Press "Enter" to skip to content

Pay walls: How does this make sense?

I am totally willing to agree that the current online news business model (e.g. publish everything for free and try and make money from eyeballs/ad revenue) has some flaws. And, the only way to find a new model or mix of models is for different organizations to try different things. Each market is different, each organization is different. Eventually it will all work out.

But, reading Business Week today Jon Fine mentions this nugget (which has been noted before):

For Subscribers Only: Locking Up the News Sites

Little Rock’s Arkansas Democrat-Gazette, which boasts a daily circulation of around 176,000, charges a monthly fee of $4.95 for full Web access. Around 3,400 subscribers are paying for that access, which comes to just over $200,000 a year, a sum that’s two zeroes shy of being meaningful for big players.

Obviously numbers are not my strong point, but this is a big paper. Can someone explain why $200,000 is a winning business model?  More to the point – how are 3,400 online subscribers (which does not count the print subs who get online access as well) enough?

Just doing the math here with round, easy numbers: $200,000 with a $5 CPM = 40,000,000 pageviews per year. So really, assuming three ads on a page they would need 13 million pageviews a year to bring in that same revenue. Increase that CPM a bit and having a paywall looks like an anchor.

Now has ads on the page, and these are viewed even by non-subscribers. So, they are double dipping a bit there. But still – how many readers and page views are they giving up by being behind the paywall?

Anyone have unique visitor or page view numbers to share and compare to  other non-paywall sites of similar circulation size? I wish anyone the best who tries something new but I would like to at least be able to understand the strategy.

Update: From the Neiman Lab on 04/02/09: Paying for online news: Sorry, but the math just doesn’t work.


Comments are closed.