Explaining the NYT Paywall

Philip Greenspun wonders, "How did the New York Times manage to spend $40 million on its pay wall?"

Philip Greenspun wonders, “How did the New York Times manage to spend $40 million on its pay wall?

Google was financed with $25 million. The New York Times already had a credit card processing system for selling home delivery. It already had a database management system for keeping track of Web site registrants. What did they spend the $40-50 million on?
[…]

I built a pay wall back in 1995 for the MIT Press, restricting access to some of their journals, e.g., Cell, to individual subscribers and people whose IP addresses indicated that they were at institutions with site-wide subscriptions. I can’t remember exactly what I charged the Press, but it was only a few days of work and I think the invoice worked out to approximately $40 million less than $40 million.

Commenter Alex in Texas offers a plausible  answer:

Perhaps their most popular blogger, Paul Krugman, convinced them that the Keynesian Multiplier effect of spending lots of money building infrastructure without regard to cost-effectiveness would lead to greater profits for them in the future.

Other commenters cite the nature of large institutions or engage in discussion only tangentially related to the question.

via Craig Newmark

FILED UNDER: Economics and Business, Humor, Quick Takes
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. MarkedMan says:

    It doesn’t seem unusual that a start up company such as Google, could finance with a small amount of money compared to a the New York Times which already has a giant infrastructure and must be up and running with tens of millions of viewers from day one. You can bet that if Google radically changed their web site’s business model at this stage, it would cost a lot more than $25M to implement. Especially given the institutional and tax incentives to throw everything remotely related onto the “project that cannot be cancelled”.