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?

Tuppence-worth on Rupert Murdoch’s Times paywalls

It was quite entertaining to watch this Sky News interviewer try to tame Jeff Jarvis on the issue of the Times paywalls (the Sky guy looks to be shielding himself with some sort of tablet computer and uses the word “monetarising”, so the odds are stacked against him from the start).

While Jarvis’s language about Rupert Murdoch is a little direct, it is difficult to disagree with his conclusions – the Times is cutting itself off from the rest of the web. Therefore, how will it grow as the web grows? How will it increase its audience and reach online, how will it attract new readers via the new tools the Web is sure to throw up?

The New York Times, which tried a paywall experiment and relented —  partly under pressure from its own columnists unhappy with the lifeblood of links, tweets and comments being tied off — will install a metered model in January, where incoming blog links do not count against a reader’s allotted “free reads”. Given that most of the NYT content I read is via a blog or twitter link, I don’t see how that will raise any extra cash from me,  but at least they’re still in the open.

Malcolm Coles offers up a different problem – the divisions between the paper Times and Sunday Times start looking a lot shakier online:

“Forcing people to subscribe to both sites but keeping them entirely separate, with no cross linking, seems a bit odd.”

The people who work there make an eloquent case for online journalism (although not one of them mentions charging):

We have been here before. When Rupert Murdoch bought the Wall Street Journal, he was very gung-ho about dropping their paywall, until the economics of the situation were brought home to him.

The irony of the situation is the Times website now looks fantastic. With the relentless focus of an operation that must either work or drop somebody in the shit, it has been redesigned. It is clean, there is hierarchy, the vibrant colours are from the Times-branded palette, the use of pictures is great. The interactive graphics and the Spectrum photo galleries are especially eye-catching.

However, it all raises the question that if this was worth doing as a spring clean before the paywall goes up, why wasn’t there this level of excitement and interest in how the website looked when it was officially chasing unique users and advertising money? The FT reports this morning that fewer than 10% of the Times’s unique 21 million-ish users are likely to pay for the revamped content. Would this level of energy and creativity have brought in enough extra unique users to justify staying in the open?

Journalists these days are being constantly harried to find the business model in what they do. On the Times’s and Sunday Times’s new-look websites, (video here, if you can stand the awful soundtrack and a PaidContent slideshow of pages here), the online editorial people have clearly upped their game, the designers have played a blinder and the infographics team – especially on the excellent eureka graphics – have pulled out all the stops. They are more than pulling their weight in trying to adapt to this experimental business model – but where is the commercial side of the operation? What are they bringing to the table?

It would be a terrible shame if, having come up with an elegant, if  newspaperesque, design (almost to the point of the website being a better designed paper than the Times itself), all of this hard work is seen by fewer readers than any other Fleet Street website. If enough of them pay, of course, it will be hailed a success, but for now it feels like Jarvis was right, and this is a retreat into old ideas rather than a striving for new ones.