The specter of $10 is lurking in the corners of the startup industry. The figure is common to two aspects of the website business. As I wrote about earlier, blog hosting sites like The Faster Times, The Awl and the late True/Slant pay their bloggers about $10 for each post—some sites pay less. Today, a business consulting company introduces a new $10 standard: the amount of money a website should bring in per user in order to make profit. The news comes out of Paid Content, a U.K. based site on the economics of publishing. The profit metric is called ‘average revenue per user’ or ARPU and it is meant to guide a company in determining who and how much to charge for access to its website. The two customers are users and advertisers, the user category being further divided into individual consumer and business client. While individual consumers are more difficult to charge, given both their more limited disposable income and ability to find equivalent content elsewhere, businesses that access the content of a given website do so, in principle, to benefit their business. This has been the justification for the modi operandi at The Wall Street Journal and the Financial Times, both of which put their content behind paywalls. When businesses see their use of content as an investment that will pay dividends, they are willing to fork over some do-re-mi. Presumably this was the thinking behind The Big Money, Slate’s short lived experiment with a business content website. And while it was not subscription based, or perhaps because it was not, the site was shut down due to profitability concerns.
ARPU perhaps tells a sad tale. As Paid Content notes, the ARPU of People Magazine was over $100 while that of a popular How-To site was under $1. Leaving questions about what is truly the opiate of the masses aside, ARPU remains an imperfect metric. Image if tomorrow only one person visited The New York Times website (probably it would be Thomas Friedman), the site’s ARPU would skyrocket. A similar case exists in real life: when the Times of London put its content behind a paywall, it lost 90% of its readership, its ARPU therefore going through the roof. As I’ve written, the logic of the Times’ argument seems sound: its advertisers want people who are willing to spend money on a product they value (unlike those do-it-yourselfers who aren’t interested in what a website has to sell them), but that doesn’t always translate into real-world success. In either case, ARPU will likely prove a useful, if limited indicator of a website’s viability.