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.

10 comments

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James Harding is taking the risk based on economic principle. “…what we (newspapers) had was a sort of suicidal form of economics, that is – giving our journalism away for free.” In the long run I believe the paywall makes sense, IF, and only if the content is good. http://bit.ly/b0gV9q

Posted by nickjohnson | Report as abusive

As somebody that’s spent the majority of their life on the internet, I just don’t see how paywalls can ever work for news media outlets. There are just too many places to get the exact same content for free.

It’s a logistical paradigm shift. Before the internet, the average person had how many ways to consume news? A hand full of tv and radio news outlets and maybe 4 or 5 newspapers. Now the internet allows you to search literally tens of thousands (more or less) of websites, many of whom’s sole existence relies on delivering you content that was gleaned from other sources (such as the WSJ). Why would anybody pay for that now?

Posted by spectre855 | Report as abusive

A paywall is a lazy publisher’s approach to monetizing content and readership. It is a lame attempt to transfer the traditional publishing business model into what just about everyone must agree is an entirely new medium. Those who revert to this approach are simply too unimaginative and risk-averse to attempt to build a new business model for a new way of reaching audiences.

Posted by Curmudgeon | Report as abusive

What, nothing about The Economist’s cookie paywall?

You can only open 5 pages per month before it stops you.

Or you can spend 1 second to delete the cookie and you get 5 more pages.

Posted by Developer | Report as abusive

The FT lets you have a few articles each free every 30 days, If that’s a cookie can you let me know. Ta

Posted by Jimbog | Report as abusive

The world has changed. “News” is now free, whether Rupert Murdoch and News International like it or not.

People will now only pay for value-added journalism and analysis they can’t get anywhere else.

And the Times just doesn’t provide that. It has NOTHING you can’t get elsewhere free.

Brutal but true.

Posted by JohnDevon | Report as abusive

I saw you tweeted that amazing Variety stat, Salmon, but has it made it here to the blog? Surely worth mentioning at this point.

http://twitter.com/#!/felixsalmon/status  /2822260385644544

Posted by ottorock | Report as abusive

Yeah, then I untweeted. It turns out not to be true…

Posted by FelixSalmon | Report as abusive

The paywall’s problem is that the price is set way, way too high. The cost should be like $3 a year, not $30 a month.
Newspapers had the same problem in the 1820s – they charged a lot – I think 50 cents or more, and had low circulation.
Ben Day of the NY Sun figured out you could sell the paper for one cent and make money because your circulation would zoom.
And don’t be fooled – the internet is killing the regional giants – Newark, Chicago Tribune, etc. They don’t have the clout a NY Times has, so they can’t compete nationally and internationally. And they aren’t focused like the small-town papers, so they get shut out there, too.

Posted by RZ0 | Report as abusive

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