The New York Times (NYT) is a classic story of disruption. Founded in 1851, the NYT created value by providing in-depth and high-quality news, opinion and entertainment daily through its printed newspaper. Although radio and TV ‘disrupted’ newspapers before, by the early 2000s newspaper advertising revenues hit a peak of $70 billion dollars – and NYT’s news revenue reached almost $3 billion.
Enter Buzzfeed. In its infancy, one can hardly argue it hit the high quality standard of the NYT. Case in point? One of its leading headlines in 2013 was: “Can You Make It Through This Post Without Feeling Sexually Attracted to Food?” (here’s the link, for whomever this piqued interest).
A group of people was attracted to this easier-to-read type of news, and left the traditional newspapers. The NYT didn’t feel too bad: these were customers who wanted something light, and are not their premium customers anyway.
Classic mistake. Buzzfeed understood the classic disruption story: after building a solid base with an ‘inferior’ product, they slowly started to increase the quality of journalism. Today’s leading article? “Trump Backs Down on Ban”.
Little by little, more and more higher premium subscribers are switching to Buzzfeed.
The NYT found it difficult to respond, for two reasons. First, disruption comes through the customers you least want. How can you prioritize resources when most in the company do not even believe those customers are worth saving?
Second, the operating model that NYT possesses are fully focused around their existing core business: delivering high-quality news to you daily through paper. NYT’s journalists prioritize their work that way (lots of fact checking and re-writing), processes in the company are designed as such (you can only publish once the hierarchy agrees), and resources have been allocated accordingly (entire supply chain runs to make sure your paper arrives in time).
The result? Declining subscribers base. And revenues under pressure.
NYT is trying adapt its business model to find new ways to create and capture value. In particular, they aim to monetize their strong brand and resources through digital channels. This led to initiatives such as NYT Now (an app for instant NYT-quality news), NYT cooking (an app that utilizes the vast history of NYT cooking recipes), and NYT Crossword puzzle (an app that… well that’s kind of self-explanatory).
Operationally, they also made key changes. A Chief Revenue Officer was instated to gain top-management support for new revenue ideas. And autonomous teams were set up (on a separate floor and with separate reporting lines), so that a new iterative culture could exist next to the existing organization.
Regardless of these initiatives, the NYT remains in difficult waters. Although the news apps are interesting, they are nowhere near close to the revenues of the paper edition. And digital advertising remains a tough market (NYT still has difficulty selling all their ad space online, even at a discount).
Is there a way out?
I believe so. My recommendation comes in two parts. One, revamp the website to make it a fully digital experience – and not based on the paper edition. That means personalizing the website further, putting more emphasis on comments and discussion, and creating a membership-culture with its subscribers.
Another thing NYT could do is investigate partnerships with Facebook and Google. The resources and capabilities that those companies have on advertising could help NYT better monetize its digital footprint. At the same time, NYT could offer high-quality, fact-checked news on Facebook and Google’s platforms.
NYT needs to find an answer. Not just because it is threatening its core business. But also because the organization – together with other newspapers – serves a fundamental role in our society: to inform the population, and provide checks and balances against any form of power. At a time when alternative facts reign supreme, we need organizations like the NYT to have a healthy functioning political system.