classreadings: July 2005

Monday, July 25, 2005

Search engine links for Wednesday.

Wikipedia page.

The Google Guide.

Deep Web.

Online Sellers Going It Alone!

Bidding Adieu: Threatening eBay's Dominance, More Online Sellers Go It Alone Service Gripes, New Rivals And Better Technology
Spur Independent Spirit

By MYLENE MANGALINDAN
Staff Reporter of THE WALL STREET JOURNAL
June 22, 2005; Page A1

In 2002, John Wieber started worrying about his business, which sold refurbished computers through Internet auctioneer eBay Inc. Although he was earning $1 million a year in revenue, profits had started to slip as competitors flocked to the site. EBay also raised its fees, further cutting margins, and fraud was becoming a problem.

So Mr. Wieber revamped his Web site and began selling through other online companies, such as Amazon.com Inc. and Yahoo Inc. Last year, his sales neared $5 million, but his eBay revenue grew at a much slower pace, making up only a quarter of the total. It will likely fall still lower. Of the auction site, where he got his start, Mr. Wieber says: "Too many sellers, not enough buyers."

EBay, with more than 147 million users world-wide, has long been regarded as the dot-com survivor that could do no wrong. Mr. Wieber's story shows why the company may be losing some of that luster. Setting up an online store is so easy these days that sellers needn't rely on eBay as a source of customers. Advertising is simple and inexpensive, thanks to new technology from companies such as Google Inc. And multiple competitors, including Amazon and Yahoo, are pulling once-loyal eBay sellers into their orbit.
[John Wieber]

EBay's latest fee increases, in February, have intensified seller complaints about poor customer service and falling prices. One result: EBay sellers are helping one another declare independence. A recent conference of eBay merchants featured a workshop on "Developing your own Web site." For the first time, after a decade of rapid expansion, traffic to eBay's U.S. Web site declined in the first quarter, as revenue growth hit a record low. Reflecting the concerns, eBay shares have fallen 36% this year.

EBay is still growing at rates most companies would die for. Its oldest markets, which are maturing, are being supplanted by business in fast-growing countries such as the United Kingdom, Korea and China. More than 60% of new registered users in 2004 lived outside the U.S. and that expansion overseas helped boost revenue 51%.

EBay executives say sellers often dabble in other marketplaces and with their own Web sites. "It's not an either/or," says Michael Dearing, eBay's senior vice president of marketing and merchandising. He says sellers typically return to eBay because it offers "extraordinary value."

In a bid to boost growth and help sellers be more successful, eBay has spent roughly $1.5 billion in the past 18 months to acquire Web sites in areas such as online classified advertising. It has also invested heavily in customer service, an area the company concedes it didn't pay enough attention to in the past.

EBay, based in San Jose, Calif., thrived in the 1990s as a uniquely efficient way for small merchants -- from part-time hobbyists to million-dollar companies -- to reach customers across the globe. Initially popular as a way to peddle second-hand goods, eBay morphed into a market for used, new and even luxury items. EBay charges sellers a small fee to list items, based on their value, and a commission when they sell.

The auction company estimates that 430,000 people in the U.S. make part or all of their living through the site. These days, many of them aren't happy.

In 2000, Tom Hawksley began selling CDs and DVDs on eBay, leftover inventory from a chain of video stores he used to own. Last year, from his home in Windermere, Fla., he tried selling on Amazon, which levies a hefty commission but no listing fee. Mr. Hawksley found he could sell DVDs of TV shows such as "Dragnet" or "Adam 12" for $35 on Amazon, where he can set his own price, compared with eBay, where he found consumers unwilling to pay more than $10.
[On Sale]

EBay shoppers are "looking for unreasonable bargains," Mr. Hawksley says.

Mr. Hawksley says he made more profit in four months on Amazon than in four years on eBay. Merchants and analysts, such as ComScore Networks Inc., say prices are higher on Amazon because it attracts wealthier shoppers.

Michael Paese began selling bicycle parts on eBay from his San Antonio home in 2003. Last year, sales slipped as eBay's fees rose and, with the help of a consultant, Mr. Paese created his own Web site. He lured shoppers by contracting with Yahoo and Google to serve up small text ads to anyone searching the Web using words relating to his business. These text ads, which have revolutionized the advertising business, appear on the search engines' results page and on third-party Web sites.

Mr. Paese says text ads are highly effective and bring in better business. "If someone goes to me on eBay, he's not really my customer," Mr. Paese says. "If they come on my Web site, they are."

Mr. Wieber, the laptop seller, was once a traveling salesman for a New York-based textiles company. He discovered eBay in 1998 while shopping online for a computer. He noticed that the site sold refurbished laptops at a higher price than even computer makers' own Web sites. To take advantage, he bought a bunch of refurbished laptops that year and listed them on eBay.

He sold as many as 30 laptops a day, typically for between $750 and $1,250. Mr. Wieber estimates each sale carried a profit of $150. His wife, a part-time teacher, helped by typing shipping labels and packing boxes.

By late 1998, Mr. Wieber says, he was making more money selling laptops than textiles. The next year, he quit his job. Selling on eBay brought a less frenzied lifestyle and freed him, for example, to attend his two daughters' ballet classes. In 2000, he says, his eBay sales topped $420,000, earning him about $100,000 in profit.

Mr. Wieber was in the vanguard of a new type of entrepreneur, set loose by the Internet's capacity to break down business barriers. By 2000, eBay had 22 million registered users and a growing cadre of "power sellers" who register $1,000 or more in monthly sales. As his business grew, Mr. Wieber occasionally tapped a tech-savvy neighbor, Douglas Deist, for advice and loans. Late in 2000, Mr. Deist quit his job selling software to join Mr. Wieber in a company they called Exel-i Inc., for "ex-Long Islanders," after their childhood home in New York.

Although he didn't pay much attention at the time, Mr. Wieber started receiving calls and emails from customers who had seen his eBay auctions or his bare-bones Web site, which featured little more than contact information. Mr. Wieber began selling to them directly, marking his first baby steps away from eBay.

In 2001, Mr. Wieber's direct sales more than quadrupled to $217,000, representing more than 25% of Exel-i's revenue. It was clear that selling direct was more profitable. EBay's fees, for listing items and for sales commissions, could be as much as $18,000 a year. Mr. Wieber moved Exel-i out of his house, where the garage was stuffed with computer-laden pallets, and into an 1,800-square-foot warehouse.

In July 2002, eBay erroneously shut down one of Mr. Wieber's accounts. For 14 days, Exel-i had trouble listing products, completing transactions and sending email. Mr. Deist fielded angry calls from customers, the Better Business Bureau and PayPal -- an electronic-payment service that was in the process of being bought by eBay -- who all questioned whether his company existed.

EBay reinstated the account, but the incident soured the two men on the auction company. At the time, eBay didn't provide telephone customer support to all sellers. Messrs. Wieber and Deist called eBay but were told to send a request for help through email. After 10 days, an eBay employee called, but didn't apologize, recalls Mr. Deist. "They were really cavalier," he says. The glitch propelled the pair to enhance their Web site. "You can't depend on someone you can't communicate with," Mr. Deist says.

EBay officials wouldn't comment specifically on Exel-i's account, citing privacy restrictions. Mr. Dearing, eBay's senior vice president, says the problem may have come from the company's attempts to tackle fraud. "We've gotten better," he says.

Earlier this year, eBay expanded telephone support for sellers. It also pledged that every email would receive a response from a real person, instead of an automated system. Bill Cobb, president of eBay North America, posted a note on eBay's site when the change was made, admitting that the company hadn't "invested enough" in customer service.

In August 2002, Exel-i added a "shopping cart" feature to its site, laptopbroker .com, allowing customers to place orders. A few years earlier, that would have been expensive and time-consuming. Today, much of the technology can be bought off the shelf and a support industry has sprung up to help small merchants set up payment systems. Mr. Deist set up Exel-i's electronic back office in under two weeks, with a consultant's help.
[Douglas Deist]

For 2003, Mr. Wieber's eBay sales topped $1 million. But his concerns about the site grew as competition increased. About 10% of Exel-i's auction items weren't selling, something that hadn't happened before, and the company had to swallow the cost of listing the items. Profits on laptops that did sell fell to about $70 per machine from $150 a few years before. And, like many eBay sellers, Mr. Wieber fell victim to fraud. One complicated scam, involving fake mailing addresses, cost Exel-i $1,000 a week for several months. Messrs. Wieber and Deist chafed at their inability to talk to anyone at eBay about such issues.

Mr. Wieber started testing other auction sites, although the less-than-satisfactory experience reminded him of eBay's strength: millions of potential buyers that let merchants "keep inventory turning on eBay very, very efficiently."

But at that pivotal moment, online advertising took off. First, Mr. Wieber spent an average of $1,000 a month to make sure his company appeared in online directories. Then he discovered the new search-based advertising system popularized by Google and copied by others. Mr. Wieber paid search engines to make ads for his company appear whenever users searched online for terms such as "IBM laptop T20." Merchants love search-based advertising because they know their ads will be shown only to people interested in specific subjects. Mr. Wieber would sometimes spend $1,000 a week if business was good.

He also hired ChannelAdvisor, a Morrisville, N.C., e-commerce consultant, to redesign Exel-i's site and tie it more closely to systems that manage Exel-i's inventory and prices. ChannelAdvisor was founded to help eBay sellers but now makes much of its money helping merchants develop their own sites and sell through Amazon and Yahoo. The result, says Mr. Wieber: Sales through laptopbroker.com and another site jumped 55% last year to $245,000, compared with a 15% increase in Exel-i's eBay sales.

Last October, at a conference of eBay sellers in Las Vegas, Mr. Wieber talked briefly with Sam Wheeler, Amazon's director of North America sales and marketplace. Two weeks later, a colleague of Mr. Wheeler called. "I almost fell off my chair," Mr. Wieber recalls. Aside from an occasional call pitching new services, no one from eBay had ever called to ask about his business, Mr. Wieber says.

Three Amazon employees spent two months helping the businessmen create a special numbering system that would allow them to sell on Amazon. Sales are small but are increasing roughly 50% a month. Mr. Wieber says Amazon sales are twice as profitable as eBay sales.

An eBay spokesman says the company may not have reached out to Mr. Wieber during his early years, but says it has added customer support to rectify the problem.

On Jan. 12, eBay announced higher fees for merchants who post large pictures with their listings or offer goods at a fixed price. Mr. Wieber figured the increase would cost an additional $38,000 this year. He decided to stop using those features.

In response, rival online marketplace Overstock.com Inc. lowered its listing fees and is courting eBay's top 2,000 sellers. EBay's fee increase was "a boon for us" says Holly MacDonald-Korth, Overstock's vice president of auctions. Mr. Wieber is trying Overstock, although he says it isn't as lucrative as Amazon.

In April, a Google representative called Mr. Wieber and offered free help composing text for search ads. Google is also developing its own payment-processing system that could compete with eBay's PayPal. Mr. Wieber says he plans to increase spending on Google's ads after further revamping his Web site.

Friday, July 22, 2005

The Design of Online Auctions: Business Issues and Current Research

You can download the file here. (Scroll down until you see "download the document from:" and some reddish-brown buttons)

Abstract:
The Internet has made auctions a common and integral part of the way commerce is conducted today. In both the consumer and business markets the applicability of auction-based trading mechanisms has been expanded by the computational power and flexibility the Internet makes available. There is currently multi-billion dollar annual activity in the online auction market with a growing variety of sophisticated trading mechanisms. The broader range of applications for auctions and implementation choices means that there is a need for more scientific research on online auctions that can be used to optimize their design. In this paper we seek to characterize the current state of management science research on online auctions, present some new empirical research results, and develop a broad research agenda around many open business issues. We find that the research in this area is still at an early stage and there remain many opportunities to do interesting applied and theoretical work spanning the disciplines of management science, economics, and information systems. Such work will better inform managers about the proper design and use of online auctions.

What is working online (from McKinsey Quarterly)

Online retailing has come a long way since the go-go years of the 1990s: it generated $90 billion in revenues for US retailers in 2004, compared with just $8 billion in 1998. To study how the online strategies of today's successful retailers reflect this maturation, McKinsey analyzed the 100 largest direct retailers in North America. We found that direct retailers with physical stores captured 52 percent of Internet sales in 2003, while those without stores garnered just 31 percent. For each group, two broad strategies appear to be most successful. Together, the four models we identified (exhibit) have lessons for all retailers.

Retailers without stores do well as either "efficiency machines" or "niche leaders." The first approach is best for sellers of relatively low-margin products like CDs, books, or computers, because the Web provides the global reach these companies need to gain scale. Efficiency machines—such as Amazon and Dell—invest heavily in brand marketing, innovative Web sites, and highly efficient sourcing and fulfillment processes. These investments create massive fixed costs, often running into the hundreds of millions of dollars, so efficiency machines must generate annual revenues of at least $750 million to be profitable. Such retailers, once successful, tend to generate strong cash flows, however. Amazon invested more than $400 million in marketing and technology in 2004, for example, while generating $477 million in free cash. The largest efficiency machines drive repeat business by offering deals to customers (for example, Amazon's $79 annual membership, which includes unlimited two-day shipping). Of the top 100 direct retailers, only 7 are efficiency machines, yet they account for a quarter of total online revenues.

Niche leaders, such as L. L. Bean and Ross-Simons, sell higher-priced, higher-margin products (like apparel or jewelry) primarily through catalogs and over the Internet. Niche leaders build a loyal customer base by offering quality merchandise, exceptional service, or both. The ability to acquire and retain customers is crucial, since most niche leaders are too small to afford expensive brand marketing and must rely instead on targeted online or direct-mail campaigns. The most innovative niche leaders coordinate their channels by making products from their catalogs easy to order online, for example, or by using their Web site to display a wider selection of products than a print catalog could accommodate profitably. The 28 niche leaders we studied generated nearly $15 billion in revenues—17 percent of which came from the Internet—and account for 6 percent of total online revenues.

Store-based retailers do well as either "traffic drivers" or "triple plays," depending on their scale and profit margins. Retailers with relatively low margins and large scale succeed most often as traffic drivers. These companies use the Internet both to draw customers to their physical stores and to offer shoppers a wider selection of goods and greater convenience. Traffic drivers, such as Target, The Home Depot, and Wal-Mart Stores, attract shoppers using a variety of techniques—gift cards, rich-media advertisements, online circulars, and e-mail notification. Since traffic drivers tend to sell low-margin products at many price points, understanding the economics of different channels and how fulfillment costs can eat into profits is critical. Traffic drivers promote their highest-margin products (such as bedding and apparel) online, for instance, while displaying just enough other merchandise to reflect the broad range of products available in stores. Although stores generate most of the sales for traffic drivers, these retailers—with nearly $35 billion in annual revenues, on average—are so big that their Web-based sales are still impressive, accounting for 35 percent of total online revenues.

"Triple-play" retailers, such as J. C. Penney and Williams-Sonoma, use stores, catalogs, and the Internet to maximize their share of customer spending. These merchants sell relatively high-margin products (home goods or apparel, for instance) while striving to tailor their channels to complement one another fully. Catalogs attract new customers, drive repeat business, and coordinate product lines; the Web offers convenience, product information, and quick updates for pricing or promotions; stores, by contrast, allow shoppers to handle and test goods before they buy them. The challenge for triple plays is to understand how customers use each channel, to match products to that channel's economics, and to create a consistent customer experience across all of them. Triple-play retailers generated nearly $6 billion in 2003, some 17 percent of total online revenues.

As these models indicate, retailers that analyze all their channels and make thoughtful, strategic choices can enjoy exceptional results. Today's top Internet retailers understand the need for complementary on- and offline strategies, coordinated marketing, and balanced investment. Without an integrated strategy, store-based retailers seeking to boost sales through the Web or catalogs risk simply shifting sales volume to these direct channels and destroying profitability because of the added costs of fulfillment and overhead. To succeed, multichannel retailers must coordinate their online, catalog, and store activities to convert customers and encourage them to spend more. Such retailers must also develop efficient processes for capturing and fulfilling orders and ensure that consumer insights are shared across all parts of the organization.

Archive.org Sued!

Keeper of Expired Web Pages Is Sued Because Archive Was Used in Another Suit
By TOM ZELLER Jr.
Published: July 13, 2005 on NYTimes.com

The Internet Archive was created in 1996 as the institutional memory of the online world, storing snapshots of ever-changing Web sites and collecting other multimedia artifacts. Now the nonprofit archive is on the defensive in a legal case that represents a strange turn in the debate over copyrights in the digital age.

Beyond its utility for Internet historians, the Web page database, searchable with a form called the Wayback Machine, is also routinely used by intellectual property lawyers to help learn, for example, when and how a trademark might have been historically used or violated.

That is what brought the Philadelphia law firm of Harding Earley Follmer & Frailey to the Wayback Machine two years ago. The firm was defending Health Advocate, a company in suburban Philadelphia that helps patients resolve health care and insurance disputes, against a trademark action brought by a similarly named competitor.

In preparing the case, representatives of Earley Follmer used the Wayback Machine to turn up old Web pages - some dating to 1999 - originally posted by the plaintiff, Healthcare Advocates of Philadelphia.

Last week Healthcare Advocates sued both the Harding Earley firm and the Internet Archive, saying the access to its old Web pages, stored in the Internet Archive's database, was unauthorized and illegal.

The lawsuit, filed in Federal District Court in Philadelphia, seeks unspecified damages for copyright infringement and violations of two federal laws: the Digital Millennium Copyright Act and the Computer Fraud and Abuse Act.

"The firm at issue professes to be expert in Internet law and intellectual property law," said Scott S. Christie, a lawyer at the Newark firm of McCarter & English, which is representing Healthcare Advocates. "You would think, of anyone, they would know better."

But John Earley, a member of the firm being sued, said he was not surprised by the action, because Healthcare Advocates had tried to amend similar charges to its original suit against Health Advocate, but the judge denied the motion. Mr. Earley called the action baseless, adding: "It's a rather strange one, too, because Wayback is used every day in trademark law. It's a common tool."

The Internet Archive uses Web-crawling "bot" programs to make copies of publicly accessible sites on a periodic, automated basis. Those copies are then stored on the archive's servers for later recall using the Wayback Machine.

The archive's repository now has approximately one petabyte - roughly one million gigabytes - worth of historical Web site content, much of which would have been lost as Web site owners deleted, changed and otherwise updated their sites.

The suit contends, however, that representatives of Harding Earley should not have been able to view the old Healthcare Advocates Web pages - even though they now reside on the archive's servers - because the company, shortly after filing its suit against Health Advocate, had placed a text file on its own servers designed to tell the Wayback Machine to block public access to the historical versions of the site.

Under popular Web convention, such a file - known as robots.txt - dictates what parts of a site can be examined for indexing in search engines or storage in archives.

Most search engines program their Web crawlers to recognize a robots.txt file, and follow its commands. The Internet Archive goes a step further, allowing Web site administrators to use the robots.txt file to control the archiving of current content, as well as block access to any older versions already stored in the archive's database before a robots.txt file was put in place.

But on at least two dates in July 2003, the suit states, Web logs at Healthcare Advocates indicated that someone at Harding Earley, using the Wayback Machine, made hundreds of rapid-fire requests for the old versions of the Web site. In most cases, the robot.txt blocked the request. But in 92 instances, the suit states, it appears to have failed, allowing access to the archived pages.

In so doing, the suit claims, the law firm violated the Digital Millennium Copyright Act, which prohibits the circumventing of "technological measures" designed to protect copyrighted materials. The suit further contends that among other violations, the firm violated copyright by gathering, storing and transmitting the archived pages as part of the earlier trademark litigation.

The Internet Archive, meanwhile, is accused of breach of contract and fiduciary duty, negligence and other charges for failing to honor the robots.txt file and allowing the archived pages to be viewed.

Brewster Kahle, the director and a founder of the Internet Archive, was unavailable for comment, and no one at the archive was willing to talk about the case - although Beatrice Murch, Mr. Kahle's assistant and a development coordinator, said the organization had not yet been formally served with the suit.

Mr. Earley, the lawyer whose firm is named along with the archive, however, said no breach was ever made. "We wouldn't know how to, in effect, bypass a block." he said.

Even if they had, it is unclear that any laws would have been broken.

"First of all, robots.txt is a voluntary mechanism," said Martijn Koster, a Dutch software engineer and the author of a comprehensive tutorial on the robots.txt convention (robotstxt.org). "It is designed to let Web site owners communicate their wishes to cooperating robots. Robots can ignore robots.txt."

William F. Patry, an intellectual property lawyer with Thelen Reid & Priest in New York and a former Congressional copyright counsel, said that violations of the copyright act and other statutes would be extremely hard to prove in this case.

He said that the robots.txt file is part of an entirely voluntary system, and that no real contract exists between the nonprofit Internet Archive and any of the historical Web sites it preserves.

"The archive here, they were being the good guys," Mr. Patry said, referring to the archive's recognition of robots.txt commands. "They didn't have to do that."

Mr. Patry also noted that despite Healthcare Advocates' desire to prevent people from seeing its old pages now, the archived pages were once posted openly by the company. He asserted that gathering them as part of fending off a lawsuit fell well within the bounds of fair use.

Whatever the circumstances behind the access, Mr. Patry said, the sole result "is that information that they had formerly made publicly available didn't stay hidden."

More Articles in Technology >

New York Times Content Eases Toward Paid Subscription

New York Times Content Eases Toward Paid Subscription
by Barbara Quint (From www.infotoday.com/newsbreaks/nb050523-1.shtml)

May 23, 2005 — How long can newspapers risk cannibalizing print subscription revenues for the wonders of Web traffic? On the other hand, how long would new Web advertising revenue grow—or even persist —if newspaper content became hidden from the open Web? Therein lies the eternal struggle. Sometime this September, probably the nation’s foremost brand name in news content—The New York Times (aka NYTimes.com)—will find out as it launches TimesSelect, a $49.95 per year subscription service. Once in place, only TimesSelect subscribers will have daily access to the copy from 22 prominent columnists from The Times and the International Herald Tribune (IHT). Even more interesting for many information professionals, however, TimesSelect subscribers will also have unfettered access to 25 years of New York Times’ archived articles. Comparing that $49.95 annual subscription fee with the standard $2.95-per-article fee charged by services such as Factiva or ProQuest or the $1.50-per-article fee often charged by other newspaper archives, this would mean that after the first 17 (or 34) articles used in a year, TimesSelect would open up access to The New York Times’ archives.

According to Toby Usnik, director of public relations at the New York Times Company, the “vast majority” of news, features, and multimedia content on NYTimes.com will remain open on the Web and free to registered users. Martin Nisenholtz, senior vice president of digital operations and the founding leader of NYTimes.com, stated, “TimesSelect combines the insights and ideas of distinctive voices from The Times and IHT with seamless access to our archives in an unprecedented way and at a terrific price point. At the same time, by keeping the majority of the site free, we will continue to scale the business through strong advertising growth.”

The 22 columnists now offered as “Special Voices” include a number from the Op-Ed, Business, Sports, and Metro sections. Their names often appear at the top of The Times’ “most e-mailed articles” lists. The columnists are David Brooks, Maureen Dowd, Tom Friedman, Bob Herbert, Nicholas Kristof, Paul Krugman, Frank Rich, John Tierney, Dave Anderson, Peter Applebome, Harvey Araton, Dan Barry, Clyde Haberman, Gretchen Morgenson, Joe Nocera, Floyd Norris, Joyce Purnick, William Rhoden, Selena Roberts, George Vescey, Roger Cohen, and John Vinocur. In an article published by The Times on TimesSelect, two columnists covered by the new program worried that they might lose readers or even get blamed if their reader appeal was not enough of a draw for TimesSelect to succeed.

Bloggers commenting on the development pointed out that, these days, blogs often compete as suppliers of Op-Ed commentary. Withdrawing this material from the open Web could make popular commentators invisible. However, The Times is planning on working out RSS feed options that bloggers may exploit to reach TimesSelect content, although readers would have to enroll in TimesSelect to access the content. Why would bloggers engage in such reader-teases? Rumors have it that The Times may provide a revenue source to bloggers in return for TimesSelect sign-ups.

More exclusive content for TimesSelect subscribers includes some unique multimedia features, such as audio and photo essays, video, and podcasts. Advance delivery of articles from the Real Estate, New York Times Magazine, Travel, and Sunday Arts comes to subscribers in the “Ahead of The Times” feature. Usnik indicated that the company may add some online-only content for TimesSelect subscribers in the future, but it was too early to say. In any case, readers of NYTimes.com need not fear that The Times will put all its efforts into subscriber content, according to Usnik. “We will continue to invest in our free site. For example, we have just revised our Business page and our Technology section magazines.”

TimesSelect subscribers will also receive a special software service to help them handle Times content. TimesFile software will help readers tag and organize articles from The Times. The TimesNewstracker, already available for $29.95, will become another benefit for TimesSelect subscribers, one that e-mails alerts on news developments in their fields of interest to readers.

The TimesPast access to back archives of New York Times content will initially cover full text back to 1980, according to Usnik. In time, the company plans to phase in access all the way back to 1851, although it does not yet know how, or whether, pricing for the historical material may change. NYTimes.com users will continue to have access to news archives for 7 days after publication.

Home-delivery subscribers will receive TimesSelect access at no additional charge. Marketing plans for notifying home subscribers have not been set yet. When I asked Usnik whether the company was worried that introducing home subscribers to digital access might speed up cannibalization, he indicated he was not concerned. “There is already an 18 percent duplication between print subscribers and digital users now. We see print and online as a matter of user preference.” The NYTimes.com Web site has 1.7 million daily users while the print newspaper circulation runs around 1.14 million.

The launch of TimesSelect will not mean the beginning of charging for content on The New York Times site. It already charges $34.95 a year ($5.95 a month) for access to daily and archived crossword puzzles. (Interesting that the perceived comparative value of 25 years of New York Times journalistic effort, not to mention the ongoing contributions of nationally renowned columnists, amounts to only $15 less than 365 crossword puzzles.) Usnik said that TimesSelect will not incorporate access to the puzzles.

The launch of TimesSelect could seriously affect the current article archive pricing from which The Times Co. reportedly garners as much as $1 million dollars a year. Access to the full archive currently extends back to 1851 and costs $2.95 per article. Archived content dating from 1996 forward has optional, discounted, multipack pricing—four articles for $7.95 (33 percent off), 10 articles for $15.95 (46 percent off), or 25 articles for $25.95 (65 percent off). ProQuest supplies the digital PDF files of historical articles from its Historical Newspaper collection. ProQuest executives were unavailable for comment on what effect TimesSelect might have on their arrangement with The New York Times.

The announcement of the new service identified three business objectives set by The Times Co. upon launching the digital service in the mid-1990s: profitability, scale, and revenue diversification. The profitability goal for its digital properties was met in 2001, and, according to the announcement, the 2005 acquisition of About, Inc. (aka about.com) increased the scale. This leaves TimesSelect as an effort to diversify the revenue base.

Controversy over business models continues to roil the world of news content. The Los Angeles Times recently withdrew fee-based access to online entertainment coverage. Web advertising revenue currently accounts for some 2 to 3 percent of newspaper revenues, but is also the fastest growing revenue source. The Times Company’s decision to charge for content followed a long study period.

Compared to The Wall Street Journal, TimesSelect’s pricing seems generous. Dow Jones’ pricing for WSJ.com has made it the only national paper with a successful policy of charging for all its online content. WSJ.com users pay $79 a year. Unlike the TimesSelect access at no extra charge to all home-delivery subscribers, Wall Street Journal print subscribers must pay $39 for access to WSJ.com. Nor does The Journal’s archive offer stretch further than 30 days. For any serious archive work, WSJ.com’s readers end up in Factiva’s Publication Library paying $2.95 per article. And the archive for The Wall Street Journal dates back only to the 1980s, not the 1880s.

Dow Jones has no corresponding relationship with ProQuest’s Historical Newspaper collections as does The New York Times. On the other hand, the Factiva Publications Library carries content from more than 9,000 sources, including The New York Times, and the WSJ.com site carries other journals besides the newspaper, e.g., Barron’s, CareerJournal, MarketWatch, etc. And, as Gary Price has pointed out, businesspersons can deduct WSJ.com access from their taxes as a business expense.

Diane Thieke, Factiva’s director of global public relations, saluted the new TimesSelect policy as confirming what Dow Jones and Factiva have always held: “that good quality content has value. It’s what we’ve been saying all along.”
Barbara Quint is contributing editor for NewsBreaks, editor-in-chief of Searcher, and a columnist for Information Today. Her e-mail address is bquint@mindspring.com.

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