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The New York Times today came out with its long awaited digital subscription pricing. Beginning immediately in Canada and March 28 in the United States and the rest of the world, heavy users of the New York Times will be asked to pay between $15 and $35 every four weeks for continued access.

Most people aren’t likely to hit the paywall. I consider myself a heavy news consumer and I value the NYT brand. But I had no idea how many stories I read a month. I checked my own usage and found that I read 18 stories in the last month.

The reality is that most traffic to news sites is already driven through search and social media. Those will remain free in the new model. Four years ago, only 20% of NYT visitors who viewed the front page. It’s likely a lot lower now. Bizarrely, the new model actually discourages people from going to the NYT home page directly.

For those who do hit the limit, there are numerous options aside from paying:

• Stop reading.
• Tweet “Psstt… buddy, can you tweet me a link?” If someone responds, you get free access to the story.
• Follow @nytimes on Twitter and click on the links from there.
• Go into your browser’s porn mode.
• Clear out cookies.
• Go to Google and search for keywords related to the story.
• Find a summary of the story on Huffingtonpost.com and click through from there.

Print subscribers continue to have free access to NYTimes.com, mobile applications and iPad apps.

Some commentators have pointed out that the pricing is out of line with the print edition. For $15 a month, you can get home delivery of the Sunday New York Times which includes all access to the online, mobile and tablet editions of the Times. To get the same access without the print paper costs $35 a month.

So the times is charging an extra $20 not to deliver the paper. In one case, you’ve got nearly zero incremental cost. In the other, you’ve got several dollars in hard costs of paper, printing and delivery.

What gives?

The point of the digital pricing is exactly to drive people to print subscriptions — even if they never read them and the papers pile up.

The ad rates the NYT can charge in print are much higher. On average, the NYT generates $600 in advertising per year per print subscriber and less than $10 per online user per year. If someone looks at the digital pricing and decides to get a paper subscription, that’s a huge win for the NYT because it gets to up its more valuable print subscription base. Of course, at some point advertisers will catch on that no one is reading that circulation.

As someone who cares about the environment, this saddens me. Chopping down trees, sending them across the country and then having diesel-guzzling trucks roaming around town all morning is just wasteful. (Not to mention the process of disposing of all this.) The Yellow Pages people, with once a year deliveries,  have nothing on newspapers.

I doubt that this new model will be an abject failure like TimesSelect. But it’s also unlikely to generate significant revenue for the NYT.

The Daily Beast’s Howard Kurtz recently took the media to task for spending too much time covering the TSA’s new procedures, referring to it as a “‘junk’ journalism epidemic.”

I’ve about had it with media types who insist on turning this into a junk story.

A government agency with more than a $7 billon budget that touches 2 million people a day (now sometimes literally) with little accountability? That’s exactly the kind of story that the media should be focused on.

Unfortunately, Howie is right in that while they’ve stayed on the story, the handling has largely been junk.

There are two biases in today’s media: laziness and sensationalism. They lazily do the standup at the airport with the grandma who says she’s happy to fly naked if it makes her safer. (Portland TV stations sent their reporters to Portland International Airport, even though the new procedures aren’t in place there.) They don’t bother to question whether it actually makes her safer.

They lazily interview John Pistole with his pat answers that admonish people that it’s all for their own good and to remember 9/11. Deference to official sources is just as strong as it was during the lead up to the Iraq war. Tough questions are few and far between. Official statements are treated as gospel. Even in Howie’s piece, he quotes Pistole as saying “Very few people actually get the pat-down at all … it’s a very, very small number.” That “very, very small number” is about 60,000 people a day.

They also interview security consultants, who have either worked for these same agencies or make their money by working for the companies that make the scanners or both. Former Homeland Security chief Michael Chertoff’s company worked on behalf of Rapiscan, one of the two suppliers of the devices.

They lazily quote polls from other news organizations without any understanding of what the poll asked or what the answer meant. The widely quoted CBS News poll was garbage.

For the most part, they don’t ask about whether the new procedures are effective or whether they can be worked around. They can — just insert the explosives into the rectum or vagina. That’s right, we have government employees fondling law-abiding citizens without cause, even though a terrorist can easily work around it. Even the companies that make the new imaging devices are uncertain whether they would have detected the underwear bomber.

They don’t bother to ask about all of the risks the TSA ignores while it puts on a show at the security checkpoint.

There’s also a bias to sensationalize. Some people are afraid to fly as it. The bogeyman of the Muslim terrorist plays well. We fear dying in a plane bombing because incidents that involve aircraft get a disproportionate amount of media attention. The media have a financial incentive to sensationalize: scared people watch TV to hear the “experts” talk about how to stay safe.

What the media don’t talk about is that flying is incredibly safe. 2 million people a day fly in the U.S. That’s more than 700 million people a year. In the last 9 years, there have been:

• More than 300,000 deaths in car crashes.
• More than 130,000 people murdered.
• Exactly zero fatalities from aviation terrorism in the U.S.  6.6 billion passengers and zero fatalities.

Everything we do in life has a risk to it. Taking a shower, walking down the street, going to the mall.

I travel between 50,000 and 100,000 miles a year most years. I also travel on larger planes and to and from foreign countries. My risk of dying in a terrorism-related plane crash is much greater than that of the average American. (16% of Americans have never flown; another 37% fly less than once a year.) But I’m not worried because I know the risk is so unbelievably tiny it’s not worth worrying about. The TSA’s new procedures don’t reduce that already insignificant risk.

The Cinnabon at the airport food court is a bigger threat to your health and well being than a terrorist is. And, by the way, what the TSA doesn’t want you to know is that the guy working behind the counter at the Cinnabon didn’t have to go through security.

This Bloomberg graphic and its interpretation in the accompanying story is full of errors.

What would readers conclude after looking at the graph above?

1. Best Buy sales have gone up at least 10 fold in the last 2 years. (Recession, what recession?)
2. Best Buy’s monthly sales at the end of 2009 were roughly $22 million, at the peak of holiday season.
3. Newegg is the #2 electronics retailer, after Best Buy. Amazon, buy.com, Walmart and Target aren’t players in electronics.

That’s what the graph says, but all of those conclusions are wrong.

In reality, Best Buy did $8.5 billion in revenue in December. In fiscal year 2009, Best Buy did $45 billion in revenue. $22 million in revenue is a rounding error.

What the graph really shows is how useless these Mint.com data are for analyzing consumer spending by category.

The reporter apparently didn’t understand the methodology behind Mint’s data. Mint allows consumers to track their credit and debit transactions. Consumers enter their account information and mint pulls transaction data from their banks and presents it online. Here’s how that methodology leads to the above erroneous conclusions:

1. The enormous growth in the graph likely represents the growth in mint.com’s user base. Mint launched in September 2007 and has grown to 1.8 million users. (Mint was recently acquired by personal-finance software maker Intuit for $170 million.) Best Buy’s comparable store sales were down for fiscal year 2009 and up marginally for fiscal 2008.
2. Only transactions by Mint’s users are included in this number, accounting for the multibillion-dollar difference. Even then, those numbers may not be complete as not all users import all accounts.
3. Newegg is the #2 dedicated electronics player as classified by Mint. Because Mint collects transaction level data, not item level data, it doesn’t know what to do with purchases from diversified retailers like Amazon, buy.com and Walmart. (Amazon wouldn’t even show up as a leading bookseller; on my Mint account, it shows up as “Shopping”.) By Best Buy’s own definitions, consumer electronics only account for 36% of its revenue.

There’s also zero justification in the Mint data to support the chart’s caption that Best Buy generated these huge returns by “offering discounts on laptops and flat-panel televisions.”

These kind of errors are rampant in our business news because many reporters don’t understand numbers or methodology. When I was in school at the Medill School of Journalism, most classmates took the minimal math and economics classes they could and still get a journalism degree.

One of the most frequent numerical mistakes by journalists is confusing percent increases with percentage point increases. If your credit card’s interest rate goes from 10% to 15%, it’s a 5 percentage point increase, but a 50% increase.

This journalistic innumeracy hurts us all. We can’t make informed decisions about what government is doing if people don’t understand the numbers. Even basics get confused: journalists frequently confuse millions with billions (via Paul Kedrosky).

Journalists are at least partly to blame for the dot com bubble and the housing crash. Not understanding the economics, they repeated the lines of “experts,” such as investment bank analysts and real estate agents — most of whom had clear incentives to keep pumping air into the bubbles. I read many stories about how exotic mortgages were making housing more affordable. What was actually happening was that the easy availability of credit and flood of otherwise unqualified buyers in the marketplace drove up price. Basic supply and demand.

Unfortunately this problem is only going to get worse. Many of the sharpest minds I know from the journalism business have left to go on to other careers for many reasons — the difference in pay (often 2x or more), instability and constant layoffs and backward thinking management.

Additional analysis of the data also takes time, which is becoming harder to come by as newsrooms across the nation shrink. The pressure to do more “quick hits” like charts of the day will lead to more sloppiness and misinformation.

More on: journalism, newspapers

See also:

• Best Buy Boosts Electronics Sales as Rivals Fade: Chart of Day