“Why is my employer so stupid?” We’re wondering the same thing Tom.

The once venerable New York Times has decided according to the never-venerable Mashable to end it’s premium “Times Select” service. With approximately 220,000 members paying $7.95 per month, the NYT was generating $1.75 MM per month or $21 MM per year.

One has to wonder which bonehead thought of this brilliant move. Assuming the NYT generates a CPM double the average of DoubleClick’s average CPM of $8.90 for a CPM rate of $17.80, it would need to generate 1.18 MM CPMs which means 1.18 B impressions per year or 98 MM per month. Let’s be kind and assume that the 220,000 paying members will continue to generate 10 incremental impressions per month leading to a whopping 2.2 MM impressions, NYT still needs to create 96 MM new views from these formerly premium articles.

Let’s assume that each new viewer attracted into these articles will generate 10 additional page views per month, they need to attract 9.6 MM new viewers to these articles. Even if we assume that Compete.com’s data is accurate, it still implies that NYT needs to attract 3 MM new viewers to its site per month. That’s nearly a 50% increase over current usage levels. Can the NYT really generate 3 MM new visitors per month to its site with this move? I doubt it.

Let’s imagine the discussion that happened at NYT headquarters:

Bonehead Newspaper Executive 1: “So with all these social networking and social news sites, don’t you think it makes sense to ditch the 220,000 paying users we have and give up $21 MM in yearly revenue.”

Bonehead Newspaper Executive 2: “Yeah, I hear that Digg.com site is worth $200 MM.”

Bonehead Newspaper Executive 3: “Brilliant idea. We can Digg up our stories and share them on Facebook.”

Bonehead Newspaper CEO: “I’m getting moist.”

Way to go boneheads! Newspapers are already going down the tube, but stupid moves like this will just accelerate the downfall. Watch for Rupert Murdoch to follow with a similar move at the Wall Street Journal.