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New York Times explains decline in digital ad dollars, paywall plans

The New York Times Co. (S NYT) raised eyebrows among media watchers this morning when it announced that online ad revenue had slid from a year ago.

While the decline was a modest two percent and was accompanied by good news on the circulation front, the drop is still worrisome for a news industry staking its future on digital revenue.

On a follow-up earnings call, CFO James Follo said the drop in digital ads coincided with a larger psychological shift that began last year.

Follo explained that digital ad sales have long been insulated from macro-economic events. Starting in 2011, however, these ad sales began to be sensitive to the European debt crisis and other events that affect print ad sales.

On the call, New York Times executives remained bullish about the company’s overall strategy of building a global digital brand starting with a core of hyper-engaged users.

The company touted its latest count of 454,000 paid digital subscribers which is a 16 increase from the prior quarter, and coincides¬†with the one year anniversary of its “levered paywall.” It added that the decision to reduce the number of paywall-free articles to ten from twenty had led to more paying subscribers.

Executives also said they were pleased with the conversion rate of ¬†100,000 readers who had been given free subscriptions at the outset of the paywall program. The NYT would not give a conversion rate but only said it had gone “extremely well.”

Overall, the company’s revenues from subscriptions increased 9.7 percent from a year ago, an increase driven in part from higher prices for its print papers.

Here are some other highlights from the call and this morning’s numbers:

  • Interim CEO Arthur Sulzberger Jr. did not directly answer an analyst’s question about whether he was poised to become the full-time Chief Executive. He only stated the search was ongoing and that there was “no doubt we’ll find the right candidate.” (The NYT has been without a CEO since Janet Robinson was fired with a $24 million golden parachute last December)
  • The company plans this quarter to unveil special digital account packages for corporate subscribers, educators and college students
  • continues to flounder with a 23 percent drop in revenue and 50 percent drop in profit from a year ago
  •, relaunched in October, drew 13 percent last quarter but still has only 18,000 paid subscribers

4 Responses to “New York Times explains decline in digital ad dollars, paywall plans”

  1. Muhammad Abd Al-Hameed

    The New York Times cannot reverse its decline unless it some big innovation. That is too much to expect of the present management. For Heaven’s sake, newspaper is a business of ideas. If you cannot even consider new ideas, you are certainly doomed.