. It's less than a cup of coffee!

It would be a better deal if you got the Saturday and Sunday paper, given that the Saturday edition is going to contain a new combined lifestyle section that will presumably feature the work of Pulitzer-winning food writer Jonathan Gold, a recent hire and possibly the most famous food writer in America.

Advantageously, the LAT's paywall is "porous," meaning you can still get to content through various means without paying up. It might get less porous over time — remember that tablet scheme — but for now, there it is.

The verdict on paywalls seems to be that they're moderately despised but that if your content is good enough, then people will break out the credit cards. They just won't pay enough to save the print side. This is the case with the New York Times and will be even more evident with the LA Times, because the pricing is so much lower. The NYT is making around $80 million from "metered access." You'd expect the LAT to bring in a fraction of that.

BUT there's a proof-of-concept thing going on here. Over the long haul, it's more important to figure out how to make money online, rather than using online revenue to make up for lost print revenue. You can view this optimistically. Or you can see it as ominous, since even a successful paywall doesn't support a news-gathering operation on the scale of the old LAT (newsroom of 1000-plus) or the NYT, with its national/interational scope.

For the LATimes, this could work out better. What was a quasi-national paper is now becoming much more a local publication that just happens to have a vast network of blogs hauling in Gawker Media-type traffic. Because it has to do less, it can charge less than the NYT. But it can't go free, like Gawker, or the Huffington Post, or Business Insider, or any of the other new media ventures that have built themselves for the online-revenue environment.

But you you could also argue that what works for the NYT — the country's premier paper, with good people on the business side — should just be copied. Don't go for a discount pricing model. Charge a premium rate and accept what you get. It wasn't like the LAT was charging vastly less for the print product than the NYT back before the online revolution.

Something to chew on at 1st and Spring.

Follow Matthew DeBord and the DeBord Report on Twitter.

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