At first brush, the Times of London’s experiment with paywalls looks like a massive failure: they lost 4 million readers but only gained about 100 000 people who paid for stuff, whether subscriptions or one-off charges (including 50 000 digital only subscribers). But TechCrunch’s Erick Schonfeld runs the numbers and finds they might actually be ahead financially.
He calculates that, at a $5 CPM (cost per thousand views, the way most online media advertising is priced), the Times lost about $1.4 million in yearly revenue. Meanwhile those new subscriptions could add up to almost $10 million a year. So the Times paywall could actually be a big, big moneymaker for them.
This is important because the Times’ experiment with a paywall is part of Rupert Murdoch‘s big master plan to get people to pay for news online. If it works, many more News Corp properties might go paid, and that could in turn drive many other properties to put up a paywall. If so, the market for online news would dramatically change. The New York Times also intends to put up a paywall, although it expects it to be revenue neutral.
Many in the tech world mocked Murdoch’s insistence on charging for online news, saying that it’s a commodity you can’t charge for anymore, and that Murdoch is an old geezer who doesn’t understand the internet. Conventional wisdom is that only business publications like the Wall Street Journal and the Financial Times can charge for online content because it’s basically companies, not individuals, paying for those subscriptions.
But like all successful entrepreneurs, Murdoch knows that being contrarian can pay off in a big way, and maybe this is one of those cases.