From following the paywall hashtag on Twitter over the last 18 months, there has been a steady increase in the debate about paywalls, both pro and con, but mostly without any data or revenue models. Our previous research (http://research.scoutanalytics.com/advertising/the-digital-drop-off/) showed that the move from print to digital significantly reduces the revenue capacity of a publisher. The reality is this: Without a fundamental change in digital ad units and their revenue production, publishers have no choice but to pursue alternate revenue streams. So where do publishers go when advertising revenue becomes unsustainable? Higher-margin marketing services and subscription revenues are quickly becoming the answer, also known as a metered paywall. Not all publishers will be able to implement a full subscription model. […]
Total Disaggregation: The 80/20 Rule of Online News
This is the final post in my series about the transition of print newspapers to online news. In print news, distribution costs led to scarcity, allowing publishers to create an audience and a marketplace for advertisers. Online distribution costs are nearly free, producing massive competition for audience engagement and a disaggregation of the newspaper business model. In addition to new competition for audience engagement from social networking and games, news publishers have to increasingly compete with themselves – the total disaggregation of the newspaper business model. This becomes clear when examining the articles read by an online-news audience. Rather than purchase multiple newspapers, print news readers consume local, regional, national, and international news from one paper. In online news however, […]
Why Online News Revenue will Never Equal Newspaper Revenue
A publisher’s ability to monetize the news ONLINE is different than their ability to monetize the newsPAPER. According to the Newspaper Association of America data at naa.org, the average user spent 1 minute and 12 seconds with online news last month. That is 0.6% of the 3 hours and 25 minutes an average user spent online in 2010 according to eMarketer. And when compared to average time spent with the print newspaper, online news engagement is 4.1% of the reported 29 minutes per day of Nielsen Media Research Study of 2006. Of course if lost engagement were not bad enough, the Web has both commoditized advertising rates and set an anchor subscription price of free, further crunching the revenue stream […]
The $195 Logic of the 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 […]