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March 18, 2024

NYT 1Q Numbers: Back to Revenue Loss as Ad Declines Swamps Reader Revenue Gain

The big number in the New York Times Company’s quarterly report today is a double-digit one: 13.3%

That’s the Times’ loss in print ad revenue, and it’s a number — if it continues into the year — that could be devastating to new CEO Mark Thompson’s turnaround efforts. The Times Company’s decline in digital ads was 4%. Those two numbers have pushed the company back into the loss column. It reported a 2% loss in revenue for the quarter, after chalking up a Rubicon-crossing .3% gain for all of 2012. It had passed the magical zero line (“The Newsonomics of Zero, and the New York Times“) and didn’t want to go back — especially one quarter later.

At a 2% decline,the Times almost managed to balance that precipitous ad decline with another gain in reader revenue, up another 6.5% for the first quarter. That compares well to its 8.5% increase in circulation revenue for all of 2012, though it begins the paint the picture of the economics the Times is now facing.

Its quarterly profit: a meager, on the line, $3.1 million.

In a nutshell, its reader revenue strategy, built atop the smart paywall system it erected two years ago, is working well, but is in danger of plateauing. The Times itself (more on the Boston Globe below) is is up to 676,000 digital subscribers, and it’s doing a good enough job of holding onto print-based, All-Access subscribers. Yet, its growth is plainly slowly. It added just 36,000 digital subscribers over the last three months.

As Thompson “Announces New Strategy for Growth,” we see the next-step, call it Paywalls 2.0, an effort gaining steam among many of the first-generation adopters of paywalls, to spur reader revenue growth.

We knew that Mark Thompson had to make a mark after announced strategy, after five months on the job. His first stake in the ground in this next-gen paywalls strategy, in three parts, from the release:

  • A lower-priced paid product designed to allow access to The Times’s most important and interesting stories in a convenient, media-rich package for consumers looking for an efficient way to stay informed. Consumer research has suggested very strong demand for such a product.
  • Other new products, also at lower price points, that would offer deep access and additional content and other new features in specific content areas such as politics, technology, opinion, the arts and food.
  • An enhanced tier that would offer extras at a higher price point to “all digital access” and print subscribers. Subscribers will likely be offered access to Times events and the ability to gift subscriptions and provide full family access, among other incentives.

The goal: to find new growth in reader revenue — revenue that has surpassed ad revenue at the Times, and then to more than make up for what will undoubtedly be continuing declines in advertising. The Times, like its peers in the newspaper and magazine business, is finding that its gasping for breath in the long-distance race with Google, Facebook, Yahoo, Microsoft and AOL for fast-growing digital ad dollars, even as those print dollars accelerate their movement to digital.

We’ll take apart the Times’ various new paywall strategies, long in the planning, as they hit market.

The focus on segmenting customer groups, with differing products at differing price points, is a positive step, though largely terra incognito. The Wall Street Journal has tested three niche products with tablet aggregator Pulse; the results haven’t yet convinced the Journal to multiply that strategy.

The third idea — the “enhanced tier” — is an idea borrowed in part from the Financial Times, whose metered model was the basis of the Times reader revenue strategy. As I’ve reported (“The Newsonomics of a News Company of the Future“), about the FT’s premium product is priced at 113% of its All-Access price, and it has gotten good response. What is in the new tier is critical; membership is an easy word to offer and far harder to fulfill in a meaningful, market-changing way.

Perhaps the biggest challenge of niching new products: Minimizing leakage of higher-paid to lower-paid ones.

Two other points pop out of this morning’s report:

  • As the Times Company readies its sale of the Boston Globe (at the Nieman Lab today, I further explore the sale of the Globe and Tribune metro properties), it’s clear the Globe is under-performing the Times. It was down 6.7% in overall revenue, as its reader revenue lost 1.9% and advertising declined 10.1%. Two takeaways here: 1) the new owners of the Globe face a tough challenge in getting back to growth, given those numbers; 2) as the Times emerges as essentially a standalone entity, its own reader revenue strategy looks better. Without the Globe, it was up 8.2% in circulation dollars.
  • The national ad market movement from print to digital may be faster than the regional one. As Gannett, the largest newspaper company reported yesterday, it announced a 4.5% decline in ads. Gannett’s ad revenue is more heavily tilted to retail advertisers,, whose movement from print to digital is slower than either classifieds (largely gone) and now national. Significantly, Gannett, also reported a 14.5 percent increase in local market circulation revenue.

In sum, paywalls are working, but will they be enough to turn the industry from red ink to black?

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