Of course they know that they need to get more subscription readers. The past two decades have shown conclusively that, presently, online advertising isn't enough to foot the bill. In light of that, chances are they're willing to give up 500 people who have no loyalty for 1 person who is willing to pony up the money for it -- and it makes economic sense. But the beauty of the NYT strategy is that they don't see treat it as a dyad.

Digital content is an intangible good; that is, the cost remains mostly fixed once it has been produced, regardless of how many people access it. Thus, the New York Times' strategy is rather clever (even if they overpaid for it by an order of magnitude): generate the bulk of your online revenue from the 5-10 percent of your readers who absolutely love the product (and value it enough to pay for it) through subscriptions and then generate some advertising revenue from the folks who have no interest in paying for your product.

By making the paywall easy to circumvent, they're able to generate ad revenue from those who have the time to engage in those practices (usually people with limited disposable income who probably wouldn't subscribe to begin with). Meanwhile, those who do have disposable income are likely to be willing to pay for the added convenience of not having to delete their cookies or run an extension (if they know how to do so). Also, by allowing people to access the content if they come from external sources, they ensure that they're still able to capture a wide audience, which can be converted to subscribers. They also ensure that bloggers continue to link to them (FT.com found out the hard way that by not distinguishing local traffic and external traffic, the paywall would make bloggers feel uncertain about whether their readers would be able to view FT articles; they soon stopped linking to them). Lastly, by gently asking consumers to pay, they're able to gain more goodwill and develop a social norm that paying for content you value is a good thing. Indeed, those who sign up willingly are more likely to be long-term, loyal customers than those who feel forced to sign up.

As to whether it's working or not, the numbers seem to favor them. Digital subscriptions have almost doubled since last year (281,000 in 2Q, 2011 to 454,000 in 1Q, 2012). Digital advertising revenue saw modest growth. Web traffic has remained relatively level. Churn is less with digital than print customers. Of course, we can't say that they would be better off by staying completely open/free, but the numbers don't look bad at all -- especially in face of predictions that the paywall would scare all their traffic away.

I'm not sure how the Streisand Effect applies to WikiLeaks here as WikiLeaks (to my knowledge) had nothing to do with this attack. According to the article, "LulzSec" is the group responsible for the act.

Also, a proper Streisand Effect would require broad dissemination of what happened; this story has received fairly limited coverage.