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.
