and why it’s not enough to offset the loss of print revenue
Imagine you have no recollection of what life was like before the internet. The idea of print newspapers must seem ridiculous. It’d be comparable to printing out a copy of your memo at work and hand-delivering it to your entire company, one-by-one, instead of slack or sending out an email. Yea. Ridiculous. You’ll probably get fired for doing that.
That said, there are benefits to print that some would defend to their death. Some would argue for the tangible feeling of a newspaper, and some would argue that information is retained better when reading a physical copy. Print’s staunchest proponents will point to the resilience of physical book sales vs ebooks as evidence that print is here to stay. I know, because I love print newspapers and I also love physical copy books.
But let’s face it, fewer people are experiencing the ‘magic’ of print as we value convenience, savings, and having options more than getting a physical copy delivered. A hard copy is great but oftentimes unnecessary. Nothing I’ve said thus far has been a hot take or likely surprising to the average reader. However, you may be surprised to learn that as recently as 2016, 2 out of 3 dollars the New York Times makes came from their print business, and that segment still accounts for almost a billion dollars today. Yes, print is dying, but don’t underestimate its immense profitability. It’s shrinking for sure, and therefore a digital strategy is a must for any news organizations now, but print will not be easily replaced by publishers without incurring some pain.
On to the New York Times. This is an organization that has successfully dealt with a digital transformation in the last few years: they’ve more than doubled their digital-only subscriptions despite losing 1 in 6 paid print subscriptions since 2016. As of 2019, NYT had 5 times the number of digital-only subscribers (4.4M) than their print subscribers (856K). Instead of faltering from the slow death of print, their business has been growing at roughly 5% annually since 2016.
This was not an easy feat for the New York Times to pivot away from an extremely profitable, reliable, but dying cash cow, that made up the bulk of its revenue, to monetizing its products in an extremely competitive digital landscape. Merchants of Truth by Jill Abrams, the former editor of the Times, shed light on their attitude in those days: the newspaper of record looked down on these outlets as being not-real news while realizing that the Times had to keep up with the times.
How the New York Times grew its digital business
NYT published a 2020 report in 2017, detailing their digital strategy. In the report, they stated: “The future of the company hinges on digital growth as the print newspaper becomes a specialized product for an ever-shrinking base of readers.”
The most obvious path forward is to replace print subscribers with digital subscribers, and that’s what the Times did, extremely successfully. NYT total revenue actually grew by 17% despite falling print revenue, they doubled down on their digital strategies and grew their digital-only subscription by 136% in that time period, more than offsetting what they lost in other segments. Moving away from print means moving away from a one-size fit all strategy. They’ve diversified content — providing more than just reporting, but also guidance on life, lifestyle commentary, curation of culture, etc. They evolved their storytelling ability as a result of more closely integrating their newsroom with their product team, adding more visuals and new forms of delivery like daily briefings. They’ve moved beyond print to The Daily on podcast and The Weekly on TV. Beyond providing different audiences with a diverse set of content, the Times also introduced dynamic paywalls to optimally monetize all types of audiences — determining the right price for the right customer based on their interests, online behavior, and price sensitivity.
It’s tough to make up for the loss of print
As the numbers have shown, the Times’ strategy worked well. Their business has grown and their subscriber numbers showed that they have adapted to the growing irrelevance of print. Despite the success in growing digital’s share of revenue, purely driving digital subscription growth will be insufficient to offset a dying print business: digital is just not as profitable. Taking into account both subscription and advertising revenues, an average print subscriber is worth 6X more than an average digital subscriber in revenue. I would venture to say that the customer lifetime value difference is likely in the same ballpark, depending on retention rates. The worst part is, this gap has only widened since 2016 when the difference was only 4X.
Part of it is the heavy discounting Times have done to attract new subscribers:
Another part is simply because digital advertising has not grown as fast as a digital subscription, despite their initial belief (as mentioned in their 2020 report) that more reader engagement would drive more advertising dollars:
The Times indeed attracts an audience that advertisers want to reach, but the Times has struggled to monetize this effectively as it lacks a developed digital advertising solution (e.g., attribution, targeting, ad exchanges, etc.) offered by strong competitions in tech and alternative media ad solutions (Google, FB, and now Vox’s new advertising suite in Concert, Forte, and Chorus). It is also true that digital-only subscribers are more difficult to monetize given the trade-off between ad monetization and optimizing reader experiences.
So while the NYT has done an amazing job growing their digital reader base significantly (+28% annually since 2016), it is likely unrealistic to continue to expect digital readership to grow at 6X the rate at which print subscribers are shrinking.
In the long term, forget about making up for the loss of print, but a new business model is required.
In the short term, continue to pursue content diversification in both content and delivery format. Successful examples such as the Daily (podcast), the Weekly (TV), and new websites (‘Parenting’) both enhance existing subscriber experiences and attract new audiences. Depending on how successful and distinct these offerings are, these could evolve into new subscription products like the Times Crossword or Cooking App. In advertising, consider what the industry is doing with Concert, and/or beef up the ad sales team. NYT customers are attractive, make it easier for people to advertise on NYT, and differentiate your product from the digital advertising behemoths.
The danger of continuing on the current path of digital at all cost is to fall into the mindset of ‘making up for the loss of print’. While both print and digital generate subscription and advertising revenue, the ecosystem and the market are both dramatically different now than when print ruled the day. There are new competitors in digital advertising but also new customers to reach through new types of content. It’ll be key for the New York Times to not only continue to pursue new products both in content and delivery format but also to consider any innovation as building a new business model. Forget print and the good old days, think about what the newspaper of record will look like in 2030.
