There is a story floating around on Reuters that is going to get a lot of wrong-headed attention. According to Reuters‘ (courtesy of Brad) summary of this Business Week cover piece, the NY Times is contemplating going paid for its online edition:
The New York Times Co. is considering subscription fees to the online version of its flagship newspaper, which now is available for free, but it has no immediate plans to do so, the company said on Friday.
Yes, it is obvious why the Times would like to go paid — it beats giving away stuff that costs money to make — but it is less obvious whether people will pay. Sure, people pay for the FT and the WSJ — as I do — but those are publications that have timeliness in their favor. Financial information is very useful early, and less useful the longer the delay. It is not clear to me the same is true for the NY Times.
Anyway, here is the “money” quote that didn’t make it into Reuters. Consider this ‘graph way down in the Business Week cover piece:
ONLINE, THE TIMES ALREADY is making serious money. New York Times Digital (which includes Boston.com as well as NYTimes.com) netted an enviable $17.3 million on revenues of $53.1 million during the first half of 2004, the last period for which its financials have been disclosed. All indications are that the digital unit is continuing to grow at 30% to 40% a year, making it NYT Co.’s fastest-revving growth engine.
Did you get that? Times Digital sports 32% net margins, and is growing almost three times as quickly as, say, Microsoft. In other words, despite being free, Times Digital does very well, thanks, and is the fastest-growing revenue engine at the NYT Co. While online is still less than 10% of the overall revenue nut for NYT Co., it is not a bad testament to the merits of using free to bring traffic, and then using ads and for-pay ancillary services to build a complementary business.