Newsonomics: The New York Times Subscriber Bump and The 'Trump Effect'
It looks like The Trump Effect, but it may be more than that.
Through Sunday, the New York Times had gained 70,000 new net subscribers since election day, the Times told me Tuesday. That’s up from the 41,000 total it reported six days ago – a number that caught a fair amount of public notice.
First published at Politico Media on Nov. 23, 2016
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Yet, the story behind that number may be even more interesting. Even before the Trump win, the Times had begun doubling the number of readers who believed it worthy of paying for. The further re-emergence [“Did the media win the election?”] of the Times, and of the Washington Post, in the new national news conversations, seems now confirmed by these increasing Times subscription totals.
On Tuesday, President-elect Donald Trump took his bad cop–good cop act directly into the lair of one of his biggest targets from the campaign trail. Trump made his appearance in the New York Times building, after “un-cancelling” the session, first claiming the Times management had changed the terms of the twin on the record/off the record visit.
By the time he’d left, he had exchanged his recently tweeted “@ the failing @nytimes” insults for exultations. The Times, he told its staff is “a great, great American jewel – world jewel.”
And so begins the next unpredictable chapter in the story of the most unlikely of Presidents and the most respected newspaper company on the globe.
In the last year, the New York Times’ own story has changed. It has morphed from being that Grey Lady in anxious digital transformation to The Opposition. While most other news media found themselves bewildered and off-kilter in figuring at how to cover the unorthodox Trump candidacy, the Times, along with the Washington Post, had gotten comfortable with calling facts facts and lies lies. Both have been rewarded for their work with unparalleled digital audience growth.
As skirmishes between politicians and media turned to war, Donald Trump’s media-bashing strategy found in the Times a useful campaign prop, a would-be red meat carcass he could chuck out to his voracious base. Just a week after his election, he had found time to tweet-chide the Times as it reported on what it called his transition team’s disarray. That activity hardly surprised anyone anymore.
The big surprise represented in these growing subscription numbers: The shocked and stunned have come to the Times’ defense, especially since mid-year. They’ve done it in a very old-fashioned way – by buying subscriptions.
Those 70,000 new subscribers represent a remarkable, and perhaps meaningful-for-the-longer-term number. Basically, the Times has now upped its reader revenue game. At this point, its run rate computes to a growth running two and a half times that of what it was at year’s beginning.
(Interestingly, The Washington Post’s surge in new sign-ups parallels the Times’. Though the Post, a privately owned company, doesn’t release much data on its business performance, it told me today that ”We began to see a strong surge in digital subscriptions over the summer, and those numbers continued to increase through the month of November. Our monthly average of new subscriptions (July through November 21) is up 73% from the first half of the year.”)
Note that the 70,000 is a net number. Given the division of the election, the Times has received a higher volume of cancellations, digital and print, and those should be accounted for in these “net” numbers.
How do we put that 70,000 number into quick perspective? Let’s look at some key Times indices to do that:
• How much did the Times really add? Going into Election Day, the Times could count a little fewer than 600,000 daily print subscribers, and about 1.1 million on Sunday. About 1.3 million digital-only news subscribers could be added to that (with newer crosswords-only subscribers not included). So we can say that on a daily basis, it could count about 1.9 million paying customers. Its so-far addition of 70,000 this quarter increases that total by about 3.5%.
• How many of the new subscriptions are digital? Most of them. In fact, I’d believe a great majority, while the Times will only confirm “a majority.”
• How many new net digital subscriptions would the Times have normally sold halfway into this quarter? If we’d asked that question at mid-year, the answer would have been about 28,000. From 2015’s fourth quarter through its second quarter this year, its sales progress had been steady. It had averaged 57,000 new net digital subs per quarter. So, midway through the quarter (or Nov. 15), we’d have expected about 28,000.
This mid-November total of 70,000 then means it exceeded that growth by two and a half times.
It is the mid-year rise in Times subscriptions that makes this tale of the tape ever more interesting. In that run-up to the election period – in which its digital audience has exploded [“Did the media win the election?”] the company reports it gained 116,000 news subscribers. That was double its subscriber growth rate for the previous three quarters.
So, all totaled since July 1, the Times has gained 176,000 subscribers – a nine percent plus gain.
• Was the Times’ value to its readers already being rewarded before the election? That seems the likeliest explanation. Circulation sales never result from one single factor. Times CEO Mark Thompson’s explanation of the third-quarter increase covers the likeliest drivers: “The gains are due in part to the extraordinary work of our newsroom during an incredible news cycle, which has led to record audiences for Times journalism and deep levels of engagement, as well as optimization of our marketing activity and our investment in international.”
So, yes, there may well be the Trump Effect of the election, but the larger election effect may be as noteworthy. The Times has become a more essential part of more people’s lives, and has been rewarded for it.
• So, is there a Trump Effect? It could be additive, or it may just reinforce this budding trend. If we compare this fourth-quarter increase so far, it is running ahead of that third quarter by about 12,000 subscribers.
• What do the circulation increases mean in dollars? From the outside, it’s impossible to gauge the exact financial impact of the new subscriptions. We know that the Times’ lowest priced digital subscriptions have long been its most popular, a plurality if not a majority of sales. These subs cost $195 a year.
Consequently, we can make a conservative estimate of the impact if the Times could finish the fourth quarter with an increase like the third quarter. Each doubling the number of net new digital subscribers per quarter should represent at least an additional $12 million a year over what it was getting in the first half of 2016 – if those new subscribers stay subscribed. That dollar amount increases as some new customers buy print or more expensive digital packages.
We see the additional reader revenue represented in the Times’ own assessment of its third quarter: “Circulation revenue from the Company’s digital-only subscriptions (which includes news product and Crossword product subscriptions) increased 16.4 percent compared with the third quarter of 2015, to $58.6 million. Circulation revenue from digital-only subscriptions to our news products increased 15.4 percent to $56.1 million.”
There’s a bigger meaning here.
Though the Times, like its peers, lost a mind-numbing volume of print advertising – down 18.5% in that revenue for the quarter – it managed to report an overall decline of only one percent in revenue. Why?
Those subscriptions sales boosted circulation revenues overall by three percent – and the second-half digital advertising push kicked in, up 21.4 percent.
That’s the new Times formula: heavy reliance on readers to fund the business, with newer digital advertising forming the crucial secondary revenue source, while the company milks print for as long as it can.
Strategically, the Times will soon push past an important point: More than 60% of its revenue will be driven by readers, up from 20-25% just a decade ago.
If and as that number approaches 70%, the Times’ – if its digital ad progress can continue – could attain a new digital-heavy stability.
That’s a huge point in business modeling for the Times – and for the wider, struggling newspaper industry worldwide. Yes, there is only one New York Times, but its lessons — in high quality journalism excellence and state of the art digital execution – can be universal ones.
This second-half 2016 reaffirmation of reader value could also have an impact on a more immediate question: Who will bring all those newer (and older) Times readers their news.
Even as the Times’ crosstown rival, the national Wall Street Journal, is in the process of jettisoning at least 46 positions, and newsroom cuts now roll out across the industry, we have been awaiting news of Times’ cuts into 2017.
Since the Times’ last round of buyouts in May, the question has been what’s next in its restructuring and budget-conforming cuts.
Given the “new money” – fairly unexpected new revenue – driven by reader payment, how many Times’ journalist positions may be able to be saved? That “extra” annualized $12 million generated each quarter isn’t really “extra”, but will figure in company’s strategy and budgeting. Allocated to headcount, it might equal about 80-plus newsroom jobs.
That’s just one of many questions driven by the year’s, the month’s and the week’s extraordinary run of news.
Editorially, Executive Editor Dean Baquet [Newsonomics: “The New York Times’ Dean Baquet on calling out lies, embracing video, and building a more digital newsroom”] must now chart a narrow path, as he fully extends the power of the more-needed-than-ever Times watchdog role, while avoiding the political pit into which the next President will likely try to force the Times.
For the moment, though, in a moment of national consternation and ramping concern about “fake news”, we do see one unexpected bright spot. More readers clearly are willing to pay for well-done, hard-hitting news reporting.
