Is New York Times about to crack the code of network effect marketing?

Why piggybacking strategy may pay off for NYT

New York Times started publishing today selected articles directly into Facebook’s newsfeed. Some think the move historic; others deem it unremarkable. For both, the intriguing part is to understand how to make sense of this deal.

New York Times is the direct pay, subscription business. To be successful, it needs a vast network of paying customers, and it needs their credit card information and their recurring payments. To jeopardize their subscription network would nothing short of irresponsible.

But to grow a network, one needs to think like a network.

Fastest growing disruptors today, like Instagram, Snapchat, Whatsapp or Airbnb, all “piggybacked” on pre-existing social networks. They built upon the user base and social dynamics of what is already out there. This allowed them to grow fast by swiftly gaining scale and creating massive network effects.

Airbnb piggybacked on Craigslist, which it used for its initial growth. Paypal piggybacked on eBay and its vibrant world of transactions. Instagram piggybacked on Facebook and its massive network. Snapchat and Whatsapp piggybacked on phone book of everyone with a mobile.

This strategy is also known as “growth hacking.” Growth hacking is considered to be one of the most scalable and sustainable growth strategies because it doesn’t waste time in building network effects from scratch (think how long it took for a telephone or even Internet to achieve mass adoption). Growth hacking is especially powerful for a company when the pre-existing network it piggybacks off offers some form of complimentary value-add to the company’s original offering — like commentary, ratings and sharing.

By using Facebook as a publishing platform, New York Times effectively hacked its own growth.

It also offered a roadmap for survival to other publishing companies.

To win in the new publishing landscape, where Facebook is as much a force as Washington Post, publishers need to think like growth hackers. They need to shift from playing defense to taking the offense, even if that means discarding formerly successful approaches.

The value that New York Times is getting from piggybacking on Facebook is cultural impact and brand visibility — and not display ad impressions. It gets to attract and retain attention the next generation of readers. If it can somehow convert this attention into direct pay, great. The option is already out there: growth hacking as a marketing technique inherently revolves around optimization of funnel conversions, and the wealth of Facebook data provides rich opportunities for content sampling and testing.

More critically, growth hacking allows New York Times opportunity to capitalize on network effects marketing. In its shift from advertising to the direct pay business model, this kind low-to-no cost marketing may prove to be a critical step in the process of retaining financial viability.

Ultimately, the success of this venture will depend on how well New York Times understands the nature of its relationship with the network it’s piggybacking on. Facebook isn’t in the business of saving journalism. Its goal is to trap people on its platform through baby gifs, ISIS videos, “Dad bod” photos — and New York Times articles.

The publishing industry already labeled New York Times’ move as “tectonic.” There were questions of preservation of journalistic integrity, the volume of articles that will be featured in the feed, guesses about revenue split between the two partners. Late David Carr noted that “the wholesale transfer of content sends a cold, dark chill down the collective spine of publishers, both traditional and digital insurgents alike.”

In the end, it will all come down to the terms of the deal and the execution. Until then, it’s all speculation — of tectonic proportions or not.

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