The New York Times and print pressures
In a moment of dubious etiquette, venture capitalist and Netscape co-founder Marc Andreessen said at a New York Times conference this week that the company should dismantle its print operations not in ten years, or five, but “as soon as possible.” Cue print lovers’ outrage.
Of course, those paying attention to the newspaper business shouldn’t be surprised to hear anyone, let alone Marc Andreessen, speculating on the eventual or imminent demise of print. At least 14 metropolitan dailies have closed since Newspaper Death Watch (a sobering site if ever there was one) started keeping track in 2007, and another dozen are working on a digital-only or digital-print hybrid. In May, New Orleans’ Times-Picayune said it would be reducing its frequency to three times a week. Gannett and McClatchy are both struggling with falling ad revenue and rising pension costs, and earlier this week, the Tribune Co. – in its fifth year of bankruptcy – announced plans to sell off some or all of its papers.
So everyone knows print is in trouble. But simply giving it up – all production and distribution costs included – is no panacea. True digital success stories are few and far between (think The Wall Street Journal, The New Yorker, The Atlantic, and the Financial Times) but are touted as beacons of hope for the industry. To date, newspapers’ transition to online-only has not been, as Andreessen asks of the NYT, a matter of “going on 100 percent offense,” so much as necessary reaction to harsh realities: ad revenue is down, circulation is flat and putting out an actual paper is expensive. It’s too early to know how such nascent operations will fare in the long run.
For the New York Times specifically, the prospect of an all-digital operation is still a financial bridge too far. It’s true that the company saw a 10.9% drop in third-quarter print ad revenue, compared with the same quarter in 2011 (and in line with a staggering drop in print ad dollars documented here) but digital ad sales have yet to come even close to filling the void. Moreover, the New York Times Co. saw a 2.2% decline in digital ad revenue in the third quarter, which—at $44.6 million—accounted for less than a quarter of overall ad dollars. In other words, online advertising is still the David to print’s (however floundering) Goliath. The subdued panic resulting from the digital advertising plateau is evident in marketers’ attempts to “revolutionize” the ad space. See: social media marketing, custom content and lofty price tags for exclusive tablet campaigns.
Of course, Andreessen isn’t arguing that the Times should drop print because it makes financial sense, but rather that the onus is on the NYT to make it make sense. And to this effect, he has a point. Print may still be chugging along – sort of like a bear that’s been hit with a tranquilizer dart – but the writing is on the wall; the train is approaching the station; the storm clouds are forming; insert additional ominous metaphor here.
The Times is already fighting the battle between rising costs and falling revenue: The paper has gone through three rounds of buyouts and job cuts in the last four years. At the end of the day, the Times will have to fit the square peg in the round hole, and the entire industry is looking to them to do it, even if the NYT’s particular clout and audience may mean its solution won’t work for many a smaller competitor. This is what Andreessen means by going on the offense. If the end of print is nigh (or nigh-ish) the New York Times should be the first in line to survive without it.
To an extent, the NYT has already been fighting the good fight: Way back in 2007, the paper invested in the kind of “experimental online journalism” that has yielded some of its most innovative interactive features. Andrew Ross Sorkin – who, fun fact, joined the NYT at age 17 – has helped DealBook become one of the paper’s most successful online properties, and earlier this year the New York Times Co. formed an R&D Ventures group with the goal of commercializing its own media marketing concepts (i.e. creating new revenue streams.)
NYT management would also be the first to mention their successful foray into digital subscriptions, which totaled 566,000 in the third quarter, up 11% in three months (digital subscriptions for NYT Co.-owned BostonGlobe.com totaled 26,000 at the end of the third quarter, up 13%). Indeed, revenue from digital subscriptions increased 7.4% in the third quarter, compared with the same period in 2011. But roughly $100 million a year in digital subscription dollars—600,000 people at ~$180/year/person—combined with about $180 million a year in digital ad revenue, may not be enough to sustain a 1,000-journalist operation plus profits, or any newsroom that costs more than $150 million a year.
There are a few major shifts that need to happen for an all-digital all-the-time NYT to work. First, newspapers desperately need a shakeup in online advertising that facilitates, if not print-level revenues, something just a teeny bit closer to them. Second, people – yes, more than 566,000 of them – have to get on board with paying for news. And third, New York Times staffers – all newspaper staffers, really – need to adjust to a new normal that will almost assuredly continue to include more work, the same or less money, fewer benefits and the often-maligned need to be a 24/7 evangelist of one’s own content.
Of course, even with the above paradigm shift, the Times – and the industry overall – can hardly anticipate the rapidly changing media landscape, the proliferation of new technologies, or the possibility (probability?) that some new trend, device, service or website will upend the newspaper business yet again in a few years’ time. That new normal – a media environment of almost ritualized chaos – is the real impetus for Andreessen’s call to kill print. Print isn’t a flexible business, and we live in a media world that demands flexibility. If the NYT wants to thrive in the long run, they’re going to have to adjust, early and often. Maybe that doesn’t mean getting rid of print yet, but let’s not pretend that it won’t.