While the digital print business is starting to find its feet thanks to the proliferation of connected devices like Apple’s (NASDAQ:AAPL) iPad, it’s hard to know how many publishers can sustain such a business. New York Times (NYSE:NYT) has found 100,000 paying subscribers for its online flagship newspaper, which, as Peter Kafka said at All Things Digital, translates to $19.5 million in annual revenue — revenue the paper badly needs as print continues its slow death.
But that revenue is hardly a guarantee however. Many of those 100,000 subscriptions were of the 99-cent, four-week trial variety — retaining digital subscribers is a challenge in and of itself.
Although it had completely different content (with very different business models and audiences), Conde Nast’s Wired magazine had just as many paying readers for its iPad edition that debuted in 2010. That readership quickly trailed off to around 25,000 a month.
To lure readers back, Wired partnered up with Amazon (NASDAQ:AMZN) and Adobe (NASDAQ:ADBE) to give away the May iPad issue for free. This isn’t to say that the New York Times‘ digital subscription rates will fall in the same way as Wired, but there’s little doubt that it will fall. Just 0.8% of the iPad edition of News Corp. (NYSE:NWS) owned U.K. Times readers converted from free trials to paid subscriptions, for example.
News Corp.’s efforts in digital print will likely be the best litmus test of how sustainable The New York Times business model is. The house of Rupert Murdoch has yet to reveal how well its iPad-only newspaper The Daily is performing but estimates are all over the place: MediaGuardian projected just 5,000 subscribers two weeks after the paper released while News Corp. claimed closer to 75,000.
It will be more telling, however, when News Corp. reveals how many readers have downloaded The Daily‘s app and purchase it on an issue-by-issue basis.
That is ultimately the readership that all digital print needs to capture: the app impulse-buy crowd. While actual print relied on subscriptions for circulation (in 2000 most magazines got around 18% of circulation from newsstands), web devices have the opportunity to change that structure.
There is a happy medium to be found in the business models of The New York Times, The Daily, and Wired — a careful balance between free and paid content. Looking at paying subscribers, a measurement useful in the old days, won’t necessarily be the mark of success anymore.
As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.
