Times Select Cancellation Leaves NYT "Balancing" on One-Legged Stool

It's been a simple news industry precept: two legs are better than one. Reader support and advertiser support. Balance. So the New York Times' decision to eliminate Times Select tonight at midnight leaves its emerging online business in a more precarious state -- in that one-legged balancing position that any yoga newbie knows is a tough position to maintain.

But it's a balancing act that news publishers everywhere are reluctantly accepting -- it's an ad, ad, ad world -- and the notion of mere readers paying for news is now obsolescent.

I've got little doubt that the Times can recoup the $10 million it has been earning annually from Times Select, as it multiplies page view and as increasingly targeted advertising directed at high-demo readers kicks in. But this decision means several things to the future of the Times -- and the daily news industry, which is watching carefully from the sidelines.

The obvious one is the complete reliance on advertising as the only substantial future revenue driver. Not only is the Times giving up on the idea of subscriber revenue. It is placing in jeopardy other millions of dollars it now takes in on licensing of its archives for use by such companies as Lexis Nexis and Factiva. As part of its Times Select termination, it is making its recent (post-1986) archives free to the public. Those archives -- behind firewalls -- generate streams of revenue to the Times. And look for licensors to be paying the Times lots less in financial guarantees going forward, as availability on the free web raises questions of value.

The near-total reliance on ad revenue means redoubling and re-tripling efforts to get the online ad business right, maximizing traffic and yields. Sure, these efforts have been underway for years now, but many news companies continue to underperform web companies in sheer execution.

The stealth problem created I believe though is around print subscriptions and print circulation revenue. Of those 787,000 Times Select customers, almost a half million -- 471,000 -- are print subscribers who've gotten TS for "free." That's a retention strategy, and one that goes by the board as print subscribers look around and say, "I don't need to be a subscriber to get archives and Frank Rich." I can't believe how many people -- well-schooled, well-heeled, appreciative of journalism  types -- tell me that they've dropped their print NYT sub, just relying on the web. There's sometimes a twinge of guilt, but it passes quickly.

Sure, Times Select may not have been the best retention strategy, but retention of a half-million Times subscribers just got a bit harder

There's an inevitability here, well-cheered on the web, and now that it's done, best to make the best of it.

Yes, it will be good for the Times and the country to have its best voices a full part of the national and global conversation as we head into an election. Yes, it will be good for the Times to remove its cloud of uncertainty (some things free, some paid -- columnists, Times Tracker, Times File), approaching the competitive reader marketplace cleanly. And, finally, yes, it will be good for the Times to get all this done pre-Novermber, when Rupert takes over the Journal and begins making his own "free" moves.

More on Times Select and the New York Times overall, here. 

Comments

[Bill Densmore]

There's a middle ground:
http://newshare.typepad.com/newshare/2007/09/old-new-comprom.html

[ahoving]

Look, everybody, here's the business model:

Integrate Google AdWords into all but the hardest news (wars, famine).

Here's what the NYT would call "the backstory":

I dropped my subscription to the print daily not long ago (but kept the Sunday sub -- which gave me free access to TimesSelect). One Sunday, I was reading a food piece in the print edition of the Magazine. When I went online to find it a day or two later, I noticed that the only hyperlink in the piece was to Al Gore (don't ask what he was doing in a piece on leeks!). The link took you to NYT news articles on Gore. Really dumb.

So here's my proposal: How about letting advertisers buy relevant text links EMBEDDED in the articles. If the article is about scallions, let Gourmet Garage sponsor that link. And signal to the user that it's an ad link by using a different color (green, maybe) or a double underline like Vibrant Media uses (but DON'T use annoying popups, just let it be an unobstrusive link).

I know the editorial side will scream bloody murder -- just like they did about the very profitable advertorials I produced for years at New York Magazine. So let's not use the "ad links" in the hardest news stories about war and famine. That leaves, like, 75% of the lighter content -- including auto, fashion, travel... big money ad categories.

We maintain the same ad/edit wall that exists in print (where even The New Yorker runs advertorials). We tell the reporters: "Ignore the ads; just keep doing the great impartial journalism you've been doing. We'll take care of the business."

[Jack]

True. But ultimately, who pays for the $300 million the Times spends each year on its news budget? Certainly there is no indication that online advertising comes anywhere near to generating the kind of revenue that would pay that bill among others, not now and not in the foreseeable future. I keep looking for a cogent answer.

[Glenn Fleishman]

A couple of thoughts on this great commentary.

First, seems like the Times created this awesome pent-up demand. Won't a flood of readers run through the doors when the paid padlocks are removed tonight? It seems like by making the Select content more special, they now have a huge audience that has been set up to believe that it's more valuable than it was, even though it's now free.

Second, is the Times still reaping huge rewards from Lexis Nexis and Factiva? My local library gives me full access at no cost (except my tax dollars) to many huge newspaper and periodical databases, and do many libraries around the country. Students no longer pay for these services while at school. The Times had made available its TimesSelect to something like 500,000 people at academic institutions by their own numbers.

I would suspect that those that subscribe to Lexis and Factiva will continue to do so because of the sheer value of the collection and its paring down ability, and that most of the subscriptions are likely sold at a corporate level. The Times has less negotiating power, but if they can move the paid database queries to Web-ad sporting pages, they may recoup more than the lost revenue. And they have to have a plan: that money wasn't going to keep coming in forever.