The meter is running

Metered reading is apparently the new ‘black’ in journalism business circles.

In evidence: The New York Times‘ apparent move in that direction; two Ottaway papers this week; and the forthcoming launch of the Journalism Online project.

The bet is by allowing a small number of ‘free’ page views before instituting a registration or paywall, the respective sites can have their cake and eat it too. Ad impression levels will be supported by the large number of fly-by visitors and subscription income will be enhanced by a smaller but dedicated number of loyal readers.

No doubt the newspaper execs involved have sat through a year’s worth of Powerpoint presentations trying to guess how these thresholds would impact reader behavior and newspaper revenues.

Good luck to them. Isaac Newton created calculus to help predict the laws of motion and gravitation, but at the time there were only five planets. I doubt he would try his hand at predicting reader behavior on the Internet.

The problem is there is no ‘average’ reader with ‘average’ behavior. Predicting the potential loss of traffic following a metered plan involves knowing the frequency and pages-per visit for any number of reader cohorts.  Most news sites have a large number of one-time visitors and a smaller number of loyal visitors, and each group may be worth about the same number of monthly page views.

So, while loyal visitors may have a good incentive to convert to registration or subscriber status, those that do not extract a significant toll on the bottom line. And, since loyals will hit the page view threshold early and often, their reaction to it will make or break the strategy.

In blue and red a 10 page view threshold looks something like this:

(click to enlarge)

The shades of blue represent fly-by, occasional, weekly, daily and loyal visitors and the typical days of the month of their return visits to your Web site. The height of each bar represents their percentage contribution to total page views for the day.

In the chart ‘loyals’ (in the lightest blue) visit on Jan 1 and Jan 2 before hitting the ten page view limit. ‘Daily’ readers visit on Jan 1 and then return on Jan 3 and Jan 5 before hitting their ten. After that they turn red meaning they are over their limit for the month.

So, assuming a zero conversion rate, the red bars indicate current page views that would be at risk under a metered reading strategy. Obviously a few more then ‘no one’ would either register or pay for access.

That’s where the calculus comes in – and it is still just a guess. If you run the numbers, a five page view threshold with no conversions puts about 50% of your traffic at risk. At the other end of the spectrum a 30 page view threshold with a 75% conversion rate might translate to only a 13% decline.

So if the answer lies somewhere between a 13% and 50% loss of traffic and your likely total conversion rate for an online subscription is less than 5% – how much do you need to charge for that subscription to make up for the resulting loss in online ad revenues?