Wednesday, January 9, 2013

The New York Times Paywall Is Working Better Than Anyone Had Guessed

Bloomberg reporting:
Ever since the New York Times rolled out its so-called paywall in March 2011, a perennial dispute has waged. Anxious publishers say they can’t afford to give away their content for free, while the blogger set claim paywalls tend to turn off readers accustomed to a free and open Web.
More than a year and a half later, it’s clear the New York Times’ paywall is not only valuable, it’s helped turn the paper’s subscription dollars, which once might have been considered the equivalent of a generous tithing, into a significant revenue-generating business. As of this year, the company is expected to make more money from subscriptions than from advertising — the first time that’s happened.
Digital subscriptions will generate $91 million this year, according to Douglas Arthur, an analyst with Evercore Partners. The paywall, by his estimate, will account for 12 percent of total subscription sales, which will top $768.3 million this year. That’s $52.8 million more than advertising. Those figures are for the Times newspaper and the International Herald Tribune, largely considered the European edition of the Times.
It’s a milestone that upends the traditional 80-20 ratio between ads and circulation that publishers once considered a healthy mix and that is now no longer tenable given the industrywide decline in newsprint advertising. Annual ad dollars at the Times, for example, has fallen for five straight years.
More importantly, subscription sales are rising faster than ad dollars are falling. During the 12 months after the paywall was implemented, the Times and the International Herald Tribune increased circulation dollars 7.1 percent compared with the previous 12-month period, while advertising fell 3.7 percent. Subscription sales more than compensated for the ad losses, surpassing them by $19.2 million in the first year they started charging readers online.
http://go.bloomberg.com/tech-blog/2012-12-20-the-new-york-times-paywall-is-working-better-than-anyone-had-guessed/

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