A lot of people have said that they wished that the New York Times’ new pricing system was more about offering more value for people who do pay rather than putting barriers in the way of people who don’t pay. Those remarks immediately made me think of Amazon Prime.
Amazon Prime subscribers pay $80 a year in exchange for “free” two day shipping on every Prime-eligible item they purchase from Amazon.com. It is, essentially, a loyalty program that you have to pay to join. I’m certain it exerts a powerful influence on the buying habits of subscribers. If a subscriber buys something from a site other than Amazon.com, they’re likely to pay more for shipping, receive the item later, or both. Plus, they’ve already got the sunk cost of the Prime membership on their mind. When they go to other sites, they probably think, “Shouldn’t I look for this on Amazon.com first to see if I can use my Prime membership?”
I always wonder how many Amazon Prime subscribers buy enough stuff over the course of the year to make the $80 they spend on their Prime membership a good deal. My guess is what they’re really buying is the ability to make impulse purchases without worrying about whether they should have waited to group items for free shipping, which in turn leads them to spend even more money with Amazon.com. Amazon.com further benefits from Prime because it encourages third party sellers who use the site to turn their fulfillment operation over to them as well so that their merchandise can be eligible for Prime shipping.
One of the core values at O’Reilly is to create more value than you capture. The fact that Prime benefits Amazon.com in many ways has nothing to do with why people pay for it – they pay for it because it delivers value to them. What can the New York Times offer that creates more value than it captures?
Clearly the New York Times would argue that their articles and blog posts deliver value well beyond their subscription fee. Unfortunately, they have lowered the perceived value of their product by providing free access to their articles for years, and more importantly, close substitutes for what the New York Times offers remain freely available.
Anyway, my plan was to make this a really awesome post with a suggestion for the New York Times that would save the paper and revolutionize online journalism. Unfortunately, great ideas elude me. I even sat and thought about what service I would gladly pay for from the New York Times, and I couldn’t come up with anything. Maybe I’m just happy I don’t work for a news site.