Here’s A Question Every Publisher Needs To Answer In Determining The Right Strategy Going Forward: Is It More Important In The Short-Term To Maximize Making Money Now Or For the Long-Term To Increase Readership?

Nicholas Ascheim, the Times Company’s director of entertainment, said flatly at a conference this week that the top priority for the company was cultivating readers, not making money.

“The strategy is to build an audience,” he said and it had to be considered that hiding premium content behind the TimesSelect pay wall could mean a new generation of readers will never know, or want to know, what is there. “New generations will never get exposed,” he said.

His comments came on the very day the Times Company released its fourth quarter earnings that actually showed some underlying improvement, but the headline was that it has finally bitten the bullet and reduced its valuation of the Boston Globe and the Worcester Telegram & Gazette by $814 million. It had paid $1.1 billion for the Globe in 1993 and $295 million for Worcester in 1999, so the write-down reduced the value of that investment by 59%. But management says it still intends holding on to both.

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Tucked away in that announcement was the fact that TimesSelect has now grown to 609,000 subscribers. About 66% have free access because of their subscriptions to the print editions of the Times or the International Herald Tribune, but the 34% that are paying either a monthly subscription of $7.95 or the annual subscription of $49.95, were worth $9.9 million in 2006.

NYTimes.com is the largest US newspaper Web site, with 13.2 million unique visitors in December, according to Nielsen/NetRatings. The company as a whole with all its various sites has the ninth largest Internet presence in the US, with 44.2 million unique visitors monthly.

So the question that Ascheim raises is whether for the sake of some 207,000 TimesSelect subscribers paying $10 million annually is it worth depriving the universe of having access to the likes of Tom Friedman and Maureen Dowd?

Ascheim doesn’t deny the product has done well to produce $10 million annually, but the debate within the company whether it is the right way forward.

What there can be no question about from the Times’ figures is how important digital operations are to the company. Internet revenue in its three media groups grew in December from a similar four-week period the year before by 30.2%. At about.com, bought in March, 2005 for $410 million, the ad revenues were up 42.1% for the same period and up 49% on the year as a whole.

“In total, our digital businesses generated about $85 million, or 9% of the company’s revenue” in Q4, according to CEO Janet Robinson. The online growth in percentage of total growth has been quite spectacular. In 2004 online represented about 4% of total revenue, in 2005 it grew to 6% at $193.9 million, and last year it hit $273.9 million to equal 9% of total revenue. She forecast 2007 online growth would be around 30%, adding some $77 million to around $350 million.

Many newspapers have said that within the next three years they are targeting that digital provides at least 12% of their income. It would seem from these numbers that the Times is ahead of that schedule, although it should not be forgotten that one reason helping Online’s proportional increase is because print, particularly in Boston, is down.

The problem is that when an advertiser leaves print for the web, the print loss is greater than Online’s gain. “Increasingly, ad dollars are being allocated to the Web,” Robinson said “and while we are capturing a sizeable part of those dollars, the differential between print and online ad rates remains significant.”

The nagging question for newspapers has been for years whether they should be giving news away on the web. The only US daily newspaper site that makes its users pay for practically everything is the Wall Street Journal. Now that is admittedly focused business and financial news in great depth perhaps giving a financial edge and incentive to those who need that information, and for the Journal making people pay has worked.

Last year its registered users increased to 811,000, up 5.6% over a year earlier and at $99 an online subscription for those who don’t subscribe to the print edition that means annual revenue somewhere around $70 million (In Europe it gives away access to the web site not only to subscribers of its European edition but also to readers who buy it at a newsstand.)

And the Journal says it wants to expand wsj.com into other languages. Web sites are easy and cheap to set up, it already has reporters providing news in 11 languages, and has already a Chinese language site that it launched in 2002 that now has 273,000 registered users with three million page views monthly.

But compare those 811,000 subscribers to wsj.com to the 13.2 million unique visitors to the Times’ site each month. Obviously the Times has built readership using the free advertising model and the Journal has built a pay model that works for it, but which, without a doubt, has kept its readership way down.

While $10 million is $10 million, in the larger scheme of the Times’ finances its pretty much petty cash. Is that money worth the possible effect of limiting more unique visitors to its site who want to read those columns behind the pay wall but won’t pay the price?

If the number one goal at the company really is generating more readership then the answer is pretty simple.