NY Times Exec: Credit Cards Make People Beautifully Ignorant Of Their Spending

Gerald Marzorati, the assistant managing editor for new media and strategic initiatives at the New York Times, said something out loud during a recent panel discussion that everyone knows, but no one really wants to admit: using a credit card separates you from how much you’re really spending, and subscribers seem blissfully unaware of subscription hikes.

Of course, it helps that subscriptions auto-renew, forcing subscribers to choose to opt out.

“We have north of 800,000 subscribers paying north of $700 a year for home delivery,” Marzorati said. “Of course, they don’t seem to know that.”

As evidence that Times subscribers don’t realize how much a subscription costs, he pointed to what happened when the paper raised its home-delivery price by 5 percent during the recession: Only 0.01 percent of subscribers canceled. “I think a lot of it has to do with the fact that they’re literally not understanding what they’re paying,” he said. “That’s the beauty of the credit card.”

NY Times Editor on the ‘Beauty’ of Readers’ Ignorance [Mixed Media] (Thanks, Kevin!)

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  1. AllanG54 says:

    Which is why I don’t have a subscription to a newspaper. Because between their price hikes and the tip to the delivery person it gets quite costly. Newsday is now $1 a day and $2.50 on weekends. We get the paper but only when we want it.

  2. Alvis says:

    800,000 people still don’t have access to the internet? That’s just sad.

    • Hoss says:

      You can read some papers fairly easily on-line. But if you’re interested in seeing everything in the NYT, it’s not very easy to do it on-line. At least it’s not easy for me. Same with Wall St Journal

      • MaxH42 thinks RecordStoreToughGuy got a raw deal says:

        As far as I can tell the Washington Post has all its print content online (except for ads), and also has both chats with and blogs by its staff that you can’t get in print, and I like those online features as much or more than the print content. It’s also much easier to share an article with friends when you read it online.

  3. TuxthePenguin says:

    Most people could go a month without touching actual currency. Heck, I don’t except for my “slush fund” monthly (what my wife decides not to impound and let me play with… *grin*).

    I’m pretty sure I’ve seen study after study that using a credit card leads to more spending. I’ve noticed that trend with just myself.

    • DanRydell says:

      I think that checking mint.com regularly makes me treat credit cards more similarly to cash. I can see my spending increase throughout the month, and if I feel like I’m spending too much I’ll dial it back some. I know how much is left from my two paychecks a month after the major bills are paid, I know how much spending I have to average per month with the remainder to break even. I always aim to stay well below the break even point so I’m saving money.

  4. DanRydell says:

    $700 for home delivery of a newspaper seems crazy to me, but then again I spend $700 a year on things that other people would think are crazy.

    Mint.com helps me pay attention to my spending a lot better than I used to.

    • theduckay says:

      +1 for Mint! I use their budgeting tool every month and it really helps me keep track of what I spend/should spend. Sometimes I’ll go over my spending budget (oops) but at least I feel bad about it cause of Mint haha

  5. dulcinea47 says:

    Are these the people who have it set up to auto-pay every month? B/c otherwise, even if you use a credit card, you should see what the amount is every month when you pay the bill. I never put anything on auto pay, partly b/c of that, and partly b/c I don’t trust anyone not to screw up and take more money out of my account.

  6. ARP says:

    It starts at an early age. When I was young, the arcade exchanged dollars for tokens. The fact that its not “real money” is a psychological seperator(er?) so that you don’t think about how much money you’re spending.

    Casino use chips and are using cards more and more in their slot machine so that you don’t realize how much money have or have spent.

    As savvy as we think we are, its surprisingly effective.

  7. Beeker26 says:

    And then they wonder why newspapers are all struggling to stay afloat. Gloating about how you’re shafting your subscribers probably isn’t such a great idea.

  8. RandomHookup says:

    People who are really price sensitive got out of paying for a newspaper long ago. It’s just us diehards left.

  9. SPOON - now with Forkin attitude says:

    I make my own credit cards at home.

  10. Hoss says:

    I don’t believe this guy when he says only .01 percent canceled after the price hikes. He says there are 800,000 customers which means 80 canceled? I canceled, and the increase for me was more the 5% (to Boston). I suspect people canceled and when asked why they just got more annoyed and hung up. Either that or the newspaper guy doesnt do math well.

    • PLATTWORX says:

      ” I suspect people canceled and when asked why they just got more annoyed and hung up. “

      No, he said cancelled AFTER the price hikes, not BECAUSE.

  11. Pasketti says:

    800,000 * $700 = $560,000,000.

    That’s five hundred sixty million dollars.

    That’s… a lot of money.

  12. Blueskylaw says:

    This is the reason that NO company has access to my credit card through auto bill or auto pay.

  13. ycnhgm says:

    I pay around $22 per month for my NYTimes subscription (7 days/week). That’s the discount they give to folks working in academia. That’s still more than $260 per year. Not sure if I would pay $700/year for a printed newspaper.

  14. PLATTWORX says:

    Subscription auto renew is a standard of the publishing industry, newspaper or magazines. If you don’t offer it customers who wish to renew forget to call and then scream when they paper or magazine stops…. you end up with massive churn… not to mention people who would have renewed and then don’t because they are too lazy to call and restart.

    THAT SAID, saying in public “”We have north of 800,000 subscribers paying north of $700 a year for home delivery, Of course, they don’t seem to know that.” is stupid as hell. This guy fired yet?

  15. jennesy says:

    I still get the NY Times delivered but only on Sundays. (When someone in my building doesn’t steal my paper, that is…)
    I read the Times daily online and use the iPhone app for free.
    I get a *huge* educators discount for my paper subscription and get premium online content (e.g., archives).
    Even though I’m a broke grad student I can still justify the $10/mo for the newspaper. If we want to continue to have good journalism someone has to pay for it.

  16. ceez says:

    wow that is so true.
    some (most) people just swipe those cards like if they’re never going to see a bill. then they think that 30, 60 or 90 day no interest is a safety net when they’re looking at a 1000 statement in which they cant fully pay in 90 days.
    let the interest frenzy begin.

  17. Fubish says: I don't know anything about it, but it seems to me... says:

    Yessir! There’s nothing like calling your subscribers stupid.

  18. vastrightwing says:

    I don’t auto-debit any bills. I pay each bill one at a time, each month, for several reasons:
    1) Lazyness is expensive: you forget that $9/wk is nearly $500/year and when you see it on your credit car bill, it’s only $9, so you let it slide.
    2) If the vendor makes a mistake, it’s up to you to fix it and it’s a big hassle
    3) I want to know exactly what I’m being charged for each month and I don’t want a rate increase to go unnoticed.
    4) If a bill comes in and I don’t have the funds to pay it, I don’t want to be stuck paying a $30 overdraft penalty or insufficient funds fee.

    Sure, I hate paying bills, it’s a nuisance, but turning on auto-bill pay in any form is bad for you and good for the companies who get you to agree to it.

  19. HappyFunTimes says:

    So, it’s the credit card’s fault that people are too stupid to pay attention to what they spend? What else can we reify these days to take the burden of responsibility off the poor consumer who is being unwittingly abused by the evil corporations.

  20. TasteyCat says:

    Credit cards do not make people ignorant. They were already ignorant to begin with.