Opinion | NYT’s hybrid model shows the way for legacy firms4 min read . Updated: 13 Feb 2019, 11:24 PM IST
The success of some newspapers proves that journalism at its best is still a viable business
Ultimately, reports of the death of traditional media have turned out to be just fake news. Last week, as The New York Times (NYT) posted buoyant fourth quarter results, the resurgence of legacy media, as it is disparagingly called, was on full display, particularly as it came against a background of large-scale layoffs at upstarts like Huffington Post and BuzzFeed, two of the champions of new media.
In the fourth quarter of 2018, NYT’s revenues grew 6.2% year-on-year, with digital advertising up 11.3%. Significantly, while the company made 17% more money from print advertising than from digital in Q4 of 2017, by Q4 2018, the ratio had been reversed as it generated 17% more from digital advertising than from print. Of its 4.3 million subscribers, 3.4 million are now digital.
And, it isn’t just NYT. The Wall Street Journal (WSJ), Financial Times (FT), The Washington Post and The New Yorker are just a few more of the old guard who have successfully survived the onslaught of digital journalism. WSJ’s digital subscriptions now account for 60% of its subscriber base, while digital subscriptions account for almost 80% of FT’s subscriber base of more than 900,000 (2017 numbers).
Of course, the turnaround hasn’t been secular and across-the-board. Sadly, layoffs and closures, especially of smaller, community newspapers have continued even as Google and Facebook gobbled up vast chunks of the media pie.
However, the success of some of the bigger newspapers proves that journalism at its best is still a very viable business. Till 2016, print revenue in the US was declining faster than the rise in digital revenue. The new hybrid models have now shown the way to fill that gap.
While that is significant for the media business, NYT’s resurgence also serves as a great example for firms in other sectors, struggling between an old but rapidly changing order and, a new, comparatively unknown, world. Whether it is car companies preparing for a future based on alternate fuels or businesses in sectors such as telecom, financial services, retail, and healthcare, erstwhile market leaders are facing huge challenges from digital disruptors.
For one, the success of NYT and indeed many other large old media companies shows that, even in the digital era, financials are temporary but quality is permanent. No matter what the business model is, the thing that matters finally is the product or the service a company provides. No amount of marketing smarts can alter that.
Till a few years ago, NYT was structured to deliver news exclusively on paper. As digital delivery kicked in, it merely altered its processes, eliminating duplication of work, choosing speed over refinement in some cases, but the objective stayed the same. NYT or WSJ or FT is successful today because of its razor sharp focus on putting out a great product day after day. As Mark Thompson, president and chief executive officer of NYT, said in a recent earnings call: “The foundation of our mission, our strategy and our offer to every new subscriber is high-quality journalism."
That kind of quality though isn’t a matter of chance. In fact, gut feel and instinct are no longer the drivers of success. They have a very limited role at a time when there is enough software capability to map every single potential customer’s needs accurately.
That calls for investments in systems and a willingness to accept empirical data. Legacy companies do have deep reserves of strength but equally they also have an embedded cultural apathy to change. In 2017, WSJ shut down its decades-old editions in Asia and Europe. Given its push into digital, physical editions in these markets made little sense.
Just as important as axing products is innovating, unearthing and monetizing sub-products and new categories. Thus, one of NYT’s fastest growing areas is subscription to categories such as the paper’s cooking and crosswords sections.
In its latest quarter, revenue subscriptions to these sub-products soared 41.3% year-on-year. Its popular 6am podcast, The Daily, isn’t just a new revenue source, but also a sampler that serves the purpose of introducing the paper’s journalism to millennials, potentially a huge future customer base.
A report from last year’s World Media and Economic Management Conference at Rhodes University in South Africa quoted the example of Correctiv, an online investigative journalism website in Germany that leveraged an investigation into right-wing terror across various platforms to reach different audiences by publishing it online as a long-form feature, creating a graphic novel, and also mounting a mobile pop-up exhibition on the subject.
NYT is also addressing the vexed issue of getting people to pay for content by increasingly focusing on profitable expansion versus aggressive subscriber additions. Soon it will start field testing a price rise for digital subscribers, the first such increase since the launch of the pay model in 2011. There’s a lesson here for aggressive new telcos in India growing on the back of freebies-fed customers. Free lunches are always welcome but too many of them can eventually close down the kitchen.
Sundeep Khanna is an executive editor at Mint and oversees the newsroom’s corporate coverage