Sunday, December 04, 2005

Extra, Extra "Times Select" Sucks

Several weeks has passed since the Times pulled their best content for a subscription based service called "Times Select." I thought I would give it some time and see if (1) they would put it back because of a popular demand, or (2) I would miss it so much I would start paying myself. Well, neither has happened.

Why are they doing this? Greed? No, that's not a fair criticism; they are a company and companies are supposed to make money. Furthermore, like all companies which are directly impacted by the internet, the Times are faced with a radical change to their business model. Remember - companies don't like big change, much less radical change - they like slow, predictable growth. Newspaper companies (Gannett, Knight Ridder, WaPo) are all seeing their traditional newspaper sales drop and their advertising from that service dropping 2 to 5% a year. In fact, its so dire one of Knight Ridder's largest owner has thrown in the towel (publicly) and asked for someone to buy their stake to put the owner out of their misery.

So if there is no answer for how to reverse this erosion of the margins, the media companies turn to their online properties. Now, online properties in large "non core internet" companies are interesting places. In the late 1990's, they were the next Messiahs. Internet people could make money fall from the sky - all you needed were the "right" people with enough stock options. When these Silicon Valley Wonderkids proved they weren't capable of hosting the company Holiday Party (much less actually run the company), there was a fierce backlash against anyone with the "dot com" stigma associated with their resume - rightfully so, I might add.

Google has changed all that. They are making real money and lots of it. They are making money without asking their customers to pay while providing services (including this blogging service) free of charge (thanks by the way). Now, all companies are giving the internet a second chance and we are seeing so "aggressive" (also see "stupid" and "NewsCorp") acquisitions of internet properties. So, that brings us back to the Times Select. They (1) have to make more money and (2) are seeing others being successful.

Unfortunately, although they are proud of their sales, I would encourage them to think longer term. I no longer reference their editorials in my witty diatribes. Their opinions no longer impact my understanding of the world around me, and I am resigned to finding analysis from other sources. I won't play the "ideals in journalism" or "duty to inform" card, but they can learn from Google - if you provide enough of a quality service, advertising can more than cover your costs and satisfy the wildest dreams of your board of directors.

19 comments:

Mr Furious said...

That's the problem. They've marginalized their own columnists. Instead of Paul Krugman's column actually having an impact or influencing the discourse, it's out of circulation.

Even if I read something in the dead-tree Times, I won't reference it on my blog either—not out of some boycott/stance—but because I can't. I can't excerpt it, and I can't link to it.

I don't doubt that one day, we will have to pay for more things online. Somehow. Even if it's not a subscription-model. Eventually, the Times cannot afford to give away the news for free, and when enough people stop buying the paper, something will have to give. But starting with their columnists like this, was a bad idea.

People like to refer to a "marketplaceof ideas." It's true. And Paul Krugman and Frank Rich (invaluable opinons IMHO) are now priced out of the market.

Otto Man said...

People like to refer to a "marketplaceof ideas." It's true. And Paul Krugman and Frank Rich (invaluable opinons IMHO) are now priced out of the market.

Yep. The Times has made itself irrelevant. I'm not surprised -- these are the same people who employed Judy Miller for so long -- but it's sad that Rich and Krugman are paying the price.

ORF said...

Yeah, I used to quote Rich a lot in my own posts and now I cannot. Even that comment I made the other day about that girl's bat mitzvah in miami was useless b/c I had to cut and paste SO much from the site. I happen to have access to the Select at my office b/c I subscribe for work, but it does me no good if my online friends cannot read it too...

S.W. Anderson said...

My sympathy for the Times' profit position is tempered by learning during the past couple of weeks from two different media sources that newspapers on average make a 20.4 percent annual profit in the U.S.

That's a profit margin most businesses would kill for. At the opposite end of the scale, I read a few years ago that food stores typically clear 1 percent to 2.5 percent profits a year. And that was before Wal-Mart got into the grocery business.

Looking to the future, maybe "greed" is too strong a word, but in the present it fits.

I don't expect the Times to give away its stuff. I agree, it should be able to attract enough advertisers at rates that bring in a tidy profit.

However, I've noticed a couple of things common to businesses in this country and expect they apply at the Times as well.

First, there's no concept of "enough" when it comes to making money or gaining market share; no matter how much they get, they always want more.

Second, while they may slip off the wagon now and then, often for PR purposes, the business of business is profit making. It is not social good works, not public service, not being everybody's good friend.

So, if I should learn that a hard-core business type has turned his widowed mother out onto the street in an effort to boost his bottom line, it may disgust me but it really doesn't surprise me all that much.

Don't get me wrong, I don't have it in for business or the people who own and operate them. They're necessary. What I have a big, fat ongoing problem with is their almost universal compulsion to maximize profits. That's where you get your Dennis Kozlowskis, "Kenny Boy" Lays and your Jack Abramoffs.

Mr Furious said...

That's where you get your Dennis Kozlowskis, "Kenny Boy" Lays and your Jack Abramoffs.

Those guys are in a class by themselves. They're not even interested in profits, maximizing shareholder returns or even the actual health of the company they're running—they are all about skimming as much for their own personal gain as possible.

In short, they are thieves.

The guys that more accurately fit your description (if I may), s.w.a., are the Walton family, and other "clean" corporate entities that might not be breaking the law, but have tossed any moral or social obligations by the wayside for maximum financial gain at all costs.

In short, they are ruthless. And not much better than thhe first group.

We could all use more of this guy.

Jim Sinegal, founder of Costco, competes on the same ground as Wal-Mart, but treats his employees generously and his customers with care. He resists the call from Wall Street that say he could increase share value and profits, if he'd "pay less" or "cut back here." He, along with guys like Ben and Jerry or the the founder of Whole Foods (whom I started a post on a few weeks ago and now need to finish) believe in a social responsibility. None of these guys pay themselves more than 10-15 times a regular employee.

""I figured that if I was making something like 12 times more than the typical person working on the floor, that that was a fair salary," Sinegal said.

More please.

Studiodave said...

I heard that number before about supermarket margins - and that can't really be correct. That may be the margins somewhere, but surely you would shut down a business if your money would be making higher returns in the bond market.

I really think the Times are missing a huge opportunity of making these editors real celebrities to counter the Faux News Spin Zones.

If they did that their readership wouldn't be so limited to people in the tri-state area and those looking to clone Bobby Kennedy (i.e. me).

One last note. And this has bothered me for years...

Is Maureen Dowd hot? I really can't figure this out. And I am willing to consider brains as sexy.

Mr Furious said...

Is Maureen Dowd hot? I really can't figure this out. And I am willing to consider brains as sexy.

I only know from her Times column photo, and that would indicate she might be hot—in an older, and sort of stuck-up looking way—but pretty. I have no idea if this translates to TV or real life.

I would have said the same thing about Katrina Van Halen-Heuvel (whatever) of the Nation until I saw her on the Colbert Report...perfectly fine, but I thought she'd be hot.

Mr Furious said...

And with that, this perfectly good discussion thread has careened into the gutter...

Back to the topic at hand. The Times sucks. And hot or not, eighty percent of Dowd's columns are not worth reading, never mind paying extra for.

I've lobbied my local paper to replace Dowd with Molly Ivins.

Thrillhous said...

Great post! Very interesting perspective. Good to have someone around here who gets the whole business world.

It does seem strange that they're charging for what you can get for free (someone's opinion) while giving away for free that which they have to spend the most on and on which their reputation primarily lies, namely news reporting.

Last year the net profit margin for grocery stores was 1.16%. That from my friends at the food marketing institute, which I think might be allied with the egg council. I don't know nothing about business, but I think grocery stores work on the principle of low markup, high volume. Last year grocery stores brought in $457 billion.

The LA Times had an interesting article a couple weeks ago about newspapers and their profits.

I really don't like the idea of the celebrity pundit. Does the world really need more David Broders? Still, it does suck that one of the few big publications that employs left-leaning pundits hides their stuff from public view.

Otto Man said...

Maureen Dowd is neither not nor smart. This is all.

--The Mgmt.

ORF said...

As a woman, I used to really appreciate the barbs that Meanie Maureenie threw. But then she ditched her low-profile lifestyle and allowed people to see another persona and well, her stock has never recovered in my books. As to her hotness, I'd say she takes care of herself and certainly knows how to dress, but she could take a tip from Goldie about collagen implants. She has no upper lip. Taht is weird.

MF, as I was reading your bit about the Costco guy, the Whole Foods guy occured to me too. I like him a lot, but he has been on the record for years now against letting his workers unionize. Whole Foods is good in that it is bringing organic, healthy eating into the public mainstream, but it does it in a surprisingly typical American business model.

Wegmans, however, a family-owned chain based in Rochester, NY, is a fantastic grocery that pays for its employees to go to college. And is also really awesome at the food thing too...

Studiodave said...

"As to her hotness, I'd say she takes care of herself and certainly knows how to dress"

This sounds a lot like the girl my mom tried to convince me to invite to Jr. prom. I made the right decision of staying home and playing my Dr. Who role playing game by myself.

The above statement is all factual. I am cool.

Studiodave said...

"Taht is weird"

Also, I don't think this refers to the part of the body I think it is. Can you clarify?

Mr Furious said...

My quick defense on behalf of the Whole Foods guy on the union issue...

The article that inspired my post and served as much of my "research" is a fairly positive article and barely glosses over the union issue. This union issue is the reason I didn't finish my post—I'm not sure what the story is...

My take is not that he is so much of a union-buster (ie: closing a store rather than allow a union to take hold like Wal-MArt), but that the structure of this company is so unusual—right down to the store and team level, that unions are almost irrelevent.

The unions are set-up for a different mode. Whole Foods allows stores and teams (ie: the Bakery Team or Produce Team) wide latitude in everything from what they stock and how they do it to who gets hired. It really is a team. Say your produce "team" exceeds expectation for a month and makes extra money. That money is distributed to that team, not passed upward. Incentives and motivations as they exist in the union mindset don't apply.

I applied for a job at my local Whole Foods (that had recently moved and substantially upsized) a couple years ago when times were tough for me, and I didn't get it. I am a college graduate applying to work at a grocery store, and I can't crack the workforce... Now, granted, I am in Ann Arbor in a highly educated pool. Perhaps I need to be pursuing an advanced degree to stack apples...(kidding. sort of.)

The local Whole Foods has loyal, knowledgable, upbeat and motivated employees everywhere you look in the store. They pay well, and the benefits are good. The people I talked to LOVE it there. I'm not sure a union would bring anything to the table that they would want.

It seems that the Whole Foods approach is similar to Costco—treat your employees so well they don't care about being in a union, and give them a stake in the company's success. It works.

I would have no problem with this business model in any industry if the employer could be trusted. In the case of Whole Foods or Costco, I've got no beef with them. Unions exist to combat the Krogers of the world, they might, simply, not be needed here.

Mr Furious said...

Here is the link to the Whole Foods "Fast Company" article. If I finish my post, I'll link to that as well. It probably won't happen today.

S.W. Anderson said...

Mr. Furious, I think you're making a distinction without a difference, in this sense: Before they crossed over into complete, unbounded criminality, the Kozlowskis, Lays, Ebbers, etc., operated like the CEO of Wal-Mart and others.

The ones that go whole hog don't get to be CEOs of a major corporation because they've earned a reputation for looting the company, cheating investors and so forth. At least, I don't think the various trustee boards are that thoroughly non compos mentis, or themselves full-bore crooks.

As for the Costco guy, I've heard/read good thing about him and the company. It's always terrific to learn of another one of them who's out of step with most of them.

The older gentleman who owns Malden Mills, who continued paying his people after his plant burned down, until a new one could be created, is a real American hero in my book. I regret I can't recall his name right now. I saw his employees being interviewed in the new plant awhile back. They really love the guy, and rightly so.

S.W. Anderson said...

" . . . but I think grocery stores work on the principle of low markup, high volume."

They work on the markup they can command. Low markup/high volume as a business strategy is almost a bogus notion.

Supermarkets are what economists call "perfect competitors," meaning the business they're in is wide open to everyone and their aunt Fanny, come one come all. Naturally, the more competitors there are, along with the fact others (say, Wal-Mart) can decide to jump in at any time, ensures low profit margins.

S.W. Anderson said...

"It seems that the Whole Foods approach is similar to Costco—treat your employees so well they don't care about being in a union, and give them a stake in the company's success. It works."

That can be and in a few cases really is a wonderful application of enlightened self-interest.

But before we all join hands and sing Kumbaya, keep in mind that exceptions like Costco and Whole Foods occur against a background where unions are operating.

Keep in mind, too, that while a company like Costco may have been started and run by a good ol' boy who treats everyone well, things can change. He can retire, leaving it to a son who turns out to be another "Chainsaw" Al Dunlap or Bernie Ebbers. Or, the business may wind up being merged or sold to a corporation that eats its young in the executive lunch lounge.

Bottom line: Even where unions aren't directly or immediately involved, it's still a good thing they're around. They're part of a healthy mix and we're well advised to keep them alive, healthy and as free of corruption as possible.

Mr Furious said...

Fair points, s.w.a. I'm not anti-Union. My dad was a Union Local President. My point is that they are not always what they are cracked up to be, and in the cases of these two companies, I'm not sure they are an improvement.