>> New updated online spreadsheet
>> Excel file version
In partnership with the NAA (Newspaper Association of America), and the help of Borrell Associates, AdPerfect and Centro, we have put together a new updated spreadsheet exploring different scenarios for paid online content for 50K circulation newspapers. We have run numbers on scenarios ranging from fully paid to mixed paid / free.
Our previous and first post showed 9 different possibilities for paid online content scenarios for a 100K circulation newspaper. We based this first set of numbers on an average of publicly available and proprietary data from North American newspapers (some of which are our clients). This set of scenarios was just a first step in running numbers to take a look at the possible revenue generation.
In this post, we run numbers for a 50K circulation paper to be closer to the average US newspaper.
* 50,000 print subscribers
* $17 / month for the print version (7-day)
* Website with 250,000 UV and 2.5M PV
* $12 display ad CPM
* $4.50 local remnant ad CPM
* $0.95 national remnant ad CPM
* 5% unsold inventory
* $.20 CPC with .36% CTR for contextual ads
* In this version we have also introduced a subscriber acquisition cost of $49.18.
For an approximation of the current online revenue based on the above assumptions, the online revenue is a little over $700K.
Then we ran the numbers for the following scenarios:
No more print version. All print subscribers are subscribing to the website that is 100% behind a paid wall. NOTE: It is highly unlikely that 100% of existing print subscribers would sign up for the web version.We are just demonstrating what could be the potential maximum revenue if all 100% did at HALF the print sub price.
Revenue = $5.2 M
Great direct marketing campaign resulting in 2% of current UV subscribing to the website. 100% behind a paid wall. They pay the same price as the print version. For all of the following scenarios, the print version still exists.
Revenue = $1.0 M
3rd scenario: Same assumptions as scenario 2, except the subscription price is halved to $8.50 / month.
Revenue = $524 K
4th scenario: Same assumptions as scenario 2 and 3, except the subscription price is again halved to $4.25 / month.
Revenue = $269 K
5th scenario: Direct marketing campaign resulting in 1% of current UV subscribing to the website. 100% behind a paid wall. They pay the same price as the print version.
Revenue = $517 K
6th scenario: Same assumptions as scenario 5, except the subscription price is halved to $8.50 / month.
Revenue = $262 K
7th scenario: Same assumptions as scenario 5 and 6, except the subscription price is again halved to $4.25 / month.
Revenue = $135 K
8th scenario: Mix of free and paid models. 60% of the site's content is free. There still are 250K UV. 1% of these UV subscribe to the paid part of the website for $8.50 / month.
Revenue = $686 K
9th scenario: Mix of free and paid models. 80% of the site's content is free. There still are 500K UV. 1% of these UV subscribe to the paid part of the website for $8.50 / month.
Revenue = $828 K
You can see these updated figures on my spreadsheet (on the 2nd tab named "50K circ"). You can also download the excel file to play around with the numbers.
As mentioned in the first post, we didn't take into account the cost side (with exception of the introduction of the acquisition cost per subscriber). However, none of these scenarios would cover the actual costs of newspaper operations. In our next iteration, we will factor in the cost side to take a look at net revenue. It will be another one of the critical factors on the end-decision of whether or not to go paid.
If you think something is missing or doesn't make sense, please comment. Also, if you have any suggestions, feel free to let us know. We're always looking to improve upon the analysis. Please email me at anytime at nwang (at)mignon-media (dot)com.
A big thanks to Beth Lawton at the NAA. Thanks as well to Gordon Borrell of Borrell Associates, Inc., Sean McDonnell of AdPerfect and Shawn Reigseker of Centro for their assistance.
More to read:
- Paying for online news: Sorry, but the math just doesn’t work. (Martin Langeveld - Nieman Journalism Lab)
I suggest some changes :ReplyDelete
1- increase the CPM on inventory generated by paid subscribers (high profiles, qualified audience)
2- Increase the sales through rates to 60% - less inventory + qualified audience= better sales through
3- introduce a low cost of acquisition for free model (nobody can say he doesnt spend time, money, energy on SEO or marketing stuff
The result wont change dramaticaly but will be more balanced imo
Thanks for your feedback! These scenarios are using the current data to determine whether or not any paid models would generate enough revenue.
That said, your suggested changes could be used for putting together target scenarios to determine at which conditions (target CPM, etc.) a newspaper could breakeven and then be profitable online.
By the way, if your company would like to sponsor any iteration of this analysis, please feel free to contact us. :)
Hi Nancy -- excellent spread sheet, great analysis, very persuasive. My back-of-the-envelope calcs on the same question, minus your sophistication, reach the same conclusions: http://www.niemanlab.org/2009/04/paying-for-online-news-sorry-but-the-math-just-doesnt-work/ .ReplyDelete
Thanks for your comment. We've added your article as a "more to read:" at the end of our post... with all of the insightful comments on this subject, there's more numbers that could be put together. We had planned to do more iterations (esp factoring in the cost side), but we are filtering to see what would be most interesting to next in the numbers. Any suggestions?
I would like to see a combination of print paper certain days of the week and web version used for the rest of the days. Show the revenue if part of the web site is behind a pay wall (20% of site) just for print subscribers (one scenario) vs. entirely free for everybody (another scenario).ReplyDelete
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You are giving the perfect information for the online content easily. It makes everyone to work on that easily. It gives some tips to work on that. The spreadsheet technique is really nice to work there easily. This is the best adopted method used by some persons.ReplyDelete
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Great blog, just discovered it. This post was very insightful and seems to confirm our own analysis. I'm Product Manager for the online branch of a local French daily in NB, Canada(20K circulation, 120 UV, 1.7 M PVs). We'd be very interested in benchmarking with similar publication, 50 K circulation or less, to discuss what has worked and what hasn't and compare certain data. Also willing to contribute our data to you for further research/analysis as long as it is used anonymously. Feel free to contact me at firstname.lastname@example.org.ReplyDelete
However, none of these scenarios would cover the actual costs of newspaper operations. In our next iteration, we will factor in the cost side to take a look at net revenue. It will be another one of the critical factors on the end-decision of whether or not to go paid.ReplyDelete