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by henrycopeland
Tuesday, February 10th, 2009

Steve Brill has a way to save NYTimes. Just charge people!

The New York Times newspaper website currently has 20 million unique visitors a month. It is a great editorial product and has done an amazing job building an audience. Now, its time to go to Step Two and make that work to usher in a bright new age for the world’s greatest newspaper.

Getting an average of just $1.00 a month (3.3 cents a day) from each visitor would yield $240m in new annual revenue. This is approximately equal to (it seems, from the Times’ financial statements) two thirds to three fourths of all of the company’s annual advertising revenue for all of its internet properties combined. And, of course, this online ad revenue would not disappear or even necessarily diminish if readers paid a small amount for online content.

At an average of $2.00 a month per unique viewer, the resulting nearly half billion dollars in added revenue would equal 50% of the entire company’s circulation revenue and create profits unseen for years at the Times.

An average of $3.00 a month in five years with 30 million visitors ($1.08 billion in additional revenue for what is currently a $3b total revenue company with year-to-year declines) would completely reverse the fortunes and invigorate the margins of the paper.

Oh the fun you can have with a calculator. Brill didn’t go the obvious next step in playing this game. Translate the Times into Chinese. Let’s see, 1 billion Chinese readers. If ONLY 1% of them will read the paper, that’s an extra 10 million readers. Presto, ANOTHER $120 million!

The problem with all this prestidigitation, of course, is that the minute you make people click more than twice to get to an article, half those readers will turn and run. Make people get out a credit card and another 90% will go away NO matter how cheap the price tag. Note to budding media economists and pundits: the slope of the price curve between 0 and one penny is infinite. You can’t do any safe extrapolating about how consumers behave as you oscillate prices between those two levels.

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