Crunching the numbers behind the paper's digital subscription plan
“A few years ago it was almost an article of faith that people would not pay for the content they accessed via the Web,” New York Times Company chairman Arthur Sulzberger, Jr. said on Thursday morning while announcing the paper's long-awaited online paywall and digital subscription service. “This move is an investment in our future. It will allow us to develop new sources of revenue."
Without the wall, the Times generates approximately $150 million annually in digital advertising revenue.
So just how much revenue is the Times looking to develop with it?
Times executives, as you might expect, aren't willing to speculate publicly.
But others, like Gordon Crovitz, the former publisher of the Wall Street Journal, are happy to.
"We estimate the Times should be able to generate $100 million in new revenues with this approach," Crovitz — the founder of Press+, a company that helps newspapers figure out how to charge for web content — wrote in a blog post on Thursday.
That may be overly optimistic. Here's some admittedly rough math.
The Times website attracts about 30 million unique visitors a month, according to Comscore. Under the current plan, the Times will ask "heavy" users — those who view more than 20 articles per month — to sign up for a digital subscription.
Times Company president Janet Robinson told Ad Age on Thursday that about 15 percent of its 30 million unique users view 20 or more articles a month.
If every one of those users sign up for basic access ($15 per month), the Times would generate $67.5 million each month, or $810 million a year.
But judging by the vast majority of the 1,200 comments about the move on the Times website – made by registered (and, one could argue, "heavy") — I'd say that less than 10 percent of the "heavy" users plan to subscribe, at least initially.
That would mean 450,000 people, paying $15 per month, would generate $6.75 million a month, or $81 million a year.
The other problem for the Times is that the wall will undoubtedly cause a slide in traffic, threatening that $150 million in annual digital advertising revenue.
"This is a long term strategy," Robinson said. "In the short term perspective, going to something new in this transition time, there may be a slight dip in traffic. But from the perspective of the way we've constructed the bundles and will remain part of the digital ecosystem, we believe we have protected our traffic and consequently protected our advertising inventory and advertising revenue."
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