Murdoch’s London Pay Wall May Be Dead-End

So, far, we’ve got only a partial view into the Rupert Murdoch’s Times of London/Sunday Times experiment. The numbers released, pre-News Corp earnings tomorrow, only give a hint and leave out some important data. Clearly, though, the math isn’t good — and most importantly don’t seem to provide a path to a sustainable business future for the papers, as readers go digital.

Off the reports, we can conclude the following so far:

• We need to more about the Times experience in print circulation, and whether News Corp will disclose details of that tomorrow. If the digital pay wall is helping significantly with retention, slowing decline of print numbers and of print revenue, then it can claim a partial success. Since most of the Times’ revenue is in in print — probably 85% or more (and growing, since with online page views down 90%, digital revenue’s got to be in terrible shapes) — then that print retention is key. Slowing print decline is the old Arkansas Democrat strategy, and one we’ll see more of it next year as more Journalism Online-powered pay wall sites go up.
• Whatever the print retention impact, the Times needs a strategy that does two things: 1) slows the decline of  print circulation and 2) continues to build a bigger digital business, mainly in advertising and secondarily in digital reader revenue. Unless, it does that, this is just a recipe for managing decline.
• On the numbers: It looks like 50,000 customers have paid a monthly price for ongoing subscriptions, according to the preliminary data. That’s a quarter percent of its pre-wall uniques, suggesting two huge problems: 1) Reader revenue runs at only $10 million a year, so far, a pittance, and quite close to what the New York Times got when it tested Times Select.; 2) Advertising revenue is down, though we’ll have to see what numbers it reports tomorrow and how granular they are. In short, this pay path doesn’t provide a route to substantial digital business. Pay per view fees are disappointing, a run rate of $1 million a year, nice change, but nothing more in the bigger picture of the business shift.
• Murdoch and time: Let’s recall Rupert Murdoch in first announcing these moves wanted to put a flag in the ground — and then have his peers follow him. If they did, then maybe the Times would have more success getting people to pay. Still, with all the free-to-readers UK news, that’s not a proposition he should bet on. The other time horizon is what happens with the Times’ experiment in 2011. I’d expect that most of those who feel the need to get the digital Times have done so, though the iPad and smartphone subscriptions and some pay per view — for the immediate reading need — will grow. Otherwise, we’d believe that the habit of reading the Times online for many readers is being broken, and that’s going to be tough to re-connect.
• Overall, this is a cautionary note for all pay systems. Those that succeed — the New York Times’ experiment being the biggest, come early 2011 — must target just the top 5-10% of heavy, loyal readers and not scare away the rest within even the hint of a pay wall, monetizing the great bulk of unique visitors simply with advertising.

1. 

   Will Anderson says:

   November 7, 2010 at 6:04 pm

   I wonder how price sensitive online subscribers are, whether they flee at any price or whether there is some modest amount they will pay? If Murdoch is charging $3/week, as I’ve seen reported, then that seems like a lot for a year, unless someone is a real traditional news junkie. I could imagine paying around $50/year for one key online news source like WSJ, NYTimes, or Times-Murdoch.

   What the price-setters don’t want to understand is that online readers have done more than move from print to bits and bytes. Behavior changes as well, so instead of relying on one or two print papers for their news, online readers are apt to sample dozens. And each of those dozens thinks that access is worth a lot of money.