Finding the New York Times’ Lost Subscribers
Can the NYTimes find its way in a digital world?
While the advent of the radio and television impacted newspaper readership, the shift to digital is causing more problems than prior technological advances.[2] [3] One company actively shifting its focus onto digital news is the New York Times. The New York Times is not new to the internet – in fact, it has been online earlier than most people online today even had access to the internet, starting its online operations back in 1996.[4] With such an early start online, it is perplexing to see that the news industry has not been as successful as other companies and industries who went digital much later. Over a century old, the New York Times has recognized that print revenue is on continual decline and that the only way to save its business is to adapt once more and embrace digital news in new ways.[5] To adapt, it has had to rethink and reshape its business and operating model.
When newspapers moved online, they initially gave access to all their articles for free thinking that digital advertising would eventually offset their costs. This has largely failed to work out as the news industry has planned. The recent uptick in digital advertising revenue as a proportion of total revenue is mainly driven by a decline in print advertising.[6] The New York Times recognized this issue several years ago and in 2011 made a move to charge for access to its news online. Whereas before readers could access an unlimited number of articles for free, under the new business model the site allows free readers to access a limited number of articles and requires a subscription to read anymore.[7] This move was intended to strike a balance between creating a completely walled-off news site and generating revenue. Other aspects of the business model that changed was agreeing to share 30% of its subscription revenue with companies like Apple to sell subscriptions on the Apple ecosystem.[8]
The challenge with charging for something that was once free is proving to the end consumer that it is worth paying for. In that regard, the company has changed its operating model over the last several years since it launched its online subscription service in 2011. Whereas initially the only tangible benefit of an online subscription was simply access to more articles, today the New York Times seeks to create more value for its readers by providing access to the news on any device. Additionally, as part of the subscription, readers now have discounts to other parallel businesses the company runs. Depending on the subscription level, readers also now have access to exclusive content such as behind the scenes stories, live panel discussions, special events, podcast series, and a collection of E-Books.[9]
The company is also actively working on reaching the reader where they are at. In its digital strategy memo, the company outlined several areas of focus and how the reader is being put first in each of these areas. Integral to news is the actual news story and with digital, the company is taking this opportunity to re-imagine and redefine how storytelling is done using multimedia, liveblogging, and interactive graphics.[10] The company is also aggressively moving on the mobile front by utilizing mobile push alerts and providing news in new formats and mobile friendly formats. In its move to be fully integrated into its readers lives, the company is also branching out to new areas such as cooking – providing a simple solution to a daily question – what to cook for dinner.[11] This venture was successful enough that the New York Times is looking at providing similar services and information for other industries.[12]
While the company has made great strides in moving digital, there are several other things it should do to further the digital transformation. Revenue from print is declining rapidly and any reliance on it will only serve to slow the move to digital.[13] The problem with digital news is that it almost has become commoditized – why pay for access when another site will offer a summary for free. This can be addressed by packaging more features into its subscription. Rather than offer its sites like Cooking for free, access to all recipes and/or features should be charged for.[14] There’s also an opportunity for the company to partner with celebrity chefs and provide exclusive recipes for subscribers only. The other barrier to entry is pricing and the stickiness of pricing. Lowering monthly prices from roughly $15/month to something more in line with Spotify and Netflix at $9.99 may increase the appeal to subscribe as the $9.99 price point is prevalent in many other digital services as well. Combined, these two changes will help the New York Times in its digital transformation progress.
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[1] (Main Image) https://static01.nyt.com/images/section/todayspaper/promo-img@2x.png
[2] “Chapter 5: The Press and Television”, http://ocean.otr.usm.edu/~w304644/ch5.html, accessed November 2016
[3] Slate, “How Newspapers Tried to Invent the Web”, http://www.slate.com/articles/news_and_politics/press_box/2009/01/how_newspapers_tried_to_invent_the_web.html, accessed November 2016
[4] Slate, “How Newspapers Tried to Invent the Web”, http://www.slate.com/articles/news_and_politics/press_box/2009/01/how_newspapers_tried_to_invent_the_web.html, accessed November 2016
[5] The New York Times, “TimesMachine: Thursday, September 18,1851” http://timesmachine.nytimes.com/timesmachine/1851/09/18/issue.html, accessed November 2016
[6] Pew Research Center, “Newspapers: Fact Sheet”, http://www.journalism.org/2016/06/15/newspapers-fact-sheet/, accessed November 2016
[7] The New York Times, “The Times Announces Digital Subscription Plan”, http://www.nytimes.com/2011/03/18/business/media/18times.html, accessed November 2016
[8] The New York Times, “The Times Announces Digital Subscription Plan”, http://www.nytimes.com/2011/03/18/business/media/18times.html, accessed November 2016
[9] The New York Times, “Get a Digital Subscription”, https://www.nytimes.com/subscriptions/Multiproduct/lp8RX3Y.html, accessed November 2016
[10] The New York Times, “Our Path Forward”, http://www.nytco.com/wp-content/uploads/Our-Path-Forward.pdf, accessed November 2016
[11] NYT Cooking, “Cooking with the New York Times”, http://cooking.nytimes.com/, accessed November 2016
[12] Nieman Journalism Lab, “4 takeaways from The New York Times’ new digital strategy memo”, http://www.niemanlab.org/2015/10/4-takeaways-from-the-new-york-times-new-digital-strategy-memo/, accessed November 2016
[13] Yahoo! Finance, “NYT revenue tumbles as digital transformation progresses”, https://finance.yahoo.com/news/york-times-beats-3q-profit-123837852.html, accessed November 2016
[14] NYT Cooking, “Frequently Asked Questions”, http://cooking.nytimes.com/frequently-asked-questions#does-it-cost-anything-to-use-new-york-times-cooking, accessed November 2016
This is interesting. I’m curious to see if adding more multimedia, liveblogging, and interactive graphics becomes an actual differentiator for them or if they will increasingly lose out to free digital sites such as Buzzfeed. I’m also curious to see if the Buzzfeeds of the world will survive going forward or if they will be acquired by giants like the New York Times. I think it’s very smart of them to continue diversifying their business model beyond strictly creating news with things like The School of the New York Times which was recently opened. By getting into new markets such as education, they can hedge their bets on the future of paid digital news.
A great summary of the challenges facing The New York Times. I wonder whether the recent election has illustrated the importance of having fair and balanced media sources? How has the commercialisation of these institutions has been to the detriment of our collective understanding of the world? I do wonder whether there will have to be government regulation implemented in order to ensure this industry survives and I wonder how that can be done without interfering in the quality of the news.
My main concern with the New York Times is that charging for the subscription has only compounded the reality that the NYT is losing influence and mindshare to online and mobile-first publications like Mic, Vice, and even Buzzfeed. The internet has democratized and commoditized, as you point out, news and I feel that the NYT and WSJ are losing its positions as voices of authority. Furthermore, more and more people are consuming news on social media – through Facebook, Snapchat, etc. How does this effect their advertising revenue if the particular article is in front of the pay wall? I am not sure. If I were the NYT, I’d look to acquire one of these more innovative, digital native news publications to diversify the business.
Is classic, expensive, and expertise-required investigative journalism in the public appetite anymore? Given trends in how consumers spend their media money, it does raise the question of how these classic news organizations as businesses can survive. The NYT Co. just bought The Wirecutter, a trusted network of reviews on a variety of products. While The Wirecutter should be commended for its effort, it’s hard to call this investigative journalism. Do you think the play is to swap traditional advertising dollars with potential premium models enabled by places like The Wirecutter?