Stop The Press! The Financial Times Proves News Publications can be Profitable

How data and digital technology helped the Financial Times grow revenue in a declining industry.

The Financial Times Ltd

In a rapidly contracting industry, with revenue declining at -5.7% over five years through 2016, the Financial Times (FT) stands out. The FT is one of the world’s leading business newspaper publications, and is one of the few to have grown both revenue and profit in 2015. Broadly, it has the same business model as its beleaguered competitors. That is to gather global news, write high quality comment and editorial, publish content, generate revenue from both subscriptions and advertising, and provide this service in an increasingly digital context. How then has the FT managed to succeed where so many have struggled?

Industry challenges

UK Newspaer Industry Revenue DeclineTo understand how the FT has driven success, it’s important to know the challenges plaguing the global news publication industry. Driving subscribers and advertising revenues is a virtuous and vicious cycle. Larger audiences command premium advertising prices.
This worked well for the publishing industry before the digital age, but both the consumer and advertiser have now changed. Firstly consumers now want instant, high quality, global business analysis, and given the multiple online sources, they want it for free. Secondly advertisers, with a plethora of platforms through which they can promote, want ever more data on their target consumer at ever lower cost. The FT has sought to solve both the challenges problems by investing in their operations to become a pioneer within the digital media world.

Setting up the foundations for success

In order to deliver quality, fast paced information in real time, the FT implemented critical technology innovations. Using a combination of Zuora, Salesforce and Redshift, the company can store, analyse and quickly access consumer data. This has empowered FT employees to make meaningful, real time decisions from which stories to publish to tailored subscription offers. Devices on which FT is availableThe technology connects 600 journalists across the world with London HQ. Advertisers can access the information they crave.  Understanding their consumer has also enabled the FT to choice fully invest in expanding the right platforms. It became clear that they could not simply jump into mobile, consumers were often browsing the FT at work on large desktop screens, and still needed the physical paper copy. Thus they made sure that their digital offering delivers seamless high quality over a multitude of devices.

Using digital to drive subscriptions and advertising revenue

The FT has pushed beyond data storage and analysis though. They have pioneered new ways to encourage subscription in a world in which the consumer is less willing to pay. They were the first to introduce ‘Metered Paywalls’. This model lets readers view a few articles before they are barred without subscribing. It is a type of innovation which only works if the content consumers seek is of such high quality that once they try it, they are unwilling or unable to find it elsewhere. The operating system facilitates such quality, connecting journalists and giving them real time feedback. As a result, the FT managed to increase its subscriber base, with digital subscriptions rising by 14% in 2015, and total circulation across print and online increasing by 9%. Driving subscribers has many benefits: a guaranteed source of revenue regardless of whether or not there is ‘ground-breaking’ news, a wealth of consumer data and a more attractive environment for advertisers to invest in.

So far, so simple – why aren’t other news publications turning a profit?

It seems simple – invest in real time data analytics, entice consumers with free, quality content and ask them to pay once they are hooked. Why has it proven so difficult for other media publishers? One reason is the business model of the FT itself. It is a specialist newspaper, and therefore the product is a premium good which can generate a high return from being continually refined for its target reader. Using data to generate specialist coverage which people find invaluable is a strategy that the FT can pursue, but which The Sun and the Daily Mail (both British tabloids) are less able to do. In fact, after just two years The Sun scrapped its ‘Metered Paywall’ as readers fled to other websites. In addition, while other newspaper publications are culling newsroom staff, the success of the FT enables it to seek out and retain top talent. Analysing the industry, it looks as if the FT has managed what very few news publications have – a strong alignment of business and operating model which is driving, for now, a virtuous growth cycle.




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Student comments on Stop The Press! The Financial Times Proves News Publications can be Profitable

  1. Great article on an interesting topic. You mentioned that the FT’s status as a specialist publication allows it to be successful where so many others have failed, and it makes sense that it plays a huge part. But I wonder if the nature of the FT’s specific target customer base – business and finance professionals…a large group who are willing and able to pay subscription fees – contribute to its success. Said differently, if a publication were to adopt the FT’s model but apply it to a different niche, would that be enough to be successful?

  2. Great post Preeya!

    It’s amazing that the FT is still profitable and growing. I agree with Alex’s point; targeting upper-middle class readers has probably been a nice tailwind, particularly for their subscription revenues. After reading this, I was surprised that the FT is still getting most of its revenue from subscription fees and display advertisements. From a monetization standpoint, this space seems ripe for innovation. I’m not sure what innovation might look like, but I think our Facebook case was an interesting preview (targeted lead generation, tracking user movement across the web, etc.). This would be a fun business model to track several years from now.

  3. Thanks for the great post Preeya. I know a lot of the players in the industry are struggling to diitalize, and it was interesting to learn what’s behind FT’s success in the mission. It created a lot of buzz in Japan when Nikkei announced that they were acquiring FT from Pearson. A lot of people were surprised by the news, but I guess it makes sense in that they both share the same strategy and success in their aggressive investment in digitalization.

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