Yesterday the Times of London released some numbers about its first few months with a pay-wall, prompting a frenzy of coverage in the media and the blogsphere. If you are reading this you've probably already read some of that, so I won't bother with the links. But although lots of interesting things have been said, on the key question of whether this means an improvement or worsening for revenues all the articles I've read seem to miss some key points. So here's my stab.

Most pundits are focusing on what the pay-wall meant in terms of audience – which is largely irrelevant here. The key number, the drop in page views, was not released by News Int. Using two different third-party sources, both Seeking Alpha and Tech Crunch reckon a drop of 90%. So, a 90% loss in ad revenues you might say? Not quite as bad, for two reasons:

- First, the remaining readers probably command a premium in advertising, because their demographics are known. Assume a 10% premium.

- Second, and more complicated, not all inventory is created equal. Before the pay-wall the Times had so many page-views that its sales team would have struggled to sell them all at a decent CPM. Assume they were selling 50% properly, and the rest via ad networks at a 90% discount. Assume also that post-paywall they can sell all their advertising directly. Put this in a calculator and you get that today they are getting 18% of their original revenues.

Mix the two effects and you have that ad revenues today should be 20% of before, or a loss of 80%.

How much is that worth? Very hard to tell without public numbers. Assume a CPM of £20; 4m impressions per month post-paywall (Comscore via Techcrunch – likely overestimated); and 2 ads per page. That means that ad revenues today would be £160,000 per month. If that's 20% of the original, the loss would be £640,000 per month.

What's the gain? News Int claim 52,250 monthly digital-only subscribers (including digital editions), at monthly rates of around £8.7. This means around £454,000 per month.

Net result: a loss of around £185,000 per month, or around one-quarter of original digital revenues.

But:

- It is early days, and presumably more people will sign up. With the assumptions above, break-even would happen at around 75,000 subscriptions.

- If you assume their initial sell-through was only 30% instead of 50%, ad revenues lost would be only £378,000, for a net
**gain**of £76,000 per month.

- If you assume their average CPM is £14 and not £20 as above (and keep the 50% sell-through) then you almost have break-even at a £7,000 gain per month.

- The value of retaining print subscribers may be considerable.

All in all an inconclusive picture, but quite possibly financially neutral or even positive.

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