Sunday, September 18, 2005

Why TimesSelect Won't Work

Web-based political commentators from all schools of thought are united in their disapproval of the New York Times' new fee-based service, TimesSelect. For 49.95 39.95 (special limited-time offer) a year, subscribers get exclusive online access to the Times' op-ed pieces, a news archive back to 1981, and assorted other fluff no one cares about (does anyone actually use personalized email alerts for anything?). Many bloggers have pledged to stop linking to the NYT altogether until it abandons TimesSelect as a protest against the service. E&P's Steve Outing offers a good breakdown of the issues and rationales behind the paper's controversial decision to go directly for its readers' wallets. It seems the chief driving force behind TimesSelect, according to New York Times Digital president Martin Nisenholtz, is that the print edition just isn't paying the bills anymore:
For the Times to continue to be able to afford to do quality journalism in the future, a way must be found to make the digital operation more profitable -- reflecting the inevitable move in the coming years away from print and toward online. As more readers -- especially younger people -- shift their reading habits to the Internet and move away from print, the digital side must bear more of the weight in paying the costs of the Times' journalism.
I understand the need to turn a profit, but is it feasible for a paper to rely on the Internet to provide a significant fraction of its revenue? It's well-known that web users don't like to pay for online services, but the Wall Street Journal has been bucking that slice of conventional wisdom since 1996 by operating the world's most popular subscription news site (712,000 customers as of Q4 2004). Of course, there are a couple differences between the two papers: for one, the WSJ has been charging its users from the start, so it engendered no feelings of commercial 'betrayal' among its online audience. Secondly, the Journal pays a hefty price for running a closed shop: Google doesn't index its subscription-walled pieces, and very few bloggers refer to them. In fact, the only section of the paper that's widely blogged at all is its opinion page--because it's free.

Also, I'd opine that the Wall Street Journal's subscription model only works because it's the only major national daily that makes its readers pay for online content. Serious news consumers may be able to handle one annual subscription to a high-quality paper, but what if the NYT, the Washington Post, and the LAT all decided to start charging? We aren't at that point yet, obviously, but because the financial considerations noted in the quote above aren't particular to the New York Times, we shouldn't be surprised to see various subscription models popping up at other big papers' sites in the near future. On the web, however, most people don't read entire papers--they might read perhaps one or two articles per paper per day, and that's not enough to justify a subscription to any one site.

For all these reasons, my guess is that TimesSelect will go bust pretty quickly. Note well the following, again from the E&P article:
The goal won't be met with TimesSelect subscription numbers in the tens of thousands, Nisenholtz says; it needs to be in the hundreds of thousands in the early years, and even more over the long term.
Barring a dramatic shift in online news consumers' spending habits that's completely at odds with all past behavior, the NYT's never gonna reach those numbers. It took the WSJ eight years to build up their 700k+ subscriber base, and that represents a best-case scenario. Newspapers all over the country are struggling to adapt to their new online presences, atrophied staffs, and lost market share to TV, radio, and the Internet, all of which underscore the urgency of seeking out new revenue streams. But direct subscription models won't do much more than ice the profit cake at best, and that's only for the largest national dailies. Without genuinely fresh ideas about how to extract money from Internet readers, the old gray papers will fade and perish quickly.