February 12, 2021

NYT’s Results Demonstrate a Return to Media Normalcy

I have been thinking a lot about the 2020 results from The New York Times. What was a failing business a decade ago has turned into one of the most successful media companies on the planet today. It made the big decision to pivot to digital subscriptions before most media companies when most people still believed no one would pay for content.

And it has really worked. If we look at The Times’ quarterly results:

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.

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.

That is a lot of people reading news. More specifically, that is a lot of people paying for digital news. It has figured out that there is absolutely a market for high-quality journalism and it’s worth paying for.

And yet, every time these sorts of results are released, I see people lamenting the fact that the business has changed and that dangerous things will happen because The Times is now serving its reader.

Let me try and break the argument down…

When nytimes.com was free, anyone could benefit from the news and enjoy it. Democracy at its finest. Corporations paid for the news through advertising and everyone was happy. But now that there are subscriptions, The Times is only serving a very specific type of audience.

The risk, according to these arguments, is that subscribers will be able to exert influence over the editorial coverage, which will force The Times too far in one direction. Rather than large, multi-billion dollar advertisers trying to exert control, it’ll be the tiny, $17 per month subscriber… unlikely.

The argument doesn’t make sense to me. I understand why it is happening, though. For the majority of people working in media who have grown up over the past 15 years, the only play was free, advertising-driven media predicated on massive scale. For most of our lives, content really has been free, so we get it in our minds that this is how it should always be.

It’s more than that, though. Media is one of the only industries in the world that feels as if they need to justify charging for their content. No other industry feels bad about charging for its product.

That’s why anytime The New York Times releases results, many people will opine that the push into subscriptions competes with its responsibility to deliver important information to the maximum number of people. It is, frankly, a tired argument.

What The Times has done by building out an incredibly robust subscription business is return to what has always been the normal way of doing business in media. For much of history, gaining access to this quantity of news would cost money.

Let’s play with some math…

When World War I started in 1914, the price of The New York Times was a penny. That’s equal to a quarter today. On Sundays, it cost $0.03, so that’s $0.75 in today’s money. That means people were spending, on average, the equivalent of $9 every four weeks to read The New York Times daily.

A four-week digital subscription to The New York Times is $17, which is less than double the cost of what it would have cost someone in 1914. Ironically, the cost of news has been coming down over the past few decades. In 1974, it would have cost $47.56 for four weeks of The Times. It’s less than half the cost today.

Why do I say all of this?

Paying for news is not new. On the contrary, the belief that all content should be free is new. For much of our history, we recognized that news costs money and that we should pay for it.

This doesn’t mean that I don’t have concerns about subscription-only news organizations. In November 2019 (eons ago), I wrote:

However, there’s a real risk that gating so much content will create a system of haves and have nots in digital media, which could have lasting effects on society overall—especially if you believe that journalists are the fourth estate.

Consider a low-income family that can’t afford a subscription to a reputable news source? They’re left with lower-quality sources that don’t present the best information.

There is obviously a balance to all of this. And the truth is, most people that get into the news business do so because of some civic responsibility. Most news organizations have kept Covid content free to people for obvious reasons.

But the simple truth is, we have always paid for news. There’s nothing new about that. Where things went bad is when we thought that the intense costs that go into running an international, 1,600-person newsroom could be covered with little squares on a screen.

But it does bring up an interesting point. One of the reasons media got into the position that it did—you know, struggling and nearly dying—is because it lost sight of its history.

A new crop of media companies launched 15 years ago that said the old ways were obsolete. For an interesting history on it, I encourage you to listen to my interview with Jarrod Dicker. But here’s the point from the show notes:

While HuffPo ultimately sold to AOL for a successful exit, one of the things Jarrod talked about was that the story of media got screwed up. It was no longer about building a great brand, but rather, about being the first and fastest to get a story out, irrespective of the outcome.

Additionally, many of these media companies saw the scale that platforms were getting and assumed that was the only way to grow and succeed. Since then, of course, that narrative has changed.

This was the internet. The old rules of media could go out the door and we could build a publication with billions of users and be just as profitable. We’ve seen how that worked.

But what this shows is the ugly truth about media. The vast majority of us are really not that innovative. We see what one media company does and we copy them. It’s why there is a Wikipedia page about the pivot to video.

And look… I don’t feel bad about the fact that we’re not that innovative. I wrote an entire piece on it. Media is an evolutionary business; not revolutionary. Our business models are all the same no matter how you try to change the narrative.

I’ve now down 20 episodes of the AMO podcast and something interesting has popped up. The people who are most successful are the ones who don’t get distracted. They focus on what they believe is the right approach and don’t deviate to try new, exciting initiatives.

The New York Times is one of the largest media companies in the world. It is so advanced with how it runs its business, it has more digital subscribers in some cities than the actual local papers.

We need to stop looking at The Times and trying to glean insight from its business. For the vast majority of us running smaller media companies, trying to compare ourselves to it is a fool’s errand. Why set ourselves up to fail like that?

Instead, we need to focus on our own businesses. We need to figure out how to create ad products that matter to our partners. We also need to figure out how to create content worth paying for. The Times is a million light-years ahead of us. Let it stay there.

As MIT Technology Review’s CEO Elizabeth Bramson-Boudreau said to me on this week’s podcast, The Times is the first layer of a user’s subscription stack. We need to figure out how to differentiate ourselves enough to be worthy of being in the second layer of that stack.

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