- Print advertising — which used to make up 75 to 80 percent of all Times revenue — now accounts for only 17 percent of its total. Within the next year or two, he told me, it will likely be the Times’ fourth-largest revenue contributor, behind print subscription, digital subscription, and digital advertising.
- The Times counts 2.1 million digital-only news subscribers, still growing post-Trump-bump at about 100,000 a quarter. Compare that to the Times’ still-strong (though declining at about 3 percent a year) Sunday print sales of 1.1 million, and we see a curious ratio. Digital payers now outnumber print payers about 2 to 1.
- Reader revenue — both print and digital — now makes up 62 percent of all Times revenue, as compared to about 44 percent when Thompson took the job in 2012. That crossover number serves as its most important one. As print advertising continues its epochal decline — even the Times was down 20 percent in print ad revenue in the third quarter, in the general neighborhood of many other newspaper chains — nearly everyone in the news publishing business is turning back to readers as their likeliest source of future funding. But the Times (along with other advanced nationals like the FT, The Wall Street Journal, and probably the privately held Washington Post) is among the few publishers who now see more revenue from readers than advertisers. Meanwhile, much of the daily press can’t imagine achieving overall revenue growth, because its reliance on print advertising counterbalances whatever success it may have in the digital transition.
Five years is a long time, especially in the media business. It was five years ago this week that Mark Thompson took on the top job at The New York Times Company. It was an enterprise still wobbling from the effects of the Great Recession, its new paywall only a year old. The Huffington Post was trumpeting that it had surpassed the Times in digital traffic — a recognition of Google’s market power and of Facebook’s emergence. The Times was a shrinking enterprise. It had shed revenues, profits, staff, and share price. It had also shed its previous CEO, Janet Robinson. Publisher Arthur Sulzberger’s pick of Thompson to replace her surprised many; despite having led the BBC’s ongoing transition to the increasingly digital world, Thompson had no publishing management experience. And he was a Brit, plucked out of London to head America’s flagship newspaper company. Half a decade later, the is on surer footing, thanks in large part to its execution of Thompson’s mantra: subscriber-first. Most newspaper companies have now embraced revenue from readers (rather than advertisers) as a priority, but the Times is the global leader in that quest, with more than 2 million digital news subscribers. Still, the finish line for that transition is still some distance away. Heading into 2018, Thompson can at least take a deep breath or two. After years of turning the Times’ business on its advertising/circulation head, he can now point to two words that have eluded its industry for a decade: revenue growth. Year-to-date through September, the Times has managed to grow revenues 6.8 percent. Each of its three quarters has seen growth, at 5.1 percent, 9.2 percent and 6.1 percent. Repeating that feat in the fourth quarter may be more problematic, the company says, but even so, the Times will look back on 2017 as a turning point. It may not have built out a new business model for the 21st-century press, but it, along with the Financial Times, has served as the leading engineers. Consider these data points:
The Sunday paper and the future of print
Doctor: It seems like the next stage of the global initiative is very much focused on English-speaking countries.
Thompson: They’re simultaneous. These are simultaneous gestures. One of which is, essentially, try hard to go for low-hanging fruit, frankly — which makes it sound like this is easy. It’s not easy. But look hard at your most obvious customer, the English-language reader.
Doctor: So it’s the same language and it’s essentially the product as it is. What are you learning, as you go in Australia, Canada, the U.K., perhaps, about how much different content do you have to offer? Or is it mainly different presentation?
Thompson: Firstly, we’re probably about nine months in our Canada/Australia/U.K. thinking and experimentation. Each market is different. We don’t think there’s a package.
Doctor: And you said you’re doing pricing experiments in Canada more, right?
Thompson: I would say, essentially, we’re now testing pricing, principally, through offers. Testing price, continuously, everywhere.
Doctor: And more higher price or more lower price?
Thompson: Typically, higher price is in the context of can we encourage you to pay for a higher price bundle which might include other things like crossword and cooking, for example.
Creating new bundles of joy
Doctor: Let’s talk about bundles a little. Your first paid numbers on Cooking were pretty good. You just launched in July and had 23,000 subscriptions. With Cooking, you’re providing that free to subscribers. With Crosswords [at 26,000 new subscriptions in the last quarter, 332,000 in total], some subscribers have to pay 50 percent of the price for it. Why the difference in those two strategies as you build the bundling strategy? Do you have that figured out yet?
Thompson: The thing I’m most hungry for is for us to create pieces which the company’s revenue departments can play with in combination. I don’t really have a particular thesis about which piece should cost more…It seems to me that many of our competitors have essentially got one thing to price.
Doctor: That’s the nature of the whole industry, right? So you want more pieces, and Cooking gives you a new piece. You’ve got Watching. A health product has been talked about. What’s going to speed up the Times product pipeline?
Thompson: We’ve literally just appointed Alex MacCullum as the head of new products here, and my answer is Alex is going to do that. She’s one of our best executives. She was the brains behind Cooking, with Sam Sifton. When I arrived five years ago, I said — a very obvious question — what about verticals? What about cooking? I happen to be quite a cook.
Doctor: What’s your best dish?
Doctor: The best Italian dish?
Thompson: Risotto, I suppose. So, I said, what about cooking? “We tried that and it didn’t work.”
Doctor: You heard that on a few things.
Thompson: Yes. Well, let’s be fair. This is what life’s like. You know, actually, most successes are based on going back and trying something that looked like a failure.
Doctor: But why not charge subscribers for Cooking? How do you decide that?
Thompson: I don’t want to say much more than the way I think about what we’re trying to do is we’re trying to add value to the experience of a subscriber. Sometimes we’re going to use that as a way of retaining a subscriber. Sometimes we’re going to say, why don’t we give this to existing subscribers, but ask new subscribers to pay more for it? The key thing is to have the pieces. You can’t juggle without a number of different balls.
Doctor: So how many pieces do you want Alex to have, say, by the beginning of 2019. More pieces?
Thompson: More pieces, yeah.
Doctor: Two more pieces?
Thompson: I don’t know. It won’t be 10.
Doctor: Fewer than 10?
Doctor: More than one?
Thompson: Probably more than one, yeah.
Doctor: You’re doing analysis behind it to say it’s better for us to charge individually for it or to bundle it. Or are you guessing?
Thompson: The truth is it’s a combination of the two. I think judgment actually plays a big part in this. I think my job is just to try and encourage the entire organization to build things of value beyond the news experience. Some of which we may use within the main news app, some which may be standalone. Things could migrate between the two.
The promise of Wirecutter
Doctor: What about the Times’ integration of e-commerce? David Perpich [the Times executive who took charge of the Wirecutter business earlier this year] is building that business, and I know you’ve been careful with how e-commerce is offered on the main Times website and connected to stories. You’ll have features like buying the right headphones at the right time, off some news. What kind of legs does e-commerce have, perhaps as part of the bundles you’re thinking about
Thompson: I think the affiliate-fees revenue stream out of Wirecutter is, potentially, highly extensible. I don’t think you’re going to see buy buttons littering, flashing all over the place. But is it extensible? Definitely. Is it possible there are resources or tools or archival content which could ultimately be behind a paywall either as a standalone or in a Times model? Yeah. Potentially yes. We think Wirecutter has got immense potential in terms of building on different categories as a standalone. We’ve demonstrated, I think, very well that Wirecutter can be used for content which fits very nicely on the Times. The basis of that acquisition is that Wirecutter is worth more to us than it would be worth to someone else, because we could do more with it.
Doctor: Archival would be a Consumer Reports model?
Thompson: Yeah. It’s complicated. It’s not obvious what the value of archival is. In some ways, I think one of the very, very clever things about Wirecutter is if all you want is to know what you should buy now, that’s the first sentence you read. “Most people should buy X” — there’s a buy button. You’re done. So, if you want a five-second interaction with Wirecutter, to mutual advantage, that’s fine. If you want to see the workings. They got the workings. To me, that’s something, again, that’s something for us to explore and learn but we’re very, very pleased with the company. There’s a couple of very interesting things about the company. First is the newsroom. They’re passionately enthusiastic about our buying the company. So, not just, you know, acquiescing: “Oh, if you must.” They were very, very excited about it. We’ve licensed Wirecutter content in the past. There was real admiration inside the Times newsroom for the journalistic standards of Wirecutter and the authenticity. It’s been a marriage made in heaven. It’s been good.
Thompson vs. Thomson
Doctor: Last question. You and Robert Thomson [the CEO of rival News Corp, appointed to that job a few months after Thompson joined the Times] both ascended at a similar of time.
Thompson: No P. He hasn’t got a P in his name.
Doctor: I know. Is that the only difference?
Thompson: I come from the aristocratic branch of the family. [laughing]
Doctor: How do you assess that competition? The Journal had taken dead aim at the Times just before you got here.
Thompson: Oh, that’s a slightly different thing there. I’ve known Robert for years. When he was running The Times [of London] and I was running the BBC and even before that. I’m a big fan of Robert’s.
Doctor: How often do you talk? Is there a secret Brit club here?
Thompson: I probably see him three or four times a year. Something like that. I’m a fan. A frightening number of people at News Corp say they worked for me. Like [Journal editor-in-chief] Gerry Baker — he once claimed he worked for me. Certainly, I knew him when he was probably 24 and I was some gray age like 27. The Wall Street Journal continues to compete with the Times for some categories of advertising. Sometimes we maybe do a better job, sometimes they do. It’s not obvious to me that we’re competing for subscribers. They have a thesis for a very tight paywall.
Doctor: It works for them, they say. It seems to work at the Times of London.
Thompson: I think the Times [of London] got stuck in that 200,000 [range for subscribers]. I don’t know — they need more scale to get that to really work. But I think they’re very serious about it, and they’ve thought about it, you know, and good luck to them. If the plan was The Wall Street Journal was going to transition into being a fully featured general-interest news organization, able to compete against a very broad spectrum of genre, I don’t see that.
Doctor: It’s really stepped back from that.
Thompson: I don’t see that happening. They have lots of good journalists. Some of them they’ve been kind enough to train and develop for us and we’re thankful. But no, I want to say more broadly, The Wall Street Journal looks like less of a direct competitor than Rupert Murdoch seemed to think they were going to be a few years ago. The Washington Post is revived and is more of a competitor. You know, we want competition. No harm in that. But it’s our relationship with the digital platforms — when we think about the critical relationships, it’s going to be how all of us deal with them.
Doctor: Robert’s been the most outspoken of the two Thom[p]sons, right?
Thompson: Yeah. He keeps on telling me I ought to thank him for that, but I said I was going to hide behind the rock and see how he gets on.
Thompson: We think we have a good relationship with Google. We’ve been very frank with Google. We’re not grandstanding about it, but we took a similar view to News Corp about the fact that Google could do a better job in helping us with our subscription businesses. And they have, I think, listened and have been pretty responsive. You can debate whether the public campaign was necessary or not.
Doctor: It’s a good cop/bad cop thing, too. That’s what Mathias [Dopfner, CEO of Axel Springer and long-time Google antagonist] does in Germany right? I mean, Axel Springer goes out there and beats the drum. Then, the Google Digital News Initiative comes out of it and other stuff. So it makes some sense. You can’t say Google’s reeling, but they are nervous. They are very nervous given the populism on both sides of the Atlantic, which could be very threatening to them.
Thompson: But also, sooner or later, obviously, fundamental questions about regulation emerge. If you essentially have the power of a utility, sooner or later, politicians are going to say, “Well, we know about utilities. We know about the market risks for utilities.” In many countries, including my own, the phone companies went through a process of being confronted with this, the idea of a period of recalibration of regulation, very much like the story in the 1980’s and 90’s.
Doctor: Do you think we’re coming back to that? You can’t come back to that in this political atmosphere.
Thompson: And to be quite clear, we know from the story of regulation, it normally arrives several decades after — I mean, the Federal Trade Commission arrived 40 or 50 years after the malpractice of the railroads in the 1850s and 1860s. It’s a fool’s errand.
Doctor: So you’re forecasting regulation of Google and Facebook in the 2040s.
Thompson: I can’t tell you what’s going to happen, but I think in both cases, to be fair, I take their leaders at their word. They don’t actually want to be antisocial in their behavior. And when antisocial behavior is pointed out to them — Facebook essentially being paid to target anti-Semites and things like that — they’re aghast. So, there’s some feeling, even in the companies, that things can’t go on quite as they have been in recent years. So let’s see where we get to.
Photo of Mark Thompson, left, and Arthur Ochs Sulzberger Jr. at the ring the bell ceremony at the opening of Euronex quotations in Paris, Oct. 15, 2013, by AP/Remy de la Mauviniere.