The NYT Concedes Defeat

It took awhile but the NYT finally got it that charging consumers to access certain parts of its online content isn’t economically viable.

Two questions: what took it so long to come to the realization, and how did the NYT think it was going to be any different from any other newspaper the (WSJ excepted) that has tried to implement a walled garden of any kind.

Sure, the NYT is a high-quality paper but when there’s so much free content on the Web getting people to pay for a subscription is like trying to make a cat take a bath. So good for the NYT for accepting the fact that maybe it can sell advertising beside some of its featured columnists and archives.

Truth be told, TimesSelect was an pretty interesting experiment that attracted about 227,000 subscribers and $10-million in annual revenue. But the growth clearly wasn’t there to justify the status quo. The silver lining is the NYT’s online business is popular – it attracts 13 million unique visitors a month, according to Nielsen/NetRatings, while Comscore ranked the NYT’s digital operations, which also include About.com, as the 11th most-visited in July with 42.7-million subscribers.

So let’s do some back of the napkin math on what the end of TimesSelect could mean economically for NYT. Let’s assume, about 20% of the NYT’s content was behind the walled garden. Now that it’s free, the NYT could add another 2.6 million unique visitors. Let’s assume, the average online NYT reader consumes a healthy 20 pages/month. This would give us 52 million more page views a month.

If you can generate $20/CPM per Web page from these additional page views, that’s $1-million of revenue per month or about $12-million a year. (Note: I completely expect that Henry Blodget is crunching the numbers as we speak, and will produce a detailed spreadsheet soon).

If you look at the numbers, the NYT’s decision makes sense. Too bad it decided to bang its head against the subscription wall for so long. Although some will portray this move as yet another sign of doom and gloom for the newspaper industry’s future, I think it could serve as a major wake-up call that the way newspaper operate really has to change – and I mean more than launching a few blogs.

Update: TechDirt said the NYT should be congratulated for making the right decision while questioning why it took so long. There’s renewed speculation about when the WSJ will drop its subscription model, while Paris Lemon thinks ESPN should get rid of its fee-based ESPN Insider service.