First, in order not to suffer a crippling loss in traffic (Murdoch's London Times lost 90% of its readership) and thus advertising revenue, the paywall cannot extract revenue from almost everyone who reads the NYT website:
- Subscribers to the print edition, who get free access.
- People who read the website a lot, who get free access sponsored by advertisers.
- People who don't read the website a lot, who can read 20 articles a month for free.
- People who get to articles free via links from search engines, blogs, etc.
- Technically sophisticated readers, who can get free access by evading the paywall
Second, because the paywall that would be unnecessary if the cost base were addressed needs all these holes, it is unnecessarily complex. Therefore, as Philip Greenspun reveals, it is unnecessarily expensive. How did an organization one would think was tech-savvy end up paying $40-50M to implement a paywall, even if it is a complex one? The answer appears to be that some time ago, presumably to reduce costs on the digital side of the business, the NYT outsourced their website to Atypon. Apparently, they have repented and have taken the website back in-house, so the $40-50M is not just implementing the paywall but also insourcing.
These costs for undoing a decision to outsource, together with Boeing's 787 outsourcing fiasco, should be warnings to libraries currently being seduced to outsource their collections and functions.