Newspaper paywall datapoint of the day

By Felix Salmon
November 2, 2010
released numbers on its UK paywalls.

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There’s lots of schadenfreude at the expense of News Corp today, which finally released numbers on its UK paywalls. Mathew Ingram, for instance, reckons the numbers prove that the paywalls are a bust, while Ian Burrell surveys other media machers and finds lots of downward-pointing thumbs.

Certainly traffic has fallen off a cliff, from 21 million to 2.7 million pageviews per month. And while News International is trumpeting “more than 105,000 paid-for customer sales to date”, everybody suspects that most of those are one-off £1 purchases to get a 30-day free trial. (News has also bundled in the papers’ iPad and Kindle editions, just to make the totals even more opaque.)

With those modest numbers, there’s certainly no way that News will get any noticeable ad revenues: media buyers simply have no interest in reaching such a small audience, no matter how much information News has on exactly who they are. And certainly, as Ingram says, “the newspapers have been cut off from the news flow on the broader Internet, and the potential benefits of attracting links and commentary from other sites that could help to promote their content”.

But to get the bigger picture of what’s going on, it’s worth looking at the papers’ print circulation. The Times sold just 486,868 copies a day in September, down 15% year-on-year, while the Sunday Times is down 10% year-on-year to a circulation of 1,091,869.

Faced with that kind of circulation decline, it’s easy for newspaper people to declare that it’s not their fault, and that the problem is that readers can find all their content for free online, so why would they ever want to pay for it. The paywall then becomes a last-ditch attempt to shore up print circulation, to stop the perceived bleeding of readers from print to the web.

The NYT paywall is clearly being constructed along similar lines: as a way of preserving print circulation, rather than a means of generating extra revenue.

But the empirical evidence doesn’t support the thesis that print circulation is dropping because print subscribers are happily just reading the paper online.

I don’t know how many readers the Times and the Sunday Times have between them, but it’s certainly higher than the circulation of the Sunday Times alone, which is 1.1 million. Of those readers, fewer than 10% — just 100,000 — have bothered to activate the digital access that comes with the paper. Most of the papers’ readers are clearly not even reading the websites when they’re free.

Meanwhile, a new report from Jim Chisholm demonstrates that there is no correlation at all between print circulation declines and online readership. The Daily Mail, for instance, is booming on both the website and the print-circulation fronts.

The fact is that insofar as printed newspapers compete with the web, they compete with everything on the web, not just their own sites. No general-interest publication can prevent its print circulation from declining simply by walling itself off from the web. Which is why the NYT paywall is so silly: millions of dollars in development costs, and enormous amounts of important management time, devoted to something which will probably end up grossing no more than $20 million or so a year. That compares to $78.3 million in internet advertising revenues in the last quarter alone.

Rupert Murdoch has a philosophical aversion to free content, and that aversion is costing him dearly when it comes to the value of his UK franchises. The NYT has to be very careful that it doesn’t make the same mistake.

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