Unless you’re an investor, you probably skipped over the New York Times’s first quarter financial report. But if you want to understand what’s happening in the media space today, the report provides a revealing snapshot of a giant media company in flux. It also offers a clue about the future of print versus digital media.
The Times Company (which includes a dozen or so newspapers, a myriad of online sites, besides the flagship daily paper) reported a nearly 60 percent drop in quarterly net income, due largely to weakness in print advertising, especially in the publishing sector. By contrast, digital ad sales grew nearly 5 percent in the quarter and now account for 28 percent of all ad revenue.
Revenue from the vaunted (and much publicized) experiment to charge online readers for Times content was not included in the quarterly report. But the Times noted that it had signed more than 100,000 subscribers since the plan went live in mid-March. “While the challenges for our company and for the larger economy are not yet behind us, the recent launch of the Times digital subscription packages on NYTimes.com and across other digital platforms brings our plan for a new revenue stream to life, offering us another reason for optimism about the future,” the chief executive, Janet L. Robinson, said.
Operating costs across the company remained flat, as costs for newsprint rose, offset by circulation declines. Essentially, it didn’t print as many papers in the quarter.
These numbers, mundane as they may be, are worth pondering if you really care about how news and information will be available in the years ahead.
For one thing, the decline of print advertising, and the parallel increase in digital ads, is no longer a trend, but rather a business fact-of-life that has forced publishers to recalibrate business strategies that once seemed etched in stone. Since ads, along with circulation revenue, have been the traditional revenue streams for newspapers — and both are now declining — one has to wonder what the future holds for the daily newspaper dropped in your driveway; mostly, will it even be around in a decade or so?
For another, quality content, which is the Times’ “brand” and its competitive advantage, is no longer a guarantee of financial success. While there will always be an audience for solid reporting and expert opinion, the size of that audience may be shrinking as successvice generations grow accustomed to reading news in bite-size samples. You have to hope that the digital Times will be a huge success because if it’s not, unsavory choices lie ahead, including trimming newsroom staff. Given the Times’ enormous prestige (it just won another two Pulitzer Prizes), and its unofficial status as America’s newspaper of record, cutting back on reporters and editors would be like baseball jettisoning its pitchers. (An independent source, Harvard’s Neiman Journalism Lab, noted that while the Times’ digital wall is off to a decent start, recent history about this kind of revenue enhancement plan isn’t encouraging).
Third, the good news — the increase in online ad sales — comes with more than a few caveats, the largest being that up to now, digital ads have not been adequate to sustain the publishing side of things at the Times Company, or anywhere else. As advertisers invest more in digital — and why wouldn’t they, if that’s where consumers are migrating — the Times digital subscription plan, or some version of it, will be increasingly commonplace across the Internet, and not just for newspapers.
In other words, the Times Company’s quarterly report should be read as the harbinger of the day, not too many years into the future, when much of what we access online — including traditional news and a lot else — will be free no more.