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 to 2009 or $10,066,000,000.
Print ARPU = ($22.8B + $10.1B)/152.2M = $215.84 per user
Online ARPU
The Newspaper Association of America does a great job breaking out online revenue. In Q4 of 2010, newspapers had an average monthly unique count of 105,291,000. The 2010 revenue for newspaper websites was predominately made up of advertising revenue which was $3,042,000,000.
Online ARPU = $3B/105.3M = $28.89 per user
Bridging the Gap
The difference between Print ARPU and Online ARPU is $189.95 or about $3.60 per week – just about the price of a week of the New York Times. The $195 price for a 12-month subscription is an attempt to bridge that gap. The $195 price is the starting price and will of course change as the packaging is dialed in.
Next week, I will present the logic and numbers behind why subscription revenues are a reality for the survival of online news but also why $195 price might be too high (hint: it has to do with the difference between news and newspapers).
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