New York Times… “trading analog dollars for digital pennies”

The NYT has been hit by the digital disruption of the industry. In tandem with new technology and the rise of mobile, today’s audiences have drastically changed how they consume content. They’re abandoning so-called legacy news media for digital and mobile.

The NYT has been hit by the digital disruption of the industry. In tandem with new technology and the rise of mobile, today’s audiences have drastically changed how they consume content. They’re abandoning so-called legacy news media for digital and mobile.

This change has had a major impact on NYT in Q2 2016, where NYT reported a net loss. Total revenue fell 3% as NYT continued to struggle with declining advertising revenue, which fell about 12%. [1]

Industry disruption has posed multiple challenges to NYT

A. Challenges to business model

Declining revenues of original business models:

  • Print circulation is stagnating driven by a decline in demand for printed newspapers. However, print advertising still accounts for ~70% of NYT’s advertising revenue [2]
  • Print advertising is in decline, mainly due to decrease in print circulation. In Q2 2016, print advertising revenue slid 14% compared to Q2 2015. [1]

NYT reacted to these disruptions by developing a digital distribution strategy, and a new business model based on:

 a. Digital-subscription:

  • In Q1 2016, NYT had ~ 1.4 million digital-only subscriptions for its news products. NYT generates about 60 mn unique visitors (U.S.) a month, of which only ~1mn pay [3]
    • However, subscription revenue is sensitive to discretionary spending available to subscribers as well as economic conditions [4]
    • There is no assurance that NYT will be able to maintain and increase its digital audience without reducing pricing or incurring subscription acquisition costs that would affect margins or profitability [4]

b. Digital advertising:

  • Digital advertising revenue now accounts for more than a third of the company’s total ad revenue [1]
  • Native advertising is a model, where NYT publishes ads in the newspaper looking like editorial content. However, this model may cause irreparable damage as it risks the loss of readers’ trust [5]
    • Rates and margins for digital & mobile advertising are generally lower than for traditional print advertising, hence, digital ad revenue may not replace in full print advertising revenue lost [4]
    • Technologies have been developed that enable consumers to circumvent digital ads leading to lost revenues from advertisers [4]
    • Competition from digital media and services, many of which charge lower rates affect NYT’s ability to attract and retain advertisers and rates [4]

Overall, NYT has succeeded in doubling its digitalonly revenues to roughly $400 million last year. The company also aims to double its total digital revenue to $800 million by 2020. [6]

What additional steps NYT should consider? [7]

  • Leverage assets to generate more revenue. For example, resurfacing archival content (currently there are ~14.7mn articles in the archives)
  • Engage audience via creative content presentation to expand customer base. For example, a former Nieman Lab staffer developed a Flipboard magazine of the Times’ best obits from 2013, which became the best-read collection ever on Flipboard.
  • Develop a more customized experience to differentiate offering, attract, and retain subscribers. For example, a “follow” button that would allow readers to follow topics/columnists and receive alerts
  • Consider expanding further into live events. There is an enormous opportunity for both revenue and engagement e.g., events similar to TED talks 


B. Challenges to operating model

  • The organizational structure of the current news room was not developed to handle the disruption in the industry, and it is challenging to understand how to incorporate digital capabilities (e.g., separate department vs in-departments integration)
  • Inflexible editing and web publishing systems often make it difficult to share and interactively present the stories that digital tools help tell
  • NYT is facing pressure to reduce costs in response to decline in revenues. Failing to do so would impact operations, quality of products, future revenues, and ability to attract and retain top talent.

How did the NYT react to the industry disruption?

  • Development of digital first teams. For example, NYT built a “digital rewrite team”, a new newsroom unit to tackle the stories that are going viral on the web [8]
  • Reshaping the news room for the digital age via cost optimization: Recently, NYT announced a sweeping strategy review, identifying areas for cost-cutting e.g., closing its Paris-based editing and production offices [9]

What additional steps NYT should consider? [10]

  • Produce unique digital features/tools that can drive significant traffic with deeper engagement and longer shelf-lives rather than focusing on reproducing traditional news stories
  • Transform the culture to genuinely adopt digital (currently “Many top editors and producers think of digital tools as extras – ‘bells and whistles’ that augment traditional story forms”)
  • Revamp the traditional editorial systems which targeted perfect editorials, and develop a lean editing strategy for digital stories/updates

Some critics claim that it is one of the largest failures that we haven’t been able to figure out a value recovery mechanism equal to the value that journalism provides to society. Many leading media companies have not been able to find a stable and sustainable business model after more than a decade of declining revenues.



Word count: 796 words


C. References:














The evolution of Singapore’s Changi Airport


I Like Baseball: How The Internet Is Changing a Thing I Like

Student comments on New York Times… “trading analog dollars for digital pennies”

  1. This post does a very good job of laying out the business and operating challenges the NY Times faces from digital disruption. When thinking of how it can stem revenue losses and continue to grow, I think the post misses a key potential solution – selling its content elsewhere. The NY Times needs to further leverage its best asset – its content. One of the ways it can do this is to sell or license its content to third parties, much like Conde Nast and Hearst do. By doing this, the NY Times can open itself to a new revenue stream that still maintains its great content and brand.

  2. Thanks for the post and for 796 written words ! 🙂 Kidding aside, reading written words, either in print or digitally is something I see tomorrow’s public growing away from. Today, more and more people are multi-tasking, and are actually being exposed to more content than before, just in different channels, watching tv episodes on their iPhones / iPads while cooking or listening to podcasts while working out or taking the subway. At the same time I don’t believe people actually want to receive lower quality content, they just want the channel and methodology to change to cater to their needs and new lives. Enter – my suggestion to the New York Times – audible read outs of their well investigated and well written posts – so that people could – only after paying a subscription – listen to the articles read out to them while on the go. Pitch it to them – it’s the future!

  3. We all hate paywalls and thankfully the current nature of the NY Times paywall is rather porous.

    The big changes to digitial news consumption would occur when NY Times and other content providers all decide to finally close all the loopholes and put up paywalls (The Google and Facebook trick stop working, and all the major reputable papers require some payment). Would we see society move away from the $0 baseline that prevents so many of us from paying? Or would we reach a model where new entrants could come in at the free price and suddenly become a popular news brand, dislodging decades old publications such as NYT?

    Either way, I believe journalism provides many positive externalities on society that benefit far more than the buyers of the daily paper. News outlets have been essential in uncovering cases of political and corporate misconduct. They have at times given a voice to the less powerful, leveling the playing field with free speech. I am all for finding a future business and operating model where deep, investigative journalism can still thrive.

  4. Taking’s point forward, the two key areas to capture audience in future are podcasts and messaging apps. Share of internet connected new cars sold is projected to increase to 100% from current 20% in just 9 years. With this will come the death of FM radio as we know it. Currently, an average american spends around 2 hours a day listening to radio in their car. “Automotive is our fastest-growing listening category,” says Geoff Snyder, Pandora’s VP of Business Development. Similarly, in 2015, messaging apps (Messenger, Whatsapp, LINE etc.) surpassed big4 social networking sites in monthly active users. Therefore, content publishers like NYT, who are currently partnering with social networks (for example instant articles for facebook), will soon find themselves on a slowing ship.

    In my opinion, NYT should leverage its credibility and content (biggest weakness of social networks / messaging apps) to get a greater presence in online podcast and messaging markets. is right in saying that people are moving away from reading written workds 🙂

    For further reading on trends mentioned above:

  5. Hey AhmadMans, on your point about NYT’s need to “transform the culture to genuinely adopt digital”, I would recommend you check out a Poynter article that came out in June, [1] which discusses structural changes to the NYT newsroom spearheaded by editor-in-chief Dean Baquet. Among other things, the digital news design team and the interactive news team have been merged into a single unit, and the audience development team has been integrated into the main newsroom workflow. I’d be interested to know if you think these changes are steps in the right direction as far as the required cultural transformation you advocated for.

    [1] Benjamin Mullin, “New York Times Reorganizes Digital Leadership Ranks,” Poynter, June 24, 2016,, accessed November 2016.

  6. Interestingly, recent research has indicated that the massive amounts of capital that have been invested into building out the digital offerings of print newspaper businesses has been a complete waste of money. [1] According to their research, of the top 51 newspapers, “Few of [their websites] have experienced any growth since 2007, the point at which the online versions had been available for about a decade, making it a mature product. In fact, more than half have lost online readers since 2011” [2]. Sadly, it seems that most readers are transitioning from reading print papers to getting their news from online new aggregators. According to a 2012 Pew Study, “26 percent of respondents cited Yahoo as a news source they used most often; 17 percent named Google, with 11 percent naming”. [3]

    Given the past returns on capital invested in building out newspapers’ digital presence, what reasons do we have to believe that future investments in newspaper’s digital strategy will be positive?


Leave a comment