The New York Times paywall haters are wrong.
That at least is the word from Scout Analytics, a Seattle-based firm that specializes in helping Web publishers maximize revenue per user. The company, whose customers include Nasdaq OMX and Elsevier, claims that a paywall actually creates three new sources of revenue for the Times, not just the revenue that comes from paying subscribers.
In a blog post today making this argument, Scout Analytics analyst Matt Shanahan cited the promotion the Times is running with Ford, which has been giving away free subscriptions to the Times' Web site to 200,000 users for the rest of 2011. While it's unlikely that Ford paid the full freight for these users' digital subscriptions, that ad deal "represents incremental revenue the NYT would otherwise not have had and most likely at a much higher rate than the CPM model," wrote Shanahan.
Plus, the Times has nine months to convince those subsidized subscribers to pay, or they can sign on another advertiser next year, he argued.
In addition, Scout Analytics noted another potential revenue source—coffee drinkers. Shanahan suggested that through a partnership with Starbucks, visitors to the chain's stores might receive free WiFi and free access to the Times. "[Starbucks] is able to provide a valuable package of content and coffee to build in-store loyalty and revenue," he wrote. And for the Times, "The paywall creates a price and enables new revenue from distribution."
Shanahan wasn't about to make any firm revenue predictions for these alternate streams. But he believes the judgments weighed against the Times paywall have been premature. "What is known is that the paywall generates revenue from more sources than just consumers," he said. "That means most of the chatter about their paywall is using the wrong logic."