Mail Online is about to turn its first profit

Having quickly become the world’s most-read newspaper website, Mail Online now looks like turning profitable earlier than expected.

“Last year, our revenues were £16 million. This year, Mail Online is very close to breaking even on revenues of a little over £25 million,” site publisher revealed to investment analysts at owner DMGT’s investor day on Wednesday.

Back in November, DMGT CEO Martin Morgan had told those same analysts Mail Online was merely “an early-stage business” that would not turn a profit until well in to 2013.

But Clarke on Wednesday said the site would turn an operating profit on a monthly basis this coming July. Next year, he is forecasting 2013 revenues of £45 million. “Within five years, we predict they will be over £100 million a year,” he said.

Most news sites see digital revenue growth. But few are seeing their digital operations turn an actual profit in isolation.

But Mail Online is also a low-cost and lightweight beast to feed. It has motored on its U.S. growth but employs just 35 journalists at its LA showbiz and New York news bureaus. All in all, Mail Online has cost just £25 million to build, Clarke revealed. “Relatively speaking, we have invested very little money,” CEO Morgan added.

Mail Online’s DMGT stablemate, the troubled regional newspaper publisher Northcliffe, also turned a digital profit in March this year, its CEO Steve Auckland said at Wednesday’s investor day. Magazine publisher Future saw its first digital profit in the first half of 2011.

“It’s sometimes said that Mail Online ‘chases clicks’,” Clarke said. “We do but not on Google or Drudge – You can’t build a business around them.

“Our referrals are organic, a one-off referral won’t make people come back time and time again. The stories which do make people click are those on our homepages; it’s those people addicted to the homepages who drive our growth.

“Many in the newspaper business believed paywalls were the only viable future for the newspaper business – we didn’t think that then and don’t think it now.”

Clarke derided the “ever more desperate debates about how they (publishers) survive online”, saying his site had to achieve global scale to remain free.