News Corp. has finally released official figures on the effect of paywalls at two of its British newspapers, which show that the two papers have lost a huge proportion of their previous readership, and only a tiny fraction of those readers have chosen to pay.


After months of speculation about the impact of reader paywalls at two News Corp. newspapers in Britain — the Times and the Sunday Times — the media giant finally released some official numbers today, and they don’t paint a very pretty picture. While the Murdoch-owned publisher claims to be “very pleased” with the results, the figures show that the two newspapers have lost a huge portion of their previous readership, and only a tiny fraction of those readers have chosen to pay for the company’s product. If News Corp.’s intent was to wall itself off from the Internet, however, it seems to have succeeded.

According to the company’s release, the two newspapers “have achieved more than 105,000 paid-for customer sales to date.” About half of that number are monthly subscribers, News Corp. said, while the rest were single-copy or pay-as-you-go customers — and the figure also includes people who have paid for the papers’ iPad apps and Kindle editions. On top of that number, the company said that 100,000 subscribers to the print versions of the Times and Sunday Times had activated their accounts and gotten access to the web version or the iPad app (which subscribers get for free).

The bottom line is that News Corp. has managed to attract just over 50,000 paying monthly subscribers in the four months since it has been running its paywalls at its two British papers — which charge $1.60 for a day’s access to the site or $6.40 $3.20 for the week — and along the way has managed to sign up 100,000 or so who were already subscribing to the print edition, who are paying nothing (although holding on to those subscribers is likely a key part of Murdoch’s strategy).

This looks even worse when you compare it to the total readership the Times and Sunday Times had before the paywalls went up, which according to Nielsen, was about 3 million unique visitors a month. In other words, after four months of selling its new paywall system, News Corp. has only managed to convince a little over one-and-a-half percent of its readers to pay something for the newspapers’ content — and has only been able to convert half of that already tiny figure into actual monthly subscribers. Meanwhile, the site’s overall traffic has collapsed by almost 90 percent, although News Corp. is painting this as a success.

Times editor Jeremy James Harding told the BBC that the paper is okay with the loss of readership because “we were engaged in a quite suicidal form of economics, which was giving our news away for free” (the editor added that online media was mostly a “huge echo chamber” anyway). News Corp. executive Rebekah Brooks, meanwhile, said the company was pleased with the results, and that “each of our digital subscribers is more engaged and more valuable to us than very many unique users of the previous model.”

It’s hard to see how much more valuable they could possibly be, however: a number of major advertising players have said they are less interested in working with the Times and Sunday Times now as a result of the paywalls, and even an optimistic estimate of the amount of revenue the company is bringing in from its paywalls and iPad app only comes to about $8 million (and that’s before Apple’s cut for the iPad app) which for News Corp. is almost a rounding error. Meanwhile, the newspapers have been cut off from the news flow on the broader Internet, and the potential benefits of attracting links and commentary from other sites that could help to promote their content. Not a great trade, no matter how you slice it.

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  1. Am curious, can someone do a “back of the napkin” analysis – for comparison – of how much they would have made with ad-generated revenues at their earlier levels of traffic? Would it have been more than $8 million?

  2. Let’s do some math here – 50,000 paid users at 6.40 is 16.6 million annually (50k x 6.40 x 12). To get this much cash from 3 million unique users, even assuming a generous online advertising CPM of 8 pounds, would require 693 page views per year (693*8/1000*3 million). This would be 58 page views per user per month. Seems like a lot of page views considering a lot of users that count as monthly uniques visit once and click on 2 pages. Not to mention, they are probably growing paid users, and had they not done this they would have seen a steady erosion of print subs looking for a free solution.

    1. Let’s remember that those 50,000 include users of the iPad app (not clear how many) and the Kindle — so not all will produce that much annual revenue. Plus, it took the Times four months to produce that many.

    2. “50k x 6.40 x 12″ = 3,840,000 not “16.6 million”

    3. We should also consider the lucrative potential for lead generation here.

      News Corp now holds the names and email addresses of 50,000 users who are willing to pay for information that’s available elsewhere for free. That’s quite a list of suckers with money.

  3. Well, just goes to show that putting a paywall up in front of something that was previously free going to lose you a lot of readers. Surely there was a better way of doing it without walling off the entire site and particlarly the news content.

    Interestingly, The Times and the Sunday Times are now running TV ads in the UK, with the general theme of “why is it worth paying for an online newspaper.”

    1. That is a good point, Simon.

    2. David B Traver Adolphus Simon Mackie Tuesday, November 2, 2010

      As a reader I know the Wall Street Journal has certainly lost me to its paywall.

  4. Those subscribers are definitely worth more. They have demonstrated a disposable income, they are old enough to own credit cards, aren’t scared of purchasing online, they probably own content consumption devices (i.e. iPad) and are willing to purchase virtual products. They probably have a lot more data on them (at least compared to random demographic surveys that most websites do).

    News Corp will be in it for the long term, they did the same with TV and it took them decades to build dominant platforms in many countries. The only thing missing, is their own proprietary newspaper consumption device – once that appears, they’ll be set with their own physical platform.

    1. News Corp is in it for the long haul, but The Times is cannon fodder.

  5. Ian Betteridge Tuesday, November 2, 2010

    I know it’s a great headline, Om, but it’s far too early to say their strategy is a bust.

    Let’s put it this way: If a content startup had been going for six months and was already looking at first-year revenues of $8 million, would you say it was “a bust”?

    No – you’d probably be calling it a success.

    The fact is that yes, they had millions of users before. The problem was that they weren’t making a profit on those eyeballs. I’m pretty certain that they’re already closer to making a profit than The Guardian is (losing £100,000 a day at last count).

    1. Or how about putting this way: If a startup was looking at first-year revenue of $8 million and it was spending $200M+ to achieve that revenue would you say it was “a success”

      More significantly, by trying the subscription model, News Corp. has a significant opportunity cost of not building a large audience and maximizing revenue through ad sales.

      1. Exactly. Thanks for that, Mo.

      2. Ahh, but that’s the thing: the online presence doesn’t have to pay for its content. That’s already bought and paid for for the print version, so anything that digital makes over and above its own costs is incremental revenue.

        To put it another way: that content has to be created for the print product anyway. Putting it on an iPad costs them whatever it costs to develop the iPad app, not $200m.

    2. The headline was mine, Ian — and this is not a startup that has been around six months, it’s a newspaper that has been around for 100 years or more and part of a giant media empire. I understand your point about not making a profit on those millions of users, but turning 90 percent of them away at the door doesn’t seem like a wise strategy to me. My viewpoint.

      1. Are Aston Martin successful Matthew? They turn away a huge amount of potential customers by attaching a premium price point to their premium cars.

        This idea of a strategy that more = more in terms of reach doesn’t necessarily equal a winning formula.

        The Times were still spending huge amounts of money prior to this and their online division, like most other online divisions of traditional newspapers, was *losing* money hand over foot.

        If their strategy with a smaller user base ultimately generates them *more* profit, then it absolutely is a winning strategy.

        (Out of curiosity – I’m not a subscriber – do they still serve adverts to their paid-for online customers? I would speculate, as pointed out by other commentators, that those customers would be of much, much higher value and deliver very strong CPMs and CPAs).

      2. Apologies – I could have sworn it had Om’s byline on it earlier! :)

        You’re right that it’s not a startup – but as I’m sure you know from your own news experience, having several hundred years of print behind you is no guarantee of success online. In fact, in many cases, it’s quite the opposite, as you have a lot of issues (especially around agility and management layers) which put you at a disadvantage compared to a startup.

        Turning away millions of users may not sound wise, but I’d ask who, exactly, is following the opposite strategy and making money? Other than The Guardian – which admits it’s losing money hand over fist online – The Times’ competitors tend to say only that “we’re profitable” without giving a clue about how they’re working that out.

        Personally, I have my doubts: I’d be willing to bet a decent dinner that no quality UK newspaper is making much more profit than The Times is. And if that’s true, again, that reinforces the idea that the strategy is not (yet) a bust.

  6. I think you are missing the point. At least this strategy gives the Times a way to succeed. They have made a start. It’s a small one, but if they were a start up you would say that were showing enough early traction to be interesting. Plainly they will need to learn what users will and won’t pay for in the future. But that’s true of any digital business that operates on the web. They have a long way to go, and there is no certainty of getting there but this way they know what they have to do to win – convince larger numbers of people that their content was worth paying for. Oh that all new news business models could have such clear paths to success…

    The alternative is to watch CPMs decline towards zero and to bet their future on the price of an ever expanding glut of online ad inventory as it careers towards a logical supply-demand price somewhere close to zero.

    The problem in judging something like this is a tendency to use large misleading numbers to make small numbers look bad. 50,000 people a month are paying to see content that used to be free. If more people can be convinced to pay by producing more exclusive valuable content then that translates to more revenue. Personally I would rather be in that game than trying to drive up pageviews while simultaneously watching the value of those views plunge to nothing.

    If you measure success in how many people come to your website then yes, this is a disaster. But if you measure success in a more well trodden way – how many people you can profitably sell your product to – this can be seen as a reasonable start. The traction may turn out to be an illusion, for sure – but if you were to be this harsh two months in with every business attempting to implement a new and disruptive business model then your pages will become tediously negative about innovation pretty quickly.

    1. Thanks for the comment, John — the reality is that newspapers have never made money by selling their content. The vast majority of money they make comes from advertising that piggy-backs on the relationship they have with their readers. It remains to be seen whether advertisers are willing to pay more or less for 90 percent fewer (but theoretically more valuable) readers.

  7. Rupert Murdoch’s paywall is a decent start | John Gapper’s Business Blog | FT.com Tuesday, November 2, 2010

    [...] digital media folk willing it to fail. (This did not prevent Mathew Ingram at GigaOm immediately declaring it a [...]

  8. Ouch. I’d hate to see how bad it would need to be for them to be less than pleased by the result!

    At the same time, despite being a “huge echo chamber,” online media paints a more accurate picture of this story than traditional corporate outlets do.

  9. London Times loses “less than” 90 percent of readers online | PrintMediaCentr.com Tuesday, November 2, 2010

    [...] It’s Official: News Corp.’s Paywalls Are a Bust (gigaom.com) [...]

  10. I’m pleased to see Rupert Murdoch make such a conspicuous ass of himself.

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