doesn’t go down!?
In a paywall experiment everyone is watching, this summer Murdoch owned papers The Times and The Sunday Times of London started charging for web access. In a press release yesterday New Corp. said they had gained 105,000 paying customers because of this. According to the NYTimes (here) website visitation was expected to drop 90% once the walls went up but according to Nielsen that number only fell by 42% (1.78 million).
Tech blog GigaOm further parses the numbers to reveal that out of 105,000 paying customers only 50% are subscribers which the writer paints as a failure: “after four months of selling its new paywall system, News Corp. has only managed to convince a little over one-and-a-half percent of its readers to pay something for the newspapers’ content — and has only been able to convert half of that already tiny figure into actual monthly subscribers.”
TechCrunch picks up the failure story and does some quick back-of-the-napkin math to show why it’s not actually true:
Basically, those 50,000 monthly subscribers are paying $12.80 a month, or $640,000 a month total. Let’s say the other 55,000 pay-as-you-read crowd is generating another $160,000 a month in subscription revenues (I am being generous here and assuming two days a month per person at $1.60 per day). That comes to $800,000 a month, or $9.6 million a year in online subscription revenues.
What did they give up in online advertising revenues? At 41 million estimated pageviews a month, assuming a $5 CPM (cost-per-thousand-impressions), that was only $200,000 a month in online advertising revenues.
[...]Depending on the actual CPM, financially they are doing at least two to four times better than they were before. And that is with only about 1.5 percent of their former readers becoming paying subscribers.
In the end this strategy will work for many publications, because the CPM’s will go up under a paywall. Advertisers want to reach engaged readers and there’s no better test of engagement than making someone pay for access. The problem all along has been the cost of making the leap both in increased infrastructure and temporary loss of advertising and subscribers. Media companies and their nearly retired owners aren’t about to take any chances.