It has become all too clear that the retro-named Journalism Online, which is Steven Brill's latest attempt to suck dollars out of the troubled newspaper industry, is nothing more than a scam, pure and simple.

So, in an effort to help my colleagues in that industry avoid yet another financial disaster, I suggest a careful reading of Alan Mutter's three-part series on his blog, "Reflections of a Newsosaur."

According to Mutter, "Even Steven Brill of Journalism Online, the foremost advocate for a global pay wall for newspaper content, says he believes no more than 10% of visitors will ante up for access to interactive news."

Let's just do some simple math here. Behind Mutter's post, let one commenter be your guide:

Anonymous said...
The problem with Brill's 10 percent is that local publishers who have started paid content...have not reached more than 5 percent of their print subscribers as a paying online subscriber.

Take a 50,000 circ paper. In the first year... they should expect 2 percent. So they would be at 1,000 subscribers. While I don't believe smaller market papers can command a 8.33/month rate, lets use it. Those 1,000 subscribers are worth an average of \$273.00 per day.

I suspect \$5.00/month is more accurate. At that rate, the per day average is \$164.00.

That same paper would probably be at say 100,000 page views a day. 3 ads per page, 300,000 ad impressions. Let's say effective CPM of \$4.00. Their daily display ad revenue is \$1,200.

Page views will absolutely drop as a result of paid content. Anything more than 22 percent and they are in negative revenue IF they can get to the 2 percent number at \$8.33/month. At the more realistic \$5.00/month anything over a 13 percent drop in page views will be revenue negative.

Page views will (and have in test markets) drop at a higher rate than 22 percent. I don't believe small market newspapers can even get to the 2 percent.

Here is another way to look at (it). Each 1 percent drop in page views is worth \$12.00 a day. Each subscriber is worth \$.27 a day. For each 1 percent loss in page views, you need 44 subscribers and that assumes you can get 8.33/month. At \$5.00/month subscriptions (\$.16/day) it takes 75 subscribers per 1 percent loss in page views.

If you're a newspaper reading this, do you think you can add 75 subscribers for every 1 percent change in page views? At 30% loss in page views, you need 2,250 subscribers. Look at your monthly traffic numbers. How much do they dip between the peak and low months? Probably at least 20 percent. That drop is from users who don't get annoyed by a paid wall.

Everything scales back and forward. A 25,000 circ paper is probably making \$600.00 a day, but would have a lower subscriber base.

1% percent drop in display is \$6.00 Each subscriber at \$5.00/month is worth \$.16. You need 37 subscribers to match that 1 percent. At the 2 percent of print circ, you're at 500 subscribers. Lose more than 13 percent of your page views and you operate at a loss every day.

Online without subscriptions can be profitable. Don't waste time and money on paid content. Take that money and raise your commission on online display. Hire dedicated sales staff. Invest in analytics integration with ad delivery. Take a look at how TV sales their sales. They teach the advertiser the value of their market. Don't make online an add-on to print as though it's of no value. Learn that Click-through isn't as important. Do you measure the walk in traffic from every one of your print ads? No, you don't because you and the advertiser realize advertising isn't always about direct sales.

This is so well-stated and the math is so obvious than I could do nothing better for my newspaper industry execs than reprint it. Thank you, "Anonymous." Note to newspaper execs: Send Brill back where he came from, i.e., Bernie Madoff Land.
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