Jason Krebs Guest Post: Nate Silver’s Newspaper Reality…and That of the New York Times
This guest post is written by Jason Krebs. Jason is president of sales and marketing at video syndicator Blip and has served in numerous leadership positions for media and technology companies over the past twenty years.including nine years at New York Times Company, last as VP/sales and marketing.
Ever been a guest at your own funeral? The newspaper industry has been a punching bag for a few years now and forced to report on its own demise. The NewYork Times seems to be one of the biggest targets. That’s a compliment and a curse, but imagine that the funeral has been going on for 5 to 7 years and you’re not really dead. People just keep trying to bury you while you’re still breathing.
Two things happened last week that have caused me to surface in defense of both the industry, and more specifically, The New York Times. 1) Jeff Bezos bought The Washington Post (no link because if you’re reading this, you know all about the Graham family decision), and 2) Nate Silver, already receiving press for moving his popular blog away from The NYTimes, publicly condemned the sales staff of The Times. As a result of these events, people are now musing as to if and when the NYTimes will be forced to sell to someone similar and whether it has been poorly managed or has not done the work necessary to remain relevant.
Let me dispel those notions by inviting you into this business scenario:
- You run an advertising business that brings in $1 billion a year.
- Of that revenue, $300 million is earned through classified advertising.
- $250 million of THAT ad revenue is profit, which in effect, supports the overhead of the rest of your company (newsroom, printing, circulation, rent, etc).
- Within 5 years, paid classified ads vanish from the newspaper landscape.
Thus, that $300 million has now been reduced to $100 million and the new profit is $50 million. That means $200 million in profits just disappeared. All of the losses in the other parts of the organization are now exposed. If you don’t act swiftly, you’ll be out of business in short order. The NYTimes is not out of business. Why? Clearly they made a lot of quick changes to circumvent this problem. How many managers out there could survive that crushing body punch? How many forward thinking digital guru’s think they would be able to survive?
The obvious accusation is that newspapers should have seen the timely demise of classifieds revenue coming, right? Well, they did. In 1998, a consortium of newspapers started Classified Ventures and Careerpath, pouring tens of millions of dollars into each (I was on both affiliate Boards). You might think that newspaper companies are not great investors, as opposed to VC’s, or that consortiums don’t work in general. However, Cars.com from Classified Ventures is a leading Internet company with consumers and advertisers, ranked the Highest Third Party Auto Website by JD Power in 2013. In other words, one out of two ventures has flourished. A fifty percent success rate is very good for this area. And let’s not forget other investments like Indeed, a website that netted TNYT $100 million from a $2.5 million investment.
Sometimes, things just don’t go your way. Brilliant managers are often seen as brilliant for a lot of different reasons that have nothing to do with their own merits, somewhat like a football metaphor I described earlier this year.
Let’s get to the Nate Silver quote. It seems a bit ignorant of reality. There’s a reason journalists and creative geniuses like Mr. Silver rarely make good business people (we’ll keep our eye out in this case).
Has Mr. Silver heard of Facebook? Or Google? Does he know the amount of money invested in digital media? Does he know what ad exchanges are? There are dozens of content websites bigger than NYTimes. Very few of them make more money than the digital editions of the NYTimes. This alone is a testament to the success of the NYTimes website as an ad sales company.
This is not meant to be a booster of the business side of NYT. I spent 9 years working on that website and I, too, have frustrations regarding things my colleagues and I weren’t allowed to develop or pursue. I firmly believe the business would be better than it is today had we been allowed to act in the best interest of the digital business and not as an appendage to a print business. If you happen to know me, this belief will not surprise you.
Despite the challenges, before anyone who wasn’t there or who doesn’t know the business decides to eulogize the newspaper industry, please bone up a little bit more on your history.
