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May 30, 2009

Pay to Play - Some Pay-to-Read Scenarios

dollar.jpgNewspaper execs gathered in Chicago this week to talk about charging for their content (making sure, of course, not to collude in any kind of way that would draw the attention of the Justice Department's anti-trust lawyers). The time has come to charge readers for what we do, said the execs.

So Martin Langveld over at the Nieman Journalism Lab ran some scenarios imagining subscription prices at modest levels. Here's why putting content behind pay walls on the internet won't work:


So the question becomes: Will the new monthly fees offset the lost ad revenue?  Here's what happens:

  • At $1 a month, with viewer retention of 70 percent, subscription revenue would be $566 million.  But ad revenue would drop by 30 percent, or $933 million, for a net loss of $367 million.
  • At $2 a month, with viewer retention of 50 percent, subscription revenue amounts to $808 million.  But newspaper sites would kiss away half their ad revenue, or $1,555 million, for a net loss of $747 million.
  • At $5 a month, and 30 percent of visitors sticking around, subscription revenue swells to $1.212 billion.  But 70 percent of ad revenue, or $2.173 billion takes a walk, cutting the net by $946 million.
  • At $10 a month, sites retain just 10% of visitors, who pay a collective $808 million for the privilege, but 90 percent of ad revenue ($2.798 billion) flies the coop, leaving newspapers poorer by $1.990 billion.
  • At $25 a month -- well, I won't bother with the arithmetic.  Make your own assumptions, but nearly all the ad revenue goes away and viewer fees don't replace more than a small fraction of it.

May 30, 2009 6:49 AM | | Comments (0)

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