NYT earnings reflects a new calculus for media companies looking at subscribers

Diversify, diversify, diversify!

The New York Times today announced its Q4 earnings, and if it hasn’t been clear for folks, it should be now: the paper of record is now a paper of record for some, but not all. 

With revenue reliant on subscribers than advertisers, media companies run the risk of making decisions to mollify the subscriber. This could be from how stories are decided, how they’re written/shaped, or written at all.

Let’s say a healthy proportion of your subscriber base doesn’t want you covering labor issues, and tells you they will unsubscribe if you continue, what do you do?

(Image via Andrew Harrer—Bloomberg via Getty)

The company reported 7.5 million subscribers, with a boost of 2.3 million digital-only subscribers in 2020. The paper (can we really call it a paper anymore?) has built a powerful subscriber base for its articles, but also for its audio, cooking and games products. Subscription revenue jumped 14.7 percent to $315.8 million. Diversification, the name of the game. 

Subscription revenues in the fourth quarter of 2020 rose due to growth in the number of subscriptions to the Company’s digital-only products, which include our news product, as well as our Games (previously Crossword), Cooking and audio products. Revenue from digital-only products increased 36.8 percent, to $167.0 million. Print subscription revenues decreased 2.9 percent to $148.8 million, largely due to lower retail newsstand revenue, while revenue from our domestic home delivery subscription products grew 2.2 percent.

The Company ended the fourth quarter of 2020 with approximately 7,523,000 subscriptions across its print and digital products. Paid digital-only subscriptions totaled approximately 6,690,000, a net increase of 627,000 subscriptions compared with the end of the third quarter of 2020 and a net increase of 2,295,000 subscriptions compared with the end of the fourth quarter of 2019. Of the 627,000 total net additions, 425,000 came from the Company’s digital news product, while 202,000 came from the Company’s Cooking, Games and audio products.

But as the company grows its revenue from a direct relationship with its reader, it continues to free fall down the advertising chute, as ad revenue dropped 26 percent last year to $392.4 million (print accounted for a 39 percent drop). 

Fourth-quarter 2020 digital advertising revenue decreased 2.3 percent, while print advertising revenue decreased 37.9 percent. Digital advertising revenue was $90.1 million, or 64.7 percent of total Company advertising revenues, compared with $92.2 million, or 53.8 percent, in the fourth quarter of 2019. Digital advertising revenue decreased primarily as a result of lower creative services revenues, which were partially offset by higher direct-sold and open market programmatic advertising. Print advertising revenue decreased as the COVID-19 pandemic further accelerated secular trends, largely impacting the entertainment, media and luxury categories.

So the story now starts to turn, and something the New York Times and other companies focusing on building subscription models to compensate for loss of ad revenue need to start asking: at what cost?

Advertising revenue is an equalizer of sorts. Companies looking to distribute their messages through inventory (whether that’s a print ad, a banner ad, a tv commercial, whatever) choose media partners through a labyrinth-type decision-making process. Usually involving some alchemy of audience, scale, brand, and relationship between buyer and seller. And because of this, walls are built between sales and editorial so that sales can’t influence what reporters cover.

While it is rare that an advertiser pressures editorial to cover a topic or story, it has happened. Like the time BuzzFeed removed three posts because advertisers complained about the content. Two of the stories were eventually reinstated. 

What happens when your model is funded by people and nor corporations? Will news organizations that operate through subscription models buckle under pressure to take down stories, or even change their editorial mission or philosophy, if a significant amount of subscribers lay down ultimatums? Will stories reflect the ideals and values of the subscriber in order to keep them? 

As media companies look to subscriptions, these are the questions they’ll need to answer. Or at least start discussing and weighing. The New York Times has a brand (and some cash) that can experiment with new formats and models. 

Indeed, in a statement, the paper’s CEO Meredith Kopit Levien set her and the company’s sights on getting more subscribers, indicating that with a broader universe of readers, any potential for mass subscriber cancellations can be alleviated. 

“With a billion people reading digital news, and an expected 100 million willing to pay for it in English, it’s not hard to imagine that, over time, The Times’s subscriber base could be substantially larger than where we are today.”

While it may be good business for the New York Times, it’s unclear if it’s good for readers.

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The Bee Gees, “Stayin’ Alive”

Some interesting links:

For executives staying in their job for a little while longer:

  • Jeff Zucker announces he will stay on at CNN through the end of the year (CNN)

For executives not staying in their job anymore:

  • Parler CEO John Matze says he’s been terminated by board: ‘I did not participate in this decision’ (Fox Business)

  • What to expect from Amazon’s new CEO Andy Jassy (Recode)

For platform and misinformation:

  • TikTok creates prompts to help people consider before they share (TikTok)

  • New study: Social media’s alleged anti-conservative bias is ‘disinformation’ (Fast Company)

For brand experiments:

  • Valentine's Day at Lowe's? 50 couples will win a 'Night of Lowemance' date, plus there's a virtual event for all (USA Today)

For content analysis of a propaganda film:

  • Movie at the Ellipse: A Study in Fascist Propaganda (Just Security)

For dark money influencing everything from media to sedition:

  • How one billionaire family bankrolled election lies, white nationalism — and the Capitol riot (Salon)

For a new sheriff in town:

  • Klobuchar unveils sweeping antitrust bill, laying out her vision as new subcommittee chair (CNBC)