Tag Archives: digital

NY Times: a bridge to a digital future

By Christopher B. Daly 

Most people who care about journalism share a concern: can the New York Times survive the transition from a print past to a digital future? And can the newspaper carry forward its unparalleled standards, staffing level, and values into a future where the Times flourishes in the news business gets out of the paper business and emerges as a truly online news operation?

Increasingly, it appears the answer will be yes.

A big hint landed softly this week in a column by the Times‘ public editor, Margaret Sullivan. In her column, she indicated that the budget for the Times newsroom is “more than $240 million” a year. That’s how much it costs for the care and feeding of some 1,250 journalists in New York and around the world — salaries (which are at the top of our field), benefits, travel, rent on foreign and domestic bureaus, and on and on. It does not include other costs, such as printing and distribution.

That figure, which I had not seen broken out that way before now, is important.

It confirms, of course, that journalism is not cheap — especially journalism that is predicated on original reporting on a global scale. It represents the paper’s “journalistic nut” — the hard core of spending that must be met, just like your rent or mortgage and utility payments.

The challenge is: how to make the nut?

The good news is that it seems more and more do-able to make the nut into the indefinite future, despite the severe contraction in print advertising.

Here’s one scenario:

–Begin by reducing the nut. Let’s just assume that there is some inefficiency in there, some feather-bedding, some wasted effort (like the still extensive time and energy put into the laying out of each next day’s print “front page.”) For the hell of it, say you could cut that budget by 8% and still survive essentially intact. (That’s one-12th of the total, or $220 million instead of $240 million.)

–That means you need to come up with $55 million per quarter.

–Already, the Times is bringing in $38 million, from digital advertising only, according to the Public Editor.

–She did not say how much money is coming in every quarter from digital subscriptions, but she did note that “digital-only” subscriptions have risen (from zero) to about 800,000.

–It would not be unrealistic to think that if the Times went digital-only, it would pick up another 200,000 out of the base of subscribers who now get the print edition.

–So, there’s a hypothetical base of 1 million digital subscribers.

–If those 1 million people would pay $20 per quarter, you would have more than your $55 million nut.

Of course, there are problems. Maybe the Times can’t find 1 million customers. Maybe those readers won’t pony up enough in subscription. And these revenue figures are all net figures: someone still has to go to work at the Times every day to sell those ads and handle those digital subscriptions. Just because those operations are digital, they are not free.

My point is that the trend of rising revenues from digital ads and digital subscriptions is approaching the point at which they could carry the newsroom. They are not there yet, which may point to another partial, temporary answer: just print on Sundays. Print advertising brings in something like four times the amount of digital ads, but that print-based is declining and will not carry the paper into the future. So, during the transition, why not keep the big fat Sunday edition? It has the largest number of readers (1.2 million), pages, ads, and revenue. No need to say goodbye to all those full-page Style-section ads from Ralph Lauren and Chanel. At least not yet.

NYTCo homepage

NYTCo homepage






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Can journalism get by without advertisers?

By Christopher B. Daly 

Why should journalism depend on advertising? There is nothing logical, necessary or inevitable about it.

Originally, advertising was a trivial source of income for 18th Century newspapers. Instead, readers supported those newspapers by subscribing for fixed (and pretty lengthy) periods. there were few if any newsstand sales. That model worked for more than a century.

It was only in the 19th Century that newspaper publishers began seeking and relying on advertising revenues. This coincided with an explosion of spending on ads, so there was plenty of money sloshing around to allow newspapers to expand. By the end of the 19th Century, many newspapers derived half or more of all their revenues from ads.

When broadcasting came along in the 20th Century, most radio and television operations could not find a way to get their audience to pay, so they became almost completely dependent on advertising income. (NPR and PBS are exceptions; they depend on a shifting mix of foundation grants, “sponsors,” a shrinking direct government subsidy, and the direct financial support of “viewers (and listeners) like you.”)

There, in broad strokes, is a big part of the current existential crisis facing all the “legacy” media with a foot in the pre-digital past. They arose under a set of conditions that no longer exist. Advertisers have reduced their spending overall, and they have reallocated the remaining ad buy so that they can buy a growing amount of space online. They are not coming back to print or broadcasting.

So, if advertisers cannot be depended on to fund journalism, who’s left?

One answer is pointed to by David Carr in his column today. Ostensibly, his column is about HBO and the success of such tv “auteurs” as the creators of The Sopranos and The Wire. Carr observes that HBO never depended on ads, so HBO’s executives never had to worry about what kind of programming advertisers would accept. Instead, the only constituency they had to please was viewers, who flocked to the better (if violent) programs. It was a case of “viewers to the rescue.”

From Carr’s column:

As it turned out, what had been holding television back was not the audiences, but the advertisers. HBO, freed of those bonds as a pay TV service, bet on a show about a fat, conflicted gangster who spent time in a shrink’s office when he wasn’t ordering up murders from the back of a strip club called the Bada Bing.

HBO had figured out that the strategy followed by broadcast networks — trying to please all of the people at least part of the time — was a losing formula for a pay service. Instead it began producing remarkable programming for a discrete audience that would pay a premium for quality. That audience has ballooned to some 30 million viewers and turned HBO into an A.T.M. for Time Warner, a lesson that was not lost on other cable channels. This revolution will continue to be televised.

In cable TV, unlike traditional broadcasting, money comes from “subscribers” — i.e., you and me and everyone else who overpays Comcast or Verizon or some other cable provider. All our monthly bills go into a giant pot, and cable providers turn around and dole it out to the suppliers of programming — X for ESPN, Y for all the NBC properties, Z for Fox, and so on. The details are the result of negotiations based mainly on who’s hot and who is bringing in the biggest audience.

HBO is just one example of a model that could be used to pay for all sorts of creative and valuable original materials. Consider: if I buy a song on iTunes, there is no jingle that I have to listen to first (or in the middle!). If I buy a book, there’s no ad on page 178. In those markets, I expect to pay the full amount, without a  subsidy from advertisers.

Can the journalism that has been brought to us by newspapers, magazines, and television be funded without advertising?

Stay tuned.



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