The New York Times
) recently unveiled its digital subscription service designed
to charge a fee to "heavy users" of its online platform. A few days
back, we took look at the qualitative impact on NYT from the new
Uncertain Impact from NYT's New Digital
). Here, we dive deeper into the quantitative impact. The new
payment structure aims to generate added revenue for NYT as it
competes with publications like News Corp's (
) The Wall Street Journal (WSJ) as well as Internet-based outlets
like Yahoo (
), Google (
) and AOL (
We maintain a
$9.32 price estimate for NYT stock
, roughly in line with market price.
NYT could continue to gain subscribers..
NYT attracts about 30 million unique visitors per month, but
only 15% of these fall under the category of "heavy users". Under
the new payment structure, all users will be able to access 20
articles per month for free, and can also access NYT's articles
through search engines. Subscribers to NYT's print version will
also have full access to NYT online. Given this level of
availability for NYT content, we believe the number of online
subscribers might end up around 500,000 for 2011.
But the real question is whether NYT can continue its subscriber
growth momentum. The paywall initiative is still in an early phase,
and NYT will likely look to spur subscriber growth by adding new
features to its digital subscription service. Price reduction, of
course, could provide added incentive for customers. Below we
consider how this pricing might trend going forward.
…while reducing the pricing of the service
NYT plans to offer three types of digital subscription packages
that also include access to smartphones and tablets apps. Fees for
these packages are as follows:
- $15 for NYTimes.com + smartphone app access
- $20 for NYTimes.com + tablet app access
- $35 for All Digital access
We estimate an average fee per digital subscriber of around $20
per month for 2011.
The introduction of the subscription service has definitely
created a risk for NYT, as loyal users might defect in favor of
sites that provide freely available content. NYT faces competition
from established publications like The Wall Street Journal and LA
Times as well as popular online content sites like Techcrunch and
GigaOm. Most of the content on the web is free, which means NYT
will have to offer competitive prices to remain in the
game. The fear of losing its users could force the company to
enact a series of subscription price reductions.
You can drag the trend lines in the interactive charts above to
see how changes to subscriber totals and fee per subscriber can
affect NYT's stock value.
See our full analysis and $9.32 price estimate for