August 7th, 2007

New York Times To Fold TimesSelect Presaging The Death of Paid Content

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The New York Times has reportedly decided to abandon TimesSelect, its experiment with paid content on the web. This comes as no surprise since the pay wall was controversial, both internally and externally, from the beginning, but it’s even less surprising when you look at the fundamental economics of content in the digital media age that may soon put the final nail in the coffin of paid content.

The ability to charge for content in non-digital media like newspapers, magazines, and cable TV was based on a limited supply of content and monopoly control of distribution. The web and digital media have generated an overabundance of content — not just a spike in high-quality content but, more disruptively, and even larger spike in “pretty good” or “good enough” content. The web has of course utterly destroyed distribution monopolies. Anyone can create and distribute content on a meaningful scale.

Search in particular has played a pivotal role in transforming the economics of content — as the dominant content intermediary on the web, search has made it possible to make money on “good enough” or borderline crap content simply by ranking well in search results (e.g. try searching for “travel france” on Google and clicking the first organic result).

The new economics of media make charging for content nearly impossible because there is always someone else producing similar content for free — even if the free content isn’t “as good as” the paid content by some meaningful metric, it doesn’t matter because there’s so much content of at least proximate quality that the paid content provider has virtually no pricing power. As smart, talented, and insightful as the New York Times columnists behind the paid wall are, the are too many other smart, talented, insightful commentators publishing their thoughts on the web for free.

The WSJ.com remains the last great bastion of paid content on the web, and with the News Corp acquisition, the pressure to tear down the walls will likely be too great to resist. Even if it’s true that the WSJ has the highest quality business content bar none, the web is so awash in good, great, and utterly crappy business content, all free, that WSJ is holding onto its paid subscribers through sheer brand strength alone.

I should caveat that the “death of content” applies most immediately to text-based content, since the barriers to producing quality text-based content are arguably lower than that of any other content, i.e. video, audio, photos. The value of long-form text content — arguably the hardest type of text-based content to produce to any standard of quality — is being constantly eroded by the proliferation of short-form text content.

Blogs have played the most disruptive role in the devaluation of text content because many bloggers have content “business models” based on personal branding.

Video content still retains its value — and thus its pricing power — because the barriers to creating certain types of video content, e.g. The Bourne Ultimatum, are still high. But shorter forms of video content that are easier and cheaper to produce will eat away at the value of long form content as people spend more time with video content that didn’t cost a lot to produce. I don’t see the collapse of feature films as paid content any time soon, but we could be headed in that direction over the long term.

The other form of “content” that is being devalued as paid content is software — Google and thousands of Web 2.0 startups are giving away software for free and using ad-based business models. It’s all part of the same phenomenon.

The next paid content economy to come under assault — mobile.

UPDATE: Niche vs. Mass Paid Content

Many commenters below have rightly observed that paid content still thrives in niches, which makes sense in economic terms — the smaller the niche, the more scarce good content is, so the more likely people are to pay for it.

Perhaps it’s more accurate, then, to speak of the death of MASS paid content, which is what TimesSelect represents. But the economics of niche paid content is very different from the economics of mass paid content of days past.

Most importantly, while niche paid content may well be a business that endures, it probably won’t be a business that scales — which fits with the larger observation that original content businesses don’t scale anymore.

The smallest paid content niches will likely be the last to come under pressure from the radically changing economics of content — and that day may seem far away or even unlikely ever to arrive — but that doesn’t mean it won’t.

Ten, even five years ago, mass media content businesses based on monopoly distribution and limited content supply seemed like they would last forever…

Comments (64 Responses so far)

  1. provider has virtually no pricing power. As smart, talented, and insightful as the New York Times columnists behind the paid wall are, the are too many other smart, talented, insightful commentators publishing their thoughts on the Web for free.” Read more

  2. sick of explaining where the computer was when Apple went and made the new iMac thinner. Oh yeah, and there were lots of other announcements too, like the reprieve of the Mac mini. There are rumors of TimesSelect not being so selective. Get some perspective. It’s a bad time for traditional advertising, though messaging is getting more efficient. C’mon, let’s sue YouTube! Everybody’s doin’ it! Rumor: all Xbox 360 versions will now have HDMI. We can all rest easy. We now have the world’s grossest

  3. Je crois et écris depuis longtemps que c’est peine perdue d’essayer de vendre, dans la très grande majorité des cas, du contenu d’information en ligne. Si le New York Times arrête, il viendra le confirmer. Car comme l’écrit aujourd’hui Scot Prat de Publishing 2.0, à propos de cette rumeur : “The new economics of media make charging for content nearly impossible because there is always someone else producing similar content for free — even if the free content isn’t ‘as

  4. have either dismantled their paywalls on their own because of depleting web traffic or competition edged them out by throwing similar content for free. Just as I was mentally speculating the odds of WSJ tearing down its paywall, Scott Karp has a nice post

  5. warum-paid-content-dem-untergang-geweiht-ist

  6. We continue to evaluate the best approach for NYTimes.com,” but adding that TimesSelect subscriber numbers rose from 220,090 in April to 224,580 in June. Whether the rumor is true this time or not, the change seems inevitable. As Scott Karp writes at Publishing 2.0: “The new economics of media make charging for content nearly impossible because there is always someone else producing similar content for free — even if the free content isn’t ‘as good as’

  7. Paid Content:

  8. in – we’re all now in the same walled garden – bounded only by the increasingly universal Internet, and separated only by the milliseconds that it takes packets to traverse the Internet. Today’s news is linked all over of course, and Scott Karp has an excellent summary posted at Publishing 2.0.

  9. that The New York Times is disbanding it’s punitive and anti-conversation subrestriction to some content. For content to be valuable, it has to be available. And moreover, it’s value increases the more it is part of a conversation stream. As Scott Karp writes at Publishing 2.0: “The new economics of media make charging for content nearly impossible because there is always someone else producing similar content for free — even if the free content isn’t ‘as good as’ the paid content by some meaningful metric, it doesn’t

  10. from the start, with some of the paper’s own columnists complaining that it limited their Web readership. The number of Web-only subscribers who pay $7.95 a month or $49.95 a year fell to just over 221,000 in June, down from more than 224,000 in April. Scott Karp of Publishing 2.0 weighs in on the development: The new economics of media make charging for content nearly impossible because there is always someone else producing similar content for free — even if the free content isn’t “as good as” the

  11. The Death of Paid Content Posted on August 9, 2007 Filed Under Contentvermarktung | Leave a Comment Der König ist tot – es lebe der König! Nichts geringeres als den Tod des bezahlten Contents sagt Scott Karp voraus, da es Gerüchte gibt, dass die New York Times ihr bezahltes Angebot Select einstellen will. Er bezieht sich dabei auf einen etwas hämische Artikel im Konkurrenzblatt New York Post: Times Content Freed

  12. upplagt. Genomskinligt! Tankarna bakom finns redovisade hos Press Gazette. • På Publishing 2.0 förs just nu den intressantaste debatten om New York Times som tycks lämna sin framgånsrika betalmodell och WSJ.com som Murdoch vill göra gratis. Läs inlägget och debatten här, missa inte kommentarerna. Även Martin Jönsson har sammanfattat om betalsajterna som går gratishållet. • Bonnier satsar nu på en äldre chefredaktör för DV Man i 48-årige Anders Falkirk, läs hos Resumé

  13. I get cold called about twice a month pitching a newspaper subscription, but as we are able to subscribe to specific channels, generalist news lose relevancy, and loses profitability. The NYT is rumored to be dropping its paid content wall. As generalist publishing moves toward free it still will not be enough to create strong sustainable profits:

  14. Rupert Murdoch has been mulling the prospect of abandoning the paid model that has served the online version of The Wall Street Journal so well. Never mind that wsj.com actually makes a healthy sum, compared to the rest of Dow Jones. Scott Karp, on his Publishing 2.0 blog, is eager to add fuel to that fire: Even if it’s true that the WSJ has the highest quality business content bar none, the web is so awash in good, great, and utterly crappy business content, all free, that WSJ is holding onto its paid

  15. that Mr. Friedman had his qualms about TimesSelect’s limiting effect on his digital footprint. And few will deny how much the economics of the Web have changed in the last two years. Scott Karp, in a thoughtful post on Publishing 2.0, even declares the death of paid content (not you Rafat!): “The new economics of media make charging for content nearly impossible because there is always someone else producing similar content for free — even if the free content isn’t “as good as” the paid

  16. ” — a currency threat to the United States’ financial systems. email: Marktrahant@seattlepi.com Also: Yesterday we mentioned that we use fewer NYT columns because of TimesSelect, a paid service that limited our right to post columns. The NYT is giving up on the service — so we will probably bring back more of your favorites onto our pages and web. Reader comments. The passing of the wiretap law is drawing discourse. Our editorial wasn’t exactly enthusiastic … we think the best thing about the act is it

  17. Karp: NYT’s reported plan to kill TimesSelect isn’t surprising Publishing 2.0 Scott Karp says dumping the TimesSelect model makes sense, too. “As smart, talented, and insightful as the New York Times columnists behind the paid wall are, the are too many other smart, talented, insightful commentators publishing

  18. Publishing 2.0 writes “The New York Times has reportedly decided to abandon TimesSelect, its experiment with paid content on the web. … The new economics of media make charging for content nearly impossible because there is always someone else producing similar

  19. Has the NYT Given Up on Paid Content? Publishing 2.0 writes “The New York Times has reportedly decided to abandon TimesSelect, its experiment with paid content on the web. … The new economics of media make charging for content nearly impossible because there is always someone else producing similar

  20. Has the NYT Given Up on Paid Content? Publishing 2.0 writes “The New York Times has reportedly decided to abandon TimesSelect, its experiment with paid content on the web. … The new economics of media make charging for content nearly impossible because there is always someone else producing similar

  21. la plus rentable pour le Times: l’espace Times Select, qui en ce moment, voit son auditoire stagner ou encore un espace public gratuit et ouvert à tous, financé uniquement par la publicité? Jeff Mignon, dans son carnet, à propos de cette rumeur, citait Scott Karp de Publishing 2.0: The ability to charge for content in non-digital media like newspapers, magazines, and cable TV was based on a limited supply of content and monopoly control of distribution. The web and digital media have generated an overabundance of content — not

  22. New York Times To Fold TimesSelect Presaging The Death of Paid Content » Publishing 2.0

  23. When pretty good is good enough

  24. com and Give It Away Too? at NYTimes.com’s Bits blog If the Wall Street Journal Were Free at Rebuilding Media If WSJ.com Was Set Free; The Numbers at Stake at PaidContent Free the Journal at BuzzMachine New York Times To Fold TimesSelect Presaging The Death of Paid Content at Publishing 2.0 Set the WSJ Free! at A VC The death of paid content? at Yelvington.com What do you think? Should WSJ.com become a free site or stay pay? Or is there a different way the Journal could charge for content while also opening up more of

  25. Well written and definitely true.

    One question: As more and more free content is published, and more and more low quality content is published with high production values since the tools (such as blogging tools) continue to get better, won’t people need to go to brands to be sure what they are reading or watching is worth the time to read it?

    Search has taken dominance because none of the editorially driven portals could keep up with the profusion of new sites coming online. But searching has an intrinsic cost — specifically the time it takes to tell if a blog or newsletter of comedy video show is any good.

    In wealthy markets people routinely pay for time saving services whether it is house finders or personal shoppers. You would think this would happen online as well.

    John

  26. I’d be interested to see how paid content is faring in niche markets, such as ESPN.com’s Insider. Or, taking it a step further, something like the Milwaukee Journal Sentinal’s Packers’ Insider. I would suspect paid web content fares better in niche markets where the so-called experts are fewer.

  27. @John, the short answer is yes: aggregators of high quality content — whether new or old brands — will dominate the new economic value chain

    @MJ, niche/highly specialized topics will be the last bastion of paid content, but those too may eventually fall, so long as there are at least 2 experts, and one is publishing for free

  28. It’s funny that MJ mentions ESPN and its Insider.

    I was referencing an article that I read in print (imagine that!) and told my friend to look for it online using his Insider account. Nothing, zip, nada. Nowhere to be found. Now if they had it, and charged my a couple bucks for it I might have purchased it. That is if I didn’t still have the print edition (imagine that!) sitting in my family room at home.

  29. “WSJ is holding onto its paid subscribers through sheer brand strength alone.”

    Not true for WSJ, not true for Times Select. I am a Times Select customer, and it is some of the most consistently high quality writing I read on the web.

    I consume great to crappy content elsewhere, and guess what? That stuff only increases my appetite for what the Times offers.

  30. @Hashim, problem is, there just aren’t enough people like you to sustain, much less grow the business.

  31. >>niche/highly specialized topics will be the last bastion of paid content.

    This is the only point I wanted to make, and of course you’ve made it. However, you might be surprised on how this can actually go the other way.

    The Google traffic/Adsense model encourages untrustworthy crap, and buyer psychology values paid expertise. Also keep in mind that we bloggers are nowhere near normal people at all. We see the sky falling for content, but it’s not true in the real world.

    I see niche membership sites that make good money selling information that is freely available elsewhere (and the bloggers providing it for free are making pennies).

    I’m most well known for giving away free information at Copyblogger, but I make a living from selling niche information. And business is getting better, not worse. The Adsense model has killed the credibility of much of the free niche information sites out there, and therefore has ironically made credible paid information more desirable (if marketed properly, of course).

    Thought-provoking post as usual, Scott.

  32. I agree that people will not pay for news or editorial/opinion. However good the article there is so much else that is also good that is for free. However people will still pay for hard data that saves them money from doing that research themselves. That hard data will have to involve human researchers as well as aggregration technology as there are no barriers to just using aggregation technology.

  33. [...] sad because if this is the death of paid content, I think the newspaper which I treasure and the people who write for it will also disappear and we [...]

  34. [...] Publishing 2.0 points to news that TimesSelect is to come to an end. It is mostly an interesting piece that scares the hell out of the publisher for profit in me. Given the calls from other quarters to free our content on the web the idea that we cannot then capitalise on that content and are destined to be squeezed out is unsettling: The new economics of media make charging for content nearly impossible because there is always someone else producing similar content for free — even if the free content isn’t “as good as” the paid content by some meaningful metric, it doesn’t matter because there’s so much content of at least proximate quality that the paid content provider has virtually no pricing power. As smart, talented, and insightful as the New York Times columnists behind the paid wall are, the are too many other smart, talented, insightful commentators publishing their thoughts on the web for free. [...]

  35. [...] New York Times To Fold TimesSelect Presaging The Death of Paid Content How long until the WSJ follows? (tags: content advertising) [...]

  36. [...] what CNet has to say on the issue, and as always Scott Karp has some interesting observations as well: The new economics of media make charging for content [...]

  37. Great post as usual. I’d add that it’s a wonderful coincidence (or not) that this announcement is nearly simultaneous with the debut of the new smaller print version of the Times. The two facts together–capitulation to the free-access mandate and the move to trim paper-based product costs–are more powerful than either act alone.

    Yesterday analyst John Morton as quoted as disapproving of the shrinking Times as something that [paraphrase] just ought not to be done, the Times is too great for this, etc.

    He of all people should realize that changes far more dramatic are coming to paper-based journalistic products, and sooner rather than later. The idea that the Times for some reason could/should resist is sentimental. This is not a good time for sentiment in the newspaper industry.

  38. [...] Scott Karp von publishing2.com analysiert das recht treffend: [...]

  39. Scott,

    Generally, I agree with you – paid content is not a sustainable business model on the web. Yet, I would like to point out a few “caveats”:

    First – ultimately, wsj.com has been able to charge for its content mostly because the subscription is a business tool (aka – “business expense”). Sure it’s best in class business content and sure it’s the best brand in its space, but don’t underestimate the power of B to B price insensitivity. (And, yes, you’re right wsj.com will inevitably be made free because they will make more money selling ads).

    Second – NY Times Select was a nice try. Again, try not compare it to a B to B play, NY Times is deeply entrenched in the price sensitive consumer market where if they raised their paper delivery price by $.02 they would see a 10% reduction in unit sales. Yet, the decision to try to charge for Times Select was sound. Consider that the content thrown behind that wall was effectively impossible to market to advertisers (opinion/editorial does not sell ads no matter where its published), and consider that NY Times has zero problems generating page views and uniques. Therefore, why not try to monetize “popular” content? In fact, I would have liked to have seen NY Times try other tactics like bundling Select with other products/services or even lowering the price.

  40. Great post, Scott. It’s an interesting phenomenon… that as content is “more free” (!), the ability to unearth the good stuff is increasingly difficult. I agree that aggregators will dominate, particularly in some circles. What’s more, the role editors play changes, too, in that they become more critical than ever.

  41. I expect Wall St Journal to do the same thing. News and other content on the web is inherently free. The monetization opportunities with ads far outweigh user fees.

    I am hoping similar changes at WSJ. Check out my thoughts around this:
    http://abhishek.tiwari.com/2007/08/02/wsj-its-makeover-time/

  42. Scott, I believe you got it mostly right, but overreached a little bit. Paid Content will continue to exist for that minority of material that is very highly valued and not available elsewhere, and in situations where the information pays for itself (as it might for investors making decisions using WSJ content, as I mention in my post here). The NY Times content only met these criteria in the narcissistic minds of its editors, but not in the minds of its readers. (Steve Boriss, The Future of News)

  43. [...] Wunder, meint Scott Karp von Publishing2.com in einer sehr plausiblen Analyse: Im Internet seien so viele kostenlose Inhalte verfügbar, dass “Paid Content” in [...]

  44. @ Steve Boriss:

    You are right, Steve. Declaring the death of paid content is foolish.

    People will pay, and do pay, for online content that is valuable to them, actionable, unique and from trusted sources (individual experts or brands).

    Usually this is niche content that appeals to an audience ranging from a few as dozens to as many as tens of thousands of people. In spite of the fact that alternative free content may be available, people understand what is valuable in their own niche and if it provides them with real value they will pay for it.

    There are dozens of paid content websites that generate substantial revenues for their operators (we know, because we’re in the business of providing the platform for such sites). They are in categories ranging from wine, to real estate case law, to dieting, entrepreneurship, preaching and anything in between.

    The issue is not that paid content doesn’t work, but that (as in the case of the WSJ and Times Select) advertising may be more lucrative because of the audience size. It is a broad generalization to assume that paid content is broken just because these players may opt for a model that capitalizes more on their mass audience numbers.

    For niche content, the subscription model works. If you want specific examples, please e-mail me — I’ve got loads.

    Kind regards,
    Evan Rudowski

  45. @Brian @Steve @Evan,

    Thanks for the important clarification about niche paid content — I addressed this in an to the post update above.

  46. [...] Spath (live.hackr) zitiert dazu Scott Karp, nach dessen Ansicht Bezahlmodelle für Nachrichten im Internet auf Dauer scheitern müssen, weil [...]

  47. [...] making their TimesSelect service free, Scott Karp points out the difficultites for media players to charge for information: “The new economics of media make charging for content nearly impossible because there is [...]

  48. [...] read more | digg story [...]

  49. I find it hard to take such an article seriously when I see “stupid” copy editing errors such as “The web has of course utterly destroyed destroyed distribution monopolies.” and “the pressure to tear down the walls will likely be too great to resits.”

    Come on! This is becoming more and more of an issue as copy editing goes out the window and spell checkers are used instead of using people who know how to spell!

  50. Hi Scott,

    I welcomed your update above which recognizes that there is still a strong role to play for the paid content model in niche categories.

    I still think some of the further conclusions in your update are perhaps a bit too general, however.

    For example, “niche content businesses probably won’t scale.” Well, isn’t “scale” a relative concept anyway? I know of a wine expert who has several thousand subscribers paying £69/year each and now has several employees helping to run the website. Has this person scaled? I would argue yes, quite nicely.

    What about the niche publisher that has built a collection of successful paid content websites? Surely they have scaled.

    I wonder if your definition of scale is rooted in a mass media background and therefore to you this represents big numbers, and perhaps makes it more difficult to appreciate “scale” at smaller volumes. Scale depends on your cost structure, and if it’s low, then you can scale at lesser quantities.

    Will niche paid content websites come under pressure from the radically changing economics of content? Well maybe — who knows what radical changes the future may hold? But I would argue that these niche sites are taking advantage of these changing economics. The means of production and of distribution are now affordable and accessible, and it has enabled these businesses to come into existence. They are the evidence of these radical changes.

    Good content of course will survive as something entirely distinct from the means of distribution. Savvy and nimble content owners who recognize the value of their content assets ought to be able to take advantage of new technological developments.

    What is wrong with big media today? They are not victims of radical change, they are victims of their own failure to respond and to execute. The internet was no surprise. I began my career 20 years ago at Newsday, working on some of their earliest online activities. Even then, we knew. But many chose not to listen.

    Thanks for the opportunity to comment. I have only recently discovered your blog and I look forward to visiting more in the future.

    Kind regards,
    Evan Rudowski

  51. @Jim,

    Wow, “stupid,” that’s pretty harsh — although I do appreciate your catching the errors, which I fixed.

    Unlike many bloggers, I read through my posts several times before publishing, but I’m not perfect and unfortunately can’t afford to hire a copy editor, so I do the best I can.

    In any case, thanks for the rant. Hope you feel better.

  52. You mean us? :)

  53. Rafat, heavens, no!

  54. [...] er i ferd med å gi opp forsøket. Scott Karp – som skriver bloggen Publishing 2.0 – har en flott bloggpost om [...]

  55. Need you to address:

    http://shylockblogging.com/gawker-media-real-traffic-data-estimated-revenues-0813/

  56. [...] NYTimes: Death of Paid Content? …and Freakonomics blog [...]

  57. [...] New York Times To Fold TimesSelect Presaging The Death of Paid Content – Publishing 2.0 “The web and digital media have generated an overabundance of content — not just a spike in high-quality content but, more disruptively, and even larger spike in ‘pretty good’ or ‘good enough’ content. The web has of course utterly destroyed distributio (tags: internet newspapers business economics journalism paidcontent nyt) [...]

  58. [...] Scott Karp at Publishing 2.0 is asking the obvious question: Are we about to see the end of paid content as a business model? [...]

  59. [...] Karp at Publishing 2.0 argues that it is. The web and digital media have generated an overabundance of content — “not [...]

  60. [...] produced and published the op-ed podcasts. Perhaps just a burp in the Times’ transition to freeing up its TimesSelect content or are these Op-Ed podcasts gone for good? Say it ain’t [...]

  61. [...] content, even if the cost of that “free” content is consuming ads. The New York Time has abandoned its paid subscription model (reportedly earning less than $10 million a year) in favor of an open, ad-supported business. [...]

  62. Paid content will not die – there will come a time when people will pay to get the most relevant and best information out there on subjects that interest them. Too much information creates a need for “über” information to rise to the top -> paid content returns.

  63. [...] I tried to read an article — I almost forgot it was there. Which made me wonder, now that the TimesSelect pay wall is gone, what the real ROI of this registration wall is for the New York Times and others sites, many of [...]

  64. [...] charging a subscription fee for access. They later ended the experiment. The New York Times did something similar with its TimesSelect service. In these instances, the free market determined their actions, not regulation. Business models [...]

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