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February 22, 2005
The New York Times Buys About.com. Why?
The New York Times announced last week that it was buying About.com for $410 million. Martin Nisenholtz, Senior Vice President for Digital Operations at the New York Times, in a conference call with stock analysts, said the Times purchased About.com because there were "some very useful synergies such as cross marketing and search optimization expertise." That sounds nice and reasonable, but it wasn’t why the Times wanted About.com.
Jay Rosen, in his Press Think blog, wrote at length (great length) about the Times purchase of About.com. Rosen quoted Nisenholtz as saying about About.com that, "Frankly, they bring a lot of competencies to us. They're the leaders in search-engine optimization." Rosen seems to believe that the Times wants to learn how to optimize search results (primarily in Google) for NYT articles. Rosen also believes that there is something untoward about the respected, stuffy NYT wanting to game search results.
I don’t believe it’s as complex and nefarious as Rosen suggests. I think it’s pretty straightforward: With the big increase in demand for online advertising space, in order to make more money, the NYT needed more inventory. The Times Web site is sold out and it could sell more ads if it had more inventory. If there is one thing ad salespeople can’t stand, it’s leaving money on the table, thus the purchase of About.com.
It’s the reason The Wall Street Journal bought MarketWatch from CBS—it needed more inventory. But the WSJ bought inventory that made sense—a leading online financial information site—the right kind of inventory, and inventory it can sell.
About.com is not the right kind of inventory for the NYT. It may add page views to the Times Web site, but not as many as it hopes. People read The New York Times online because they want information—lots of good solid information—in fact, too much information. About.com provides much of the same type of info, so I believe the NYT’s readers would rather get information and news from NYT reporters, not the “experts” that About.com features, and, therefore, readers won’t use About.com much. The Times will find that it will have to provide make-goods to advertisers who buy About.com in hopes of reaching a large new audience.
I think the purchase of About.com will turn out as badly as the Times purchase of 46 percent of the Boston Metro paper, which is being held up in court. It’s clear with that purchase, the NYT was trying to reach younger readers with the Metro and it’s pursing the same strategy in buying About.com. But these strategies won’t work because nothing will bring younger readers back to newspapers. The barn door is being closed after the horse has left. About.com will not provide enough additional income to offset the loss of income from declining circulation of the mother paper.
Arthur Sulzberger is doing his best to diversify and create growth for the New York Times, Co., but his best isn’t enough to stem the steady decline of young readers—their departure from print is inexorable.
Posted by Charles Warner at February 22, 2005 02:07 AM
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