It’s certainly the case that the NYT has proven to be one of the media outlets that’s managing to transition from the old world of print to the new world of digital - as well as validating Tzuo’s long-standing thesis on the rise of the Subscription Economy! (Check out this from 2015 for prescience!).
And while the current occupant of the Oval Office still insists on referring to it as the “failing” NYT, that’s just Fake News. According to the New York Times Company, it now boasts 4 million digital subscribers, up 206,000 year-on-year. Of those new subs,143,000 are subscriptions to the digital news product while the remaining 60,000 subscriptions are for the Cooking and Crosswords offerings.
Even more impressively, 3 million of those subscribers are paying with digital subs now accounting for close to two-thirds of total revenues on $101.2 million. CEO Mark Thompson says:
We attribute these numbers to several factors. The seasonal boost we see every year towards the end of the quarter as much of the world goes back to school after the summer; a suddenly electrifying news environment with events that played to the Times' strengths, like the Kavanaugh hearings and the blockbuster Op-Ed by Anonymous; the growing strength of our Cooking product, which has now passed the 120,000 subscription mark; and the launch of a more deeply discounted introductory offer for our main news product in late August.
It’s been a case of speculate to accumulate subscribers, he adds, and there’s more to come:
You're going to see us continuing to experiment with an introductory pricing, meter count, and ferocity, registration and login and bundling through Q4 and into 2019. We're pleased with our progress so far, but believe we have the scope to accelerate subscriber growth further. We're continuing to spend marketing dollars efficiently and are monitoring subscriber acquisition costs and lifetime value carefully, but we will not hesitate to invest heavily in future growth where it makes sense…We also believe that our success with subscriptions across digital and print is a tribute to the quality and creativity of the journalism produced by our colleagues in the New York Times newsroom and editorial departments, and is a validation of our strategy of ramping up investments in journalism.
There’s also progress on digital advertising, up 17% year-on-year to $57.8 million in the most recent quarter. With print advertising essentially flat - which counts as a win these days! - digital now account for 47.5% of ad revenues.
There has been a lot of talk of a so-called ‘Trump bump’ from which the NYT has benefitted, but Thompson clearly regards that as too simplistic an explanation:
It is true that intense interest in U.S. politics gave us additional digital momentum in late 2016 and early 2017. We remain determined to cover that story with more authority and more original journalism than any other news provider, with the latest test of that coming as soon as next week with the midterms. But our strategy and current digital growth does not depend on that or indeed on any single stranded news. It is broadly based, includes a wider range of news and features than any of our competitors, not to mention lifestyle products, audio, television and a thriving international business. It is this breadth and our proven ability to extend Times' quality to new topics and new media that convinces us that we can scale our digital business further and faster than anyone else.
Expect now to see more focus on engagement with digital subscribers suggests Chief Operating Officer Meredith Kopit Levien: That sort of thinking also impacts on how the NYT markets itself:
When I started looking after the subscription business, we spent a 100% of our money on direct response and we have pretty dramatically shifted that, since that, half now. So we've increased our spend and also shifted the mix there…There is sort of top of funnel, so the work I just described to drive affinity and willingness to pay. Think television spots, digital video spots, brand ads, outdoor.
There is a lot of work going on now in the middle of the funnel and we're just getting stated at this. I think this is a very efficient way to spend money, where we potentially spend money to get people to download our app, to get them to engage with particular kinds of content that will bring them closer to the gateway or to get them to register and then ultimately log in and make a relationship with us.
And those digital relationships need to (a) last and (b) get deeper, she adds:
We're generally getting much better at churn and at managing churn. We've spent a lot of effort at what I would call the edges of churn. So getting good at priority moments, like transitioned for price and billing issues, involuntary churn savings stops, and that has worked well. I think, in general, the churn performance over the last three years has been quite good and compares quite well to other digital and other much larger digital subscription businesses.
But the truth is, the real nut to crack on retention and churn is engagement. And we are just at the beginning of what I would say real work to get even our subscribers to engage with us from the outset of their subscription much more often and for longer periods of time. That's a long winded way of saying, I think, we feel sufficiently confident that if we can bring someone in on an introductory offer, we can actually turn them into a lasting subscriber.
We actually believe that much of the work from here is to make the product itself, the combination of customer journey, user experience and the programming that sits within it to make it that a much better engine of demand creation and capture. So that beyond paid marketing, beyond introductory offers, when someone comes to the Times and begins a relationship with us, that relationship is self-propelled because the product itself does that.
It’s an ongoing learning curve, observes Thompson:
We're getting more confident about retention, about building the number of subscribers, keeping a close eye on aggregate digital revenue growth and a very close eye on the economics of projected lifetime value, less subscriber acquisition costs. We're trying to spend intelligently against the internal hurdle rates, but trying to explore combinations of price on products which are effective and we believe will be effective in delivering long-term yield, as well as growing the subscription numbers.
This is not necessarily entirely kind of heroic, moonshot, entirely original work. It's about learning intelligent lessons from other people in the market who’ve done some of these things better than us. I'm getting where we want to be in terms of just kind of intelligent professional optimization. So, some of it, I think, I hope, will be really great and innovative. But you don't have to believe, you don't have to shut your eyes and imagine some extraordinary unheard of breakthrough, to see it's getting meaningful improvement through further optimization.
If this is “failing”, it’s some new Trumpian definition of failure. I'll stick with the Tien Tzuo assessment. The NYT has become a powerful exemplar of digital transformation in the ever-widening Subscription Economy.