The New York Times began charging online readers Monday for full access to its website and dangled a heavily discounted introductory offer intended to lure its first digital subscribers.
The Times is offering its three digital subscription plans for the same price of 99 cents for the first four weeks.
After that, unlimited access to NYTimes.com and the newspaper's smartphone application will cost $15 for four weeks while full access to the website and a tablet computer application will cost $20 for four weeks.
Full access to NYTimes.com and both smartphone and tablet applications will be $35 for four weeks.
I predict the New York times is about to lose some online readers, but revenues will increase.
Starting at a price of zero maximizes the number of readers but minimizes revenues (TR=PQ). As P goes up, Q goes down (law of demand). Initially revenues will rise. The trick is to choose the right price to maximize revenues (assuming that's the goal), because if the price rises too far, the loss in site readers will overpower the increased price per retained reader.Unless, of course, demand is perfectly elastic (horizontal) in which case any price increase will result in readership falling to zero and revenues stay the same as now ($0).