On the fallacy of locking your online content…

Fascinating denouement to a two year experiment in revenue seeking for online newspapers, that was widely loathed from the beginning. It seems that the Times Select experiment did little but rob some of the New York Times best writers of their online audience and, therefore, influence. Jeff Jarvis explains the difference between ‘revenue’ and ‘profit’:

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.

PS: if you know an editor, trustee or owner who should read this story, don’t stint, pass it on!

  • Cormac

    Perhaps someone should inform the Irish Times?

  • Great, if only because my three-month freebie is up shortly.

    Now, what’s the chance of a similar bolt of sanity at (say) 24-28 Tara Street, Dublin 2?

  • Dawkins

    Yes, and papers here should take note if they’re charging for subscriptions. I don’t have research data but my gut feeling tells me that peeps notice online advertising more than print ads, especially when there’s Flash animation involved. This could prove a more lucrative source of revenue in the long run.

  • Cormac

    You only have to look at the descriptions on the Guardian’s world news guide for the ROI to see the sorry state of the traditional print media’s online presence – registration, subscription, more registration etc

    http://www.guardian.co.uk/worldnewsguide/europe/page/0,11376,622977,00.html

  • Dawkins

    Cormac,

    They’ll learn. Is the Irish Times worth reading BTW?

  • Cormac

    Dawkins:

    As much as I hate to say it – it’s not the same since Kevin Myers left! Disagreed with him 90% of the time, but the guy could write (and enrage!)

    It’s a damn sight better than the Indo, though, even with KM.

    …not sure I’d shell out for it, though. Subscription AND banner ads? No thanks (very RTÉ, btw – licence fee AND ad breaks)!

  • Dawkins

    Cormac,

    Kevin Myers isn’t my favourite peep, but boy can he write and argue verbally!

  • Cormac

    Without seeking to derail the thread, his article on the German ambassador’s supposed gaffe was particularly good.

  • Dawkins

    Cormac,

    Agreed! And I don’t think you’re derailing the thread — if the article hadn’t been available free online, I for one wouldn’t have seen it.

  • Dewi

    It will be interesting to find out what, in the fullness of time, economic model succeeds. The type of newspaper sites that are interesting are the quality newspaper ones. Cost money and can’t be done for ever for nothing – bit like Slugger I suppose.

  • merrie

    The London Independent realised a couple of years ago that trying to make people pay to read their columnists did not work. We just avoided that part of the newspaper.

    And it led to The Guardian having its “Comment is Free”

  • Nestor Makhno

    Imm, have to confess I use Firefox with Adblock that removes almost all advertising from a site (including Slugger’s). As more people begin to do this, what will happen to site revenue?

  • Dawkins

    Nestor Makhno,

    Naughty boy! You’re helping spoil Slugger’s chances of extra revenue by posting that.