NYT: “Our Path Forward”
Its 96-page internal “Innovation” report in March 2014 called for a strategy to make the New York Times newsroom “a truly digital-first organization.” Last month, the strategy was unveiled, and it might rather be termed a “mobile-first” strategy.
Executive Editor Dean Baquet, Chairman and Publisher Arthur O. Sultzberger Jr., and eight other officials of the 164-year-old newspaper company declared in an 11-page memo solemnly titled “Our Path Forward”: “Our company was built for the print era and now must be redesigned for the mobile era… Our first two million subscribers grew up with The New York Times spread out over their kitchen tables. The next million must be fought for and won over with The Times on their phones.”
The memo noted that in the last five years, the newspaper has doubled its digital revenues to $400 million. The headline from the memo was a goal to double the digital revenues again to $800 million by 2020. Last summer, the Times announced that it had surpassed the 1 million mark in digital subscribers.
The Times is making an impressive effort to figure out how a major news organization rooted in the print era can survive in the digital era. With so much at stake—the Times‘ epic contribution to American journalism, the legacy of a great newspaper family—one assumes this strategy is as cutting edge as it gets. But will it work?
The Times is betting on its uniqueness. It is betting that the best business model should focus on getting users to pay for Times journalism—on the basis of the uniquely high quality product it offers—rather than depending on advertising revenues. The Times is betting on digital subscriptions, and it believes that loyalty of digital subscribers is what will drive whatever digital advertising it also manages to attract.
From the memo:
Though “user-first” has become a popular buzz phrase in recent years, it has real meaning for us. While most of our competitors chase scale, our unique business model is built on directly asking our most loyal readers to help us pay for our massive news gathering operation. In addition to contributing all of our digital subscription revenue, they also are responsible for driving the majority of our advertising revenue through their deep engagement. The sustainable path to long-term revenue growth requires that we always prioritize user experience and the needs of our customers over hitting quarterly revenue targets. These deep reader relationships are our most valuable asset.
The Times newsroom, 1,300 journalists strong, has already re-geared as a digital-first organization. The memo accepts the “inevitable decline in print.” But the memo’s talk about the need to “deepen the engagement with our current readers” and “building new relationships with people around the world” is a leap of faith.
The Times has prioritized hiring journalists “with new skills in graphics, video, technology, design, data, audience engagement and much more.” In outlining fresh approaches for the digital era, the memo points to innovations like digital storytelling techniques, big multimedia projects, video reports, liveblogging, mobile phone alerts, newsletters, translations, service journalism, and new formats like Apple Watch and Snapchat. These are in line with the Times‘ core goal of making the user experience as enriching and personal as possible.
Yet, it’s not clear how those wonderful features produced by digital-savvy journalists are going to enable the Times to keep its 2 million current paying customers—one million of them buying the print paper—let alone recruit new ones. Undoubtedly news consumers everywhere will continue to love reading the Times. The question is whether enough of them will be willing to pay for it.
The memo predicts that “over the next few years, the battle is going to be won or lost on smart phones.” Yet, mobile devices with five-inch display screens don’t seem to be a very ideal platform to support what the memo rightly calls “ambitious, original, high-quality journalism that is essential for an informed society.”
In the last few financial reporting quarters, the Times has been clocking 20 percent or so increases in its digital subscribers—no doubt, one of the reasons for the surprising confidence expressed in “Our Path Forward.”
Other numbers continue to be sobering, however. Digital advertising revenues, though steadily improving across the industry, only contribute about one-third to overall ad revenues. Print ad revenues have been steadily declining at the Times in 2015—down 11 percent in the first quarter, 13 percent in the second quarter, and about 1 percent in the third quarter. In the third-quarter results released at the end of October, just three weeks after the “Our Path Forward” memo was issued, even digital ad revenues declined by 5 percent. As the memo says, “for all we’ve accomplished, our digital business is not yet close to supporting the scale of our ambitions.”
The Times’ strategy is a clear-headed appraisal of the challenges it faces, and a reasonable action plan for survival in the digital era. It aims to not only survive but thrive. The Times‘ goal is nothing less than attracting readers who will “build a lifetime relationship with The New York Times.” Times‘ executives deserve enormous credit for their unyielding commitment to quality journalism rather than bottom lines. Yet the Times‘ future depends to a great extent on dynamics outside its control.
The memo notes, for example, that the Times will particularly focus on younger readers, who are “reliable first indicators of major trends that ultimate affect our entire audience.” Already the under-35s make up 40 percent of the Times’ mobile audience. But studies show that these so-called Millennials have adopted digital media consumption habits for the digital age—digital natives are getting their news from networks such as social media more than via destination news sites. It is far from certain that the Times will be able to demonstrate to this demographic “the unique value of consuming The Times on our own platforms.” The memo acknowledges the ominous phenomenon of readers’ “changing habits.”
As the memo notes:
Skeptics still openly wonder if we can continue to deliver on this journalistic mission, given the seeming mismatch between the economics of news media and the scale of our operations. They suggest the days when a media company can fund a big, ambitious newsroom are over. They doubt we can continue to cut legacy costs and fund digital innovation at the same time.
These are serious and fair questions. The most pressing challenge is not to prove that our journalism matters—it’s to demonstrate that our business can continue to support this mission.