Thread by @trengriffin

Challenge: break down the unit economics of a New York Times subscriber. google.com/amp/s/www.nyti…

What is:

1. Average revenue per subscriber?
2. Gross Margin?
3. Churn?
4. Customer Acquisition Cost?

Assume a 10% cost of money and calculate LTV for extra credit. Be a detective!

Are you aware of an article in which the writer calculates unit economics of a newspaper? Why not? You will see lots of articles that mention a P/E ratio since they can just look it up on a web site.

Good news: "The NYT's cash position continues to grow, and it now has $826M"

The challenge for other newspapers is that more of the best customers in other cities are getting their writing, commentary and analysis from the New York Times. The bad news is that this is substantially a zero sum game given the total addressable market for written material.

Here are some more clues: ~3.3M people pay for news, crossword and food app subscriptions. Online subscription revenue gained nearly 18% to reach $400M.

$400M/3.3M then divided by 3 months is Monthly ARPU = $40.40

Gross margin? See the chart.

Harder: What are CAC and churn?

Companies don't like to reveal numbers on customer churn. Sometimes using compatibles is all you have. "Publishers’ churn rates are commonly 10% or more" google.com/amp/s/digiday.…

NYT tripled its subscriber retention staff between 2015 and 2017. Best way to grow? Don't shrink!

If you assume G&A is 12% of revenue at The New York Times, how much did they spend acquiring each new subscriber on a gross addition basis?

Doing this detective work is hard so people say instead: "Hey, what's the P\E ratio? Who will the Knicks select in the NBA draft?"