Wired magazine recently published, Keeping Up with the Times, a story about the New York Times and its slow & painful transition to a digital first publication. “It’s to transform the Times’ digital subscriptions into the main engine of a billion-dollar business, one that could pay to put reporters on the ground in 174 countries even if (OK, when) the printing presses stop forever,” Gabriel Snyder (one of my favorite writers, by the way) wrote in his in-depth feature, which is worth reading.
After reading the piece, I thought let’s see how the Times is really doing — by the numbers. With help of Nima Wedlake, I came up with data to chart the progress made by the company, to see how far it really is from its transformation into a billion-dollars-in-digital-business. Have a look:
- The company reported revenue of nearly $1.6 billion in 2016 — remarkably consistent with prior years. But under the surface, the mix of revenue is changing dramatically as revenues from its print advertising business continue to decline.
- Print advertising revenue dipped by $70 million year-over-year to $372 million in 2016.
- Digital advertising revenue, while a meaningful portion of the Times’ revenue, did not grow enough to offset vanishing print ad dollars. Total digital ad revenue in 2016 was $209 million, up only 6% from the prior year.
- The key revenue driver for the New York Times has been its digital subscription business, which added more than half a million paid subscribers in 2016.
- Thanks in part to interest around the presidential election, the newspaper added 276,000 new digital subscribers in Q4, the single largest quarterly increase since 2011 (the year the pay model was launched).
- The company hopes to grow total digital revenue to $800 million by 2020 (from nearly $500 million in 2016).
- Growth in the subscription business is the byproduct of a shift in focus and culture at the Times towards digital. The Beta Group, which is the company’s internal digital team, has been given freedom to experiment with new models for reaching and ultimately monetizing its reader base.
- In October, the company acquired The Wirecutter, a popular product review site, for $30 million. In Q4, the Times reported that its “other revenue” category (which includes affiliate revenue generated by The Wirecutter) grew by more than 16%.
- The Times’ digital success is hinged upon two major drivers: affiliate revenues from services like the Wirecutter and digital subscriptions. Advertising might be a good short term bandaid, but the company needs to focus on how to evolve away from it even more aggressively.
- The Times needs to simplify their sign-up experience and make it easier for people to pay for the subscriptions. As of now, it is like the sound you hear when scratching your nails on a piece of glass.
- Additionally, the company should find more verticals for The Wirecutter that can add lucrative affiliate revenue-streams.
- Success in the digital subscription business may be the byproduct of a broader trend — consumers’ growing willingness to pay for digital content. Here are some of the services with the total number of paying subscribers: Netflix (93 million), Spotify (40 million), Apple Music (20 million), Hulu (12 million) and HBO NOW (2 million).
Featured photo of The New York Times building, courtesy of Wikipedia.