Is The NYT Paywall Working?

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Almost one year ago in mid-March 2011, the New York Times put up a paywall on its site and started charging frequent visitors. So how is it doing? Traffic to the NYT predictably took an initial hit and is still slightly below its pre-paywall levels. But the number of paid digital subscribers is growing steadily.

In its most recent quarter, the New York Times announced today that there are now 354,000 paid online subscribers to the NYT and the International Herald Tribune, up 16 percent from the previous quarter. (If you add in the Boston Globe’s 18,000 digital subs, the total rises to 372,000, but I’ll stick with just the NYT numbers for this analysis and the chart above).

The number of paid subscribers to the NYT is up 62 percent since the second quarter of 2011, when it had 281,000. Digital subscribers pay between $15 and $35 a month (although you can get a 4-week trial right now for 99 cents, and print subscribers get the online versions for no additional charge). Total circulation revenues at the New York Times Media Group is up 12.8 percent to $190 million, while total advertising revenues are down 4.5 percent to $173 million. Circulation revenues are now more than advertising revenues.

And it’s not just weakness in print advertising that is bringing down those numbers. Digital advertising revenues in the news group alone are down 2.3 percent (and down an even greater 10 percent if you count the struggling About.com unit). Without the paywall, digital ad revenues would be higher.

But the tradeoff seems to be working somewhat. Circulation revenues are growing faster (up 12.8 percent) than advertising revenues are declining (down 4.5 percent). All of these numbers are just for the New York Times Media Group, but the same trends are showing up across the entire company, which includes numbers from the Boston Globe and About.com (Total advertising revenues are down 8.1 percent, while total circulation revenues are up 9.7 percent).

The NYT is now at about half a million paid digital subscribers. That number is partly inflated by special discounted trial offers, but if it can keep those trial members paying at full price or convince print subscribers to stick around, the paywall will be doing its job. It really needs to get to one million paid digital subscribers to prove enduring. By that point, digital advertising revenues might also rebound because paid subscribers are considered more loyal, and thus more valuable to advertisers. That’s how it works in print media. Magazines and newspapers routinely spend marketing dollars to increase paid circulation so that they can charge more for the ads. The ad rates are typically based on the number of “paying” subscribers (even if they are not all paying full price).

Online it’s a little bit different because the same ads are shown to paying subscribers and casual visitors ( who can read 10 stories a month for free). Paying subscribers, though, will make up an increasing percentage of the total pageviews since they are not limited in how many pages they can view. The NYT salesforce should be trying to charge more for its paying audience, which overtime should result in a higher blended CPM (cost per thousand impressions) for its online ads—or at least keep upward pressure on those rates.

It doesn’t take that many more paying subscribers to impact pageviews significantly, which is what the advertising revenues are based on (impressions). If you are paying for the NYT, chances are you go there every day and click to your heart’s content. I’d love to know the number of clicks per paid subscriber. But I’d be willing to bet that at about one million paid subs, the pageviews more than make up for what they lost to the paywall.

Taking A Different Path

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With Path raising north of $30 million yesterday at a reported $250 million valuation, it’s natural that everyone is comparing it to Instagram, which sold just last week for $1 billion to Facebook.

After all, on the surface the two mobile apps start from a similar place: both are primarily used to share photos with friends and followers, both use filters to make crappy phone pics look better, both are mobile-first apps, and both are highly social apps.

It’s easy to compare. In fact, when the Instagram deal was announced, I wondered out loud what it would mean for Path’s valuation:

But as Om Malik detailed in a post yesterday titled “Why Path is no Instagram,” the two services are far from interchangeable. “I find the comparisons with Instagram unfounded and premature,” he writes.

The truth is that Path is not trying to be like Instagram. It is taking its own path, one which may end up being more difficult. But if it makes it through to the other side, it could end up becoming even more valuable than Instagram. Path’s ambition is not to become a killer mobile app. Its ambition is to become a killer mobile social network. It’s a much broader ambition than Instagram’s and much harder to pull off.

Right now, Path only has about one tenth the number of registered users that Instagram does (3 million versus 30 million), and an even smaller fraction of active users. AppData, for instance, estimates Path’s monthly active users at 500,000, compared to 12.6 million for Instagram. (Remember, these are outside estimates, and thus, are surely wrong, but hopefully they are wrong by the same degree for both services and thus give us a sense of the relative popularity of each one. Also, note how all the publicity in the past few days has boosted Path’s numbers).

Not only does Path have much fewer users than Instagram, but its semi-private nature (you are limited to 150 friends) is holding back its reach. I am not as convinced as Om, however, that this is such a bad thing.

When you take a deeper look at Path, it is very different from Instagram. Yes, it uses mobile photo-sharing as its starting point, but there is so much more you can share with your friends, including your thoughts, your location, who else you are with, the songs you are listening to, video clips, and even when you are going to sleep (never used that one). Instagram does one thing incredibly well: mobile-photo sharing. Path is broader and yet more intimate at the same time. It is about sharing your life, but only with those people who are closest to you.

Today, Path is a drop-dead gorgeous mobile app, especially in its current incarnation (Path 2.0). Just like with any social app, it is only as good as the people in your network who are also using the app. And while Path is making progress, the way it is designed actually works against rapid, viral growth.

As I’ve argued in the past, the quasi-private nature of Path is its Achilles Heel. I personally still struggle with the empty-room problem whenever I open the app. The only people I see in there are VCs and bloggers, not my actual close friends.

Om has a similar issue:

. . . the app at present lacks the draw or the engagement I normally experience on Instagram and other apps. I have found that it does so much that I sometimes forget to open the app, even though I intend to. Path still needs to define a singular addictive behavior and that is its challenge (and opportunity.)

I am not so sure about that second part. Yes, Path needs to do one thing well. But one thing does not always mean one feature (sharing photos or location or ideas). The one thing Path needs to do well is to become the means to share your life no matter what you are doing and no matter where you are.

If it wasn’t for the empty-room problem, I would be addicted to Path. But it’s too early in Path’s trajectory to determine where it will land. At least anecdotally, I am noticing the room is filling up, or at least more people are wandering in.

Path used to be completely private, but one of the smartest changes it made was to allow you to selectively share posts with your broader social networks across Facebook, Twitter, Tumblr, and Foursquare. That draws other people into Path and reminds inactive users to go back and check it out (“Hey, something is happening there!”).

However, keeping the network somewhat closed is still the key to making Path distinct from other social networks. The semi-private nature of the network is intended to make people comfortable sharing things they would never share on Twitter or Facebook. If Path is designed properly, people will share things there that they won’t anywhere else. (I haven’t seen too much evidence of this myself, but most of the people I know on Path are over-sharers anyway).

Path’s growth is slower than Instagram’s because it is more restricted by design. Path demands more of its users. You can’t follow someone unless they follow you back. It’s less for lurkers than it is for active sharers. You can’t just be a lurker because there aren’t enough people in your network to make lurking addictive.

You have to actively post and share to your network. It only becomes addictive when you get positive reinforcement, when your friends comment on or like whatever you are sharing—and perhaps share something back in response. Those are the magical moments Path needs to capture.

Until there is a critical mass of your friends posting in the app, there isn’t much reason to open it up. But once it reaches that critical mass, it might become very addictive indeed. And as long as Path keeps growing at a decent pace (albeit its own pace), it will keep moving closer to that tipping point. Can it get there? That is the $250 million bet investors just placed on Path.

Personal Capital’s iPad App Keeps Track Of Your Total Financial Picture (Demo)

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Former Intuit and PayPal CEO Bill Harris launched his latest company, Personal Finance, last September. Today, he is launching the Personal Capital iPad app. In the video above, he gives a demo of the app.

Personal Capital is like Mint for your finances. It shows you a picture of all your financial accounts, from banks to brokerages, and helps you get a handle on your total financial portfolio. It takes all of your financial details and boils them up into simple charts displaying your asset allocation across all your accounts. The iPad app is filled with interactive charts that you can swipe and drill down into. It even includes ways to visualize how much your stock options are worth.

“It is more and more clear that most American households financially are out of control,” says Harris. Simply seeing where all your money is across various accounts is the first step to gaining back control. Customers get the data analytics for free, but Harris is betting that a significant portion of them will opt into letting Personal Capital manage some of their money. The company is a registered investment adviser and employs financial advisers who are available by phone or Web. Now, with the iPad app, you can even do Facetime sessions with your adviser.

Since launch, a total of 10,000 people have linked their accounts to Personal Capital, which is now tracking more than $2 billion worth of assets. A small portion of those people have signed up for the paid investment advisory service. Harris is going after affluent Americans who have assets to invest but are below the threshold of most financial advisers or who simply want better data and a digital dashboard for their finances.

The Coolest App At SXSW—Arqball Spin

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I just spent five days in Austin at the SXSW Interactive Festival. There were no breakout social apps that took over the conference as in years past (like Twitter, Foursquare, or GroupMe), but there was one app that got almost zero buzz that blew me away. It has nothing to do with proximity-based social networks, photo-sharing, or finding a pedicab to the next SXSW marketing party. No, this is an app that can take real-world objects and turn them into photo-realistic 3D models.

The app is called Arqball Spin (iTunes link), and you can see it in action in the video above. Co-founder Jason Lawrence took my watch, placed it on a platter, then captured the rotating image on his iPhone using the app. In the time it took him to explain the technology—about a minute—he had a full 3D model of my watch that you can pinch, zoom, and rotate. (Check out the 3D model of my watch here, and this one of a spinning egglpant).

Arqball uses “computational photography” to create a 3D model of the rotating object placed on the platter, and then stitches images from different angles on top of it. The result is a digital object that looks real and even catches the light the same way my watch did on that platter. Game developers and animation studios create 3D objects like this all the time, but they don’t do it using their iPhones. That is why this is truly disruptive. It brings 3D modeling to the masses. You don’t need bulky 3D scanners or expensive desktop software, all the rendering happens in the cloud after the data is compressed to a 1MB file, and what you end up with is a 3D artifact called a “spin.”

The first application for Arqball Spin isn’t even for gaming or animation. It’s for commerce. Imagine every Etsy and eBay seller showing off their goods in 3D. The virtual item can be embedded on any site via an Arqball player. And it’s all HTML5—no Flash (so it works in iPad and iPhone browsers). This could be especially useful for luxury and highly-crafted items where the design is a key selling point. The drawback to online shopping is not being able to see or touch the product you are buying. Immersive technologies such as Arqball’s could help bridge that gap by giving people the opportunity to digitally manipulate and play with products before they buy.

I can see this becoming very appealing to high-end online retailers like Gilt who already spend a lot of time and money on lovingly photographing every luxury product on sale. Arqball’s platter, which it expects to sell for around $100, can only accommodate small objects not much larger than an Apple right now. But a professional photographer or retailer could build a bigger platter for larger objects. The technology works the same no matter the size of the object, as long as it rotates at a certain RPM.

Targeting online commerce is an obvious market entry strategy, but the app can be used by anybody. Lawrence sees it as a way to unleash “user-generated 3D content.” It seems like an obvious addition to any Maker’s tool belt. Over time, Arqball’s database of 3D objects could become increasingly valuable.

Lawrence and his co-founder Abhi Shelat are computer science professors from the University of Virginia. The company is completely bootstrapped and is based on technology they developed themselves. The app is free, and you get 5 “spins” that you can share. In the next few days, Arqball will introduced tiered pricing plans for users who want to share more spins.

Turntable.fm Goes Legit, Signs Deals With Major Music Labels

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The biggest question hanging over social music startup Turntable.fm was whether the major labels would let it survive. The answer to that question is, yes. Turntable chairman Seth Goldstein is announcing at SXSW that after 9 months of negotiating, Turntable has signed licensing agreements with all the major music labels. I caught up with Seth yesterday at the Four Seasons in Austin, where he told me about the deal in the video interview above. (Greg Sandoval at CNET caught wind of the news a few days ago, and now it is confirmed).

Turntable launched less than a year ago, and now has reached one million users. Through its website and mobile apps, you can visit virtual clubs where you can spin music for everyone else in the room or just listen along, chat and bob your virtual head. The music licensing wasn’t straight-forward because depending on whether a user is DJing (and selecting tracks) or just listening (the majority of users), a different license applies.

But Turntable is an amazing marketing vehicle for the music labels, and they came to terms with the startup. In the video interview, Seth talks a little bit about how Turntable finds sponsors to bring major music artists to both Turntable rooms and live events. He also mentions that an Android app is in the works.

TV Apps

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It’s time to rethink TV apps. Many of the top entertainment apps on the iPad today are essentially digital TV channels—both new and old (Netflix, Hulu, ABC, NBC). But these are basically just ways to watch regular TV shows on your iPad, computer, or big-screen TV connected to an Apple set-top box. They don’t really go beyond that or take advantage of the fact that they are, well, apps.

All of that could start to change soon. Tomorrow, Apple is expected to announce a new iPad and a new Apple TV. It is very possible the Apple TV tomorrow will be just an update to Apple’s current set-top box device—AKA, the “hobby,” not the mythical TV the company is also supposedly working on that was Steve Jobs’ last project. When Apple moves the product beyond hobby status, it will be an actual TV with a screen and computer innards. If it is successful, it will not only change the way TV shows are distributed, but could also change how we experience TV.

In its attempt to turn TV into more than a hobby, Apple is reportedly trying to convince the TV industry to turn their channels into apps and stream their video programming over the Internet directly to Apple TVs (as well as iPads, iPhones, and Macs). Presumably, these channels apps could be free and advertising-supported or charge an ongoing subscription just like magazine or other apps can today.

The prospect of streaming subscription TV delivered over the Internet is a direct challenge to the cable and satellite TV industry because it bypasses their distribution and their bundled billing relationships with consumers. The ability to pick and choose your channels or shows and pay only for the ones you actually watch is certainly appealing. But disrupting TV distribution is only half the story, and Apple certainly isn’t alone in trying to do this (so is Netflix, Amazon, Google, and Hulu).

The other part of the story has yet to be written, and it will be written by developers. Apple wants to turn TV channels into apps. What does that mean? So far we’ve only seen plain vanilla versions of TV apps. They are typically collections of videos from one TV channel or site organized in an easy-to-consume fashion. Sit-back TV works, and they don’t want to mess with it. But TV apps could deliver so much more than just video. They could deliver data, social commentary, and even geo-local context when appropriate.

For most TV apps, there should always be a veg out mode. That should be the default mode because that is the way most people watch TV. But it also depends on the show and what else you are doing. We are already multitasking when we watch TV. The rise of second-screen companion apps that you play around with on your iPhone or iPad while you are watching TV is a testament to how easily our attention drifts. When the TV show or game your are watching gets boring, many of us are increasingly turning to Twitter and other companion apps for entertainment (often to commiserate about how awful the shows are that we are forcing ourselves to watch).

Most companion apps today pull in filtered social feeds about the shows you are watching. Social streams like chatter on Facebook and Twitter are just a layer of data. Those streams could just as easily be available in the primary TV apps themselves. There should be a way to push the video to your big living room screen via AirPlay, while continuing to use your iPad or iPhone for the other data features.

But let’s tale this a step further. What other layers of data could be added to TV to make it better, and more engaging? I think that depends on the kind of TV you are watching. If it’s just mindless TV, adding “interactivity” could be a mistake. But if I am watching a movie with a great soundtrack, when the credits roll, why not link to those songs on iTunes? Or if I am watching a cooking show, let me download the recipe. A newscast or documentary could benefit from all sorts of additional footage, links, and charts. A travel channel could geo-target its shows.

The traditional lean-back videos, you throw on the big screen. And when you want to dig in and lean forward, you do it on your iPad or iPhone. It’s the same app running, just on two different screens. And if what’s on your iPad is more interesting than the video on the big screen or you want to share it with everyone else in the room, pause the video and throw the Twitter stream or data visualizations up there. Or don’t pause the video, just overlay it on the screen. Take control of the experience.

Right now, the only control you have over TV is to change the channel. What if you could essentially control the graphics, or dive deeper into areas you want to learn more about? The only way this is ever going to happen is if TV apps are designed to make such exploration feel natural. And it’s not going to come from the TV industry. People in the TV industry generally don’t think this way. They package up video and present it all ready to consume. No, the best TV apps are going to come from app developers who ask themselves how they can use software to make TV better.

So you tell me, what is a TV app?

News.me: Rebuilt From The Ground-Up For The iPhone

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When betaworks and a team from the New York Times put out the News.me iPad app last year, it was a forward-thinking experiment on using your Twitter network to filter the news. It was a little bit too forward thinking, as it turns out, with its multiple views of what people in your social network were reading. But the News.me team learned from it and redesigned the entire experience from the ground up for the iPhone app, which just went live today in the iTunes store.

While the News.me iPad app never really took off, its daily news email became a quiet hit. It is a once-a-day summary of the top news your friends are reading on Twitter. The engagement rates on the email product were through the roof, so the team took that as its new starting point. “After seeing the reaction to that,” says News.me general manager Jake Levine, “it became clear to us there is this overwhelming need for a social discovery experience built for news.”

Unlike the iPad app, which never rolled up all of your social news into one feed, the iPhone app does exactly that. (Instead, you had to click on each of the people you follow on Twitter one at a time to see their social news view). The News.me iPhone app presents you with a single, unified stream of the top news stories across your social networks. You can log in with Twitter and now with Facebook too, and then it shows you not only what the people you follow are sharing, but what they are seeing and reading in their feeds.

“There is an opportunity to build a new network for news on top of Twitter and Facebook,”says Levine. “There is too much crap on Twitter and Facebook, and people need help wading through it.”

The iPhone app shows you both the article headline and the conversations around it. But the articles come first instead of the Tweets and status updates. It shows you conversations at the article level, with comments below. This combination of headline and picture, with social comments below is a compelling re-ordering of the way we normally “read” news on social networks. It draws you into the story.

The entire app is designed to be used with one hand.When you click on a headline, you can often read the full story in the app (otherwise it opens up a browser within the app), save it to your reading list for later, and share it via Twitter, Facebook, or email. You can also comment on the article within the News.me app, or just leave a quick reaction (Ha!, Wow, Awesome, Sad, Really?).

I’ve been using the iPhone app for a couple of weeks, and I find myself wanting to tweak the algorithm, or exclude certain sources . But for the most part, it provides a steady stream of top news across my social networks, pre-filtered and ready to read.

Levine is right that there is too much noise out there and News.me is tackling the very hard problem of how to filter the news shared across your social networks. Its first pass is simply to pull out the headlines from the links and show that first, but then it looks for other signals such as how many times a story is shared or retweeted.

Filtering the news in a way that seems natural to different readers is extremely complex. News.me does this filtering job better than most apps using a combination of social signals and algorithms (remember, betaworks also owns bit.ly, so it knows what links people are sharing across the Web). But the key is that it boils this down into a simple interface.

With News.me, the news is only as good as your network. Just one more reason to follow people who share the news you care about.

Facebook Is Selling “Stories,” Not “Ads”

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I am sitting here at Facebook’s marketing conference in New York City’s Natural History Museum (TechCrunch has a liveblog here), and the big message Facebook is trying to communicate to the brand advertisers assembled here is that they shouldn’t think about Facebook as a place to show people ads, but rather to tell them stories. Facebook is a “storytelling platform,” says VP of product Chris Cox. Facebook marketing director Mike Hoefflinger put it more bluntly: “We are evolving from ads to stories.”

Just as Facebook users now all have their new, more visual Timeline, brand pages will also soon adopt the Timeline design. Brands will love this because it will give them a much richer canvas to market to Facebook users, including features such as pinned posts and new ad types such as offers.

With pinned posts, Facebook is following in the footsteps of Twitter, which introduced a similar concept on its brand pages in December. But Facebook goes way beyond what Twitter is doing. For one thing, it will now be selling ads in your news feed itself, not just along the side. Twitter for the most part has resisted cluttering the main user streams with ads, (although Promoted Tweets can appear there under some circumstances). Facebook ads will continue to appear in the top right of your Facebook page, but they will also appear in your feed itself, on mobile, and as well as in the logout screen (37 million people a day log out of Facebook, so that is valuable real estate)

But remember, these are not “ads.” They are “stories.” And brands are encouraged to use these stories to create one-on-one relationships with consumers. Usually these stories take the form of things people would like to share like videos of sponsored athletes (something which Red Bull does). A successful ad on Facebook is one that people want to talk about, and thus share on Facebook with their friends.

So how will Facebook make increase the chances that those brand stories will be shared? Probably the most important announcement today for brand marketers is a new Facebook ad targeting product it announced today called Reach Generator. The most likely people who will share a brand’s message are consumers who are already Facebook fans of that brand. Reach Generator is simply a way to target Facebook ads, or “stories” to those fans in different places on Facebook (in their news feed, on their homepage, on their mobile devices, at logout). Ben & Jerry’s, a beta advertisers, found that marketing to fans doubled their engagement rates, and Facebook says other advertisers are finding similar results.

Targeted advertising up until now involved guessing which consumers across the Web would be most likely to be interested in a marketing message. Facebook’s twist on targeted advertising is to show ads to people who have voluntarily stated their affinity to a brand. And those fans then spread those ads to their friends, but only if they don’t seem like ads. So brands need to tell stories.

It’s a return to Advertising 101. The best commercials on TV are mini-narratives. The best magazine ads look like art photos. The best ads online spark a conversation.

PostCrunch

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Monday was my last day at TechCrunch, after more than four years and 4,000 posts. This blog is my new home on the Web. I’m keeping it simple. Just a WordPress blog where I will write about startups, technology, and media.

This is a personal blog. It is not a professional news site. I don’t plan to hire any other writers. I don’t even expect it to be my main project (but it is the first one I can share publicly). It will be personal in that I will be writing more for myself than to please readers, but if I please some of you along the way, all the better. I will use it to work through some ideas about media and technology, and as a sounding board, which I hope will inform other projects.

In a way, I am returning to blogging’s personal roots. But on the internet, the personal is very public, which is what originally made blogging interesting. Some of that got lost along the way as blogs became news sites. (Yes, I am partly to blame for that). News sites operate by their own logic which is hard to escape.

I won’t be chasing news here, although I might break some now and then. I am going to write about things I care about. Maybe some of you will care about them as well. What makes a good startup? Where is the nexus of mobile and social? What happens to media in a post-PC, post-TV world?

This will be my TechStream (the sub-title of this blog) because for me media and technology flow together. Over the past few years, media has become dominated by realtime streams—Twitter, Facebook, Instagram, and so on. Media is increasingly consumed as streams of information. Also, more generally, here is where I will publish my stream of thoughts on tech.

No pressure, no deadlines, no noise. All signal.

Photo credit: Audrey