The True Cost of TimesSelect

As we’ve all read about, the New York Times’ TimesSelect experiment of 2005-2007 was spun as quite successful even as it was cancelled, while those of us in the industry had a strong sense that it flopped.

But just how much did it lose? No one seems to have put figures to it yet.

While the NYT lauded the $10MM in annual revenue that the program created, what they didn’t mention was the cost. Based on traffic rebounds of 65% once the TimesSelect program was cancelled, the TimesSelect program cost NYT one-third of its traffic and likely almost as high a fraction of the site’s revenue.

At today’s monetization rates of $75 RPM (imputed from their Q3 2009 financials) on the 62MM suppressed pageviews of their traffic at the time, that’s making $10 million at the cost of $56 million a year. (Or maybe even more than that, as ad rates have fallen since then. If anyone has then-current CPM estimates for, please leave me a comment.)

Relative to today’s estimated $110MM topline for online ad revenues, that is a hefty price to pay at 50% of revenues.

Clearly, that was a subscription program gone wrong.

The stakes are high. This time, it’s no wonder NYT will need to take care to optimize take rates and retain advertising revenues.

(The Excel model for these estimates is posted here for those who want to play with the assumptions – and if you have any suggestions please leave me a comment.)