In an update to its investors in August, The New York Times took a line that has become familiar among media companies: Although print revenue continues to fall, increasing digital revenue is helping the company stem its losses.
Today, The New York Times doubled down on its digital bet by way of a memo from the CEO Mark Thompson and Executive Editor Dean Baquet. Touting the company’s new media bona fides, Baquet and Thompson outlined an ambitious but practical goal of doubling digital revenue within the next five years. From the memo:
We want to begin by sharing a simple yet crucial financial target with you. Our new goal is to double digital revenue once again, this time to $800 million a year by 2020. Achieve that and we will secure our journalistic mission for the long term as well as create one of the world’s most successful digital content businesses.
Can The New York Times do it? That will likely depend on one of the critical strategies mentioned in the memo: eking out more dollars from the fraction of readers that provide the overwhelming majority of digital revenue. According to the memo, 12 percent of the Times digital readership provides more than 90 percent of the paper’s digital dollars. To grow that group, The Times plans to recruit digital readers, especially those who are younger and from areas outside the U.S:
To double our digital revenue, we need to more than double the number of these most loyal readers. We will need to develop them increasingly from younger demographics and international audiences. This will require new thinking in journalism, product and marketing. Our print product is a vital ingredient in the mix for many of our most engaged digital readers. We must ensure that it too remains relevant and valuable in this digital-centric era.
To be sure, youthful and international audiences represent two groups that have large potential for growth. Like many outlets, The New York Times has invested significant resources into reaching international audiences that may not have encountered the company’s journalism before. And The Times continues to tweak NYT Now, its flagship news app that aims to draw a younger segment of readers.
The best argument for the paper’s potential to attract a swath of new digital readers might be its previous success in that area. The company recently announced it had recruited 1 million digital-only subscribers to the company’s properties. And in August, Digiday reported a stat that bodes well for the company’s strategy of segmenting its audience: The Times has a 70 percent open rate across its portfolio of 33 newsletters.
The overarching theme of the memo might best be boiled down to a focus on readers beyond all else. Rather than look solely at metrics, the company wants to emphasize its products and services.
We will shift the way we work to focus on the reader rather than on platforms or departments. Without ever losing the separation of editorial decision-making from commercial sales, we want to see teams from across the company working together on solutions to our challenges. We will set these teams’ goals based on shared objectives and then give them room to experiment, learn and develop their own solutions.
Two factors counting against the Times is the ever-present ubiquity of free news online and a growing number of competitors in the digital arena. The debut of new high-metabolism news organizations like POLITICO and Vox.com combined with the digital growth of longtime print adversaries means that The New York Times has major rivals for digital readers. But Thompson and Baquet remain optimistic, and they want everyone at The Times to join in:
What’s needed adds up to a transformation of the company. Responsibility begins at the top. We know that a lack of unity or clarity among senior leaders can slow everyone down. That’s why we’ve developed this new thinking together. This is not a newsroom plan or a revenue plan or a corporate plan. It’s our plan. We all made it and we all back it because we all want the same thing – the future success of The New York Times.
Here’s the memo:
“Dear Colleague,
Over the past five years, great journalism and real progress in both our subscription and advertising businesses have enabled us to double our digital revenue to $400 million in 2014. No comparable news organization is even close to that number. It’s an amazing achievement, but we have much further to go. What we need now is a common vision and a shared sense of urgency.
A group of us spent the summer looking together at our company’s direction and reached agreement on many ambitions: editorial, creative and commercial. Of course, we will have to keep our costs in mind in the years to come, but our message today is not about cutting, it’s about growth.
We want to begin by sharing a simple yet crucial financial target with you. Our new goal is to double digital revenue once again, this time to $800 million a year by 2020. Achieve that and we will secure our journalistic mission for the long term as well as create one of the world’s most successful digital content businesses.
In reaching for this goal, our commitment to producing the best journalism in the world won’t falter. It’s the bedrock of our strategy. But if we are to succeed, many other things must change – and quickly. All of our plans and operations must begin and end with our readers – and in particular must seek to build and deepen our relationship with our current and future most engaged readers.
This document describes our progress and plans in detail. We encourage you to read it in full, but here are a few important highlights:
Our unique business model depends on a deep relationship with our most engaged readers. Twelve percent of our digital readers deliver 90 percent of our total digital revenue. To double our digital revenue, we need to more than double the number of these most loyal readers. We will need to develop them increasingly from younger demographics and international audiences. This will require new thinking in journalism, product and marketing. Our print product is a vital ingredient in the mix for many of our most engaged digital readers. We must ensure that it too remains relevant and valuable in this digital-centric era.
For its most loyal readers, the physical New York Times has always been an essential daily habit. We want to recreate that same daily must-read essentiality on the smartphone. Our digital experiences must satisfy our users’ hunger for journalism of depth and range, but also fit seamlessly into the pattern of their individual lives. Serving as an essential guide in readers’ daily lives across digital platforms also means being more than a news and opinion report. We are developing new digital lifestyle and culture products, like Cooking.
Many of our competitors focus primarily on attracting as many uniques as they can with a view to building an advertising-only business. We see our business as a subscription service first, which requires us to offer journalism and products worth paying for. Our focus on quality and a deep engagement with readers is also a competitive advantage in advertising, which at its best is driven by unique consumer insight and superior creative work.
We want Times journalism to be widely read and we want to meet readers where they are, so we will continue to encourage new users to sample our journalism on other platforms. But our main focus will be to make our own products and services – digital and print alike – the best destination for news and lifestyle in the world.
We will shift the way we work to focus on the reader rather than on platforms or departments. Without ever losing the separation of editorial decision-making from commercial sales, we want to see teams from across the company working together on solutions to our challenges. We will set these teams’ goals based on shared objectives and then give them room to experiment, learn and develop their own solutions.
In addition to encouraging you to read the full plan, we want to hear from you. Beginning tomorrow, we will be holding a series of sessions with the two of us and other members of the executive committee to take you through our thinking more fully and listen to your questions and ideas. Look for an email about the first six sessions later today. They’re open to everyone and we hope each of you will take the time to participate. Arthur will also be hosting a State of The Times gathering next month and you have our word that we will make sustained communications a priority.
What’s needed adds up to a transformation of the company. Responsibility begins at the top. We know that a lack of unity or clarity among senior leaders can slow everyone down. That’s why we’ve developed this new thinking together. This is not a newsroom plan or a revenue plan or a corporate plan. It’s our plan. We all made it and we all back it because we all want the same thing – the future success of The New York Times.
Mark and Dean on behalf of the Executive Committee”
