Monday, January 10, 2005

Subscriptions and the New York Times

The cover story of BusinessWeek is "The Future of the New York Times".

Apparently, the online version of the New York Times is quite profitable ($17.3M net on $53.1M of revenue in Q1 & Q2 2004). Despite this success, the paper is considering requiring online subscriptions.

It's a little curious. Only a few months ago, the Wall Street Journal experimented with allowing unrestricted access to its content to see the impact on its traffic. Now the New York Times is considering restricting access to its content to paid subscribers.

The BusinessWeek article spends a fair amount of time on the distinction between subscription and "free" news websites. It's isn't really correct to say the New York Times is free for users. It isn't uncompensated; it is supported by advertising. Readers pay for the content by viewing advertising.

Google is compensated and compensated quite well by users of its "free" search engine. On average, Google makes 54 cents per click on an advertisement and nearly 17% of searches end in a click on an advertisement.

Rather than destroying their traffic by restricting access to their content, perhaps newspapers should improve the relevance and usefulness of their online advertising.

[BusinessWeek article via Steve Klein]

Update: As Maarten pointed out (in the comments), I made a couple mistakes in my original post. They have been corrected.


Maarten said...

Apparently, the online version of the New York Times generates 33% of the NYT's revenue I think you misread that, Greg.

The article says "New York Times Digital netted an enviable $17.3 million on revenues of $53.1 million". In other words, NYT Digital as a division has very healthy profit margins. Later, the article says: "A majority of the paper's readership now views the paper online, but the company still derives 90% of its revenues from newspapering."

And Batelle's "nearly 17% of searches" has become "nearly 20% of searches" here. That's a nearly 20% increase from one weblog to another :) , while it isn't totally clear from Batelle's post (and following comments) whether the clicks are really all from searches or some from in-context ads on other sites.

Greg Linden said...

My mistake. I corrected the article. Thanks, Maarten, for pointing them out!