I’ll be playing catchup on a few links today. First up:
With newspapers like The San Francisco Chronicle losing $1M per week, it’s going to take a hell of a lot to more than the iPad to save the industry. In what I consider a best case (and far fetched) scenario, 7% of iPad owners have downloaded The New York Times’ paid app by the end of 2011; the NYT is generating $200k/month in advertising revenues from the platform; and they are able to charge $15/month/user for subscription fees. In this case, NYT is still only generating approximately $20M in net revenues. This would be fantastic for any new venture launching a news-based app; but does little for a company that has around $2.34bn in annual expenses (and approximately $600M associated with print operations). As the NYT acknowledges in their annual report, “significant portions of our expenses are fixed costs that neither increase nor decrease proportionately with revenues.” In other words, they’re not going away anytime soon. And a $20M bump in net revenues is going to mean little to nothing.
This is, of course, what I would consider the best case scenario. It is far more likely that the NYT will be lucky to see 1% of iPad owners download the app for a $15 subscription fee—and, this figure will undoubtedly drop dramatically if they charge more than $15/month. If they are lucky enough to generate $200K in incremental (rather than cannibalized) advertising revenues, they might see an increase to net of $3.4M by the end of 2011. Not a world changer.