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Murdoch's online subscribers aren't worth enough money, says research

Further research on the subject of paywalls casts another gloomy perspective on News International’s bold paywall experiment.

According to Ben Evans of Enders Analysis, a newspaper paywall subscriber is worth between 25 to 33 per cent of a buyer of the print edition.

It’s not just a question of whether enough people will sign up online to offset the lower online advertising revenues, he says. According to his analysis, even if every print buyer moved to online subscription or bought the iPad app, the Times and Sunday Times would not be able to run their operations profitably.

With online subs amounting to about a quarter of the revenues of print, even though the paper would cut its print costs by about 25 per cent by moving to digital production, the revenue per buyer would still be 70 per cent lower.

The paper would either have to make immense cuts, and therefore deliver a much smaller product, or increase subscription costs dramatically, to find a way of breaking even.

Some agency people, particularly in the direct marketing area, believe that News International can increase the revenue per customer to sustainable levels by reader offers and commissions on sales from direct communications with the audience, given that they know people’s names, email addresses and credit card numbers, but that is an even more competitive marketplace than the newspaper sector.

Whichever way you look at it, Rupert Murdoch will have to find a stroke of genius to make his latest initiative pay.

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About David O'Reilly

David is a former deputy editor of Campaign and writer for a number of leading titles including Management Today and the Sunday Times. He is a partner in The Editorial Partnership.
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