Judging by the preliminary results of its online pay wall, it seems The New York Times has managed to avoid catastrophic audience declines of the sort warned against by pay wall skeptics. They predicted that any attempt to charge for news would fail, following a decade where most readers grew used to free access.
According to Experian Hitwise, total visits during the 12-day period following the pay-wall launch were down 5% to 15%, compared to the 12-day period before the launch -- except for April 8, when there was basically no change, and April 9, when there was a 7% increase. (That was probably related to the threatened government shutdown.)
Averaging the percent changes, including the one instance of positive growth) the NYT Web site suffered an average audience loss of 7.5% following the introduction of the pay wall. Page views experienced a slightly larger drop of 11% to 30% across the 12-day period following the launch, averaging out to a 20% decline.
It would be hard to draw any conclusions about the long-term impact on just two weeks of data; it's not difficult to imagine equally plausible scenarios where the audience rebounds somewhat or declines even further, depending on any number of factors.
However, the 5% to 15% decline suggested by data from the first couple of weeks may prove to be an acceptable loss, provided the Web site succeeds in monetizing a sufficient proportion of its heavy users.
According to NYT publisher Arthur Ochs Sulzberger, Jr., heavy users made up 15% of the pre-pay wall monthly audience of roughly 30 million (per comScore), or about 4.5 million heavy users per month. Supposing that 15% of these convert to the minimum subscription plan at a cost of $15 per month, this works out to 675,000 subscriptions for revenues of about $10 million per month, or $120 million per year.
This figure is close to a forecast from former Wall Street Journal publisher Gordon Crovitz, who predicted in December of last year that the new NYT's pay wall could take in about $100 million per year.
To break even, the NYT's digital subscription sales just have to offset the potential losses in online advertising revenue resulting from the downward adjustment in audience size. In 2010, NYTCO recorded a total of $212.2 million in digital advertising revenues at the News Media Group, most of which came from the NYT Web site.
On the basis of audience size (assuming that audience size corresponds most strongly to digital ad revenues) a 7.5% drop in digital ad revenues at the News Media Group would translate to a loss of about $16 million -- a good deal less than the company stands to gain according to the forecast above.
Per page views (assuming these are the best correlation), digital ad revenues might drop up to $42 million -- not ideal, but still less than the projected gain of $100 million-$120 million.