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Summary:

The New York Times is seeing continued growth in subscription revenue thanks to its paywall, but at the same time its advertising revenue is still falling, both in print and online.

New York Times building logo, photo by Rani Molla

A year ago, I wrote about how the New York Times — despite the success of its metered subscription plan — was stuck running “the Red Queen’s race” from Alice in Wonderland, the one where you have to run at top speed just to stay in the same place. The newspaper’s latest financial results show that this is still the case: although the Times has seen further growth in subscriptions, its overall revenue barely budged, and much of that lack of movement was due to continued declines in the paper’s advertising revenue — both in the print version and online.

In a piece at the Columbia Journalism Review, writer Ryan Chittum gushed about how the Times‘ digital subscription revenue “soared past its digital ad revenue” in the third quarter — but it did so in part because digital ad revenue plummeted another 3.4 percent during the same period, compared to the year before. And that’s actually a larger drop than the Times saw in the third quarter of 2012, which means the problem is getting worse instead of better.

Advertising, b&W ad

Bloomberg took a look at the advertising problem the Times is facing in a recent piece, noting that the paper’s third-quarter revenue for both print and digital was likely about $140 million, or the lowest it has been since 1998. The drop in the latest quarter marks the 12th straight consecutive decline in ad revenue for the paper — and the Times blamed the decline on “an increasingly complex and fragmented digital advertising marketplace,” which is exactly the same thing it blamed its poor digital ad results on last year.

Ad revenue falling, paywall growth slowing

Print advertising revenue, meanwhile, fell by a somewhat smaller amount in the third quarter — just 1.6 percent. But if you look at the nine months (PDF link) since the beginning of 2013, print ad revenues fell by over 7 percent, part of an ongoing story at newspapers that has seen billions wiped off the balance sheet over the past few years: to take just one example, the Times said that automotive advertising sales at the paper fell by almost 60 percent in the latest quarter.

In a nutshell, digital subscriptions are climbing, but — as Chittum notes, and as industry analyst Ken Doctor also points out — the rate at which they are increasing has slowed dramatically. Right now, the Times is making almost exactly the same amount from digital advertising as it is from digital subscriptions: about $110 million in the first nine months of 2013. But that first number continues to drop, as does the amount coming from print advertising.

At the moment, the paper is more or less holding steady: revenue climbed a minuscule half of one percent in the first nine months of this year. Doctor is right when he says that this is better than a drop in revenue, but it isn’t exactly robust growth, and if print and digital ad revenue continue their rate of decline — and the rate of growth in subscription revenues continues to flatten — the Times could find itself going in reverse before too long.

Post and thumbnails courtesy of Shutterstock / Everett Collection and Rani Molla of Gigaom

  1. Stanley Krauter Saturday, November 2, 2013

    Here arre two simple ideas for the NYT et al to increase their revenue.
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    Every newspaper website should be programmed so it can remember every article that a reader prints or emails so their readers could buy an ebook or a print on demand paperback book filled with information that they selected as important. This will immediately make long news articles more profitable because many readers will pay for the opportunity to become the editor of a book they think is important. (Charles Dickens’ novels were published as daily or weekly chapters in a newspaper before they became bestsellers in books. The same results could be accomplished by turning newspaper articles into bestsellers.) The frequency of visits to a website and the amount advertising looked at will also increase when readers get close to having enough articles for a book. And some casual readers will be happy to pay for the service and that could create a secondary increase in revenue when they pay for a subscription.
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    The newspapers should also get the software used by a journalism website (Fair dot org) that enables a pop-up to immediately appear when a mouse is dragged over a headline. Their pop-ups display a one or two sentence introductory paragraph for the article. But the pop-ups for a newspaper’s front page stories should display at least five or six paragraphs because this will make it possible for readers to learn more with less effort. People actually read more articles with a newspaper that they can hold in their hands because clicking on a headline is a time consumption price that stops many people from learning. And if people just look at the five of six paragraphs from one of the front pages stories, they will be much more likely to click on it or one of the less important stories. Then they will also look at more advertising and buy more ebooks and paperback books edited by themselves.
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    But I am convince that the NYT et al will not consider my ideas because reporters are not interested in communicating like teachers. Reporters are the Peeping Toms of society. It is their job to look into everyone’s dirty underwear and show it to the world. That is what they like doing. And that is what they care the most about.

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    1. I have a biased opinion, but those are two really good suggestions. I’m creating a news site now that does both of those. It’s not a daily website, but we’ve definitely embraced taking content and extending it through ebooks. The second idea was spot on for us because we realize readers might not want to read the whole long form story we’re writing, but they might get enough seeing five paragraphs as an introduction. They might want to continue to read or they might then be interested in getting the ebook when they have more time to read.
      I might be naive, but I also believe there are more than enough journalists who are interested in telling good, informational stories and not the tabloid journalism that some have adopted to attract eyeballs.

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      1. Stanley Krauter Tuesday, November 5, 2013

        Thank you for your comments. But I can’t seem to find “enough journalists” who will acknowledge that they are repeatedly failing to communicate.
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        Consider our tax laws. There have been many news reports on our tax laws since the 1986 reform but nothing was done to stop Congress from creating at least one new tax deduction for every lobbyist with a tax deduction. So the hard work of many reporters have been a complete waste of time. And all of the campaign reform laws have also been a complete waste of time. However, these problems could have been overcome if every major newspaper had just published a one page report on our tax laws every year on April 15. But reporters don’t seem to care about their failures to communicate. They are only interested in entertaining their audience instead of educating voters.

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  2. The NYT is not embracing new web based technology to connect to the scriber! The format of the paper is not what I would call view interactive, It has zero point zero user inner face dashboard, this by itself could push ad revenue up significantly. Dave Lewenz

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  3. “In a piece at the Columbia Journalism Review, writer Ryan Chittum gushed about how the Times‘ digital subscription revenue “soared past its digital ad revenue” in the third quarter ”

    It is quite apparent they have a sales problem and not a readership problem.

    “the Times blamed the decline on “an increasingly complex and fragmented digital advertising marketplace,” which is exactly the same thing it blamed its poor digital ad results on last year.”

    Having commented that they have a sales problem it is important to recognize the complexity and fragmentation as they stated. However, the pay wall is not helping the sales problem as it negatively impacts advertising campaign reach and frequency.

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  4. The answer is in getting results that advertisers can measure to the penny. Here’s how, in markets small and large: I’m a two time radio station owner. I’ve delivered seven figure results for advertiser after advertiser. Our industry, like yours, continues to moan about the fragmented ad dollar pie.

    Just give the advertiser the results. I’m sick and tired of media sellers’ failure to address advertisers’ frustrations about not being able to nail their results. They can, and make millions, from New York City and Toronto to Lindsay Ontario and Gettysburg PA.

    I can share what I give prospects and clients – a two page summary and a 25 minute “how to” video that cost $30k to produce. It ain’t hard people. I just don’t have the time to talk with ad seller after ad seller, but if you’re an owner or publisher or advertising manager or circulation manager, call me and I’ll send it to you, or drop me a note at AndyMcNabb.com. The video is quite thorough, but you’ll have to pardon the primitive text and links site – my developer is finishing another project for me, and looking pretty online is not a priority this November.

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  5. My thoughts are in line with Andy’s, the only way to reverse the fortunes of newspapers is by offering value to advertisers. Falling circulation/readership makes publications less attractive as an advertising vehicle. At the end of the day, businesses need to advertise to attract customers and make sales – most seem to be struggling with the same issue – where to put their dollars for the best return.

    I have just developed a fully integrated print and digital strategy to give print adverts the same accountability as digital ones (or probably even better) we do not just track leads and click throughs’ we record the number and value of sales attributable to each print advert in our publication. In addition to this measurable outcome, our value proposition to advertisers also includes a package of mobile, online and social media services at no additional cost.

    Our first publication is delivered Tuesday/Wednesday this week, so now we wait to see whether consumers embrace what we’re doing … and whether advertisers continue to support it.

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