At what point does churn rate inhibit growth and profit in a digital media business model? Both in the information services and SaaS industries, a churn rate over twenty percent is problematic for the business model. In both of these industries, sustainable profits exist at around ten percent churn. In controlled circulation of print media, a twenty percent churn rate would have been difficult to sustain. In digital media, the lifetime value of audience members is a key success factor to creating a profitable business model. This research note begins to explore the dynamics of the lifetime value of a digital audience. In September of 2011, Scout Research began tracking several audiences on B2B publisher sites to understand the lifetime value of the […]
Profit is More Important than Monthly Unique Visitors
Do publishers measure what matters for digital? If profit is the goal, then monthly unique visitors and page views are not relevant performance indicators. What matters most for profit is revenue capacity and contribution from the loyal, profitable audience. When a Fly-by is worth less than $0.20 and a Fan is worth 250 times more, it’s hard for publishers to make profitable revenue off Fly-bys. Unfortunately, few publishers put a monetary value on their audience members or develop strategies to build and reward loyalty that yields profits. The monetary value of an audience member is defined as the combination of advertising and direct revenue (e.g., subscriptions, events, e-commerce, etc.). However, analyzing the relationship between loyalty and advertising revenue demonstrates the […]
Counting Page Views? Don’t Call It A Business Model!
Measuring the number of page views as a key performance indicator (KPI), is a growing practice among publishers. In fact, editorial and development teams are increasingly being rewarded for boosting page views, with some publishers even shaping their entire site just to generate page views. That is not a business model! Let me prove it with an extreme example. Any publisher can deploy bots to generate page views for their site. No advertiser will pay for those page views, because the page views have no advertising value. While page views could be used as a KPI by the editorial team to generate more content for bot consumption, no revenue is coming through the door to keep them employed. The right metric for publishers […]
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 […]
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