While President Donald Trump might dismiss it as “the failing New York Times” and a purveyor of so-called ‘Fake News’, the media company behind the newspaper is actually enjoying considerable success on one front -the digital transformation of its business model.
The firm has just clocked up north of $100 million in new revenue from digital subscriptions over the past twelve months and is exceeding its own growth plan. That translates to 157,000 new digital subscriptions over the past three months alone.
Making the shift to a subs model is critical at a time when traditional advertising is flatlining. Meanwhile digital advertising is up 11.5% over the past year, but the negative growth rates of print advertising means that the total ad revenue as a whole is down 7%.
For CEO Mark Thompson, the importance of making digital work for the newspaper business is crucial:
In late 2015, we set ourselves the goal of doubling our pure play digital revenue from just over $400 million, which is what it was in that year, to at least $800 million. We set a timeframe of five years to achieve that goal, with 2016 being the first and 2020 the last of the five years.
At the end of 2017, year two of our five years, pure play digital revenue, digital-only subscriptions, digital ads, Wirecutter and other smaller purely digital revenue streams accounted for $607 million of our revenue as a company. In other words, after just two years, we are halfway there. We believe, we are scaling our digital revenue more effectively than any other comparable news organization in the world.
Over at Rupert Murdoch-owned rival News.com, Thompson’s near name sake, CEO Robert Thomson, is seeing similar drivers and trends in the marketplace:
We’re still in the midst of obviously a transition from print. Print remains a strong platform, and we’re seeing that with a new real estate magazine that we’re launching in coming months, which is oversubscribed by advertisers. So, don’t discount print. But the digital market itself really is in the midst of our people, where you have both advertisers and ad agencies reviewing their role in the market.
It’s important to innovate to keep a competitive differentiator, he adds:
A great deal of concern about the sort of environments in which famous prestigious advertisers find themselves. I think what we are gradually going to see, and I think we have little doubt about this, is that there will be a migration to premium and that’s where we have a comparative advantage because titles around the world are the leading titles in their markets.
To supplement that, we are creating News IQ, which is our own in-house based advertising platform, taking advantage of the great inventory we have and the authenticated audiences we have and being able to offer advertisers an opportunity to project their image and their wares in a space that won’t be detrimental to their image, but brand enhancing.
None of this is to say that elements of the traditional news media model don’t translate across to the digital roadmap. Thompson of the New York Times argues:
We still regard advertising as an important revenue stream, but believe that our focus on establishing close and enduring relationships with paying deeply engaged users, and the long-range revenues which flow from those relationships is the best way of building a successful and sustainable news business.
Our strategy as a company is to double down on high-quality journalism, to invest in it and support it in every way we can. We believe that this uncompromising commitment is not just good for democracy and society, but the only way of building a successful digital news business.
If some years ago the market and the world doubted whether there was strong demand and a strong need for quality journalism, we never did, but…the really big change over the last year or so has been a recognition by the digital platforms, by consumers who are subscribing in greater numbers than ever before, and I think by the market, that differentiated high-quality news really is valuable.
Reference to high-quality news values brings the debate back round to Trump and his Twitter-rants about ‘Fake News’, with the New York Times often in his sights. In fact, the President and the CEO have common ground on the subject of ‘Fake News’ dissemination. Thompson says:
2017 was a year when the ecosystem around The Times also changed. In particular, the major search in social media platforms faced criticism for not doing enough either to support serious news publishers or to ensure that the public could distinguish between real and fake or distorted news.
He does note that moves by Google and Facebook to be seen to tackle the problem have been made:
Google’s decision to meet requests from the New York Times and other publishers to do more to support digital pay models, in the way they surface news content in search is welcome, as is Facebook’s recent announcement that they will give relatively more exposure to trusted news sources like The Times in their newsfeed.
Although the impact of these changes will only become clear over time, we believe that the recognition by these major platforms, of the value of trustworthy news and the changes they’re making, are strategically beneficial to our digital business.
Thomson at News.com concurs, although keen to have Rupert Murdoch take the credit for beating down on the social media giants with news.com positioned as “the strongest international advocate of necessary changes to this mephitic landscape”.
But he doesn’t see enough action being taken yet:
Clearly, there are profound changes taking place in the creation and the distribution of digital content. The big tech disruptors are in the midst of a particularly disruptive period commercially, socially, and politically.
We appreciate that Google has ended the prejudicial First Click Free and that Facebook is prioritizing provenance, but these are modest steps towards changing a digital environment that is dysfunctional and sometimes dystopian.
There is a social and commercial value to journalism, but that value needs to be valued by the digital publishing platforms. The bot-infested badlands are hardly a safe space for advertisers, whose brands are being tarnished by association with the extreme, the violent, and the repulsive.
A tale of two Thom(p)sons, rivals, but with more in common perhaps than either would openly admit. Both have digital transformation at the top of their agenda. Both are reporting successes related to that agenda. And both are talking tough about ‘Fake News’ and social media platforms.
Leaving aside the social responsibility angle that both CEOs pitch on that last point, there’s also a clear commercial none-too-hidden self-interest subtext there, particularly from the Murdoch camp, whose naked hostility to online giants parking their tanks on Rupert’s lawn has been a recurring theme for several years.
But as an ongoing case study in disruption and the necessity of executing an operating model overhaul, the traditional news media sector remains one to watch. The outcome of the current instability is far from clear – and there are no winners guaranteed.
Image credit - New York Times/New York Post