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Posted by: Dale Franks on Wednesday, January 18, 2006

I don't get it. After months of trying to make a little cash off of "TimesSelect", the New York Times subscription picture for TS looks like this:
The Times has been reluctant to provide the most recent data on TimesSelect subscribers, last revealing more than a month ago that some 270,000 people had signed up for TimesSelect. About half of those are believed to be print subscribers who receive complimentary Web access as part of their home delivery plan.
So, basically, the supposed national newspaper of record has racked up 135,000 subscribers, after a year of pushing TS, putting their premium content behind a firewall, and—get this—preventing you from even talking to their select columnists.
Back in September the Times asked the hundreds of papers who publish the Op-Ed contributors through The New York Times News Service (NYTNS) to stop printing the writers' e-mail addresses with the columns (and to take the columns off their Web sites, too). Apparently not everyone got the message, because last week the Times' syndication service sent out an advisory reminding its client papers to remove the e-mail addresses.

"If you are not a TimesSelect subscriber you won't have access to that e-mail functionality," Times spokesman Toby Usnik confirmed Tuesday. "It centralizes [the columnists' e-mails] around the TimesSelect site."

But instead of being able to put an address in a mail program and firing it off at your leisure, TimesSelect subscribers now have to fill out an online form similar to the generic feedback forms found on many Web sites.

"I think it is a bad idea," said Keith Runyon, opinion editor at The Louisville (Ky.) Courier-Journal, which runs all of the Times Op-Ed columnists. "Our goal is to give readers as much information as we can." Steve Smith, editorial page editor at The Republican in Springfield, Mass., which also runs the Times' columnists, agrees. "I would prefer that readers be allowed to e-mail columnists directly," he said. "We don't make readers pay to comment on editorials"...

Usnik denied that the limit on e-mails was an effort to get readers at newspapers syndicating the columnists to pay for TimesSelect instead of their local paper. "That is not the intent," Usnik said. But when asked what those newspaper readers should do to be able to contact the columnists, he urged them to sign up and pay the additional fee. "The recommendation would be that they consider subscribing to TimesSelect."
I'm still trying to figure out the business reasoning behind TimesSelect You gotta love the reasoning on display in that last paragraph. That's not our intent. It just works out that way.

I'm still trying to figure out the business reasoning behind TS. NYT Online has to be making the lion's share of its revenues from banner ads on the pages. And, if I was an advertiser, I'd be a lot less willing to pay money for a banner ad on a page that only 200,000 people a day see, as compared to a page that 1,000,000 per day see. So, it seems to me that you'd need a lot of subscribers to make up for ad revenue losses.

If I run through the math, I guess that, with 22 columnists behind the TS wall, then all the premium video, photo essays, podcasts, and free access to the archives, they've got about 50 pages of content at any given time.

OK, so the NYT charges 49.95 per year, per subscription. 135,000 or so of those subscriptions come free with the print edition. So, TS makes about $4.16 per month, per subscriber to TS alone. That comes out to about $562,000 per month for pure TS subscribers.

So, if TS has 50 pages behind the firewall, then, to make the same amount of money every month, they have to sell an average of $375 in ads per page, per day.

I don't know what their ad rates are, so I don't know if that's doable or not. But the thing is, if walling off their columnists reduces web site traffic overall, they have to lower their ad rates for the entire web site. So, it's not just the ad revenue from the TS pages themselves. You have to wonder how lower traffic—and I think that walling off Kristoff, Krugman, Friedman, and Tierney undeniably kills a lot of traffic—hits the overall ad revenue for the whole web site..

Let's say that you have 300 pages on the whole web site at any given time. (Yeah, there's a lot more than that, but let's take 300 as the maximum that anyone will be interested in looking at, at any given time.) If so, you only have to make $62.44 per page per day in ad revenue to equal the revenue from TS.

Now, maybe that works out fine. Let's say that, before TS was rolled out, NYT Online was making $200 per page in ad revenue. Then with TS, the reduced ad revenues that would come from lower overall traffic, even if you had to cut rates, as long as you don't cut your page revenue average below $137.66, you're better than breaking even. So, even if you cut ad rates by 25%, you end up making more revenue in TS subscriptions than you lose in ad revenue.

The thing is, if Times Co. was actually raking in extra cash off of TS, then why aren't they trumpeting it to their shareholders? Why are they so cagey about releasing subscription numbers?

But, OK, let's say that TS is a better than break-even prospect financially, right now. Even so, wiping out a significant portion of your traffic—which had previously been growing, especially with the rise of the blogosphere—and making a significant portion of your web site essentially disappear off the Internet behind a subscriber wall has to have a pernicious effect on future ad revenue growth. If, two years from now, TS is still at 300,000 or so subscribers, and revenue growth from ads has stagnated, then TS begins to look a lot like an albatross. I mean, if you're gonna kill ad revenue growth by slashing your own web traffic, then the only way to make the site a paying proposition is to constantly increase the subscriber base.

I know the business models for print and web aren't exactly the same, and the costs are certainly different, but the principles are the sameBut that's not how the paper edition of the paper makes money. Subscription fees for most papers don't come anywhere near covering the cost of printing and distributing the paper. The real money is in ads. And ad prices rise based on the number of eyes that see the ad. Theoretically, I suppose you could raise the price of a paper subscription from, say 75¢ to $2.00, and subscription fees at that price would be profitable, at the current level of subscription.

Of course, at that price, probably more than half of the subscribers would cancel, and newsstand sales would probably dry up almost completely. That would, in turn kill ad revenues, because no one is interested in buying ads in newspapers no one reads. So, a daily subscription price of $2.00 would be the kiss of death, in the real world, no matter how good it looked on paper. I mean, Jebus Cripes, the Wall Street Journal only charges paper subscribers about 65¢ per copy, and they have a captive subscriber base in many ways, because they're really the only major business daily in the country, so a lot of their customers have to buy the darn thing.

On the paper side of the business, they accept that subscription fees are really just nominal sources of revenue. It's the ads that are where the money is. The subscription fees basically cover the delivery of the paper, and that's all. So, if that's true of paper papers, why isn't it equally true of web papers?

I know the business models for print and web aren't exactly the same, and the costs are certainly different, but the principles are the same. In the real world, you wouldn't offer paper subscribers the NYT for 50¢ per copy without the Opinion section, and $2.00 per copy with Opinion included. If you did, you'd rapidly find that you no longer needed to actually print an Opinion section. Indeed, you might find that you no longer needed to print a paper at all.

So, why would you do that to web subscribers?
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Previous Comments to this Post 

"the Wall Street Journal only charges paper subscribers about 65ยข per copy, and they have a captive subscriber base in many ways, because they’re really the only major business daily in the country,"

Try Investors business Daily (IBD).
Written By: SkyWatch
URL: http://
IBD is really an investor’s paper, not really a general business newspaper like WSJ.
Written By: Dale Franks

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