Most would agree that The New York Times is one of the best known and trusted news brands in the world, yet the company has hit the proverbial brick wall over the past few years – along with the rest of the American newspaper industry. It has been forced to undergo a series of changes and acquisitions which nervous publishers and newspaper executives across the globe have followed with keen interest in the hope that the “Gray Lady” will find the cure to the industry’s malady.
The NY Times learnt the hard way that it wasn’t financially viable to run separate print and digital operations.
Subsequently, the editorial floors in its new building were specifically designed to facilitate an integrated operation with the news department being organised around reporting desks and a handful of departments that service the remaining desks. Most importantly, these reporting desks and departments serve both the print and digital versions of the NY Times and are treated with equal priority and respect.
The New York Times Company has also feverishly invested in digital businesses and acquired online properties such as About.com. More recently, it announced plans to merge the NYTimes.com, one of the most visited online destinations on the planet, attracting in excess of 25-million unique users per month, with the website of its sister title, the International Herald Tribune, in order to aggregate traffic and increase value proposition offered to advertisers.
Despite all these efforts, the company is finding it increasingly difficult to remain profitable and relevant in this harsh new digital age, which is particularly worrying for the global newspaper industry since, if an icon such as the New York Times is unable to find a new sustainable business model after so many attempts, what hope is there for the other rags?
A decline in newspaper circulation and print advertising revenue has resulted in a number of staff retrenchments and page reductions at the paper. Advertising revenue for the New York Times Media Group fell by over 21 percent in November last year compared with the same month in 2007. Furthermore, the company’s stock price dropped to $5 a share in that same month compared with $24 just two years previously.
Ironically, the NY Times is making money from its digital initiatives, but not enough to offset the loss of revenue from print, and therein lies the problem.
The recent decision to start selling display advertising on its lucrative front page, once considered an editorial safehaven, is testament to this and was perfectly summarised in an accompanying article published in its business pages as “the latest concession to the worst revenue slide since the (Great) Depression”.
One could write an entire book about the reasons for the newspaper industry’s slow decline and there are, in fact, many. Philip Meyer infamously wrote in his book The Vanishing Newspaper that the last American edition would be published in 2043 if current trends are anything to go by. He has since updated this prediction and now believes it will happen much sooner.
The extent to which the local newspaper industry will be affected is debatable, but we are defi nitely beginning to see the squiggles on the wall. The most recent ABC figures showed an overall decline in daily and weekly newspaper circulation. Add to this the high cost of printing and distribution, as well as fragmented adspend and an economic recession, and all of a sudden the outlook isn’t very promising.
Key differences between the local and US markets thus far have been that the decline in the US can largely be attributed to shifting consumption habits as a result of disruptive technologies and new media, while in South Africa, economics and literacy have played a much more crucial role due to a higher rate of poverty and limited access to Information and Communication Technologies (ICTs). The bottom line is that both are heading in the same direction.
While no one knows for certain if newspapers will be able to weather the storm and regain their relevance and social currency, South African newspaper execs should accept the fact that they are no longer immune to global trends and should start preparing for the worst. Only once they’ve addressed crucial concerns, such as which convergence strategies to put in place in order to focus on their strengths and deliver real value to their shrinking customer bases, can there be any hope of survival in the future.
Colin Daniels is the publisher of The Times Online, the digital arm of The Times and Sunday Times.
- This article first appeared in The Media magazine’s newspaper collection (February 2009)