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March 17, 2011, 12:35 p.m.

Call it the Frank Rich Discount: The Sunday New York Times moves from premium product to loss leader — and the best deal for digital access

It’s a truism that subscribing to a newspaper (in America, at least) never actually covered the cost of reporting, printing, and delivery. The traditional breakdown for a U.S. paper was 80 percent of revenue from advertising, 20 percent from circulation revenue. The goal was as mass an audience as you could assemble, so newspapers were willing to subsidize a low cost for the end user — 25 cents at the newsstand! eight bucks a month and we’ll hire a child to deliver it to your front lawn — to reap the rewards in ad dollars.

But that was before the Internet, and the circulation story of the past few years has been newspapers hiking their circulation prices — arguing that, as subscribers drop dead or discover the Internet, the loyal few(er) who remain should pay more of the freight. The Boston Globe now runs $637 a year for 7-day home delivery; The New York Times costs $769. Price increases like those have led to realities that would have seemed bizarre to a newspaper owner in 1980, like NYT circulation revenue actually passing ad revenue for a quarter.

But the new New York Times paywall announced today is, in some odd way, a return to that drive for print circulation at all costs: The Times is now actively subsidizing both the print paper and delivery. It’s now less than free — considering the high rates they’ll now be charging for online access and that the full digital bundle will come free with any print subscription. And yet, if my math is right, it’ll actually make the Times more money.

Let’s say you’re a multiplatform kind of guy and you like the Times’ stories on the web, on your iPhone, and on your nifty new iPad. How much will that cost you?

Option 1: You can buy their top-tier “All Digital Access” bundle, which gives you in a browser, the Times’ iPhone app, and the Times’ iPad app for $35 every four weeks — or, since that odd timetable sneaks in a 13th payment each year, $455 a year.

Option 2: You can subscribe to Sunday-only home delivery of the Times, which comes with the “All Digital Access” bundle at no extra charge. Your cost, at least if you live in the Boston area: $30 every four weeks, or $390 a year.

That’s right: The New York Times will now pay you 65 bucks a year to accept the Sunday paper into your life. (And onto your lawn, although probably not delivered by a child at this point.)

Call it the Frank Rich Discount, in honor of the just-departed Sunday Times columnist who moved to New York magazine a few clicks before the paywall’s arrival.

Who counts as a subscriber?

The Internet has thrown the definition of a “subscription” into a blender, but generally speaking, the Audit Bureau of Circulations has demanded that, for something to count as a subscription, the customer has to pay something for it. That’s why we’ve seen such shenanigans with the pricing of digital-replica e-editions, whose actual usage ranks somewhere around that of cassingles and Commodore 64s, but which get counted as “subscriptions” even if they charge even a penny over the home delivery rate.

But for this subset of digitally oriented subscribers — a subset I suspect will shortly include me — the Times isn’t even getting that penny. They’re giving up 125 of them every week for the privilege of putting a +1 to the print subscriber total that they show to advertisers. Who would have thought the Sunday New York Times — the inarguable jewel of American newspapering, the single most expensive and single most prestigious artifact of a centuries-old industry — would be turned into a loss leader, the equivalent of the Safeway pricing milk and sugar cheap so you’ll come in and pay the big bucks on frozen dinners?

But here’s the wrinkle that makes this a sensible choice for the Times. While it’s possible that the Times has cut a special deal with Apple, the more likely version of events is this: A print subscriber who gets “free” access to the digital bundle lets the NYT Co. keep 100 percent of the subscription revenue generated. A digital-only subscriber — at least any who pay from inside iPhone and iPad apps — will have 30 percent of his revenue sent to Apple. If that’s true — and it fits with what we’ve been told — then the Frank Rich Discount actually makes the Times an extra $71.50 a year for those customers.

That’ll pay for at least some of the gas in the delivery trucks. And it means that, if your (worthy) goal is to support the Times, but you don’t really want a daily print newspaper, the Frank Rich Discount is the most cost efficient way to do it. You save more money ($65 a year), the Times makes more money ($71.50 a year, at least before delivery/printing costs), and you get an actual, physical Will Shortz crossword puzzle to fill out every week.

What to do with the paper?

The only tradeoff of the Frank Rich Discount is that you have to take the Sunday paper, whether you want it or not. Not a great hardship, surely, but some folks really don’t want a new four-pound stack of newsprint every weekend to instill a sense of civic-minded guilt in the whole family.

So maybe it’s time for some creative solutions. Want the digital bundle? Subscribe to the Sunday paper, get the digital bundle for (less than) free — but have the Sunday Times delivered to a local library instead of your house. Or a community center, or a nursing home. Or, if you’re feeling cheeky, maybe directly to a recycling center, or a Boy Scout camp for kindling? That moves the Frank Rich Discount from win-win to win-win-win.

POSTED     March 17, 2011, 12:35 p.m.
PART OF A SERIES     The New York Times’ new paywall
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