When Is A 0.82% Conversion Rate from Free Trial To Paid Subscription A Win?

In answer to the headline, it is when your target is 0.2 percent, but is that low of a conversion rate a sustainable business? In a paidContent article last week about the UK Times paywall the meager conversion of 0.82 percent of iPad users from trial to paid users was cited as a win, beating the even lower 0.2 percent conversion expectations. That 0.82 percent conversion rate also came after a dedicated campaign to drive conversions to the paid product.

In total, the Guardian reports that the UK Times has gained 79,000 paid digital subscribers, including those 0.82 percent. At the same time the UK Times circulation has dropped 58,000 subscribers and the Sunday Times also lost over 74,000 subscribers in the last year.  The New York Observer reported a decline of 18 million page views per month in the first four months the UK Times’ paywall went up.

The UK Times paywall by the numbers

Using some rough estimates, here are the revenues involved*:

  • Online digital subscription price: est. $13/month
  • UK Times (daily + Sunday) print subscription: est. $52/month
  • UK Times Sunday only subscription: est. $13/month
  • UK Times CPM: est. $5/month

So let’s compare the estimated revenue streams over the last year:

Revenue increase:

  • 79,000 x $13 = est $1,027,000

Revenue decrease:

  • 58,000 daily & Sunday subs * $52/month = $3,016,000
  • 16,000 Sunday only subs * $13/month = $208,000
  • 54,000,000 page views per month * $5 CPM =  $270,000

So by those calculations the total decrease is: $3,494,000

With the net decrease: $1,027,000 – $3,494,000 = – $2,467,000/month

Note that the decrease in page views amounts to the smallest amount of this loss, but more importantly, the number represents a monthly loss or significant decrease in revenues.

What this “success” for UK Times paywall means

The overall situation is that print subscriptions are falling, and the net loss in revenue is actually higher. Print advertisers are less willing to pay the same prices when print circulation drops. At the same time, the page views are plummeting, further decreasing the package size and online advertising that could be included in those advertising packages.

The move to digital subscriptions does not appear to be countering the overall loss in revenues nor the bleeding away of print subscribers. Opponents of the paywall will look at the commodity nature of news and the high-expectations on the quality or exclusivity of content that must be maintained if users are expected to pay. Journalists at the Times must also consider the dwindling readership that will see their stories.

Other options, such as the paywall concept from the New York Times, are less strict, and by design allow for more access by casual readers and a paywall for frequent or heavy users. That system seems fairer, however, if the news is still a commodity and there is no exclusivity in the content. Many readers will find other replacement sources and some will find ways around the paywall such as those covered in Mashable here or frequently trafficked page here.

The fact of the matter is that people generally aren’t willing to pay for news they can get on TV or from other sources for free. They may pay for exclusive content, special formatting, or even convenience, but those mechanisms also cost more to produce or to maintain the quality. I applaud the attempts to consider new revenue sources and business models, I just hope that the publishers consider the users and readers and then provide increased value to justify any prices they impose on their user base.

* Monthly subscription prices based on numbers converted from Guardian UK article here.

About Duane Kuroda

Business ninja, deal hunter, Internet marketer, and technology fiddler obsessed about growing companies and launching products. Currently at Peerspin, Duane’s past lives include Vice President of Marketing roles at companies leading micropayments, Internet video, and online communities as well as research and consulting for mobile advertising. Duane has spoken at conferences including Digital Hollywood and Digital Video Expo on topics covering monetizing online content and online video, has appeared on TechNowTV and KNTV, and has been quoted in various magazines. Follow Duane on Twitter: @dkuroda.