Firms Abandon Online Subscription Plans

The New York Times has cancelled its online subscription service "Times Select." Rupert Murdoch says The Wall Street Journal may follow suit. And a music download service now allows users to get music for free after they watch an ad. The message many companies are learning? People expect the Web to be free.

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We may be hearing the death now for subscription news services online. At midnight, The New York Times abandoned its 2-year-old pay service TimesSelect. It still costs to get The Wall Street Journal online. But the new owner, Rupert Murdoch, says he's considering offering it for free, when he takes control of the paper.

NPR's Laura Sydell reports that this might be the way that everything is going on the Web.

LAURA SYDELL: Information wants to be free. That's the mantra of many Silicon Valley entrepreneurs and idealists. The phrase emerged in the early days of the Internet. But this week, the New York Times came to the same conclusion. It is ending its paid subscription service. Previously reported articles were free, but columnists, such as Maureen Down, Thomas Freedman and David Brooks, were behind a wall. The Times had more than a quarter of a million paid subscribers.

But Vivian Schiller, senior president of the Web site, says they realized they could have a larger audience for those columnists as more people came to their Web page when they search for specific news stories.

Ms. VIVIAN SCHILLER (Senior Vice President, TimesSelect): New York Times articles on those subjects would rank very high on Google or Yahoo. And people would come to us and we attracted a very, very large audience that way. In fact, our audience, over the last two years, has grown over 133 percent as a result.

SYDELL: By ending the subscription service, the Times will lose about $10 million in revenue. But Schiller believes they will more than make it up in advertising dollars. Schiller says, right now, growth in online ads is in the double digits.

Ms. SCHILLER: So it's not just a matter of looking in the short-term and can we make up, and when will we make up that $10 million in subscription revenue, it's also we're in this for the long haul. And looking at those growth figures, we just think that it's going to be a user experience and better advertising revenue by opening up the content.

SYDELL: Newspapers are going to have to figure out how to make more money online because, all throughout the country, subscriptions to the newsprint editions are dropping.

Ken Doctor, a media analyst with the research firm, Outsell, believes The Times announcement and Rupert Murdoch's musings about the Wall Street Journal are a sign that we have reached the tipping with online advertising.

Mr. KEN DOCTOR (Affiliate Analyst, Outsell): What's happening really I think is the ad revolution. And the Times and perhaps the Journal is deciding there is a lot more money to be made from advertising on the Web than there is from readers through subscriptions.

SYDELL: This ad revolution maybe translating to more than just news on the Web. People have been trading music for free illegally over the Internet for years. This week, a new company launched called SpiralFrog that lets you legally download artists for free, such as Erykah Badu.

(Soundbite of music)

SYDELL: All you have to do is watch an ad first. Eric Garland, CEO of BigChampagne, which tracks online music trading and sales, believes that despite the success of iTunes, an ad-based model could take off for music.

Mr. ERIC GARLAND (CEO, BigChampagne): We have come to this cultural expectation that we can reach out, and access, and grab, and take, and have whatever we want on the Internet. And clearly, you know, going back to the earliest days of the Internet, the businesses that have really survived and prospered have been ad-based.

SYDELL: Garland says while iTunes has sold a lot of songs, it hasn't been very profitable for music companies or Apple. Still, Garland and other analysts say that making money on the Web remains a big experiment, one in which many of the companies that have traditionally provided content are going to have to continue to change.

Laura Sydell, NPR News.

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