Jay Rosen points to another interesting, if not altogether surprising, tidbit about how the New York Times plans to construct its promised paywall. Essentially, it appears that if you come to a Times article via a link, either on the Web or in an email, you will get to read the whole article, and the article won’t count against your monthly limit of articles. This news comes from a Q&A in which Times CEO Janet Robinson and digital chief Martin Nisenholtz answered readers’ questions about the subscription plan. Here’s what they said:

Q: … will I still be able to send the e-mail link to others who may or may not be NYTimes subscribers so that they can open the link and read the article?

A: … yes, you can still send links to your friends.

Q: What about posting articles to Facebook and other social media? Would friends without a subscription then not be able to view an article that I think is relevant for them?

A: Yes, they could continue to view articles. If you are coming to NYTimes.com from another Web site and it brings you to our site to view an article, you will have access to that article and it will not count toward your allotment of free ones.

The Wall Street Journal has been doing something similar with Google News; if you come to the Journal site from a Google News link, you get to read the whole article, even if it’s blocked for other nonsubscribers. The Times model would seem to expand this loophole enormously, basically giving news surfers (“freeloaders” in my market segmentation scheme) unlimited access to the Times’s online content. Or, as Rosen puts it, “for those people who get their news from the web itself, using search, aggregators[,] social media and blogs to find the stuff they want, the stuff they find from the New York Times will always be available, free of charge.”

The Times’s paywall is not only a delayed paywall, falling after some number of articles have been read; it’s a delayed, leaky paywall. This makes it all the clearer that the Times plan is a versioning strategy, through which, as I described yesterday, Times readers will segment themselves according to the value they ascribe to the Times and their willingness to pay. Freeloaders will continue to get more or less unfettered access to Times stories for free, while Times Loyalists, who value the Times as an information source and want to spend significant time browsing its site (or using other digital delivery mechanisms), will be asked to pay a modest subscription fee.

Inveterate news surfers will scratch their heads at this plan. Why buy the cow when you can get the milk for free? In fact, a commenter on Rosen’s post raises this point: “This is super weird … It’s an interesting (if nothing else) way to structure a paid system, but it won’t take long before people realize they can just browse the @NYTimes Twitter stream, as opposed to NYTimes.com’s home page.” (In another comment, the normally astute Scott Rosenberg also professes dismay at the Times plan, saying it “makes zero sense.”) But that view is a fallacy. It assumes that everyone wants to bop around on the web all day trolling different sources for stories. It also assumes everyone is a scheming hacker who, to avoid having to fork out a few bucks, will click links in the Times twitter feed or otherwise figure out some geeky way to get around the system. But not everyone’s like that. In fact, most people aren’t like that. Some people just want to go to a few trusted outlets for most of their news – sources rather than links define their news-gathering behavior – and some subset of that group will likely be willing to pay something for the convenience of having free run of a trusted site. (The iTunes store has revealed that a substantial set of people will happily pay money for digital music files that they could fairly easily scrounge up for free elsewhere on the web.)

The Times subscription plan may fail. It may be built on a misreading of the marketplace. But it’s not super weird, and it’s not cockeyed. It’s a reasonable, thoughtful plan, and the company may discover that a delayed, leaky paywall is the kind of paywall that pays.

UPDATE: Reuters’ Felix Salmon writes: “if this is true, then [the Times is] not actually charging for NYT content; they’re charging for NYT navigation. What you get charged for isn’t reading NYT stories, but rather navigating from one NYT page to another. Now, the navigation at nytimes.com is excellent, and I can see that some people might be willing to pay for it. But it’s a pretty weird thing to charge for.” I think navigation is part of what you’re paying for, but I think the more salient sources of value will be convenience (of which navigation is one element), access to various modes of digital delivery beyond the web site, and, most important, the Times’s editorial skill and judgement as a producer and aggregator of the day’s news and commentary. (To find all of the Times’s content through external links might be possible, but it would be a royal pain in the neck.) What the Times is hoping, obviously, is that a large enough set of people will perceive that value as something worth paying for.

The soon-to-be-disappeared Sun Microsystems had a knack for prescient slogans. “The network is the computer” has come true. And then there was “write once, run anywhere,” which heralded the age of universal software applications. Rather than tailoring their programs to run on a particular type of computer – an IBM mainframe, say, or a Windows PC – programmers would use a language like Sun’s Java that was adaptable to any computer. It was a liberating idea: Software developers and users would no longer be locked into one operating system, and beholden to the owner of that system.

And it came to pass. The Web, a universal medium built on device-agnostic standards, sped the embrace of the “write once, run anywhere” ethic. The idea of tethering an app to an OS came to seem kind of absurd. All was good in the land of software.

And then Apple opened its iPhone app store, and in a Cupertino minute everything changed. Suddenly, the idea of tethered software seemed normal again. (Ironically, when Apple was struggling to survive in the 90s, the Web’s run-anywhere ethic had served as an important lifeline for the company, reducing the importance of Microsoft’s control of the PC software market.) Proprietary app stores are popping up everywhere, as device makers and social network operators seek to extend the usefulness of their gadgets and sites and at the same time strengthen their ability to lock in customers. Just last week, Amazon announced it would be opening an app store for its Kindle e-reader.

The rise of the app store comes as the nature of personal computing applications is changing. Some of the apps sold for the iPhone and other devices are old-fashioned, self-contained programs, drawing on data stored in the device itself. But most of them are what might be called “cloud translators.” They serve as software gateways between the Internet and the device. They tap into stores of data that exist out in the Net’s cloud, from maps to message streams, and they tailor that data for some practical use geared to the device’s form and interface.

So is Sun’s “write once, read anywhere” ethic as doomed as Sun itself? Is the proprietary app store model the new normal? Farhad Manjoo, writing in Fast Company, doesn’t believe so. Although “companies increasingly see it as the future model for all software distribution,” he argues, “the app bandwagon” may soon hit “a dead end.” The universality of the Web, he says, will once again win the day: “The App Store’s true rival isn’t a competing app marketplace. Rather, it’s the open, developer-friendly Web. When Apple rejected Google Latitude, the search company’s nearby-friend-mapping program, developers created a nearly identical version that works perfectly on the iPhone’s Web browser.”

“You’d be a fool,” concludes Manjoo, “to ignore the long-term trend in software – away from incompatible platforms and restrictive programming regimes, and toward write-once, run-anywhere code that works on a variety of devices, without interference from middlemen.”

He may well be right. The advantages of run-anywhere software, and of the browser as a universal platform, remain strong. And yet you’d also be a fool to ignore a different trend: people’s retreat from the open Web and their embrace of private networks, whether run by device makers like Apple or site operators like Facebook. The battle between universal software and proprietary apps is also, in other words, a battle between two models for the future of personal computing. While both models will almost certainly survive, only one will be the dominant model. The question that will be answered in the years ahead is this: Is write-once-run-anywhere the destiny of software, or was it an anomaly?

It’s always slightly disturbing, when scrolling through an old book in Google Books, to suddenly come across a page obscured by the fingers of the technician who manned the Google scanner. You find yourself, for a moment, both repelled and beguiled, as if you were witnessing a secret, ghostly act of violation.

The writer Caleb Crain, in doing research for a review of Adrian Johns’ new book, Piracy: The Intellectual Property Wars from Gutenberg to Gates, came upon a particularly eerie image:

And what work, you might ask, is the scanner’s hand so boldly groping? It’s an essay by Immanuel Kant, the title of which is “Of the Injustice of Counterfeiting Books.”

Comments Crain:

Could there be a fitter representation of copyright’s contemporary plight than the fingers of a Google technician obscuring Kant’s defence of writer’s rights? An author’s consent, Kant cautions in a footnote, “can by no means be presumed because he has already given it exclusively to another”, yet Google is struggling to effect exactly this sort of transfer of consent today, as it attempts to win approval for a legal settlement in the United States that will allow it to republish works whose copyright owners have not come forward. I couldn’t have read Kant’s essay so easily without the Google technician’s labour – in fact, without Google, I might not have got around to reading it at all – but her fingers were nonetheless in the way. The internet’s attitude toward Kant’s words is ambiguous, combining respect, appropriation, liberation and accidental vandalism.

Jeff Jarvis, the popular media blogger, has long ridiculed newspapers for trying to find innovative ways to charge for the stories they publish online. True to form, he had a kneejerk reaction to the New York Times’s plan to ask frequent readers of its digital content to buy a subscription. Jarvis argues that in seeking to charge its “best customers,” the Times is guilty of “cockeyed economics”:

So why charge your best customers? Why single them out? Why risk driving them away? The logic eludes me. So do the economics.

But it’s Jarvis, not the Times, whose economics, and logic, are askew. Jarvis might want to spend some time reading about the fundamentals of pricing, particularly Hal Varian’s classic work on the “versioning” of digital goods. Varian is a distinguished economist who teaches at Berkeley and is also now Google’s chief economist. Here’s a little of what he says about “versioning information goods,” which is extremely pertinent to the Times’s strategy as well as the news and media business in general:

One prominent feature of information goods is that they have large fixed costs of production, and small variable costs of reproduction. Cost-based pricing makes little sense in this context; value-based pricing is much more appropriate. Different consumers may have radically different values for a particular information good, so techniques for differential pricing become very important … [One] particular aspect of differential pricing [is] known as quality discrimination or versioning … The point of versioning is to get the consumers to sort themselves into different groups according to their willingness to pay. Consumers with high willingness to pay choose one version, while consumers with lower willingnesses to pay choose a different version. The producer chooses the versions so as to induce the consumers to “self select” into appropriate categories …

[Consider the case] in which the seller knows something about the distribution of willingness to pay [WTP] in the population, but cannot identify the willingness to pay of a given consumer. In this case the seller cannot base its price on an exogenous observable characteristic such as membership in some group, but can base its price on an endogenous characteristic such as the quality of the choice the consumer purchases. The appropriate strategy for the seller in this situation is to choose two qualities and associated prices and offer them to the consumers. Each of the different consumer types will [select] one of the two quality/price pairs. The seller wants to choose the qualities and prices of the packages offered so as to maximize profit.

The intention is to get the consumers to self-select into the high- and low-WTP groups by setting price and quality appropriately. That is, the seller wants to choose price/quality packages so that the consumers with high WTP choose the high-price/high-quality package, and the consumers with low WTP choose the low-price/low-quality package.

The Times’s plan is, obviously, a variation on this versioning strategy, where the quality variable that is being controlled is the number of stories available to be read in a month. By establishing a volume-based trip wire for a paywall, the Times introduces a mechanism that requires its readers to self-select based on the value they perceive in the Times’s offering and hence their willingness to pay.

Such versioning strategies have proven very successful for many digital goods. Software companies routinely use versioning to segment their customers and optimize their profits, and many cloud services – such as Google Apps – are also following the strategy. The common thread through the strategies is that the “best customers” pay more, while the “worst customers” pay little or nothing. When news stories or other media products are digitized, they also become candidates for versioning strategies. If news organizations don’t experiment with versioning plans, they’d be foolish.

The only thing cockeyed about the economics of the Times’s plan is Jarvis’s view of it.

In a mildly anticlimactic announcement, the New York Times let it be known today that in, oh, a year or so it will get around to figuring out exactly how it will charge some people for its stories.

If discretion is the better part of valor, the Gray Lady is Rambo.

This much we know: The Times will refer to its as-yet-undefined online subscription service not as a “paywall” (which it is) but as a “metered model” (which it isn’t). “Paywall,” apparently, carries the wrong sort of connotations; it sounds like the type of thing Ronald Reagan would have demanded to be torn down. “Metered model” is less likely to raise hackles; it’s the way we get electricity and water and parking spaces.

But the essence of a metering system is that what you pay goes up along with your consumption. That’s not what the Times has in mind. Its system will be a delayed-paywall scheme similar to that already in place at the Financial Times. You’ll be able to read some number of stories, or look at some number of pages, during the course of a month, and once you hit the limit a big old paywall will come clattering down, and you’ll be asked to fork up a few bucks for a monthly all-you-can-eat subscription. There are just two prices, in other words: zero and nonzero.

It’s not the most aggressive move imaginable, but it’s a smart move, particularly when viewed in the context of the Times’s previously disclosed last-man-standing strategy. (Saying it’s a smart move doesn’t necessarily mean it will work; it means that the risk of not trying it at all is higher than the risk of trying it and finding that it doesn’t work.) The structure of the written news business is in flux right now because the Net has erased the traditional local and regional boundaries that once defined newspaper markets. Because, as I described in an earlier post, the highly dispersed and fragmented newspaper supply model was built on the assumption of local market boundaries, the industry is now weighed down with much too much supply. That imbalance is in the process of being remedied as newspapers fold, consolidate, and lay off journalists. The supply side of the industry is shrinking, and every time a newspaper disappears the surviving papers get a little bit stronger. Once the shakeout runs its course, the “last men standing” will face less competition, for readers and advertisers, which in business is always a good thing.

The reduction of supply won’t solve all the problems faced by written news organizations. They will still have to grapple with changing modes of news consumption (and production), the resistance of large numbers of news consumers to paying for the news, and the fact that the web provides a less-than-ideal platform for the kinds of traditional advertising that have been the bread and butter of newspapers. One way to deal with these challenges is to start some rational experiments in market segmentation, and that’s what the Times’s paywall plan – oops, I mean “metered model” – is fundamentally all about.

The Times recognizes that, even in our digital age, the news-consuming public is not an undifferentiated mass. Some people are blind to differences in the quality of reporting and writing; other people pay attention to those differences and place a high value on quality. Some people are happy to skip around the net sampling all sorts of stories by all manner of producer; other people have better things to do and would prefer to stick with a few trusted sources. Some people still prefer printed newspapers; other people prefer to get their news from web sites or Kindles or iPhone apps; other people want all of the above. Some people find the idea of paying for news anathema; other people don’t.

The Times’s plan involves dividing the market into three categories and tailoring a different offering and business model to each. Here are the segments, as I see them:

Traditionalists: Largely though not exclusively an older and fairly well-heeled crowd, they continue to value the unique attributes of a printed newspaper while also wanting the option of digital delivery. They’ll pay a pricey subscription fee for a print edition, and they’ll (likely) get the full panoply of digital options thrown in for free. Because they’re an attractive audience to many advertisers, they’ll also generate significant advertising revenues, across print and digital media.

Loyalists: They don’t care about print editions. They want their news digitally, but they value quality and hence tend to be fairly loyal readers of what they see as quality news outlets. The Times hopes to convince a good chunk of these folks to subscribe to the all-you-can-eat digital version of the paper. This will be a tough sell, but it’s not an impossible sell. And if more digital news starts to be delivered through software applications and computing devices better geared toward the display of text and the navigation of an online newspaper (like the soon-to-be-nonmythical Apple tablet), the idea of paying for access to a quality online news outlet will likely become more palatable to this segment. Here, again, the subscription fees will be supplemented by ad revenues.

Freeloaders: The biggest and (from a business standpoint) least attractive segment of the market, they’re happy to hop around the web gathering news content from many different outlets, and there’s no way in hell they’re going to pay for it. The Times will give these folks free but limited access to its site (though probably not other kinds of digital delivery), and it will carefully establish the limits on free access to ensure that most of the members of this segment will go on getting what they’re used to getting from the Times (and if they don’t, they’ll come back for a few stories next month). Freeloaders will continue to provide the Times with some marginal ad revenues, and over time some small but not insignificant number of them might relocate themselves into the Loyalist category. Maintaining some level of free access is crucial for a news outlet like the Times because, as the company’s top execs put it in a staff memo, it needs to “remain a vibrant part of the search-driven Web.” It needs to stay in the link stream.

The newspaper business has been shrinking for decades, at least in terms of readership. It will never be what it was, and it will certainly never be what it was before the Web. But for the last men standing, things may not turn out as bad as the doomsayers think. The consolidation of supply in the industry, the reduction of competition, the emergence of new market segments, the willingness to experiment with targeted subscription programs and other types of pricing schemes, and the coming of new devices and software for news delivery: these may not be causes for optimism in a beleaguered industry, but they are causes for hope.

This is the third installment of “Dog Bites Newspaper,” Rough Type’s non-award-winning series on the future of written news. The earlier installments were The Writing Is on the Paywall and Google in the Middle.

Never before in history have people paid as much for information as they do today.

I’m guessing that by the time you reached the end of that sentence, you found yourself ROFLAO. I mean, WTF, this the Era of Abundance, isn’t it? The Age of Free. Digital manna rains from the heavens.

Sorry, sucker. The joke’s on you.

Do the math. Sit down right now, and add up what you pay every month for:

-Internet service

-Cable TV service

-Cellular telephone service (voice, data, messaging)

-Landline telephone service

-Satellite radio

-Netflix

-Wi-Fi hotspots

-TiVO

-Other information services

So what’s the total? $100? $200? $300? $400? Gizmodo reports that monthly information subscriptions and fees can easily run to $500 or more nowadays. A lot of people today probably spend more on information than they spend on food.

The reason we fork out all that dough is (I’m going to whisper the rest of this sentence) because we place a high monetary value on the content we receive as a result of those subscriptions and fees.

Now somebody remind me how we all came to think that information wants to be free.

It’s a strange world we live in. We begrudge the folks who actually create the stuff we enjoy reading, listening to, and watching a few pennies for their labor, and yet at the very same time we casually throw hundreds of hard-earned bucks at the saps who run the stupid networks through which the stuff is delivered. We screw the struggling artist, and pay the suit.

Somebody’s got a good thing going.

UPDATE: Alan Jacobs, over at Text Patterns, adds an interesting gloss to this post:

One of Nick’s commenters suggests that his point is misleading because we’re not paying all that much per bit of data. That’s probably true, but it may not make the point the commenter wants it to make. Consider an analogy to restaurant dining: Americans in the past twenty years have spent far, far more on eating out than any of their ancestors did, and that’s a significant development even if you point out that huge portions of fat-laden food mean that they’re not paying all that much per calorie. In fact, that analogy may work on more than one level: are we unhealthily addicted to information (of any kind, and regardless of quality) in the same way that we’re addicted to fatty foods?

Back when we were more conscious of what particular bits of information we were spending our information dollars on was our information diet (so to speak) healthier than it is today when we buy tickets to all-you-can-eat buffets? I’m not sure I know the answer to that question, but it’s a question worth pondering. It certainly underscores how silly it is to simply try to measure “cost per unit of information” as if that alone tells us anything. Unless, of course, you believe that every unit of information is identical in terms of quality and value.

In the wake of Google’s revelation last week of a concerted, sophisticated cyber attack on many corporate networks, including its own Gmail service, Eric Schmidt’s recent comments about privacy become even more troubling. As you’ll recall, in a December 3 CNBC interview, Schmidt said, “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place. But if you really need that kind of privacy, the reality is that search engines – including Google – do retain this information for some time and it’s important, for example, that we are all subject in the United States to the Patriot Act and it is possible that all that information could be made available to the authorities.”

For a public figure to say “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place” is, at the most practical of levels, incredibly rash. You’re essentially extending an open invitation to reporters to publish anything about your life that they can uncover. (Ask Gary Hart.) The statement also paints Schmidt as a hypocrite. In 2005, he threw a legendary hissy fit when CNET’s Elinor Mills, in an article about privacy, published some details about his residence, his finances, and his politics that she had uncovered through Google searches. Google infamously cut off all contact with CNET for a couple of months. Schmidt didn’t seem so casual about the value of privacy when his own was at stake.

The China-based cyber attack, which apparently came to Google’s attention just a few days after the CNBC interview, makes Schmidt’s remarks about privacy and deferring to “the authorities” seem not just foolhardy but reprehensible. When the news reached Schmidt that some Gmail accounts had been compromised, perhaps endangering Chinese dissidents, did he shrug his shoulders and say, “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place”? Did he say that Gmail customers need to understand that sometimes “the authorities” will have access to their messages? Judging by Google’s reaction to the attack, it takes the privacy of its own networks extremely seriously – as well it should. The next time Schmidt is asked about privacy, he should remember that.

Of course, Schmidt isn’t the first Silicon Valley CEO to make cavalier comments about privacy. It began back in 1999 when Schmidt’s onetime boss, Sun Microsystems CEO Scott McNealy, proclaimed, “You have zero privacy anyway. Get over it.” Just this month, the idea was repeated by the web’s most amusing philosopher-king, Facebook CEO Mark Zuckerberg. In an on-stage interview, Zuckerberg defended his company’s recent decision to roll back privacy protections on its site by arguing that the desire for privacy was evaporating as a “social norm.” Facebook, said Zuckerberg, was merely responding to that putative shift.

Reading through these wealthy, powerful people’s glib statements on privacy, one begins to suspect that what they’re really talking about is other people’s privacy, not their own. If you exist within a personal Green Zone of private jets, fenced off hideaways, and firewalls maintained by the country’s best law firms and PR agencies, it’s hardly a surprise that you’d eventually come to see privacy more as a privilege than a right. And if your company happens to make its money by mining personal data, well, that’s all the more reason to convince yourself that other people’s privacy may not be so important.

There’s a deeper danger here. The continuing denigration of privacy may begin to warp our understanding of what “privacy” really means. As Bruce Schneier has written, privacy is not just a screen we hide behind when we do something naughty or embarrassing; privacy is “intrinsic to the concept of liberty”:

For if we are observed in all matters, we are constantly under threat of correction, judgment, criticism, even plagiarism of our own uniqueness. We become children, fettered under watchful eyes, constantly fearful that – either now or in the uncertain future – patterns we leave behind will be brought back to implicate us, by whatever authority has now become focused upon our once-private and innocent acts. We lose our individuality, because everything we do is observable and recordable.

Privacy is not only essential to life and liberty; it’s essential to the pursuit of happiness, in the broadest and deepest sense of that phrase. It’s essential, as Schneier implies, to the development of individuality, of unique personality. We human beings are not just social creatures; we’re also private creatures. What we don’t share is as important as what we do share. The way that we choose to define the boundary between our public self and our private self will vary greatly from person to person, which is exactly why it’s so important to be ever vigilant in defending everyone’s ability and power to set that boundary as he or she sees fit. Today, online services and databases play increasingly important roles in our public and our private lives – and in the way we choose to distinguish between them. Many of those services and databases are under corporate control, operated for profit by companies like Google and Facebook. If those companies can’t be trusted to respect and defend the privacy rights of their users, they should be spurned.

Privacy is the skin of the self. Strip it away, and in no time desiccation sets in.