Times deselected

TimesSelect is dead. It was a cynical act doomed from the start. With it goes any hope of charging for content online. Content is now and forever free.

No one with sufficient experience ever thought that TimesSelect made good business sense. Oh, they talked a good game: It was another revenue stream to balance dependence on advertising, said the spin, . . . It was a tribute to the great value of the Times brand and its unique content ,. . . It was an opportunity to create added value worth added revenue. . . . It was a way to give print subscribers new benefits. Yada-yada-ka-ching.

Bull. TimesSelect represented the last gasp of the circulation mentality of news media, the belief that surely consumers would continue to pay for content even as the internet commodified news and — more important — even as the internet revealed that the real value in media is not owning and controlling content or distribution but enabling conversation.

I remember Alan Rusbridger, editor of the Guardian, giving a speech in which he ridiculed the revenue TimesSelect brought in. In his beloved PowerPoint, Rusbridger showed a picture of the new Times headquarters and said that the revenue from TimesSelect wouldn’t even pay the gas bill for the place.

The financial analyses of TimesSelect were always too simplistic — as if revenue were profit. The Times obituary for its service said that the service collected $49.95 per year or $7.95 per month from 227,000 paying customers at the end — 787,000 total customers, including print subscribers and, recently, academic readers given a free ride. The Times said it brought in $10 million revenue after two years, which sounds damned respectable. But no one ever mentioned the marketing cost to get that revenue. A magazine that costs $50 a year will spend almost that much acquiring subscribers. No one mentioned the extra editorial costs of creating more content to try to make the damned thing special enough to pay for. I never heard any calculation of the customer-service cost of maintaining that many customers, most of whom brought in no revenue. And then there was the question of how much revenue was lost in the Times archives, included in the deal. So though TimesSelect may have brought in revenue at a rate of $10 million at the end, it didn’t earn that much profit. I wonder whether it was profitable at all.

And TimesSelect cost the paper much more in the internet age: It took the Times columnists out of the conversation and reduced their influence in America and worldwide. Worse, it diluted the paper’s Googlejuice. Even as the Times acquired About.com, a grand demonstration of the economic power of search-engine optimization (where, full disclosure, I consulted for a year and a half), the company shut off some of its content from Google’s search and bloggers’ links. That was its greatest harm.

TimesSelect’s brilliant cynicism was that, when forced to find something to put behind a pay wall, they came up with content that was, indeed, uniquely valuable — the columnists and archives. But this was also content for which there was no significant ad revenue at the time (advertisers buy ads in food and travel but not opinion sections; there is essentially no endemic advertising for blather). Thus they made the good college try to prove whether or not a pay news service could work without harming the ad revenue of the business. Even so, TimesSelect hurt the larger brand and its position in the marketplace, in the conversation, and in Google. It was a short-sighted strategy.

I should add that this is apparently why the company just decided to make some of its archives free — great news for readers and for the paper, for it will bring in more traffic, more Googlejuice, and more revenue (and, besides, it’d be hard to charge for archives once they were perceived as free for most TimesSelect users). Oddly, the Times story says that archives from 1987 to present and from 1851 to 1922 will be free but there will be charges for reading articles from 1923 to 1986 (I smell a committee decision).

The bottom line is that the staff of the Times online did the best it could with TimesSelect, creating the richest service they could and probably garnering the largest paying clientèle possible — but still, it was a bad idea from the start. It turned out to be one expensive experiment, one bad investment.

But now everyone else in the content business can learn from the Times’ mistake. Rupert Murdoch has publicly toyed with the idea of taking down the pay wall around the Wall Street Journal online; I’d bet the odds of that just increased. If the Times and the Journal stop charging — and the Economist just took down its wall — then I’d have to imagine that the Financial Times will have to follow suit.

So much for the idea of charging for content — news content especially — online. Too much of it is commodified. There’s no end of free competition. The value is fleeting in time. The cost of charging is too high.

Whether or not content wants to be free, it is free.

Don’t let anyone tell you that this is bad for the content business. It’s only good sense. Having worked in the magazine business, I saw this even at the dawn of the internet: As I said above, a magazine has to pay up to $30-40 in marketing costs to acquire subscribers; it can pay up to $5-7 to print and distribute a copy of a glossy magazine; it has high editorial costs. Add that up, and a magazine can find itself in the hole $60 or more per subscriber in the first year of a subscription. And they get as little as $1 per issue in subscription revenue. Yet clearly, a magazine can make money because that subscriber’s value to advertisers is much greater.

It’s the relationship that is valuable. It’s the relationship that is profitable, not the control of the content or the distribution. That is the essential media moral of the internet story. It has taken 13 years of internet history for media companies to learn that, to give up the idea that they control something scarce they can charge consumers for, but they’ve finally learned it. That is the lesson of the death of TimesSelect.

: Here’s the Times’ announcement. Note that they sold American Express as a sponsor of the now-public opinion section. They are good at sales.

Here’s Staci Kramer’s report in PaidContent (hmmm, a name that has never been great but is now less-great than ever). She interviewed NYTimes.com GM Vivian Schiller:

The change is because of what’s happened in the internet in the past two years–particularly the power of search.” She added later: “Think about this recipe–millions and millions of new documents, all seo’d, double-digit advertising growth.” The Times expects “the scale and the power of the revenue that would come from that over time” to replace the subscriptions revenue and then some.

  • BW

    Saw this post coming down 6th Avenue in a cab.
    But I say that in good fun.

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  • Jim Smith

    Great post, Jeff.

    I am currently doing battle with the conservative minded folk at the South China Morning Post, who currently have a whopping great wall round most of their website – far worse than even the New York Times was.

    I’ve emailed them to ask them to read your post.

    Feel free to email me with any additional information.

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  • Steve

    I have been subscribing to the paper Sunday paper just to qualify for Select and the archives. if that’s all free now, I guess I can cancel, no?

    Also, I loved “Yada yada kaching.”

  • http://billkosloskymd.typepad.com/lexicillin_qd/ Bill Koslosky, MD

    Great post, Jeff, I’m been waiting to hear confirmation about this story.

    I agree that the WSJ and Economist need to remove all cash barriers with the proviso that they maintain the quality of their reporting. If it means laying off their staff as economic justification, then I’d rather pay the subscription fees.

    In a way, the WSJ is moving incrementally towards free-as-in-free-beer online journalism, by allowing open access to their blogs. Their healthcare blog is a wonderful resource.

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  • Steve

    Me again.

    Jeff, I just read your post again.

    You have written one clear, cogent, and definitve analysis. Old models die hard, but when they do they need an obituary worthy of the magnitude of the event. That’s what you’ve written.

    You know who I was thinking of this morning after I read about the demise of Select? The times Internet ad sales person who woke up today and said: “Oh shit, you mean now it’s all on me? (Not that he or she hasn’t been thinking about this for a long time.)

    The other person who probably had an “Oh, Shit” moment, although I’m sure he or she has had many of them already, is the print ad sales guy. Oh he’ll hang on for a while, and even make some money , but sooner or later……..

    By the way, those newly liberated archives are a valuable commodity. And if the real money wasn’t going to be made by putting a wall around them, I see no reason to now not find a way to the gets some serious cash (ads) when a demented academic like me needs the September 3, 1939 frontpage article about Harold Ickes. I have been happily paying archives for these articles for quite awhile.

    In fact, just a thought, but the really old archives — given the very specialized needs that people have for specific articles — might still have some “pay for content” value. The difference between this stuff and all the other content is that , when you need an old article , you generally need it for a specific reason, uou need it quickly, and it often is not available anywhere else.

    I can think of many articles from the Los Angeles Times’s excellent archives, from which I get an actual photograph of the article as it appeared on the page, for which I was willing to pay a fairly elastic price.

    But I know what you’re thinking, and you’re probably right: With a little ingenuity, they can make more money figuring out a way to make me look at a bottle of Stolichnaya on the way to the article about Harold Ickes.

    Today, Buzz Machine was truly a must read.

  • http://livebythefoma.blogspot.com yellojkt

    A great synopsis. I am glad to be getting Mo MoDo again. They were only cutting off their nose by restricting access to their most identifiable brand feature.

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  • http://theobstructionist.com/ Seth

    I think there earlier decision to charge actually caused a much-needed fundamental shift. When it happened, me and just about everyone I know changed our homepage from NYT.com to Google. It’s great that there backtracking, but I don’t see how they can ever really recover the online market now that the iron is so set. I doubt they will ever again become my main source of news.

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  • http://www.subhub.com Evan Rudowski

    Jeff,

    I admire you and your analysis a great deal but I think you’ve jumped to too much of a sweeping generalization here, and it’s one we will surely see a lot of from the other bloggers who cover, as you do, Big Media.

    Before the “paid content is dead” bandwagon picks up too much steam here’s one contrary view to hopefully be heard above the celebratory horn honking and cymbal crashing.

    The decision by the Times to drop its subscription firewall proves nothing about whether all content on the web should be free or paid for. It is relevant only to the economics of Big Media, and in that context it is indeed a wise decision, for all of the reasons you cite.

    The Times will certainly make more money by opening up its highly regarded op-ed columns and archives, driving more Googlejuice to its range of content overall, increasing audience size, and thus generating more from advertising and sponsorship than it would have from subscriptions. The decision enables the Times to gain the full benefit of the broad scale of its content and audience. Times Select ran contrary to this, reducing the scale of the opportunity for the Times, which after all is fundamentally a business built on scale.

    This is not true for all content businesses, many of which are highly specialized and are not commoditized as most Big Media tend to be. “Content must be free” just doesn’t ring true for publishers that provide unique, actionable and measurably valuable content targeted at well-defined niches. This does not describe Big Media but it does describe the many thousands of industry newsletters, hobbyist publications, health letters and many other publishers.

    The web is full of these niche, specialist sites and many of them do very well indeed with a subscription model — far better than they would from advertising — and the Times’ decision today will have zero significance for them.

    As you are an advocate not only for the future of Big Media but also for the future of journalism, I would expect your position to be more nuanced. What’s good for Big Media on the web is not necessarily good for journalism. Journalists deserve to be paid for their work and sometimes that work is so unique, valuable and non-replicable that it justifies payment and the audience is glad to pay it because the content is worth it to them.

    It goes without saying that it is up to the content creator to deliver content that is worth paying for, and if they cannot then they deserve to be commoditized or cannibalized.

    This incessant drumbeat that “all content must be free” does no service to the many journalists and publishers who need to enjoy the proceeds of their work in whatever form is most appropriate. It is a blunt, non-discriminating sentiment that if widely accepted would make it that much harder for smaller, specialized publishers to earn money from their efforts. In a perverse way, this would be good for Big Media as it would undermine media diversity and thus competition.

    Not all content always deserves to be free.

    Best wishes,
    Evan

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  • http://roborant.info Rob

    I’m not a listener, but I imagine that Rush Limbaugh would laugh himself silly reading this post.

    After all, he’s got thousands of people paying $50/year for access to the members-only part of his website.

    Jeff, I think you need to modify your thinking just a bit (or maybe just your semantics): There will always be CONTENT that people will pay for. It’s just that NEWS isn’t in that class. Unless you meant that all along and were just using the word “content” to mean “news”.

  • http://adcontrarian.blogspot.com Bob Hoffman

    What a lot of hoo-ha over nothing.

    The Times decided they could make more money selling their content to advertisers than to users. The tv networks figured that out 60 years ago.

    This is news?

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  • http://www.brijit.com/homepage.do Brijit

    Nice obit, Jeff. Hard to argue that Times Select wasn’t doomed to fail from the start. Commodity content gets commodity pricing, so the price of news goes to zero. Great for the consumer… unless, of course, our unwillingness to pay for content makes it impossible for the unique, high-quality, low-volume, long-form publishers to make a living, in which case we all lose.

    Wouldn’t it be ironic if the New York Times, which holds itself up as a bastion of editorial integrity and quality journalism, helped kill both?

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  • http://www.webomatica.com/wordpress/ Webomatica

    If the Times had a nickel for every time I clicked on a link to their site – and realized I had to pay, and then quickly hit “back”… well they’d have a lot of money. But needless to say, I never found it essential to pay so all those nickels never got to the Times.

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  • http://blog.syracuse.com/newstracker Brian Cubbison

    Pizza wants to be free!

    1. Give away pizza.

    2. Sell advertising on the box.

    3. ???

    4. Profit!

    Actually, the Times is probably making the right move. But I hope we don’t end up with the whole economy based on selling ads for goods and services no one wants to pay for.

  • http://www.buzzmachine.com Jeff Jarvis

    Brian:
    Brilliant! Pizza 2.0! I’m sure we can find a few million in venture capital to fund it. And hell, why limit it to the box! We can put ads on the pepperoni: a new standard IAB unit. Antacid is an endemic category. We can start charging based on CPB — cost per bite! Sign me up….

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  • Steve

    The Free Panic is ON:

    3:12 PM (2 hours ago)

    I.B.M. to Offer Office Software Free in Challenge to Microsoft’s Line
    from NYT > by STEVE LOHR
    The company plans to announce the creation of I.B.M. Lotus Symphony, free programs for word processing, spreadsheets and presentations.

    I’m ready to cross the line. I want my children to be free. All these costly little creeps need is a tatooed Pepsi logo on their forehead and advertiser supplied clothing.

    I’m ready.

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  • http://www.howardowens.com Howard Owens

    1851 to 1923 = Public Domain
    1923 to 1986 = Associated cost to digitize
    1986 on, already digital.

    No committee. Just reality.

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  • Anon

    Did it ever strike you people that the NYT thinks it may not be able to influence the 2008 elections from behind the firewall?

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  • http://marginalizingmorons.blogspot.com/ CaptiousNut

    I guess the Times figures now that their credibility is totally shot – outside their Myrmidonian tribe – that they can now safely release the errata euphemized as “archives”.

    Jeff, shouldn’t they open comment threads on the archives? That would seem to be the crux of facilitating “conversation”, would it not?

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  • Abel

    “I think there earlier decision to charge actually caused a much-needed fundamental shift. When it happened, me and just about everyone I know changed our homepage from NYT.com to Google.”

    Why?

    All the news was still free, only the columnists were behind sub walls. What indispensible Google columnists were you reading?

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  • Jeff

    Not to look backward here, but this is the television model — content is free for users, paid for by advertisers. (Similar to the way most magazines work, where subscription fees cover postage costs and not much else. How else could you get Esquire for $8/year?) In order for this to work, online ad revenue has to increase exponentially. What no one seems willing to admit is that unrestricted public access to newspapers’ websites is largely subsidized by those papers’ print subscribers and advertisers.

    For newspapers, print ad revenue is dropping and online ad revenue is increasing, but the actual dollar amounts paint a grim picture. In Q2 2007, online ad revenue was $796 million. Print ad revenue was $10.5 billion. Physical production and distribution sure as hell don’t solely account for that difference.

    Either online advertising has to get much more expensive (or frequent), or reporters have to suffer huge layoffs and salary cuts and we, as a result, will be left with lower quality coverage and less of it. Something’s got to give. “Free content” sounds great, but it ain’t gonna come free. If, as you write, the relationship between a newspaper or magazine and its readers is so valuable to advertisers, why isn’t that value reflected in online ad rates?

    Another concern is that news content could follow the downward trend of television content, and we’re left with the equivalent of cheaply produced reality shows and sensational, marginally revelant local news and all the “quality” content still costing money (eg, HBO & Showtime).

  • Ted

    I feel sure the ware the archives are provided reflects copyrights. The earliest stuff is guaranteed to be in the public domain. The middle stuff probably reflects the fact that the Times published some pieces to which it bought only first serial rights and which are now copyrighted property of the individual authors (or their literary estates). The later stuff being available probably reflects the Times taking note of the dawn of the digital age, and updating its contracts and terms of publication to retain archival rights.

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  • Sam Abrams

    How come the NYT is still charging for the online crossword puzzle?

  • http://newshare.typepad.com/newshare Bill Densmore
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  • Geneva Overholser

    Jeff,

    Your post is interesting as always, but I question where you get your notion that advertisers never wanted to be on opinion pages. It’s true that they rarely HAVE been on opinion pages but, in my experience as a newspaper editor, that was because we never let them be. We felt that the opinion pages (like the front page and section fronts) were brought low by advertising. We keepers-of-the-flame editors stood our ground against this incursion, wisely or not, much to the chagrin of advertising directors. So one interesting twist here is that the TimesSelect experience helped bust that old barrier.

    Geneva

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  • http://markivey.typepad.com/onthemark/ Mark Ivey

    “…Even so, TimesSelect hurt the larger brand and its position in the marketplace, in the conversation, and in Google. It was a short-sighted strategy…”

    Good points, but I think it comes down to the old media evolving to the new media and marketplace. Most of the publications like the Times, Wall St. Journal, etc, are still reporting and writing stories the same way they were when I was writing for BusinessWeek 15 years ago.
    Wake up–the world has changed. Bloggers, social media, YouTube–all are reshaping the media landscape. I posted about this and potential suggestions on my site. But you have to ask, at the end of the day: Can a leopard really change its stripes? Can these institutions fundamentally change the way they do business?

  • http://www.gwu.edu scott Talan

    I am a media professor and what is still not clear to me is if there are any restrictions on accessing everyday regular NY Times material?

    Do you need to be a subscriber to the newspaper?

    If not, do you need to register?

    I want my students to read the times and seeking to find out more….

    Scott Talan

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  • Sabrina Jaszi

    Hi Jeff,

    Great post. It really cleared up a lot for me.

    I’m currently working in Ukraine for an online and print magazine all about trends in mass media called Telekritika. They want me to write an article about this “new” trend towards free online content. The idea of the article is to demystify the process of revenue through online advertising for a community several steps behind in terms of online readership, and popularity of the online medium. That is to say, that in Ukraine, most publication offer their online versions for free, but have not yet figured out how to make a profit, or much revenue at all, from advertisement.

    Any advice for Ukrainian journals and newspapers just starting out online? If this is something that interests you, let me know, and we could talk further about it.

    Sabrina

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  • http://clearcastdigitalmedia.com Matthew Chamberlin

    Wonderful post. Linked back to it on my blog.

    Information is out there and it’s free. That is not to suggest that there is NOTHING worth paying for online, but you have to do a better job picking your spots.

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  • Desmond Lazinsjie

    Its not just the Times Select that is gone. Looks like they have opened up a lot of free public domain content from the very beginning of the archives:

    http://googlemapsmania.blogspot.com/2007/10/nytimes-archives-hack-google-maps.html#links

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  • http://www.financialspreadbettingsystem.co.uk financial spreadbetting

    The Times have again started charging to use their website.

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