It’s no secret that President Trump and Rupert Murdoch both dislike the Sulzberger family which has controlled the New York Times (NYT) for more than 120 years.
Trump has repeatedly referred to “the failing New York Times” since the days (all of four years ago) when it looked as though he might just be right. He has even accused the newspaper of “treason”.
Murdoch first went to “war” with the Sulzberger family during his 2007 campaign to acquire the Wall Street Journal. He had been stung by a NYT editorial that sought to persuade the owners to “find a buyer who is a safer bet <than Murdoch> to protect the newspaper for its readers.” Once successfully acquired (for a whopping $5bn), News Corp moved WSJ closer to a general interest newspaper – in competition with the NYT.
However intemperate, Murdoch’s 2010 stated intention “to cripple The New York Times” somehow seemed achievable back then.
A decade later, it all looks different.
The 2019 financials for the 169-year-old NYT are the story of a newspaper turnround, marked by:
- 5.3m paid subscriptions, of which 4.4m are digital-only
- 966k stand-alone subscriptions to its digital services Crosswords (600k), Cooking (300k) and Parenting (60k)
- 583k international digital subscriptions
- 136m monthly uniques on its web site (96m in the US)
The world’s largest newspaper is subscriber-first, has its biggest audience, and seems likely to keep growing: the 2019 digital news subscriptions were no less than 26% up on the previous year.
The digital results were achieved while maintaining relatively strong sales of the print newspaper: 443k (weekdays) and 918k (Sunday). The international edition (formerly the International Herald Tribune) has a total circulation of 164k in print and “print-replica”.
The NYT’s 2019 revenue of $1.8bn (44% was digital) was 4% up on 2018 and was the third consecutive increase. More than two-thirds of revenue comes from subscriptions which was 4% up; ad revenue was 5% down. The company’s investment strategy is reflected in the fact that operating profit (£175m in 2019) has been held back by operating costs that have increased by 17% since 2015.
For all the occasional job cuts, the NYT has (almost alone among its peers) consistently increased total staffing, which has grown by 26% to 4,500 in the past five years. It includes an all-time high 1,600 journalists, a large share of the whole US newspaper industry whose total headcount may have fallen to just 25,000.
The NYT has so far remained “exempt” from the Coronavirus woes afflicting the news industry. It is still recruiting staff both in the US and UK, while most other media have been making cuts.
But, then, the pre-Covid circulation of US dailies was 50% down from its peak and revenue was 60% down. (Only the New York Times, Wall Street Journal, and Washington Post have buoyant readership based on the drive for digital subscriptions.)
In first place, the NYT is making the successful shift from the once typical newspaper dependency on advertising to getting readers to fund its journalism. The NYT now has more digital subscribers than The Wall Street Journal, The Washington Post, and all 250 Gannett local newspapers put together.
The transformation really began with its digital paywall in 2011 and the start of selling digital subscriptions. The “intelligent” paywall enabled site visitors to read, first, up to 20 articles a month free before hitting the paywall. The free news has become scarcer over the years as the paywall has tightened. The strategy was followed by the launch of new subscription packages and products.
The NYT has invested heavily in data resources and AI. It has also hired a lot of tech talent and has boasted that “no other newsroom in the world has more journalists who can code.”
But it still never looked like a sure-fire strategy. It is only three years since Wired magazine was speculating about the potential of the newspaper’s dreamy plan “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/when the printing presses stop forever”.
The strategy – seemingly inspired by the “pay for quality” strategies of Netflix, Spotify and HBO – was to invest in journalism and add products and services so that a subscription became indispensable to the lives of existing subscribers and more attractive to future ones.
In a widely-leaked 2015 strategy document, the management said: “Our over-arching aspiration is to cultivate another generation of readers who can’t imagine a day without The New York Times. Our first two million subscribers — including our more than one million newspaper 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 plan is working.
Some of the credit goes to the NYT president and CEO Mark Thompson, a Brit whose previous role as boss of the BBC hardly seemed to have equipped him to do the job he took up in 2012. There was more of a following wind than anyone could have guessed.
Within four years, Trump had been elected president – and was promising to wage war on the NYT. But, four weeks after the election, Thompson said subscriptions were growing at 10 times their usual rate because of “… the public anxiety to actually have professional, consistent, properly funded newsrooms…” That was an experience matched by other US print-centric media including the Washington Post, Wall Street Journal, the New Yorker, and The Week. It implied that the president’s hostility to reporters and to the very notion of facts reminded readers that journalism needed their support in order to survive.
The NYT is now aiming to have a total of 10m subs by 2025, an estimated 20% of them outside the US. It may ultimately compete internationally also with the likes of CNN and the (coming soon) NBC Sky World News. Its relationship with Netflix, Amazon Prime and Hulu suggests a possible route to a “New York Times news channel” as the streamers extend their offerings.
That might be be guessed from the way that its audio product The Daily has become the best news podcast since it was launched in 2017, as a 20-minute agenda-setter. The podcast now has a full-time staff of 13, a daily audience of 5m, and is said to be profitable (from advertising). Time magazine says: “Listening <to The Daily> is as different from reading as the Times of 10 years ago is from the news organization today.”
The audio success prompted the recent acquisition of Audm, a subscription-based service that creates actor-read versions of features for media including The New Yorker, The Atlantic – and the NYT. The deal follows speculation that the NYT is also negotiating the $75m acquisition of Serial Productions, producer of “Serial”, the true crime podcast franchise said to have attracted more than 300m downloads. It is believed that Serial could, with The Daily, could form the basis of an ambitious new paid-for product — like the Crossword, Cooking and Parenting apps: “The HBO of podcasts”.
The Daily has spawned The Weekly on US TV, which may account for some $50m of annual revenue. The company is also making full-length documentaries, and shows for Netflix and Amazon based, respectively, on the newspaper’s “Diagnosis” and “Modern Love” columns.
NYT had been early to buck the business model of most media companies, which had been to chase mass audiences with free content optimized for Facebook. It took many too long to realise that, as fast as they grew their audiences, most of the ad revenue growth went to Facebook and Google.
While NYT also flirted with Facebook, notably on Instant Articles, it has mostly stuck to the basic idea of publishing journalism that people want to read, giving them a taste for free and then asking them to pay for it.
What once seemed a pipe-dream of getting subscribers (instead of advertisers) to pay for the company’s high-cost news gathering, has been based on five key pillars:
- The digitalisation of the core readers of quality newspapers which have increasingly joined younger audiences in consuming news on smartphones and tablets. It has been easy to under-estimate the relative solidity of core older audiences at the heart of news brand circulations that were once swollen by promotions and the drive for advertising revenue. This core news audience is underlined by the Financial Times and The Times of London which have respectively built subscription bases of 1m and 500k over the past few years. While millennials are the largest and fast-growing demographic of the NYT readership, the business has arguably been built on the stability of its older audience
- Global interest in Donald Trump and political populism has created a huge new appetite for political coverage in the US and internationally. The shocks have been good for readership.
- A digital strategy that has, as Mark Thompson puts it, allowed new products and services “to grow independently of the gravitational pull” of the still-declining print newspaper.
- Energetic innovation including the 2017 launch of The Daily podcast (and now The Weekly TV show), the digital Crossword, Cooking and Parenting subscription services, and the general push into audio and video. It seems likely that the NYT will eventually become the first traditional news brand to give readers the unfettered opportunity to ‘pick and mix’ only the content, services (and even advertising) they actually want.
- Continuing emphasis on journalism Last year, The NYT produced 59,995 articles, 193,929 photos, 3,900 videos, 445 podcast episodes and 39 pieces of television. Its talent pool has been rejuvenated by some of the writers who had once made digital media seem formidable. The former top editors of Gawker, Recode, BuzzFeed and Quartz and many of the reporters who started Politico are now at the NYT.
This year, the NYT emerged from its digital transition and hit the ambitious target of earning $800m per annum through digital revenues – 12 months early. Its share price rose to a 15-year high.
But it is not much more than three years since the estimable media analyst Ken Doctor, of Nieman Lab, said: “The truth is that the Times has weathered the internet’s disruptions relatively well. But it still must find at least one more good trick to make it through to a sustainable, digital-centric future.”
Three years on, the Harvard Business Review says: “These successes come just a year after unexpected layoffs at digital natives, BuzzFeed, AOL, Yahoo, and HuffPost led to questions about the financial feasibility of any digital news organization. With operating profit down from last year and ongoing concerns about how to cover their cost-intensive reporting style, The New York Times is by no means done with its digital transformation – but it has set itself up for success to continue innovating in the years to come.”
Fifth generation family publisher Arthur Gregg (“AG”) Sulzberger says he still faces stiff competition, including from the BBC globally. “But there isn’t another news organisation doing as much, as well, as The New York Times.”
He might have chosen to acknowledge the “contribution” of President Trump: When he became president in 2016, the New York Times had just 1.5m subscribers; by the time of this year’s election, it may be five times that. But Sulzberger doesn’t often comment on those relationships, not even on the NYT’s exhaustive three-part “expose” of the Murdoch family last year, or the fact that “The Daily” had once been the brand for a News Corp digital product which failed in 2012. Or that WSJ publisher Dow Jones peppered its 2019 results announcement with explicit NYT comparisons including that “Dow Jones is significantly more digital than the New York Times.” The history continues.
The NYT’s turnround has some important pointers for media companies everywhere. All media will become more consolidated, a process that is being accelerated by the Covid-19 crisis. Only the winners in whatever niche, channel or market may survive. Readers, users and advertisers will each concentrate their buying habits. They will (only) pay for high-quality information they cannot get anywhere else. To find success, you must experiment widely.
Traditional media executives everywhere should be inspired by the defeat of the sceptics who bet against the survival, let alone revival, of the New York Times. You can do it.