First things first: we’re a bit gobsmacked that it cost $40-50 million to implement this solution. Yes, there are a lot of moving parts, and yes, they’ve spent over a year planning this move… but $40-50 million?
Second, total digital advertising revenue runs north of $300 million. This relies on the New York Times’ 33 million unique monthly visitors. The meter the Times has established is to prevent those uniques from dropping. Like all implementations before it, it’s a nice thought but uniques will fall.
So the goal here is to increase subscription revenue faster than advertising revenue decreases.
[H]ow much revenue will the paywall bring in? A very large number of the paper’s most loyal readers are already print subscribers, and get access to the website at no extra cost. So the new revenues from the paywall will only come from people who read the website a lot but who don’t subscribe in print.
How many of those people are there? Emily Bell reckons that the number of people who’ll even hit the paywall in the first place is only about 5% of the NYT’s 33 million or so unique visitors. That’s 1.6 million people — compare the 1.3 million people who already subscribe to the paper on Sundays. The former is not a perfect superset of the latter, of course, but there’s a big overlap; let’s say that realistically the NYT is going after a universe of no more than 800,000 people that it’s going to ask to subscribe. And let’s be generous and say that 15% of them do so, paying an average of $200 per year apiece. That’s extra revenues of $24 million per year.
$24 million is a minuscule amount for the New York Times company as a whole; it’s dwarfed not only by total revenues but even by those total digital advertising revenues of more than $300 million a year.