The Times UK Lost 4 Million Readers To Its Paywall Experiment | Hacker News Reader

The Times UK Lost 4 Million Readers To Its Paywall Experiment

techcrunch.com

59 pointsssclafani58 comments

I don't understand how this is being spun as a failure. It sounds like a success based on the bottom line:

"Depending on the actual CPM, financially they are doing at least two to four times better than they were before. And that is with only about 1.5 percent of their former readers becoming paying subscribers."

Sounds pretty good to me.

For the most part it isn't. I saw this reported in the mainstream media a couple times today and it was spun as a resounding success.

Tech blogs are run by ideologues in favor of everything being free.

Looks like Rupert Murdoch gambled correctly. Congratulations to him for taking a high-risk move in the face of huge opposition.

I think it has a valuable lesson for entrepreneurs that sometimes taking the unpopular route can be the correct business decision.

My blog, daily readership of just under 1000, can now boast an audience that is 1% of the size of a national UK newspaper. Except my blog costs next to nothing to run, maybe an hour a day and use of a laptop.

The cost basis alone of the Times website is clearly and massively wrong. At the very least if this business decision is good (losing 99% of your audience and hiding yourself from Google is at best dubious), but if it still makes sense, someone else can come along and undercut them on cost and make even more money.

This is akin to saying someone can come along and make a $20 smart phone and Apple will lose all of their iPhone revenues.

People will pay more for quality. No offense to you, but your blog would likely not be considered that by 100k people, at least not enough to pay. (Neither would mine). Quality content costs real money to produce, some schlub like you or me writing our opinions online does not.

Charging certainly wouldn't work for bloggers, but it just might for outlets like this or the WSJ or the NYT. There's a market for both.

Put some ads on your blog. You'll make maybe $300-400/year.

You'll essentially be making $1/hour. Advertising doesn't generate anywhere enough revenue to cover a journalists salary let alone the overheads of a news gathering organization.

Really? According to[1], print advertising brought in over $47 billion in 2005. Skip to 2009 and that number a bit over half (24.8BN), with online newspaper advertising not even getting in 3BN. That seems like a major loss in revenue to newspapers, one that must be making an impact.

According to the NYT's 10-K [2], 53% of revenue comes from advertising! Yet in 2005, 66% did [3].

Also remember as print subscribers fall off, those costs fall off too. The raw cost of materials was around 30% of subscriber revenue, although I think they trimmed the size of it down to help out there. Wages for the actual print side are another fair portion.

So, contrary to other claims, it would seem that advertising generates quite enough revenue to cover journalists.

EDIT: Perhaps _online_ advertising isn't enough to cover salaries, but that's a separate issue. The newspapers are trying to make a transition as that nice money from advertising (especially classifieds) dries up. They can whine and complain about people "getting stuff for free" but it doesn't change the fact they are painfully adjusting to a new business model.

1: http://www.naa.org/TrendsandNumbers/Advertising-Expenditures... 2: http://investing.businessweek.com/research/stocks/financials... 3: http://www.nytco.com/pdf/annual_2005/2005NYTannual.pdf

modesty's great and all, but if you're not going to link to your blog in the comment at least make sure you've a link to it in your HN profile!

The article title is pretty misleading here. It starts off citing a 62% drop in uniques and 90% drop in pageviews and how disastrous it's been, but concludes that they're actually netting $600,000 more per month from the subscription revenue than they would if they kept it free with ads. Assuming those CPM figures are accurate, that sounds like a pretty good business decision, especially with a more focused user base that actually places value in the paper's content.

Techdirt has a nice writeup of how the numbers are not as good as they make them out to be. For instance, the full price is 2 pounds/week, but there is a trial right now for 1 pound a month.

http://www.techdirt.com/articles/20101102/02570411678/murdoc...

From the other perspective, as the new york times puts it:

"More Than 100,000 Pay for British News Site"

https://www.nytimes.com/2010/11/03/business/media/03newscorp...

$16 per month * 100,000 * 12 months = $19.2 M per year

Would 4 million readers bring that much in ad revenue?

Depends on how good their ad sales team is.

Here's Alexa graph: http://traffic.alexa.com/graph?&w=400&h=220&o=f&...

No. I calculated the revenue per user per month for the NY Times a while ago and based on 2008 figures, it was about 71 cents per user per month.

I was using numbers from several different sources when I made that calculation so I can't guarantee its accuracy.

0.71 $/user/month * 4,000,000 user * 12 month/year = 34,080,000 $/year > $19.2 M

What am I doing wrong?

Is scaling up your architecture 40x free?

(Actually, for static content, it might be. But remember, each user using your site has some incremental cost. If the incremental cost exceeds what they generate in ad revenue, you lose.)

I dare say the cost of producing the content far exceeds the cost of serving it up to people.

maybe it was 4 million users over the course of the experiment, not per month? Just a guess.

edit: I'm wrong.

you're correct, I'm wrong about the "no". I misread the calculation that was given.

Seems unlikely, given that Techcrunch which is heavily monetized made about $10 million from 9 million unique visitors.

Techcrunch is full of tech people with AdBlock installed.

>"Depending on the actual CPM, financially they are doing at least two to four times better than they were before."

The problem is over time as noone links to their stories they slowly lose relevancy and their brand diminishes. Remember, the future of news is online, and right now they are probably at their peak number of subscribers. They have nowhere to go but down.

I'm not so sure. Quality across the media has suffered over the years because they have been driven by advertising, which is driven by eyeballs. This creates an incentive for attention grabbing headlines and sensationalist articles and works against good journalism.

If they are able to generate more revenue, perhaps they will be able to restore the quality that the industry has lost and use real journalists again. They could build a reputation of quality over sensationalism.

The Times is the establisment newspaper in the UK - it's like the BBC of print. The UK newspaper market is not like the US and is still pretty healthy; The Times isn't going anywhere in the near future.

Are you based in the UK? Do you read The Times? There might be lingering perception that the times is a quality paper — perhaps we all watch too many re-runs of Jeeves and Wooster — but the Times is more of a Sky News than a BBC.

Yes, I'm UK based. I read The Times, Telegraph, Guardian or FT, depending on the day.

Whilst I think BBC News on radio and TV is good quality, the website is often of appaling quality.

Agreed for the print newspaper. That's going to slowly wither or whatever you think will happen to newspapers.

However we're talking about the website, and that really works in a different way and it's obvious that the Times does not understand the way the web and search engines work.

Really? I think hiding from your consumers behind a paywall, slashing your site traffic and plummeting yourself off of Google will invariably kill any web business.

Name a startup that actively hid from its users and survived? Can you even think of a startup that actively hid from its users?

Yep, and advertisers can now target readers that are willing to spend money online.

Not to mention users who are identifiable down to address and name level, instead of mostly on an IP-only basis.

Wait so after you subscribe, paying hard cash for access, they still show you advertisements?

Who are these suckers paying for access?

Oh so you don't get ads on your TV or in the magazines you subscribe to?

Well, I don't. Whether it's the BBC, ITV, iPlayer, 4OD for video, or Le Canard Enchaine for press, or the stuff in my RSS feed, I'm only paying one way or the other.

TV is free? Most magazine subscriptions can be had for ~$10/year.

The parent objected to paying cash + being subjected to looking at ads. I tried to point out that's how traditional media has worked with examples from TV and magazines.

Right, and I'm disagreeing. Both tv and magazines require token payments that don't even cover distribution.

Oh so $16/mo can cover The Times costs, while $60-80/mo can't cover for TV. (Also, afaik, TV has more subscribers than newspapers)

Off topic... but welcome back from your sabbatical. You may want to update your profile :)

Thanks jrockway. Updated :)

Exactly. As a businesses, they aren't trying to optimize viewers but profits.

No, this is completely wrong. This is suggesting that having fewer people reading your newspaper is not a bad thing, when it is exactly the opposite. You want more people to read your newspaper, and there is a indirect cost to losing those readers.

One of the main things you are losing is influence, all those readers have gone to another paper to get their news.

Nevertheless an interesting experiment, we will see how long the times keeps this up.

One respect in which more readers is a bad thing is hosting costs, which the OA doesn't mention.

Can anybody who knows more about this than me shed any light here? How much more does it cost to serve millions of "freeloading" users per month vs the 100,000 they're dealing with now?

Good for them. I heartily encourage News Corp to put all of their newspapers behind pay walls. In fact, if my meager contribution were enough to convince them, I would be the first in line to pay so that all of their television news could remain safely behind a pay wall as well. Godspeed, Mr. Murdoch.

Here's a link from The Times front page with their own take on the numbers

http://www.thetimes.co.uk/tto/business/industries/media/arti...

Sorry, couldn't read that, it's behind some sort of paywall :-)

EDIT: Sorry if I sounded whiny, but you had to click on the link so a smiley face would have spoiled the joke

Also, which I think was not mentioned is they get to pay less operational expenses because the bandwidth used is lower.

As the comments at TC discuss, this doesn't take account of how many ads are running per page, and depending on how the various numbers stack up it could go either way. But if they were making more money from this, wouldn't today's press releases have boasted about this, rather than just the increased numbers?

Large media companies such as News Corp seem exceptionally wary about advertising their revenue and profit margins; so it would have massively surprised me had they done this.

A lot of people have been talking about this as a failure, but I'm not so sure it's either a straight failure or success.

The Times lost a lot of traction, but in doing so gained a lot of revenue both direct and indirect. Add to that the reduction in potential overhead (server 100,000 users instead of millions) and the ability to add content from the main newspaper without fear of it being 'stolen' (compared to if it was open - yes I know it'll be shared in some form anyway, it's news after all, but that's not necessarily how the powers that be may perceive it, and they may feel it's better to push content from the dead tree version out. I don't know, I don't subscribe to either) and you have something that is significantly more profitable than before. If that's the goal, then they win. If bums on seats is the goal, then they lose.

Couple of things to ponder considering future audiences.

a) How many of those 105,000 subs do we think are under 40 yrs old?

b) Try to sign up to the site and you will note something interesting when entering in your DOB. This text:

"You must be 18 or over to use our websites"

I assume this is because most payment processes don't cater for < 18s. But still, think about it, it is now an over 18s ONLY newsite.

Therefore I think the future of The Times looks actually quite bleak due to the lack of future readership.

I don't think "The Times" has ever been a 'young' newspaper. I'd expect its reader demographics to be heavily skewed toward 30+ year olds. So I don't think this is much of a change from that.

From Yes Prime Minister:

"I know exactly who reads the papers: the Daily Mirror is read by people who think they run the country; The Guardian is read by people who think they ought to run the country; The Times is read by people who actually do run the country; the Daily Mail is read by the wives of the people who run the country; the Financial Times is read by people who own the country; The Morning Star is read by people who think the country ought to be run by another country; and The Daily Telegraph is read by people who think it is."

http://www.youtube.com/watch?v=DGscoaUWW2M

No newspaper has strong under-18 readership, even under-21 readership is fairly small for most papers. Most newspaper readers don't start until they're in their mid-20s.

FWIW, Newspapers such as "The sun" I'd expect to have a far younger readership than "The Times".

eg Tabloids are read by the young, grown up broadsheets by the old.

I don't buy it. I think that's hearsay.

You pick a paper and more or less stick with it. I've seen plenty of people sub 30 read The Times. It's the paper you used to read if you wanted to be "serious" (pre-Murdoch).

Your paper of choice is typically picked when you first start working around the ages of 18-24 or even before then.

I find it bizarre to imagine someone hitting 30+ and then changing their paper of choice. I don't think people work like that.

The Times experience on the iPad is pretty good. That's the future - custom clients whose owners are comfortable making small payments on a whim.

(Full disclosure, I am a Times subscriber)

I wants mines for free.

Reply on news.ycombinator.com