The New York Times Adapts to the Digital Age
With its existence threatened, the storied newspaper has stayed afloat by re-inventing itself for the digital age.
The newspaper industry has been impacted dramatically by the rise of digital technologies . The business model employed by traditional newspaper companies enjoyed decades of success. However, changing consumer preferences and the availability of free digital news via online and mobile platforms has shaken that business model to its core. As evidence, see Figure 1 below which shows the degree to which industry-wide U.S. print newspaper revenues have decreased every year since 2005 . The New York Times is one of the many companies that has had its existence threatened by this digitization of the industry.
The New York Times has taken several actions to respond to threats posed by news digitization. The first key step has been migrating their content online and creating a NY Times app so that their readers can access content from anywhere . While the most critical component was making new articles available on these digital platforms, the NY Times invested significant time and resources into making nearly all their historical articles available digitally as well . This step increased the overall value proposition of their digital offering. The next major task was to monetize their digital product. In 2011, NY Times began charging readers for an online subscription if they desired to read more than 20 articles per month . That monthly limit has since been reduced to 10 articles in an attempt to increase the number of subscribers . To their credit, the NY Times has also expanded their scope beyond written content. Specifically, they’ve created several podcasts intended to attract new, younger consumers to their brand . These podcasts are free for listeners but generate advertising revenue .
The NY Times had to alter their own culture to effectively adapt their product offerings and meet changing customer expectations . For a 164-year-old company, organizational change can be particularly difficult. First off, they had to embrace a culture of experimentation and acceptance of failure to allow for innovative new ideas to thrive . Second, the company has had to shift from a work environment that was traditionally siloed by department to one that involves a ton of cross-functional collaboration . For example, the production of smartphone apps requires teamwork between employees who focus on technology, marketing, content creation, etc. Finally, they had to reassess some of their content production goals to best fit the consumption habits of digital news readers. Per editor Clifford Levy, this involved shifting from their traditional mindset of seeking the best possible investigative story to thinking about how they can provide the type of digestible content that can improve their readers lives in the limited amount of time which readers devote to news each day . These changes have resulted in financial performance which has at least kept pace with the limited expectations for the industry . In the third quarter of 2016 total revenue was just 1% below that of 2015 and the number of digital subscribers increased by 116,000 from the prior quarter .
Overall, the New York Times has done an impressive job of remaining relevant despite the transition to digital news. One area in which they could improve is more effectively using customer data to convert free-loading readers to paying customers. In their current model, once a reader reaches the monthly article limit their only option to continue reading is a subscription . For many young readers, I’d imagine that the shift from paying nothing for news to making a recurring monthly payment is too big of a leap for them to stomach. After all, millennial consumers have been trained over time to expect online information to be free. To address this issue, I suggest NY Times use their data to identify readers who may need to be weaned into the paying model more gently. Specifically, I would identify all readers who have attempted to read an 11th article (and thus been informed that they must subscribe to continue reading) in each of the past two months but have chosen not to subscribe. When those readers hit their 11th article the following month, I would offer them the ability to pay 10 cents to read just that single article. Given that the expense is tiny and non-recurring, some of these customers are likely to find it more palatable than a subscription. I would allow them to pay on a per article basis for 2-3 months. In subsequent months, they would be offered only the subscription option after hitting the monthly article limit. My expectation is that some of them would find the transition to a subscription payment more tolerable after having previously demonstrated to themselves that they are indeed willing to pay SOMETHING for this service. There are many potential ways to tweak this strategy, but the general idea of using data to identify ways in which to treat different customers differently could have a significant positive impact. (798 words)
 C. Taylor, “How Internet Affects the Newspaper Business,” Chron, http://smallbusiness.chron.com/internet-affects-newspaper-business-39364.html, accessed November 18, 2016.
 Lydia Polgreen, “Why People Pay to Read The New York Times,” Medium, May 9, 2016, https://medium.com/@lydiapolgreen/why-people-pay-to-read-the-new-york-times-60720880e707#.3vh1651zw, accessed November 18, 2016.
 Benjamin Mullin, “Meet Beta, the Team that Brings The New York Times to Your Smartphone,” Poynter, March 25, 2016, https://medium.com/@lydiapolgreen/why-people-pay-to-read-the-new-york-times-60720880e707#.3vh1651zw, accessed November 18, 2016.
 Sophia Van Valkenburg and Evan Sandhaus, “The Future of the Past: Modernizing the New York Times Archive,” Open, July 26, 2016, http://open.blogs.nytimes.com/2016/07/26/the-future-of-the-past-modernizing-the-new-york-times-archive/, accessed November 18, 2016.
 Jeremy W. Peters, “The Times Announces Digital Subscription Plan,” The New York Times, March 17, 2011, http://www.nytimes.com/2011/03/18/business/media/18times.html, November 18, 2016.
 The New York Times, “Digital Subscriptions,” http://www.nytimes.com/content/help/account/purchases/subscriptions-and-purchases.html, accessed November 18, 2016.
 Liz Spayd, “Taking the Plunge Into the Podcase Pool,” The New York Times, October 22, 2016, http://www.nytimes.com/2016/10/23/public-editor/podcasts-new-york-times-liz-spayd-public-editor.html, accessed November 18, 2016.
 Eric Johnson, “The New York Times has to Think Like a Tech Startup, NYT Digital Editors Say,” September 1, 2016, http://www.recode.net/2016/9/1/12732004/sam-dolnick-cliff-levy-new-york-times-digital-strategy-nytnow-virtual-reality, accessed November 18, 2016.
 “New York Times Print Revenue Drops but Digital Grows,” Crain’s, November 2, 2016, http://www.crainsnewyork.com/article/20161102/TECHNOLOGY/161109962/new-york-times-print-revenue-drops-but-digital-grows-as-push-for-digital-subscriptions-continues, accessed November 18, 2016.
 The New York Times, https://www.nytimes.com/subscriptions/Multiproduct/lp8RX3Y.html, accessed November 18, 2016.
Figure 1 & Cover Image
Lydia Polgreen, “Why People Pay to Read The New York Times,” Medium, May 9, 2016, https://medium.com/@lydiapolgreen/why-people-pay-to-read-the-new-york-times-60720880e707#.3vh1651zw, accessed November 18, 2016.
Student comments on The New York Times Adapts to the Digital Age
Thanks for the post. The point editor Clifford Levy makes, about shifting content from best possible investigative story to more DIGESTIBLE content for readers – really alarmed me. In my opinion, this is exactly what is wrong with the new media and mains stream tv trying to stay relevant in these times. If there’s anything we’ve learned from this past US presidential election, is that this is may lead to a slipper slope to faster, shorter and ratings driven news. The leap from that to other unregulated un supervised organizations producing fake new, is not an imaginary one (as depicted by the New York Times on Nov 18, 2016 – http://www.nytimes.com/2016/11/18/technology/fake-news-on-facebook-in-foreign-elections-thats-not-new.html …. that is if we believe this post to be of high integrity and quality….)
As the NY Times moves away from printed news and toward digital content, they will certainly need to adjust their physical footprint around the country. I would be interested to know how many printing plants the NY Times has taken out of service recently and how these closures are effecting their bottom line. Cost cutting through plant closures might be a big part of making the switch to digital work for the times. The reduction in print will also effect the NY Time distribution network. Distribution networks generally benefit from economies of scale, so is the NY Times moving toward a point where distribution of any print product will become to costly to continue? When they reach this point will the times completely stop distribution, or can they adapt their current distribution network to deal with the changes in demand?
While the New York Times (NYT) certainly has its roots in the newspaper / print industry, it has adapted well into the digital age. In contrast to many other local or regional newspapers, its scale and existing footprint have allowed NYT to diversify its product offerings to better engage with its new generation of audience. However, as digital media continues to evolve, I think it’s imperative for the newspaper to rethink its business model as a media channel as a whole. As the author has indicated, the idea of subscription has been a tough sell for millennials, who are used to receiving free news coverage on the internet. On the broader scheme of things, newspaper media is also no longer the only way of receiving news. Millennials today are used to being bombarded with latest news or trends from hundreds of sources, and the network effect is increasingly prevalent as news sharing becomes instantaneous. NYT needs to recognize that in order to stay relevant, it must begin engage with its audience in other channels where they reside, and become as integrated and immersed as possible.
PD, I think you are absolutely right in that millennials see it as a big leap from paying nothing to a monthly subscription. Yet, I don’t think lowering the costs to 10 cents per article will save the problem. I believe that the biggest hurdle is actually going from paying $0 to paying even the smallest amount, like e.g. $0.0000000001, as it requires an additional effort to create an account and enter a payment method. To lower this hurdle, NYT could think about offering a reader that reached her limit another 5-10 articles for free if she puts down her credit card down and creates an account.
Additionally, I believe that there could be an opportunity for the NYT to position itself more as the medium helping you to navigate through the ubiquitous information available online. Already by now NYT offer 53 different newsletters, ranging from morning briefings, over tech news, recipes, to running tips and Broadway promotions (http://www.nytimes.com/newsletters). I’d imagine that, specifically among young professionals pressed with time, there would be quite a few readers interested in customized newsletters that provide them with a brief summary and link of 5-10 articles covering their specific interests. These newsletters, customized or more generals ones, could subsequently be used as a hook to get readers subscribed as they will quickly run into their 10-article limit if the content is really interesting to them.
Hi PD, I would push back on your suggestion for the NYT to adopt a micropayment model by saying this is an idea that’s been around in journalism circles for many years now, but it’s never really taken off because of the mental barrier it poses to readers. The problem, the long-standing argument goes, is less about the amount readers are required to pay, and more about the fact that they are required to pay anything at all (and enter payment info to do so, which takes time). There is a Dutch start-up called Blendle that nonetheless believes the pay-per-article model is promising if weaved into a seamless customer experience. Major publications such as the NYT, WSJ and others have partnered with Blendle, presumably in the hopes of getting insight into the micropayment model. This is a recent development in the news industry, but I’d be curious to see how NYT’s bet on Blendle pans out.
 Julia Greenberg, “Would You Pay 25 Cents to Read an Article? Blendle Certainly Thinks So,” Wired, March 23, 2016, https://www.wired.com/2016/03/pay-25-cents-read-article-blendle-certainly-thinks/, accessed November 2016.