News International took a bullish line today with the announcement of early results for The Times and Sunday Times paywall experiment. Times editor James Harding said the papers were “hugely encouraged” by paying subscribers that have hit 105,000 after four months.
The BBC’s Rory Cellan Jones estimated that the annual revenue from this subscription base with “very rough back-of-the envelope calculations” would be around £7m. I think that might be optimistic given that News International haven’t indicated churn rates or how many of that 105,000 are currently in the introductory £1 for thirty day trial period. Given that we’re just four months in it might be a quarter.
Where this really doesn’t add up is when you look at ad revenue. The Guardian is pulling in £40 million a year in online revenues more than double that of the Times and bear in mind that doesn’t account for the fact we are not looking at a full year position for The Times. It looks like online ads at the Guardian represent serious value in comparison. From their pre-paywall high point the audience for the TimesOnline has dropped almost 90% and the figures from Alexa.com (below) will include anyone stopping by to look at the free to view front page.
What is most worrying of all for the 225 year old news title is that reach is still falling, 7% in the last month, at a time when most free on line national newspapers in the UK are seeing significant growth. If there is a new financial model for national daily news titles, and there is no guarantee that there will be, you wouldn’t expect an old-style news baron to come up with the magic formula. On the strength of the figures released today The Times paywall very definitely isn’t it.