The Guardian’s Josh Halliday (via John Gruber) reports on The Times of London losing 90% of its readership compared to February since introducing a paywall in June.
Gruber calls this dumb. But I’d like to point out a couple of observations.
Access to The Times costs 1£ a day. If 90% of readers jumped ship, 10% stuck and are now paying 1£ a day. Assuming an alternative model of an advertising-financed Times, that would equate to The Times website receiving one ad click in ten visitors. A 10% click-through rate. It also means that each click converts to 1£ of pure revenue for The Times.
I doubt they can fullfill both of those criteria. And even if they don’t, behind that paywall the Times is still displaying a few ads.
So, if The Times has two models:
A. Revenue = Feb Readership * 0.1 * 1£ B. Revenue = Feb Readership * Clickthrough Rate * Revenue per Click
The Guardian calculates £1.4m in revenues from this model. I’m no expert, but that isn’t bad for a regular news website. I also predict this number will pick up if the Times can properly pitch its value proposition of a beautiful layout, better content and tablet-friendly format.
If A > B, and readership sticks around that 10% number, this paywall works.
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