NYTimes reports that their TimesSelect program (which provides access to op-ed content and archives, among other things, for $50/year or $8/month) now has 270,000 subscribers just two months after launching. Half of that number represents paying users; the other half gets TimesSelect free as part of their home delivery subscription. According to my back of the envelope calculations:
- Assuming 10% of paying users are on the $8 monthly payment plan and the 90% have the $50 annual package, the average paying subscriber contributes about $54.60 in yearly revenue
- At 135,000 paying customers, then, NYT TimesSelect makes about $7.3M in annual revenue.
Given the sorry state of newspaper circulation numbers, I think NYT is smart to experiment with business models that aren’t based on advertising. They can and should be able to scale their subscriber count significantly from where they are now.
The WSJ–which has been recognized by many for providing an outstanding online service–requires users to subscribe before they can access any content. No free lunches there. Staci @ Paidcontent.org estimates that WSJ.com collects about $40-50M in revenue. That said, I vastly prefer NYT’s approach of offering both subscriber-only areas and also a very significant amount of free content: because of this decision, NYT can collect ad-based revenue in addition to TimesSelect subscriptions. For that reason, I think the NYT’s model will be a better business.
Still, it’s easy to be a skeptic. NYT generated $3.35B in ttm revenue, so TimesSelect hasn’t yet had any material impact on the company’s financial performance. Also, the company has irritated certain customers with sloppy execution. And, some believe NYT may be damaging its online ad sales by killing two important sources of traffic: blogs (because they can’t or won’t link to TimesSelect-only content) and search engines (because their spiders may be restricted in what they can index).
All in all, though, I think the NYTimes is off to a good start.
Also: here are other thoughts regarding business models for consumer-facing internet companies.
Left by メディア・パブ on November 12th, 2005