Is the Demand to Read the NY Times Inelastic?
"Love is inelastic." This wise phrase was written on one of my Columbia colleague's blackboards back in the mid-1990s. Do we love the NY Times? How much will their readership fall when it starts charging readers in 2011? I see that print subscribers will read online content for free.
Non-subscribers will pay a fixed access fee and then face a zero marginal cost per article. So, they will keep their "heavy reading" nerds and lose the light readers. Someone in their marketing group must have a prediction about the distribution of hidden types of readers.
Now this is a leader follower game with the NY Times and the Wall Street Journal as the leaders. Consider Matt Kahn. If the NY Times gets pricey, I substitute to reading Paul Krugman's blog and the NY Post. While my substitution patterns may strike you as odd, it raises the issue of how the NY Post (and other 2nd tier content providers) will respond to the unilateral move by the NY Times and WSJ. If the Post responds by introducing a similar access fee then the NY Times will lose less business. So, there is the possibility of collusion here. The NY Times controls itself and the Boston Globe. Will it choose pricing for both while recognizing the cross-elasticities of demand? Some Stanford PHD will be able to write a good thesis based on this experimental desighn.
Will bloggers be the big winners here as we will filter the news we read (as voracious reader types) and then provide free content for you? This would make us bloggers more influential and increase our readership.
Let me think about this issue some more and I will have more wisdom for you.
Non-subscribers will pay a fixed access fee and then face a zero marginal cost per article. So, they will keep their "heavy reading" nerds and lose the light readers. Someone in their marketing group must have a prediction about the distribution of hidden types of readers.
Now this is a leader follower game with the NY Times and the Wall Street Journal as the leaders. Consider Matt Kahn. If the NY Times gets pricey, I substitute to reading Paul Krugman's blog and the NY Post. While my substitution patterns may strike you as odd, it raises the issue of how the NY Post (and other 2nd tier content providers) will respond to the unilateral move by the NY Times and WSJ. If the Post responds by introducing a similar access fee then the NY Times will lose less business. So, there is the possibility of collusion here. The NY Times controls itself and the Boston Globe. Will it choose pricing for both while recognizing the cross-elasticities of demand? Some Stanford PHD will be able to write a good thesis based on this experimental desighn.
Will bloggers be the big winners here as we will filter the news we read (as voracious reader types) and then provide free content for you? This would make us bloggers more influential and increase our readership.
Let me think about this issue some more and I will have more wisdom for you.
posted by Matthew Kahn at 11:15 AM
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