New York Times. Subscriber paywall working but Ad revenues are down. This is the line quality publishers need to walk.

The New York Times is growing its digital subscriber base although its advertising revenue is declining.

668,000 thousand digital subscribers for the group is up from 566,000 in September. Advertising revenue though is down by -8%, largely due to declines in the print versions (down -10%) whilst digital revenue is down just under -2%. But they're down.

The problem here is a trade-off between a model that makes money from a subscriber paywall versus a model that makes money from advertising. If you have paid subscribers (paywall) then you've less readers compared to when it's free. As some of the content is closed off for subscribers only, free readers move away elsewhere. Therefore the page impressions decline and consequently too, the ad revenue will fall. Charge for content and you'll have less readers and therefore, less advertising.

However, the NYT overall revenue is up +5% so the growth in subscribers revenue is more than offsetting the consequential loss in ad revenue. For now.

In return too, its shares are up +15% bringing more capital value - so people like what they're seeing.

If a paywall subscriber model is adopted by publishers like the NYT, it actually puts pressure on content. Paying readers want more up-to-date content, more services, more video, more coverage because they're now paying for it. They'll want detailed business analysis for one. Quality journalism.

So a paywall will work best in a quality title where affluent readers will be more able and more willing, to pay. It's a risk for sure but that depends too on where the paywall is placed - a combination of good free content (on the homepage for example) with subscribers getting detailed content, might be a good balance between maintaining digital Ad revenue and generating subscriptions.

If you can walk that line, it's an opportunity that The NYT is proving.