Massive Disconnect: Paywall Analysis Claims It's Reasonable To Expect 66% Of Readers To Pay
from the good-luck-with-that dept
And we were amazed by reports that Stephen Brill actually expected 10% to 15% of newspaper readers to pay up for the paywall he's building for various newspapers (still none confirmed, as far as we know). A reporter over at Slate seems to have taken things to a new level. John points us to the back of the envelope analysis/calculation of the NY Times' decision to put up a paywall that appears to have some highly questionable assumptions. The biggest one is that 66% of readers will pay. Yes, 66%. Oddly, this statement comes right after the reporter's claim that, "a large percentage" of readers probably wouldn't pay -- but he seems to assume that "large percentage" is just 33%:First of all, a large percentage of these readers land on these sites though search engines, and therefore are not likely to consume a lot of pages. Such visitors, about a third of the total audience, must be removed from the pool of readers likely to pay for content.I'd argue that getting even 5% to pay, as one recent study suggested, may be wildly optimistic. 66% is downright delusional. While the pricing is clearly much higher, you would think that the recent example of Newsday getting a grand total of 35 subscribers to its paywall would be telling. So, it's difficult to take the rest of the analysis seriously, when it kicks off with such a bizarre assumption.
How much would people pay? According to a Boston Consulting Group survey, readers would agree to pay $3 per month on average. Interestingly enough, the BCG found the upper limit to be $6 for the "heavy print consumers" category.
Coming back to the Washington Post, using the remaining 66 percent of total users likely to pay for content (7.34 million unique views/month), the expected revenue could be considerable.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: journalism, paywalls
Reader Comments
Subscribe: RSS
View by: Time | Thread
(1) local news
(2) in-depth and investigational work
(3) an expanded-content CwF+RtB benefit to print subscribers
(4) have a hard copy to carry around
If someone is internet-connected, at the very least he's going to have free access to:
(1) local news (via local television news websites)
(2) in-depth and investigational work at the Newsweek and Time magazine websites
(3) inter/national news (via the big three cable news network websites)
Tell me: How much is a hard copy to carry around (only on the days you need it) actually going to be worth? I'd wager: Not much.
There's just not much reason for people outside of the New York Metro area to pay the NYT for online access except possible CwF+RtB content that is, by itself , unlikely to induce non-regional readers to purchase online subscriptions unless said CwF+RtB content is hands-down better than the Newsweek and Time magazine websites.
At most, I see the NYT getting a few more non-regional print subscribers out of this experiment.
[ link to this | view in chronology ]
Not a good reason to pay - bad writing
And I suspect that 33% coming from searches is a low estimate.
[ link to this | view in chronology ]
Re: Not a good reason to pay - bad writing
I think the "likely to _consider_ paying" group should be measured from a smaller subset of readers: those who manually visit nytimes directly.
I'd bet that even more than the users coming from search engines are using coming from links on blogs, aggregators etc. Those users have no reason to pay. At all. Those links will simply dry up and point elsewhere. People won't submit NYTimes links to Digg, Reddit, Slashdot, BB etc once they know most readers won't be able to follow them, and if there aren't links, why would those readers pay for access they won't use.
The pool of direct readers should be the starting point for these calculations. I have no idea how big (small?) that is, but even smaller still is the portion of those readers who will pay.
If they have a HUGE direct readership of %50, and get a MASSIVE conversion rate of %10 of those to paid users, that's only 5% of the users overall.
Good luck expecting *MOST* users to consider paying.
[ link to this | view in chronology ]
Re: Not a good reason to pay - bad writing
There is a world of difference between what is "possible" and what is "probable."
[ link to this | view in chronology ]
Re: Re: Not a good reason to pay - bad writing
Still ridiculous, though.
[ link to this | view in chronology ]
Re: Re: Re: Not a good reason to pay - bad writing
I think this is where he becomes ridiculous to me. Factor in lost advertising, and I think the expected revenue is negative.
[ link to this | view in chronology ]
In other words, people read online news as a little break from work. Something to fill in a downtime. And as evidence has shown, people are not willing to pay for that.
The guy from Google specualted that the reason we bought newspapers (although we only paid a nominal amount and the real profits came from advertising) was for the experience of reading a newspaper.
Cuddling up on the couch with a cup of coffee, slowing reading through the news, doing the crossword, laughing at the comics, seeing what new movies were out, checking out the scores, etc. We were willing to pay for that because we enjoyed doing it.
For what ever reason, maybe we're too busy... whatever, we simply no longer enjoy that experience. So we no longer pay for it. And regardless, we certainly do not enjoy it while sitting at the computer.
[ link to this | view in chronology ]
Not a chance!
[ link to this | view in chronology ]
Re: Not a chance!
[ link to this | view in chronology ]
so 35 people = 66 percent?
[ link to this | view in chronology ]
His assumptions are not quite that bad
He gets back into crazyland at the conclusion where he says a paywall must NOT:
- "block access for the general audience" - how do you do that?
- "discourage linking from other sites" - isn't this the behavior all the newspaper executives are complaining about?
and it finally must target "only the heaviest users, those willing to pay $6 rather than $2 per month, and those ready to be charged for ad-free content on mobile. Or on a tablet". but for this last one, a big section of the article talks about the paywall adding value for advertisers because ads within the paid section have an increased value (which makes sense), but if your customers are paying for ad-free content, how did you increase the value of the ads?
Yeah, the article seems to be self-contradicting in a lot of ways. Aren't newspapers supposed to have some kind of editing process to weed out some of the crazy?
[ link to this | view in chronology ]
Re: His assumptions are not quite that bad
"we think 2/3rds of people won't have an issue with $6...and that 10% of those might actually do it" means the numbers are still ridiculously optimistic.
All you have to do is the fix the decimal. Assume that they are saying that 2/3rds (.66) of 1 percent are likely to pay $6 per month (with 10% of that actually subscribing) and suddenly it seems much more like the other paywall experiment. Even at 100 thousand people that's 6600 subscribing for $6/mo. I guess 40 grand a month is significant for a paywall?
/I'm not sure if I got my math right either, though.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Ah the dream of waking up every money with the newspaper automatically pushed unto my newspaper provided e-reader. Much like what Amazon's Kindle offers right now with the only exception cost associated with the device.
[ link to this | view in chronology ]
The empires add no value
[ link to this | view in chronology ]
Get on with it already
[ link to this | view in chronology ]
Re: Get on with it already
That's a quote for the books.
[ link to this | view in chronology ]
Making Connections
I can just imagine them believing that they can lock up their content like a cable television signal and charge for access.
What they are failing to realize is that, unlike cable TV, there are numerous alternatives.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
When did we ever pay for newspapers?
When you subscribe to a print newspaper, the amount your paying amounts purely to paying the cost of delivering it to your door. When you buy it at a store, you pay a small fee - just enough that the store will be willing to carry it. The paper doesn't profit from either of those, all of the profits come from the advertising that's in the paper. Indeed, in citys where they can set up newspaper dispensers, there's often a "free - take one" sign, because the cost of distribution for those is negligable.
When you have an online newspaper "delivered" to you, that costs such a tiny fraction of a cent that the paper company can safely call it 0 and not have their profits be significantly impacted. The money, as it always has, comes from running ads.
I don't understand why companies suddenly feel they need to change this, when giving away their ad-supported paper for free goes back literally centuries.
[ link to this | view in chronology ]
murphy's law
A guy like me will give you freely that same news locally free
put ads on his pages and deduce that thats fair enough revenue as long as cost plus a little is met.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Paywall
[ link to this | view in chronology ]
Re: Paywall
[ link to this | view in chronology ]
Re: Re: Paywall
I will do the pretender thang now, and brain storm as to how this could actually be made to work ...
Lets go back to scarce goods. In this day and age the only scarce news is new news. 15 minutes after its published its known world wide. Articles and good reporting are scarce goods. What if the new york times were to set up a system using smart phones, iPads, kindle, etc as a delivery system that goes live after one year of iPad type sales. Thats an estimated 10 million iPad type devices after one year.
How would one set up the site?
All of the following would come off the same URL it would just expand sections based on time passed and interest in the story. No interest it expands quickly, some interest slower, Frak me I need to read this now... way slower.
1) New news is sent to the iPad, etc.
2) after a delay it gets posted as a headline to the web site with a blurb.
3) after another delay it gets posted to the web site as a summary.
4) after another delay it gets posted as the full article and remains there for anyone to use in its entirety. With a simple blurb "This article is copyrighted by the new york times. All online and offline usage must contain this URL ... http etc"
They would have to have an open blog for each article that doesnt censor. The blog would have to have an instant sign up feature requiring the following, Username, displayname, Password, email address, type this word to verify, and nothing else. The instant signup would have to be with in the page and be an expandable web 2.0 app so you never leave the page. Verification would have to be one click in the e-mail. A "click here to open a new browser and sign into your web mail button" would be appreciated but might cause paranoia.
Maintaining everything behind the paywall and removing articles will be the death of any of these newspapers. Old news should not be paid for on any news site it gets people pissed and loses non paying individuals.
I just came up with a rule. The rule is called the "one bite at the Apple rule" also know as the "one window rule". The rule can be summarized in one sentence ...
In the media distribution business you now only get one window (chance) to make a profit.
[ link to this | view in chronology ]
Actually...
I don't think that Filloux's math is as bad as you make it out to be.
I think what he is trying to say is that the 33% of readers that arrive at the site through search engines won't ever be willing to pay, so he immediately excludes them. Then he says that of the 66% of readers remaining - which he unfortunately terms "likely to pay," even though I think he means "might possibly pay" - he then spins the wonder of getting 25% or 10% of them to actually pay. So his numbers are more like:
High end: 66% x 25% = 16.5% of readers will pay
Low end: 66% x 10% = 6.6% of readers will pay
So his low end number is closer to the 5% referred to in the study you cited. But they are still hand-waving numbers with no evidence to back them up.
[ link to this | view in chronology ]
Reasonable... hmmmm
Define reasonable. I think what they mean is that the papers deserve that much because of the value of what they do, and how much it costs to produce, thus, that is a "reasonable" amount to ask.
It reminds me of when a young person was up for a job and came to me to find out how much pay to ask for. I did a pseudo-analysis based on how much people were getting paid for that job at the places where I had worked. However, this was just before the big dot-bomb crash, so I was way off base when the economy tanked.
That's just how off-base these guys are when they say 66%, and sadly, they will get slammed with reality very soon. There's a lot of hand-wringing at newspapers, but little contact with reality. It's human nature - we all think we're valuable. It's the same thing that causes union members to demand too much, and then they're all let go.
[ link to this | view in chronology ]