Perspective: TimesSelect is all about the print model, not digital media
I've had a few days to chew over the Times' announcement that they'll be charging $50 a year for TimesSelect, which offers access to the archive back to 1980 as well as to op-ed and columnists. Here's my off the wall assessment: This is not a move to make the online nytimes.com profitable so much as it is an effort to shore up circulation figures for the print paper.
After all, as Doc Searls pointed out in his closing keynote at Syndicate, print carries huge, gargantuan infrastructure costs - the Times owns and leases more than 5 million square feet of space.
By selling access to archives at roughly $3 a pop, the Times Online generated about $1 million in revenue. Pretty small potatoes for a company that creates $3 billion in revenues and $500 million in operating profits. So clearly they need to better and one-price-beats-all is an appealing approach.
But how much value can they really extract out of old news (today's news is tomorrow's birdcage liner)? Consider that 2004 circ revenues were over $600 million and that circulation is down at the Times 1.2% from 2003. (Circ earned $87 million from their regional papers, down 1% from '03.) [Annual Report (PDF)]
To see how much value the Times ascribes to digital archives compared to circulation, consider this: TimesSelect is a freebie for folks who subscribe to the printed paper. The bottom line is that by charging for the online Times, the value of the printed paper is enhanced. Why join TimesSelect for $50 when you can get the daily paper AND online access.
Locking up archives and columns behind a paygate hurts the online advertising business, hurts the Times' visibility online (google doesn't archive pay-only pages), and will generate relatively modest revenue in return; even if they increase revenue 1000%, that's $10 million. By contrast, if the Times can increase circulation 10% (at least in part by the added benefit of free access to the fee-based website), that's $60 million in revenue (not profits.)
A newspaper's website is an extension of the paper, not a freestanding business. There are numerous things the website can do to support the printed paper but ultimately that's what it does. That's what the Times is asking of its site whether its really knows that or not (I suspect they do). Ultimately, this is problematic because the costs of running a national printed paper are so high.
Unlike Doc, I wouldn't suggest the Times charge for today's news and give the archive away. I would actually suggest that today's paper be available online not today but tomorrow and that the archive be given away for free. Everybody loves to talk about the Times, from the anti-MSM bloggers to Berkeleyites. The Times could encourage this, put itself out there as the source material for people to annotate, explore, deconstruct, etc. They could actually use technology to find ways to organize, display, link to the many ways bloggers interact with the content. They could sell advertising on all of this. They can insert references to Times content in About.com pieces. They could offer a Google Adwords-like feature to website operators (include links to Times articles based on your content). They could develop premium, for-pay content.
What they are doing is something different, something ever so Old Media: they are beefing up their circulation numbers.