“We are not dead yet!” – The Parable of the New York Times
If used wisely and smart, the digital transformation does not necessarily mean the death for newspaper companies. The New York Times is a great example to show how a newspaper company can turn a threat into an opportunity and a great chance to improve.
“Haven’t you heard of that madman who in the bright morning lit a lantern and ran around the marketplace crying incessantly?”[1] This madman could be any publisher in the late 1990s, when the newspaper companies faced a new and challenging change: the possible death of the printed newspaper and the rise of the Internet.
Since the publishing of the first newspapers, there has always been a struggle for existence – in this case circulation.[2] With the rise of the Internet, a lot of people shifted to this new device, amounting to a decrease of subscriptions for printed newspapers while the consumers searched for free and current news online.[3] This shift from printed news to news online resulted in a decline of the traditional newspaper revenues through subscription, retail and classified advertising. The tragedy for newspaper companies hereby lies in their rising popularity with more readers than ever but fewer who are actually paying.[4]
So the interesting question arises, how a newspaper company like the New York Times Company has changed its business as well as operating model in order to stay not only barely alive but thrive?
The New York Times Company, one of the major global multimedia news companies, was founded in 1851 by Henry Jarvis Raymond and George Jones.[5] As with the Internet new challenges and opportunities arise, the New York Times Company tried to adapt their business and operating model to this new change.
In this short article I want to outline five adaptions the company has taken.
The first one was to focus on its core brand – the New York Times. In 2012 the company sold its Regional Media Group containing out of 16 regional newspapers for $143 million[6] and agreed to also sell The Boston Globe as well as other New England media properties for $70 million one year later. Additionally it was planning to close editing and prepress print production operations in Paris.[7]
One big opportunity the digital transformation provides is the reduction of acquisition costs of new customers to a near-zero amount,[8] so to go a step further, the company was planning on investing about $50 million over the next three years in international digital expanding.[9] Furthermore it invested in different editions with the latest one being the Spanish edition, launched in February 2016: New York Times en Español.[10] In order to attract a global audience, the International Herald Tribune was retitled to The International New York Times.[11]
Another step, the company has taken, was to introduce a paywall. On March 2011 the site became restricted once again,[12] after the two first attempts to let readers pay for articles failed.[13] Capitalizing on its former mistakes it chose a combination of a metered system and device-specific offers with a limit of up to 20 free articles as subscription method.[14] Rapidly it became the second-largest paid subscription website among newspapers[15] and reached about 1.4 million digital-only subscriptions in 2016.[16]
Exhibit 1: Subscription Choices for the New York Times
With the consumption of news mainly through technical devices, the New York Times Company launched apps for these devices in which you can not only browse the news constantly and comfortably but also chose different kinds of subscription possibilities.
Exhibit 2: NY Times App Exhibit 3: Pricing Structure in the NY Times App
As a lot of revenue was made through advertisement, the popularity of free online venues like craigslist[17] and the rise of ad-blocking led to a worsening of the situation for a lot of publishers.[18] The New York Times Company pursued another concept and founded T Brand Studio in 2014, a custom content studio containing of 70 journalists, videographers, designers and engineers who delivered more than $50 million in revenue in 2016 for creating and distributing brands.[19]
In order to gain more revenue, the company could take further steps like for example personalizing advertising. Since a lot of subscriptions are through devices like tablets or smartphones, the app could get access to data in order to customize advertising. With this, not only more revenue from advertisers could be gained but also things that are distributed through the company can be sold better.
Then with creating an additional broad portfolio around its core product, it can reach both target audience and a general audience. This could contain the collaboration with for example research institutions which can lead to an increase in the quality and diversity of articles while reducing journalist costs and creating a separate revenue from the institutions who want to publish their papers on the website.
Hence, the Internet is – if used wisely and smart – not the death knell for newspaper companies, instead it is a great chance to improve. Paper is slowly, the Internet and its digital transformation instead fast. News can actually be breaking and widespread, more people can be reached and especially newspaper companies can benefit from this growth by using the new technologies.
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Literature
APSFK: Lincoln Offers Frequent NY Times Readers a Way around the Paywal (2011). <http://www.psfk.com/2011/03/lincoln-offers-frequent-ny-times-readers-a-way-around-the-paywall.html> (10.11.2016).
Chozick, Amy: Fourth-Quarter Profit and Revenue Declined at the New York Times Company. In: The New York Times (02.02.2012), <http://www.nytimes.com/2012/02/03/business/media/quarterly-profit-falls-12-2-at-times-co.html> (10.11.2016).
Doctor, Ken: At Almost 400,000 Digital Subscribers, Inside the New York Times Pay Strategy, Year 2. In: Newsonomics (20.02.2012), <http://newsonomics.com/at-almost-400000-digital-subscribers-inside-the-new-yorktimes-pay-strategy-year-2/> (10.11.2016).
Ember, Sydney: New York Times Co. Reports Loss as Digital Subscriptions Grow. In: New York Times (03.05.2016), <http://www.nytimes.com/2016/05/04/business/media/new-york-times-co-q1-earnings.html?_r=0> (10.11.2016).
Fletcher, Richard; Levy, David A. L.; Newman, Nic; Nielsen, Rasmus Kleis: Reuters Institute Digital News Report 2016. <https://reutersinstitute.politics.ox.ac.uk/sites/default/files/Digital-News-Report-2016.pdf> (06.11.2016).
Haughney, Christine: New York Times Company Sells Boston Globe. In: New York Times (03.08.2013), <http://www.nytimes.com/2013/08/04/business/media/new-york-times-company-sells-boston-globe.html> (10.11.2016).
Isaacson, Walter: How to Save Your Newspaper. In: Time (05.02.2009),
<sites.google.com/site/sarajaneschlesinger/Home/intro—to-newspaper/HowtoSaveYourNewspaper2.5.2009.doc> (06.11.2016).
Newman, Nic: Overview and Key Findings. In: Fletcher, Richard; Levy, David A. L.; Newman, Nic; Nielsen, Rasmus Kleis: Reuters Institute Digital News Report 2016. <https://reutersinstitute.politics.ox.ac.uk/sites/default/files/Digital-News-Report-2016.pdf> (06.11.2016), pp.8-29.
New York Times: Our History. <http://www.nytco.com/who-we-are/culture/our-history/#1835-1880> (06.11.2016).
Nietzsche, Friedrich: The Gay Science. With a Prelude in German Rhymes and an Appendix of Songs. 2008.
Park, Robert E.: The Natural History of the Newspaper. In: The American Journal of Sociology, 24 (3). 1923, pp. 273-289.
Smolkin, Rachel: Adapt or die: as newspaper companies confront a challenging future, they are increasingly viewing their trademark print product as the engine driving a diverse ‘portfolio’ that embraces other ‘platforms’ such as Web sites and niche publications. Is this a strategy for survival? In: American Journalism Review, 28(3). 2006, p. 16+, <Academic OneFile, go.galegroup.com/ps/i.do?p=AONE&sw=w&u=wate34930&v=2.1&id=GALE%7CA147375836&it=r&asid=fb3802564cc00609b7404dafb792faff> (10.11. 2016).
The Associated Press: New York Times selling regional papers for $143M. In: cnsnews.com (27.12.2011), <http://cnsnews.com/news/article/new-york-times-selling-regional-papers-143m> (10.11.2016).
Thompson, Mark: The Challenging New Economics of Journalism. In: Fletcher, Richard; Levy, David A. L.; Newman, Nic; Nielsen, Rasmus Kleis: Reuters Institute Digital News Report 2016. <https://reutersinstitute.politics.ox.ac.uk/sites/default/files/Digital-News-Report-2016.pdf> (06.11.2016), pp.108-109.
[1] Nietzsche, Friedrich: The Gay Science. With a Prelude in German Rhymes and an Appendix of Songs. 2008, p.119.
[2] Park, Robert E.: The Natural History of the Newspaper. In: The American Journal of Sociology, 24 (3). 1923, pp. 273-289, p.274.
[3] Newman, Nic: Overview and Key Findings. In: Fletcher, Richard; Levy, David A. L.; Newman, Nic; Nielsen, Rasmus Kleis: Reuters Institute Digital News Report 2016. <https://reutersinstitute.politics.ox.ac.uk/sites/default/files/Digital-News-Report-2016.pdf> (06.11.2016), pp.8-29, p.8.
[4] Isaacson, Walter: How to Save Your Newspaper. In: Time (05.02.2009), <sites.google.com/site/sarajaneschlesinger/Home/intro—to-newspaper/HowtoSaveYourNewspaper2.5.2009.doc> (06.11.2016).
[5] New York Times: Our History. <http://www.nytco.com/who-we-are/culture/our-history/#1835-1880> (06.11.2016).
[6] The Associated Press: New York Times selling regional papers for $143M. In: cnsnews.com (27.12.2011), <http://cnsnews.com/news/article/new-york-times-selling-regional-papers-143m> (10.11.2016).
[7] Haughney, Christine: New York Times Company Sells Boston Globe. In: New York Times (03.08.2013),<http://www.nytimes.com/2013/08/04/business/media/new-york-times-company-sells-boston-globe.html> (10.11.2016).
[8] Doctor, Ken: At Almost 400,000 Digital Subscribers, Inside the New York Times Pay Strategy, Year 2. In: Newsonomics (20.02.2012),
<http://newsonomics.com/at-almost-400000-digital-subscribers-inside-the-new-yorktimes-pay-strategy-year-2/> (10.11.2016).
[9] Ember, Sydney: New York Times Co. Reports Loss as Digital Subscriptions Grow. In: New York Times (03.05.2016),
<http://www.nytimes.com/2016/05/04/business/media/new-york-times-co-q1-earnings.html?_r=0> (10.11.2016).
[10] Fletcher, Richard; Levy, David A. L.; Newman, Nic; Nielsen, Rasmus Kleis: Reuters Institute Digital News Report 2016.
<https://reutersinstitute.politics.ox.ac.uk/sites/default/files/Digital-News-Report-2016.pdf> (06.11.2016), p.32.
[11] Haughney: New York Times Company Sells Boston Globe.
[12] Chozick, Amy: Fourth-Quarter Profit and Revenue Declined at the New York Times Company. In: The New York Times (02.02.2012),
<http://www.nytimes.com/2012/02/03/business/media/quarterly-profit-falls-12-2-at-times-co.html> (10.11.2016).
[13] Vivian Schiller, “A Letter to Readers About TimesSelect,“ (2007). <http://www.nytimes.com/ref/membercenter/lettertoreaders.html>
(10.11.2016).
[14] APSFK: Lincoln Offers Frequent NY Times Readers a Way around the Paywal (2011).
<http://www.psfk.com/2011/03/lincoln-offers-frequent-ny-times-readers-a-way-around-the-paywall.html> (10.11.2016).
[15] Chozick: Fourth-Quarter Profit and Revenue Declined at the New York Times Company.
[16] Ember: New York Times Co. Reports Loss as Digital Subscriptions Grow.
[17] Smolkin, Rachel: Adapt or die: as newspaper companies confront a challenging future, they are increasingly viewing their trademark print product as the engine driving a diverse ‘portfolio’ that embraces other ‘platforms’ such as Web sites and niche publications. Is this a strategy
for survival? In: American Journalism Review, 28(3). 2006, p. 16+, <Academic OneFile, go.galegroup.com/ps/i.do?
p=AONE&sw=w&u=wate34930&v=2.1&id=GALE%7CA147375836&it=r&asid=fb3802564cc00609b7404dafb792faff> (01.11. 2016), pp.16.
[18] Newman: Overview and Key Findings, p.8.
[19] Thompson, Mark: The Challenging New Economics of Journalism. In: Fletcher, Richard; Levy, David A. L.; Newman, Nic; Nielsen, Rasmus Kleis: Reuters Institute Digital News Report 2016. <https://reutersinstitute.politics.ox.ac.uk/sites/default/files/Digital-News-Report-2016.pdf> (06.11.2016), pp.108-109, p.108.
Interesting article on a nationally important publication. To what extent do you think NYT can survive the next wave of consumer interaction with content? It would seem that mobile is the most important shift; is NYT able to provide a similarly competitive experience on e.g. an iPhone versus other sources? Such sources could include Twitter and Facebook, which seem to have been used as proxy news sources increasingly over the past year. A recent survey suggests that a majority of US adults are getting at least some of their news from social media (http://www.fool.com/investing/2016/07/09/is-twitter-falling-behind-as-a-news-source.aspx).
Interesting post, and, especially in the context of the recent election, it’s interesting to consider the role of new sources such as NYT in how Americans develop perspectives. With the advent of digital, it’s easy to see the blurring of the lines between journalism, advertising, and editorial. I’m particularly interested in how NYT will be able to compete with established Spanish-language news sources. Developing a strategy for this new market reminds me a bit of the IDEO case, as the NYT staff seems to have spent a solid amount of time learning first-hand how Spanish speakers across the Americas consume their news. Despite the relative ease of building a platform in a new language, there’s still an analog angle.
http://www.niemanlab.org/2016/02/en-espanol-the-new-york-times-launches-a-spanish-language-news-site-aiming-south-of-the-border/
Interesting read. Worth sending to the NYT – who knows, maybe it will be a front-page splash 😉
There will always be appetite for premium journalism…the question is whether that appetite will involve paying customers. With the entrance into the market of some many new players who are serving up increasingly high-quality content for free (e.g. Buzzfeed, HuffPo etc.), I fear that old-world media houses such as the NYT will need to do more to justify their paywall. Perhaps this could be done through investing more in exclusive video content? They already do some of this with T Brand Studio as you mention, but I feel there could be more. VICE have seen significant success in this arena with their long-from documentary series.
Bringing in additional revenue streams through initiatives such as live events could also be an interesting option. It is something that the Guardian has been doing as they look to cultivate ‘brand love’ and foster deep customer loyalty – something that will only become more important as readers become less and less prepared to pay for their news.
Interesting article. Even with the paper’s success with the paywall, I think challenges remain as there are so many sources for news. Even premium news is available for free nowadays (e.g. Vox, FiveThirtyEight, and Jon Oliver’s clips on YouTube after airing on HBO).
Perhaps NYT will continue to double down securing big-name authors and editors (such as Nobel Laureate Paul Krugman). The luminaries will always want a central, powerful platform to spread their voices. And I think we can assume that consumers will value these lumninaries. But honestly, who knows?