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News, says the New York Times’ Martin Nisenholtz, “is a commodity business.” It’s like a basic service, or a packaged good, or a mineral or vegetable. It’s all the same, in other words. Indistinguishable. CNN, Reuters, Bloomberg, MSNBC, Business Wire, PR Newswire, ZDNet, etc. One product as good another. From the consumer’s point of view, there’s unlimited choice and at a great price; we are all managing editors.

This is not a point of view that people at the New York Times would naturally propound or accept, but it’s commonplace on the Internet. Nisenholtz, while a Timesman, is also the Times’ Internet man, running the New York Times Electronic Media Company, on Sixth Avenue, a few blocks but a great psychic distance from the Times itself on West 43rd Street. Part of Nisenholtz’s accomplishment is that to the extent that the New York Times and the Internet conflict – and there may be no greater conflict, of a capitalism/communism, or television/book, or God/no God variety – you wouldn’t know it from Martin Nisenholtz. His affect is all Times-mild-mannered, cautious, literal, pent-up. Not for him the flared-nostril aggression of a manager-class cybercrat, or the wall-eyed stare of the technologist.

Nisenholtz’s version of a good old boy has undoubtedly aided him as he has quietly built, under the eyes of one of the world’s most conservative media companies – its primary source of revenue and profit has not changed in more than 100 years – a significant Internet empire, certainly the largest new-media organization run by an old-media company.

Now, of course, the Times, along with every other old-media company with new-media interests, is discussing spinning out its Internet business and getting its share of the Internet’s wealth (real or imagined). Last week, in the kind of precursor move that Wall Street understands and loves, the Times announced it was rolling all of its Internet properties into something called Times Company Digital, a business unit that Nisenholtz will head, which will report directly to Times chairman Arthur Sulzberger Jr. and president Russ Lewis, and which will no doubt be the entity that forms the future public company.

The fact is you probably can’t create an Internet company – a big, swinging Internet company – with real money. You need that so-much-more-valuable stuff of dreams Internet currency, a public stock. You can’t buy other Internet companies (a.k.a. a roll-up strategy – the Times recently invested in and is looking at other companies) or hire Internet-generation stars without Internet stock.

Everybody’s doing it. NBC has just rolled its Internet properties into a public company; Disney has its interest in publicly traded Infoseek; Bertelsmann and B&N just rolled out Time Warner is busily trying to figure out how to turn its Internet cable company, Road Runner, into some multi-billion-dollar stock value.

But there’s a difference between those companies, with their music units, movie studios, station groups, TV networks, and satellite systems, and the Times, which has only, really, the Paper – and not just as core asset but as Holy Grail too.

In such a spin-out, you’ll have, on the one hand, the Paper, worth, today, about $6 billion (this includes the Boston Globe, among other non-core assets), and, on the other hand, a pure-play Internet version, shimmering and illusory, of the great Gray Lady. This new Times will be worth, as a multiple of its 7.5 million registered users ( has 51,000 subscribers and went public at $1.6 billion; AOL’s 16 million users are worth $130 billion; Yahoo’s unregistered users are worth $1,000 apiece), something like $10 billion to $20 billion – or let’s say, on a bad day, in a down-market moment, only $5 billion to $10 billion.

The gods, of course, will be laughing.

There is probably no other media company less culturally suited to being an Internet information provider than the Times. You can hardly find a media company more technologically diffident (intellectual snobbery mixes with Luddite pride mixes with lack of basic skills), or one more wedded to the idea of news as a handcraft, or one more dedicated to the primacy of its own product (with a deep snobbery toward everyone else’s) than this one.

In Internet terms, however, news isn’t really news; it’s data, a constant, enveloping flow of almost-untouched-by-human-hands reports (Nisenholtz is getting ready to launch a 24-hour-news operation at the Times). And online, the strongest information brands are content-neutral (what does Yahoo! stand for?) – that is, once your brand has drawn eyeballs to your site, the business imperative is to keep these eyeballs there as along as possible, feeding them a diet of the world’s information riches. And most disconcerting of all, Internet valuations make Sixth Avenue the likely future center of the Times and 43rd Street the annex. In the Times world – among news staff, the Sulzberger family, and its aging readers – these are pretty unimaginable developments.

And yet this transmogrification seems to be occurring with un-Times-like efficiency and determination. Where almost every other diversified, share-price-fixated, cross-platform media company has bungled the Internet game, the Times appears, weirdly, to be succeeding.

This is no doubt because Nisenholtz has been doing what he has been doing – figuring out how to sell interactive media to advertisers – longer than anyone else; and because he has, according to Times insiders, the patience of Job, and a television-dad affability, that has allowed him to survive the slings and arrows of the newsroom. But perhaps most of all because the Internet itself – or the new economy created by the Internet – has afforded Nisenholtz a peculiar moral authority within the Times.

When Nisenholtz, who is 44 with the look of a British movie star of the sixties, handsome but fussy – Dirk Bogarde, say – came to the Times in 1995, he was undoubtedly the most experienced executive in the wholly inexperienced field of Internet marketing. He’d come out of the Annenberg School of Communications at the University of Pennsylvania, then taught at the Interactive Telecommunications Program at NYU, and launched the first interactive unit at a major ad agency, Ogilvy & Mather, in 1982. For twelve years, through the rise and fall of video text, interactive television, CD-roms, and the rise of the Web – not to mention the rise and fall of the British ad-agency raiders – Nisenholtz held on to his interactive-marketing job (the Times’ corporate politics are some of the most baroque anywhere, but an LBO’ed global ad agency is probably pretty good preparation).

In 1994, Nisenholtz wrote in Ad Age the first rationale and guidelines for advertising on the Web. Shortly thereafter, he decamped to Ameritech – the Baby Bells were, in 1994, ascendant in the Internet business – to become its new-media prince. At that moment, as the management hierarchies of first- and second-generation Internet companies were being assembled, Nisenholtz was the main prey of every headhunter. When they couldn’t get Nisenholtz, they described other candidates in his image: “He has a Nisenholtz approach …” “He has a Nisenholtz type of background …” “He’s worked with Nisenholtz …”

He could have gone anywhere. There are dozens of jobs he could have had that would have made him as rich as a Sulzberger. At any point over the past four years, he could have jumped for $100- or $200- or $300 million.

But he went to the Times – and stayed. (The kind of Krazy Glue that holds most people at the Times – i.e., that it is the Times – combined with a very Times-like risk aversion seems to have held Nisenholtz too.) Now, the Times is, perhaps first and foremost, about moral authority, and you certainly achieve a level of moral authority when you choose the New York Times over becoming one of the richest men in the world.

“At some point as online stuff developed, the main issue went from how to do it cheaply and in a Times fashion to how to keep Martin happy,” says a senior Times executive. “How could you ever afford to replace him?” Nisenholtz has become, literally, the Times’ most valuable employee.

With what a Times financial executive describes as “dribs and drabs of $20 million or $30 million here and there,” in an ever artful and patient process of outliving whatever “just don’t get it” executive he had to report to, in a process of never directly confronting the newsroom and never quite spelling out the breadth of his business plan, Nisenholtz, who is the only business-side executive at the Times to whom editors report, and who has become as powerful as all but a few of the names on the masthead, built an Internet company, from New York Times on the Web to CyberTimes to New York Today to the 24-hour-news project to its investment in And not just a Net newspaper.

He took the Times, its brand and its content, and built a business that is not principally about either of those things. Rather (and rather heretically), it’s about the more fundamental Internet disciplines of building and tracking an audience. The chief asset that he’s created, in other words, is a database (loyalty to the Times is not, as they say in the Internet business, particularly scalable; a smart database of users, on the other hand, can become the basis of all sorts of profitable businesses). So far, there are 7.5 million people who have submitted to Nisenholtz’s registration process. Offering them the Times is great (“a good content play”). But you can’t and wouldn’t stop there. The cost of having gotten these users is so big, and the upside for being able to hold them longer and sell them more so vast, that you want to keep feeding them. This is, in other words, the information-supermarket business.

A few weeks ago, Arthur Sulzberger delivered a curious speech before a conference of interactive-marketing executives. It was a gallant effort to reconcile the legacy of the Times with its heady progress in this new medium. The Times will never change, but the Internet is the future (“We will all need to be as bold and iconoclastic as the original online pioneers have been”); the Times is the greatest of journalistic organizations, but it is also an audience “aggregator”; the Times “will continue to adhere to our time-honored values,” but at the same time, “we will create a Quality Network, a kind of ‘knowledge portal’ where users of the Web can come to get the best information from Times journalists, from ‘outside’ experts, and … from each other.”

The Times has resisted, uncannily so, the lure of virtually every other media business – it did not become a broadcast company, or a cable company, or a magazine company. The Times has, of course, a level of contempt for those forms and also, undoubtedly, understands that they undermine newspapers – drawing not only readers and advertisers but talent.

But here it is on the verge of becoming an Internet company. Perhaps it’s possible to rationalize, if you want to rationalize, that the Paper will stay the Paper while some virtual equivalent develops in its own fashion. You could think that.

Of course, for the Electronic Media Company to be spun out, and to realize its full value in Internet wealth, it will have to be a real public company – one controlled by shareholders betting on the Internet rather than by shareholders whose real interest might be the newspaper business. In other words, in cyberspace everybody votes, not just the Sulzbergers.

Oh, yes, another little point: If you turn the Times Electronic Media Company into a real Internet company, these new Times digital employees, the ones on Sixth Avenue – Nisenholtz and his team – will have to be competitively incentivized (as they say in cyberspace). Now, the Times as we know it has always been proud of its shabby chic. Being a Times reporter – having reached the top of your profession – was a reward you wouldn’t measure against the pay scales of your classmates. But now the Internet comes along, upending values and logic everywhere. So? What happens at the Times? Even assuming it can make its peace with e-commerce and content aggregation and news as blander and blander commodity, can it deal with some of its people getting rich – really rich, amazingly, sickeningly rich – while its other half stays virtuous and schlumpy and true to the Times? This should be interesting.

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