The core content and paywall strategy of the Times worked — that’s Paywalls 1.0 — but building on it has been tougher than planned. Today’s move is significant, but it’s one that should be understood carefully.
How much had the Times invested in the new strategy? While it’s impossible to parse the differing kinds of resources the newsroom added over the last three years or so, the amount of them is a number to behold. In 2011, the Times counted 1,189 newsroom employees. At the end of 2013, the number was 1,251, up 5.2 percent. Currently, it counts 1,330, up 11.5 percent from 2011. With 100 to be taken out, the 1,230 number would still be 3.4 percent higher than three years ago. It’s worth highlighting: While the overall number of newspaper editorial staffers has declined across America (down 20,000 jobs, about 30 percent of the total, in seven years), the Times has been bolstering its staff.
Let’s look at four of the key questions to pop out of today’s move:
Is this a major business reversal?No, the Times’ revenue is on a familiar path. If you look at the financials of the first six months of the year, reader revenue is still growing a bit and advertising is basically flat overall. The big bright spot is obscured by that big layoff number: a 16 percent increase in Q3 digital revenue, compared to 3.4 percent up in Q2 and 2.2 percent up in Q1. That’s a big number, and a hopeful one for the future as new executive vice president for ads Meredith Kopit Levien works through her massive overhaul of the Times ad operation.
Is the poor business performance of the new niche products a surprise?Not really....
What do we learn about investing in news product?The stock market — no surprise — loved today’s announcement. It was an announcement of business discipline. Call it a pivot, as CEOs like Thompson are wont to, or a sharp unexpected turn when the boulders in the road look larger than Google Maps told you.
We can figure that the 141 increase in staff in the newsroom over last 30 months cost about $12.5 million a year. Take out 100 of those and the Times saves about $9 million a year. That’s a positive financial move. Look at the wider expense context. Newspaper companies have been cutting expenses annually in the low- to mid-single digits for almost a decade now; that’s the only way they can stay profitable since they largely haven’t grown revenue year-over-year since 2005. Last year, the Times was down 2.1 percent in overall expenses, pruning in lots of places while investing in the newsroom and new products. Through the first six months of 2014, though, it’s been up 4.5 percent. Given the flattish revenue performance (more on which below), that number couldn’t hold. The Times’ operating profit for 2013 was $156.1 million, and Thompson’s already said it will be less than that in 2014.
What’s the size of the Times’ paying audience?Consider this. At the end of the last century (1999, to be precise), the Times print paying circulation stood at:
- 1,097,200 daily;
- and 1,682,200 on Sunday.
- 1,217,201 paying Sunday print readers;
- 680,905 paying daily (Monday-Friday) print readers;
- and those 870,000 digital-only subscribers.
Adding today’s daily print to digital only, we get 1.55 million paying readers, or close to the top print circulation (Sunday’s) of 1999.