March 9, 2017 | Lucy Penn
The New York Times has recorded significant success with their digital, paid-for strategy. The Times’s commitment to a subscription based revenue model that is less reliant on advertising revenue seems to be working well for the publisher.
The publisher reported that digital advertising revenue rose 6% last year, to $209 million. The Times Company added 514,000 net digital-only subscriptions for its news products during the year, bringing its total to 1.6 million. In the last three months of the year, the company added 276,000 net digital-only subscriptions. This has been accelerated by the Presidential election and adds up to more additions than in 2013 and 2014 combined.
The New York Times believes that by improving the quality of their journalism and concentrating on their core offering they will attract digital subscribers to pay for their content, ultimately strengthening their bottom-line. By offering enhanced content, the publisher believes that a subscription to the Times will eventually become indispensable to the lives of its existing subscribers and create a demand for new ones securing a lasting future for the 165-year-old brand. This model has been inspired by strategies from Netflix and HBO who both invest heavily in their core offering, creating a powerful demand for customers to use their platform.
The New York Times president and CEO Mark Thompson commented on this strategy saying that “The continued excellence of our journalism and our consumer-first focus led to incredible strength in our circulation business, both in the fourth quarter and for the full year.” It seems to be working, the statistics show that in the third quarter digital subscriptions grew at their fastest rate since their original 2011 paywall model approach.
However, the inevitable is still upon the New York Times, the publisher is not immune to the dramatic decline in print advertising revenue which is still impacting the financial results of all publishers. The New York Times reported a fall of about 2% revenue for the year, slipping to $1.6 billion. Their advertising revenue has halved in less than a decade driven by a 16% decrease in print, showing the newspaper is still heavily dependent on its print business. Digital subscriptions account for just over a quarter of total circulation revenues, while online ad revenues account for 36% of overall advertising sales.
The New York Times is in the process of rethinking their complete outlook on their editorial strategy, with a view to prepare for a future digital first strategy. This year the publisher’s top editors have announced a review of their newsroom, with a view to cut a number of print-centric editing and production roles in an attempt to accelerate digital growth. With an ambitious target to reach $800 million in digital revenue by 2020, the NYT hopes to be best positioned to take advantage of changing media consumption habits.
The growth seen since the implementation of a subscription-based strategy has been extremely positive for the New York Times. Although it is impossible to plan for the continued decline in print revenue, the Times are creating valuable content that readers are more inclined to pay for. This shift to a willingness to pay for online news will take time but the Times success is promising for all publishers to hear.
Next Week: See how A Media implemented their 3-stage subscription plan