Some fag-packet sums on the Times paywalls

I am still trying to get my head around the Times’s and Sunday Times’s experiments with paywalls.

In its last valid ABCe figures, Times Online had about 1.2 million unique users a day.

If, as the Guardian and FT have suggested, about 10 per cent of users convert to paying £2 a week:

120,000 users x £2 x52 = £12,480,ooo a year.

Wired magazine quotes an Enders report which suggests Times Online made £15 million-£18 million in annual ad revenue before the paywall. Because the audience will drop so drastically, Wired guesses that the advertising take will fall to about a third of that after the paywall (I have no idea what they base this guess on, but keeping a third of your revenues with a tenth of the audience may also be optimistic).

So at the upper end of that scale, let’s say £6 million in advertising revenue on top of the £12.5 million in subscriptions. That makes £18.5 million – an increase of £500,000 in online revenues post-paywall.

That doesn’t seem like much of a gain and offsets a little more than two days’ reported losses at both titles (£240,000 per day).

Nor can it be too cheering for  journalists at both Times titles waiting to hear about the take-up of 80 voluntary redundancies, which closes today.

It gets worse — Paid Content quotes research by Enders Analysis saying the take-up could be as low as 2 per cent — making about £1 million a year. Even if the advertising revenues stayed the same as above, that would be an £11million loss.

It gets worse still — as I said yesterday, even the optimistic-looking 10 per cent will dwindle because stories are only discoverable from inside the paywall. There will be no Google search engine indexing. Surely this means that ad rates will also fall over time as the clicks to deep links fall off and are not replaced?

I pointed out yesterday how well-designed and enticing the new websites for both titles look — was it really beyond their capability to increase the uniques to the 30 million mark?

The Guardian’s website, which had 29.8 million uniques in February [2010] generated £25m in revenues last year [2009] (PaidContent)

The Timeses are trying to cut their combined £100 million editorial budget by 10 per cent, or £10 million. If they are really trying to protect the newspapers and their dwindling revenues with a paywall that limits the growth of online revenues, they could miss out on twice that in online revenue.

Can anyone explain the logic of that to me? Have I messed up the maths somehow?

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  1. 1 Reactions coming thick and fast to Rupert Murdoch’s Times paywalls « Fin O’Reilly

    […] I’ve now heard two sources inside the Times, one direct, one relayed, that holding five per cent of their pre-paywall audience would be considered a success by Mr Murdoch and his expanding crew. As I’ve already posted, the sums just don’t add up on that for me. […]




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