Archive | ARPU

The $195 Logic of the New York Times Paywall

new york times paywall

Here is one way to understand the $195 price of a 12-month digital subscription to the New York Times. The price bridges the 2010 gap between average revenue per user (ARPU) for print vs. the ARPU for online. Here is the calculation of the difference. Print ARPU The Newspaper Association of America Trends & Numbers provides details on audience and revenues for US newspapers. Users of print are determined from the print readership which was 152,245,119 in 2010 according to Scarborough Research. Revenue of print is determined from a combination of the advertising and circulation revenues. The print advertising revenue in 2010 was $22,795,000,000. While 2010 circulation revenues have not been provided, most analysts expect them to remain flat compared […]

Do Newspaper Paywalls Solve the Online Revenue Issue for Shareholders?

Given the New York Times earnings call this week and all the chatter about their paywall, my curiosity was piqued about how shareholders should assess the paywall ability to offset low online advertising revenue. The following analysis explores that topic. The assumptions and conclusions are based on both public information from the 2009 Annual Report for The Washington Post Company and Scout Analytics experience. The scenario is hypothetical but representative. As print circulation and revenues decline, digital audiences and revenue have to take their place. Because online advertising has not yielded the same revenue as print advertising, many publishers are looking to paywalls to solve the digital revenue problem. The conclusion below is that the yield from online advertising has […]

Increasing ARPU Is The Fastest Source Of Profits

Posted by: Matt Shanahan In Q4, Scout Analytics published research that showed publishers on average have 20-30% untapped revenue potential with their existing users. How attractive is that untapped potential? To examine that question, we did further analysis on the relative value of those revenues compared to increasing sales volume or cutting sales expense. In each scenario we modeled, increasing average revenue per user (ARPU) increased profits more than the other tactics. While each publisher’s model will vary slightly, here is an example scenario to illustrate the point. Let’s assume a publisher has a $100M online business with a 15% profit margin and 40% cost of sales. In this model, the publisher is generating $15M in profit annually. Impact of […]

The Power of Digital Revenue Allocation

Demand Map

Posted by: Matt Shanahan During the last five weeks, I have written extensively about the Demand Map™, a quantitative lens for digital revenue optimization. The Demand Map™ posts describe how the unit cost of engagement can be calculated (i.e., engagement divided by revenue during the period) and used to identify which licenses or ad orders are incorrectly priced. The chart to the right depicts a example of the Demand Map™. In this chart according to my previous posts, each of the data points could be either a sold license or ad order and the associated engagement. The reality is that the Demand Map™ has more power than just charting licenses and ad orders! Unlocking the true power of the Demand Map™ involves digital […]