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How much is New York Times content worth?

The Times is my favorite publication, and I pay about $14 a month for its content via my Kindle. So that’s what I think it it’s worth. But not everyone else agrees.

UPDATE May 2010: The New York Times Sunday magazine published a great survey of this question since I’ve published this blog post. If you haven’t read it, it’s worth a look: “Putting a Price on Words.”

You already know that advertising isn’t very profitable for most content publishers. (You can stop reading this item if you have a successful website on health treatments, cute cat photos, or as the musical Avenue Q pointed out, porn.)

But exactly how unprofitable is it? And will it remain unprofitable?

Michael Wolff has done the math, using The New York Times as a model. The CPM (cost per thousand unique visitors to a webpage—the basic unit of revenue for ad-supported content) for a New York Times article might be about $5. That means that if it cost the Times‘ about $1,000 to create an article—including the amortized cost of rent, employee health care, site maintenance costs—the company would need roughly 200,000 readers for that one article before it broke even.

Consider that the Times only has 15 million unique visitors a month. Few of its stories get 200,000 readers on any given day. Yet if you divide the Times‘ annual income from Web advertising (about $200 million) by the number of pages of original content it produces (doubling the number of articles that appear on the Kindle (or in the print edition per week) as a rough estimate of online content), you’ll find it plausible that The Times isn’t making enough money to cover its costs.

One solution for the Times’ is to cut its costs by 40 percent across the board and to start charging for access to its non-AP content (while keeping the site accessible for free via Google, which homepage go at $40 per CPM. (For examples of other content publishers, such as $30 CPM for Martha Stewart Living, $70 CPM for Daily Candy’s e-mail newsletter, and $70 CPM for WSJ video, see this AdAge slide report.)

And yes, there may be more than one ad showing on any given page.

At the same time, CPMs on small “inside” stories that don’t draw targeted advertising—like stories about a suicide in a Queens apartment building complex—may go for less than a $1, meaning the production cost has to be kept to $200 to break even. And all of this assumes you’re producing content as popular (or well branded and marketed) as the Times‘.

Yup, the Internet is a cruel mistress.

[image courtesy of ajawin/Flickr]

UPDATE: 1/31: Even publishers can’t agree on what content is worth in print, let alone online: See the Rusbridger essay.

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