New York Times – A Casualty of the Digital Revolution?
The New York Times (NYT) is arguably the best known daily newspaper in the United States. The organization has been operating since 1851 and has won more Pulitzer Prizes than any other news source. However, with the rise of the digital age, some say the sun has set on the NYT. Their readership, like many newspapers, has steadily and alarmingly declined since the early 2000’s, with the drop accelerating in 2007 and beyond. Readers gained greater access to the internet, started to rethink the “newspaper form factor” (e.g. the desire for a tactile, hard print experience waned), and a variety of online options (blogs, e-zines, podcasts, etc.) proliferated. The New York times has had to weather a tough transition from print to digital, and I’d label them a “loser en route to victory” as they strive to find their footing in a rapidly changing environment.
I will explain NYT 1.0’s business model (value creation and capture) and operating model and will do the same for NYT 2.0 explaining the key challenges NYT faced / continues to face during the transition.
NYT 1.0 – Old School Journalism
NYT created value for readers and for the world by producing and curating high-quality, relevant, and trust-worthy news. The NYT, along with the press more broadly, acted as a critical enabler of U.S. democracy by holding politicians and business leaders accountable and ensuring an educated populace.
NYT traditionally made money via a two-fold revenue model: 1) Print sales and subscriptions; and 2) Print advertisement revenue. In its “heyday” traditional print advertising was quite lucrative. In 2006 total print advertising revenue industry-wide was just over $49B. But by 2012, it was just 45% of that.
- Tech: capital intensive printing equipment and related maintenance
- Marketing and sales: Tried and true newspaper advertising sales model
- Service Delivery: High delivery costs (shipping, truck fleets, etc.)
- Staffing: Staffing requirements focused around writing and editorial staff
- Culture & Values: Old-school approach to journalism; NYT prided itself on thorough and well-researched work
NYT 2.0 – Going Digital
It took time for NYT to realize that the type value that its customers are demanding is shifting in the digital age. Readers want news fast, they want it in different formats, they want it to be interactive, they want it to be personalized, and they want their news to have an opinion. While reliability is still important, NYT digital must shift to consider its changing customer value proposition.
Value capture is the area in which NYT has struggled most during the transition to digital. I believe there are three key drivers to the value capture challenge: 1) the barriers to entry have eroded (expensive printing equipment is no longer required and anyone can create a website!) encouraging the entrance of a vast array of alternative news sources that the NYT must now compete with for eyeballs; 2) technology hacks (incognito window anyone?) have allowed readers to circumvent subscription firewalls; and 3) in an age in which people have quick and free access to mines of information, many argue that high quality news should be available to all free of charge. This mindset shift has allowed many to justify their use of the aforementioned hacks.
In the face of these barriers, NYT’s value capture model has remained fairly consistent: they make money from subscriptions and digital revenue. They’ve had to shift internal capabilities (discussed further below) to accommodate a digital advertising model (which looks different from print advertising). However, with declining readership (for reasons discussed above) and continuously declining print advertising, digital advertising has failed to bridge the gap. Few would argue this is a trying time for the NYT and other traditional newspapers. NYT is starting to consider and must continue to explore alternative revenue streams moving forward (ex: added fees for new services such as VR formatted news).
NYT must get creative quickly!!! or their inability to capture the value they create will jeopardize the quality of their news.
- Tech: customer researchers to understand shifting consumer preferences, software engineers, user experience designers
- Marketing and sales: digital advertising expertise (digital advertising differs from traditional advertising in its ability to target audiences, its cost structure, and the available media formats)
- Staffing: The locus point of the newsroom has shifted from writing and editorial team members to blog writers, designers, multimedia experts, and engineers
- Culture & Values: NYT must shed its nostalgia for the past and embrace a cadre of young new talent looking to modernize the NYT user experience; the organization must find the delicate balance between speed/sexy format of news and maintaining their high journalistic standards. (We must not ignore this latter tension – a high-quality press corps is criticalin the context of a Trump administration.)