TimesSelect Termination Leaves NYT.com Wholly Focused on Online Ads
Important Details: The numbers were impressive. In two years, the New York Times had built a sizable paid subscription product, gaining 227,000 paying customers ($49.95 a year) and helping retain 471,000 print subscribers who had signed up (for free) for TimesSelect. In addition, a more recent initiative had added 89,000 free academic subscribers in colleges and universities. In total, the Times was taking in more than $10 million in revenue a year: the goal it had set for itself at launch two years ago.
But as of this week, TimesSelect is no more, an artifact of news internet history. The product had put about two dozen of the Times’ highest-profile columnists, archives, and news tracking and saving tools behind a pay wall.
The statement from NYT.com General Manager Vivian Schiller explains why succinctly — it’s all about the great growth in internet advertising and the power of search. “Think about this recipe — millions and millions of new documents, all SEO’d, double-digit advertising growth.” The Times believes it can earn back the $10 million in foregone revenue — and more — as it multiplies page views and hones the art of targeting advertising.
The move also comes two months before News Corp. assumes ownership of Dow Jones, which through its Wall Street Journal and Marketwatch brands is a competitor to the Times, especially in the increasingly lucrative business news and information sector. Just as the Times was making its announcement, News Corp. CEO Rupert Murdoch talked publicly about making the wsj.com site free as well. The combined public pronouncements show both how the online subscription model may be vanishing for news and the increasing possibility of greater head-to-head competition between the two major national publications, the Times and the Journal. Further, it raises new questions for the Journal’s major business competitor, the Financial Times and FT.com, as it strategizes its own business models.
Implications: Long-rumored, the demise of TimesSelect is no great surprise. But combined with Rupert Murdoch’s statements about the likelihood of the Journal dropping its estimated $50 million a year (983,000 online subscribers) business in favor of an open, free web site, it becomes another watershed moment in the online journalism business. The signal is clear to all news publishers — especially those with less global, less proprietary content-based brands than the Times and the Journal. That signal is that advertising will be the only significant source of revenue as the digital business grows and replaces, over time, the print one.
Such a strategy puts publishers in an awkward position. The strong two legs most publishing has stood on for decades — advertising and reader revenue — are being replaced by a one-legged balancing act. All the eggs are being placed in the ad basket. Outsell believes there is an immediate inevitability to the strategy, given the out-sized 20% growth of online advertising and the fact of omnipresent free news and information on the web. Still the strategy has its perils. Among those:
- While the online ad business is the fastest-growing one around, its growth is already slowing. Foregoing reader revenue increases publishers’ exposure to volatility of ad markets, and overarching economic conditions that affect ad spending more than they have reader subscription buying.
- For both the Times and the Journal, there’s a little-discussed link to another big source of revenue — print subscriptions. About 27% of Times revenue overall is driven by circulation currently. TimesSelect, in addition to creating a new revenue stream, offered another reason for print subscribers to keep their subscriptions, rather than opt for free access on the web. Now that reason is gone. The Journal itself has done some bundling of print and online subscription sales. Putting print subscription revenue at further risk is a concern as print advertising trends downward.
- By making its post-1986 archives free, the Times risks another revenue source — financial guarantees and royalty payments from aggregators, including LexisNexis and Factiva. These companies see open-web access to Times content as diminishing their own value proposition to customers and are likely to make that case with the Times — and with all publishers making archival content freely available.
- In a world in which almost all online news is freely available, and in which free daily newspapers are beginning to proliferate, publishers must be concerned that the paid model underlying their print products is eroding. Outsell believes the combined forces at work are inevitably driving general news sources — in print and online — inevitably to freer availability.