Fullrunner

Wednesday 8 December 2010

Dept of Small Numbers: The Guardian’s analysis of Murdoch’s paywall traffic

The Guardian’s analysis of behind-the-paywall traffic at The Times and The Sunday Times, reported exclusively by Press Gazette this morning, offers something new: an assessment of how many subscribers are actually visiting the sites.

The official numbers for pure-play digital subscriptions from Wapping, published in early November, told us something about conversions. Likewise the recently-publicised survey stats from Oliver & Ohlbaum, based on a November survey of newspaper readers, which suggested that 14 per cent of Times newspaper readers had reacted to the paywall (imposed on 2 July) by subscribing in some way.

Conversion rates are important. But so is usage, which acts as a slam-dunk proxy for reader loyalty. Loyalty directly influences renewals. And renewals – rather than expensively-acquired new subscribers – are the secret sauce of any subscription business. Unfortunately, the GNM/Hitwise numbers don’t look encouraging in this respect.

In early November, News International revealed that:

100,000 joint digital/print subscribers. . . have activated their digital accounts to the websites and/or iPad app since launch.

Well, yes. But how many of these cross-media subscribers delved beyond the paywall at thetimes.co.uk and thesundaytimes.co.uk during September?

According to the GNM/Hitwise study, the number was 26,000. However you look at it, these sites don’t seem to have been a hit with devoted users of print and/or iPads. A majority of print subscribers seem to have activated their online sub. . . and not returned to the site.

Perhaps this is predictable. But how much interest have pure-play digital subscribers shown in Wapping’s paywalled sites? These are the punters who should be showing the greatest loyalty, accessing paywalled content on a regular basis.

By the end of September, when the Guardian performed its study, The Times’s paywall had been up and running for three whole months. Judging by the numbers released by News International in early November, The Times and The Sunday Times had been selling, on an averaged monthly basis, around 13,000 micropayment deals (“single copy or pay-as-you-go customers”) plus a similar number of pure-play monthly digital subscriptions across all platforms (web, iPad and Kindle).

Now let’s take these average monthly sales figures and then slice them to fit within the timeframe used by GNM’s researchers. The numbers suggest that The Times and The Sunday Times sold 26,000 pure-play subs (monthly and £1-per-day passes plus Kindles and iPad subs) in July, and the same again in August and then September.

Of course, it would have been ideal for Wapping if all of these subscribers visited the sites at least once during September. On this basis, the maximum number for pure-play behind-the-paywall visitors in September would be 79,000.

This target is toppy: it comes with a few provisos. Some of the £1-a-day punters, for example, will have purchased access twice, or more, during September. We should also subtract a small number of eccentric Kindle-heads and an unknown number of standalone iPad subscribers. (News International didn’t start bundling web access with iPad apps until the second week of October.)

So: at this point, what would you expect thetimes.co.uk and thesundaytimes.co.uk to be doing in terms of pure play (no newspaper subscription) visitors during September? Clearly, 79,000 would be way too much. So how about 60,000 paying punters a month? Or 50,000?

Er, no. According to GNM/Hitwise, during September, thetimes.co.uk and theesundaytimes.co.uk attracted 28,000 punters who had paid for pure-play access.

The numbers suggest the existence of a problem. So far as I can see, there are at least four possible explanations for it:

1) Pure-play customers are churning away from the paywall in large numbers, buying £1/month “introductory” subs and then cancelling their direct debits soon afterward.

2) Subscribers are subscribing, and churn is running at acceptable levels, but users have little reason to return to the paywalled sites. Perhaps their isolation from the rest of the web is causing even committed users to neglect them.  Whisper it who dares: Jeff Jarvis may be right about the power of the link economy. In the long-term, these apparently weak visitor numbers suggest that disappointing renewal rates lie in wait.

3) Perhaps The Times’s iPad app has taken off like a rocket, providing compensatory ballast for poor website numbers in that obfuscatory 2 November press release from Wapping. If this explains September’s poor numbers on the web site, it may also explain why Rupert Murdoch has committed so much resource to The Daily, the iPad-only US news service that News Corp  is expected to launch in Q1 of next year.

4) The data from Hitwise/Experian is incorrect. It’s beyond my pay grade to comment on this possibility. But traffic numbers are always vulnerable to challenge. . .

By contrast with these negative findings from GNM, it’s worth noting the optimism of Jonathan Miller, the much-lauded ex-boss of AOL who now runs News Corp’s digital operations. At a conference last week, Miller suggested that The Times and The Sunday Times are on an “immediate path” to compensate “within months” for the decline in ad sales that followed the imposition of paywalls.

“There’s a transition there that’s tough, which unfortunately means not every company can do it,” Miller said. “We’ll make it, but in all honesty because we can afford to.”

You’d need to be confident to bet against Mr Miller. On the other hand, he may be merely buying time before News International adopts the freemium model of the Wall Street Journal, or the metered model of the Financial Times. Doing so would end Wapping’s self-imposed isolation from the link economy and offer The Times and The Sunday Times a low-cost marketing platform that could better engage potential subscribers.

The numbers from GNM suggest that this might be a sensible route forward for Wapping.

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