What’s next for The New York Times?

Can't help wondering what the future has in store for newspapers? It's telling that even the New York Times are slashing employee benefits and laying off staff. Watch a very interesting interview with investigative journalist Russ Baker putting what's happening at the paper into a broader context: 

How long will the print audience exist? Seems the New York Times is safe since, for the US, predictions are that only four major dailies – The New York Times, USA Today, the Washington Post, and the Wall Street Journal – will continue in print form, along with local weeklies

How can newspapers find 90% of their revenues online?

When you look at the newspaper industry you find that they still get 90% of their revenues from ads in the printed paper. 


Online ad revenue is on the rise but still only a fraction of the money papers get from printed ads. One huge problem is that studies have shown that most people ignore online ads. And another is psychological in the sense that people prefer to pay for something they can hold in their hands.


Most online advertising not on news sites


In total more money is spent online but search, engines such as Google ,get much of it and news media has come to accept that they are unlikely to get the kind of revenues, or maybe rather profits, that they get from print advertising. They know they need to find new and smarter ways since ads and subsciptions alone will not work online. For some companies even the experimenting required is a bit of a challenge.


But one notable exception is US magazine publisher,Atlantic Media, who reported last year that its online advertising revenue was higher than for their printed magazines. One reason for that could be that it has lower advertising prices than similar publications. Maybe something that could be developed online as well. Provided it doesn't result in too many ads, since that will turn readers away. 


Enter video


Advertisng on videos online increased with 39% in 2010 and that trend is likely to continue. No wonder most media companies online sport more and more videos. Mainly without advertising though. So that seems to be an area that could be more exploited. No wonder Helsingborgs Dagblad, a profitable Swedish local newspaper is moving heavily into video reporting.


Targeted banner ads one possibility


Targeting the interests of the individual with the "right" ads, like on Facebook is also on the rise. Media here, in theory, has the potential to know what their different readers want and display ads that should appeal to them.


Google CEO Eric Schmidt apparently told the New York Times in 2010 that while his company was built around search advertising their next big business is targeted display. Consequently on January 24th this year Google annonced their new online privacy policies that enable them to use information to target online ads at users more accurately. It's not possible to opt out and the new rules will be implemented on March 1st.


Let's see what happens to advertising on Google after that. Not least since revenue from their "pay per click" ads have declined.


Consumers not keen on online subscriptions


More and more of us are reading news online. But despite that, the majority of people are not prepared to pay more than $5 a month for subscribing to online news. So no matter how we look at it, subscriptions will, as always, be a small part of revenues.


The jury is still out on if paywalls, like for instance the New York Times and the Economist use, will work. But it's unlikely a paywall is a viable alternative for smaller, less famous publications.


Sponsorship actually works for some media companies so that may be another source of revenue. Some online media outlet operate as a tax-exempt, nonprofit corporation funded by donations and grants. So we will most likely see more of that as well.


Future journalists freelancing


Unfortunately what just happened to staff at the New York Times is likely to continue for the simple reason that lower advertising revenues means cutting expenses. So in the future most journalists will be independent and work on their own.


It seems to me that the likely way forward are newspapers written mainly by freelance journalists and more news coming to you in video format. And online news may not have to be expensive if you are prepared to accept that newspapers use the information they have on you to target you with the appropriate banner ads.


Very much doubt there will be an outcry from readers about targeted ads. Let's face it, Facebook has been getting away with doing so for a long time, and Google is now going down that route as well. How likely is it that people will suddenly stop using Google and all its services? Can't see why readers would prevent newspapers from doing what Facebook and Google are doing to their privacy?


What's your opinion? How do you see the future of online newspapers? Do you agree with me that video and tageted banner ads will be more prominent in the future? Or do you know better ways for newspapers to make money online? What alternative sources of revenue can you imagine? Print journalism will be around for quite some time since that's still where the money is. But how will newspapers survive – and preferably thrive – once the printing presses stop rolling?


Video: RTAmerica – You Tube

34 thoughts on “What’s next for The New York Times?

  1. Catarina – It has been a while, but your question remained in the back of my mind. I have been researching ways of explaining, describing and helping people visualize the Internet in general and social media in particular when I ran across an article on Project Cascade at the NYT. It looks like they will be building a service, which they will sell to publishers, ad agencies, etc. Thus this would be yet another effort to create a revenue stream related to, but not a core product of, the business of newspaper publishing. You can Google NYT Project Cascade or go ot my post and click on the link at Visualizing Web Dynamics: The physics of virtual social spaces – All the best,
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  2. It's interesting Catarina as I remember a few years ago they thought we'd have paperless offices – which isn't happening. People still like to hold something in their hands.

    My husband still buys a paper although he does now have a Kindle.

    I love buying magazines even though I get all my news/gossip for free on the internet.
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  3. Also read news online, Jamella. Glad you agree with me that paywalls i.e. reading 20 articles for free, isn't the way forward. It may work to some extent for top publications like the NYT, but not for local papers. As you say there are other sources online. For instance instead of reading more than 20 articles on NYT we can read on Reuters that's for free.

  4. Hi Catarina,
    Personally, I would not object to online news sites placing unobtrusive banner ads on their sites. I’m even getting to the point where I’d be willing to accept some advertising on videos. Although, I do admit that I think it can be abused. If these magazines were to offer us the option of paying to now have the advertising, that would seem like an acceptable solution to me.

    Thanks for another article that has me thinking and has a lot of people talking!
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  5. Glad you agree with me. However, the profits from printed ads are enourmous and the catch is to make that kind of profits online. Most likely we will see different types of companies operating newspapers. Maybe diversified conglomerates that get their main income from other companies?

  6. Ragnar, the scenario you paint would be good. But unfortunately it's not that simple:-) But somehow newspapers have to find ways of making the kind of money online they are making with printed papers.

  7. The advertising & marketing world had changed dramatically in recent years, and it seems that the rate of changes are just going to increase. Those who try to look into the future and guess the trend , visionaries like you, might be able to find it first and use it for their benefit.
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  8. Hi Catarina,

    Once you give away something for free it is extremely hard to get people to pay and that is one reason I don't think a paywall will work. As you mentioned the majority of their print revenue is advertising and so far we are seeing them try and replicate it online. With all the tools available to track online readers behaviour and viewing I am sure they will be testing different ways to show the value to large companies to advertise online.

    The other thing is that like other markets their competition for readers and advertisers have increased. No longer do they have a couple of other papers to compete against, they have online news sites around the world and I am not sure they are taking this into consideration.

    1. Good points Susan. The catch is to make the kind of profits online as from printed ads. Am sure they will find a way, but it may entail lower profits. One way is alternative sources of revenue like Jeannette pointed out.

  9. Thank you Keyuri. However, online news have to be financed in order to provide good content. Advertising in printed papers has so far provided funding. But that will not work once the presses stop rolling. So unless you want to pay a super high subscription fee there will be advertising. Alternative funding would be excellent. Just not sure how that can provide the kind of profits printed ads do.

  10. Eli, I was in the media business until 2005 working with a number of top publications such as the NYT. The problems started much earlier. Advertisers feel they get more value for money when they get someting in their hand. It's hence possible to charge more money for printed ads. As you also know, the majority of readers don't want to pay for reading news online. So what you suggest would unfortunately only amount to a small revenue.

  11. Good stuff, I was actually thinking about this the other day. Targeted display is HUGE. Thats why there are so many "related videos" next to what you watch on youtube. It's part of the consistency principle of psychology. People are prone to engage in something they are already interested in, or similar to what they're interacting with (or reading in this case).
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  12. Hi Catrina, I think you already know my answer – YES I think "video and tageted banner ads will be more prominent in the future". There is a commercial on TV about some cellular phone company where news spreads so fast by a simple click of a button – spreads like wild fire. Videos are becoming easier and easier to create – people are using their cell phones to shoot video with really good quality results. Add to that the fact that people prefer to watch than read and you have a really strong case for video ads rising in popularity, value, and usage.
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  13. Very thoughtful commentary, Catarina. The New York Times will continue to exist but what the new revenue model will be is still uncertain. The Times is already using free-lancers extensively and, unfortunately, editorial quality is suffering, in my view. The free-lancers to this point are not assigned to major policy or international stories. More for reviews and special features, but that could change. I respect the Times enormously and have been a subscriber for years. The paper will need to find other sources of revenue outside of its core business. It already has a growing conference business. Possibly it could buy a major economic summit such as Davos. There may come a day when the Times is a radically smaller operation than it is now — fewer reporters, a shrinking print version, supported by more online revenue if they can figure out how to make more money online.
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    1. Thank you Jeannette. Good points. They have to find ways of making money online or revenues will be drastically reduced. Didn't know about the conference business. Would be interesting to know how much of their revenues come from that. Buying the World Economic Forum would presumably be very expensive. However, creating somthing similar would be an option:-)

      Jeannette the more I think about your solution of alternative revenues the more I like it. Conferences, maybe in cooperation with WEF would be an opition. The actual newspaper online could then be a service to readers and participants. They could also run other types of businesses to generate revenues. But still somehow the actual newspaper should break even, or it will be closed down.

  14. Interesting analysis of print vs online ads and the psychology behind how readers would identify more towards the print ads. Thanks for sharing!
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  15. I think that the online subscription model is developing – albeit slowly. In the UK, a number of publications now have online subscriptions and seem to be starting to gain traction with this.Prices vary from around £2.99 a week down. The key is what they deliver. If a paper can deliver the electronic version of the printed content for that sort of fee, it can make sense as they remove the costs of distribution which are high (I subscribe to a printed paper, too, for about £5 a week (7 days), so am happy to pay up to that for a good quality electronic read – particularly if the information is more frequently updated.

    1. That's good news Guy. But subscripsions is, and always have been, merely a service for readers. A whole 90% ot newspaper's revenue come from advertising. And so far from paper ads. So it's essential to find ways to generate that kind of revenue online.

      1. Some of the online publications are reproducing the print adverts, others are using different adverts, and some are not really using advertising. I agree that getting the advertising right is key: online should be able to provide more accurate contextual adverts and so lead to better conversion rates than print, if done properly.

        1. Guy newspapers, such as The New York Times, get their revenues, and not least profits, from print advertising. Have a long background in the media industry. Prices for online ads are lower and most of the time advertisers buy a package with print and online advertising or even get the online ad thrown in for free. Without printed ads revenues would be reduced drastically. So, as we agree they have to increase advertising revenues online drastically.

  16. I think that publications with established reputations for quality research, writing and analysis like The New York Times and The Economist (full disclosure: I subscribe to both) will find people willing to pay for a better product. We'll see how their pay walls work out. But with so many people unwilling to pay for news these days, smaller publications, especially local ones, are definitely going to die off.

    One concern I have is that this will lead to a trend where primarily the wealthy will have access to quality information that they can capitalize on, whereas the rest will have to settle for less, thus further exacerbating inequality between the rich and the rest of society, who will become less well-informed and rely more on an assortment of cheap news and blogs with a narrow world view that conforms to their readers' viewpoints and that prohibit them from seeing the bigger picture of how the world actually works. Of course this already happens to a certain degree, but if it extends even to our basic news, when in the past most families paid for print subscriptions to local newspapers of the same quality, then it could even further widen the divide. Maybe it's a groundless fear, but I do consider it a possible consequence.

  17. As a 2x management refugee from the industry – Gannett and local business publisher ACBJ – I think the shift in revenue streams will continue to be slow and painful.

    Trust of the source and appreciation of the value of editing come at a price. As that concept becomes more embedded in the information consumer's psyche the more willing they will be to pay for that accuracy and focus (subscribe) making those readers more valuable to the market (advertisers.) Basically pay a rate that sustains the service online instead of print.

    The rub is in the transition from where we are today. Will Google become an editor? The opportunity is there. Is there room for an enterprising freelance reporter to bootstrap the next "NYT" exclusively on mobile? That opportunity is there too.

    I know a guy in Austin TX capable of that and in the fledgling stages of doing so. Would I subscribe to his version of current and accurate journalism about government in my neighborhood from a trustworthy source? Absolutely. Would I be willing to deal with display and text ads to subsidize that trust? Absolutely. How much? TBD.

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