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The Sun is launching its new subscription site Sun+ on 1 August.
The Sun is launching its new subscription site Sun+ on 1 August.

Sun paywall needs more than 300,000 subscribers to cover outlay, say analysts

This article is more than 10 years old
Sun+ service predicted to result in drop in online ad revenue with NI also paying £30m-plus for digital Premier League rights

The Sun will need to attract more than 250,000 subscribers to its £2-per-week online service to cover the loss of online advertising and recoup the £30m-plus it paid for the digital Premier League football highlights, according to City analysts' estimates.

The new service, which will be called Sun+, launches on 1 August and will include seven-day access to the Sun online, via tablet and smartphone apps.

Erecting a paywall will greatly diminish the 1.68 million daily unique browsers who visit Sun.co.uk, with News International left facing having to convince at least 20% of them to cough up £104 a year, analysts predict. When Rupert Murdoch took the Times and Sunday Times behind a digital paywall in 2010 traffic fell by 90%.

Analysts at IHS Electronics and Media reckon that the Sun will need well over 250,000 subscribers to cover the loss of digital ads, as brands won't pay premium rates when the web traffic drops, and costs and overheads related to the three-year Premier League rights deal.

Enders Analysis puts the figure higher, at about 340,000, on the basis that at least half of the subscribers will come from in-app purchases in which Apple and Google will take a 30% share of the payment, which might make about £35m for News International.

IHS has not factored this in, believing that NI can circumvent this hefty pay out by getting the vast majority of subscribers to sign up directly.

Enders also reckons the Sun can probably pull in £15m a year in digital advertising, meaning if it can hit 340,000 subscribers it will roughly match the £50m in revenue the free Mail Online makes.

Mike Darcey, the News International chief executive who was responsible for striking the deal in January, is banking on his knowledge of the power of exclusive content to drive uptake of News International's digital subscription packages.

Darcey, a veteran of several Premier League football TV rights negotiations during his time at BSkyB, has kept the digital rights under lock and key and chosen not to syndicate the clips to rivals including the Daily Mail, the Guardian, the Sun, the Times, the Daily Telegraph, London Evening Standard and the Independent.

While the mobile rights package allows News International to offer up to eight 30-second highlights clips during all live Premier League matches, the longer internet highlight clips cannot be shown online until the Monday after matches have been aired.

The BBC could prove to be something of a thorn in the digital side for News International, with the Premier League allowing the corporation to put Match of the Day and Match of the Day 2 on the iPlayer from midnight on Mondays for the first time.

Enders also questions whether the Sun's digital subscription drive will accelerate the decline of its core print product.

"There is substantial evidence digital subscriptions can support print subscription strategies for newspapers," says Enders media analyst Douglas McCabe.

However, he points out that the Sun is unique from others taking the paywall path in that it is only sold at newsstand, not as a print subscription.

"There are at present 124,000 daily website users who also read the print edition: put simplistically, what if they reduced their frequency of print purchase as paying digital subscribers?," he says.

Darcey has said the paywall decision was made because "it is just untenable to have 2.4 million paying 40p for the Sun at the same time as a bunch of other people are getting it for free".

Given the position of the Sun as the biggest selling UK newspaper, there are those who argue that News International missed out on an opportunity before Darcey's arrival at the beginning of 2013 to make it the biggest free website as well – a market leading position now held by Mail Online.

The two titles were digitally almost neck-and-neck four years ago, but now the Mail Online has 110 million monthly users, leaving behind the Sun on 27 million.

However, it could become a force in the fast developing mobile content market, according to McCabe.

"We see no reason to assume the Sun would not become one of the most popular content apps in the market," says McCabe. "We believe the Sun's content is eminently well suited for mobile device delivery. [It is] short, witty, attractive for sharing, and relatively easy to package on a rapid publishing cycle to optimise breakfast, commute, coffee break and lunch usage, as well as exploiting the key weekend and evening competitive advantages."

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