Undercover Economist

Did you pay to read this?

Until recently, there were two types of newspaper website: those that made you pay to read many of the articles (The New York Times, The Wall Street Journal and the Financial Times) and those that didn’t.

That is changing. The New York Times recently announced that almost all its online material would now be free. FT.com has just moved to a system of free access for occasional visitors. And Rupert Murdoch has strongly hinted that the Journal might do something similar. The theory is that advertising revenue will outstrip subscription revenue.

So is this the death of subscription-model newspapers? And will the availability of so much free online journalism also doom their pricier print editions to a slow death?

These are hard questions, because the internet is changing so quickly that first principles are little help. One smart response is to experiment, but such experiments can be pretty expensive if they don’t work out.

The New York Times’s retreat from a subscription model is widely portrayed by online commentators as a humiliating and belated acceptance of the inevitable. But Matthew Gentzkow, an economist at the University of Chicago, recently published research that suggests that there has been no expensive mistake…

Continued at ft.com, subscription free.