By Christopher B. Daly
What’s going on at the most important institution in American journalism?
Hard to say, but let’s engage in a bit of speculation.
Recently, the New York Times announced two developments, which the paper reported in a single story, giving rise to the notion that they are somehow linked.
Item #1: An earnings report. As usual, the Times reports about itself in a glass-half-empty way.
Buoyed by strong digital growth and cost savings, The New York Times Company reported on Thursday an increase in quarterly profit but said revenue was flat as its print business continued to decline.
There is not all that much news there — just a continuation of two long-running trends. Digital revenues (the money that comes in from online advertising plus the money from digital subscriptions) continues to rise. Print revenues (the money that comes in from display ads in the printed newspaper, plus money from people who subscribe to the print edition) continues to fall. The digital revenue is rising pretty briskly, but from a small base. The print revenue is dropping relentlessly, but from a large initial base. Someday, those trend lines will cross, but not just yet.
Later, the story added this:
Digital revenue remained an area of growth. Digital advertising revenue increased 11 percent during the fourth quarter, to $70 million, a number representing about a third of the company’s total advertising revenue.
The company said it added 53,000 net digital subscribers in the quarter, the most added in a quarter in three years. The Times now has close to 1.1 million paid digital-only subscriptions.
So, that’s the good news. All those digital ads are starting to add up, and the blessed new digital subscribers are finally pitching in and paying a greater fraction of the cost of delivering all that journalism. All told, the digital revenue is approaching $400 million a year, or about a quarter of total current annual revenue. The paper has set a goal of $800 million in annual digital revenues by 2020.
The existential question for the Times is this:
Is that enough money to sustain the newsroom?
In other words, if the newspaper got out of the paper business altogether (as it one day must) and laid off all those printers, truck drivers, and others who are linked to the print edition, could it survive on a budget of digital-only revenues?
That’s an open question, which brings us to . . .
Item #2: Announcement of a team charged with conducting a “sweeping review” of the Times‘ own newsroom — staffing, procedures, everything. It will be led by David Leonhardt, the fair-haired boy who created The Upshot. Clearly, he’s a figure on the rise. The paper’s top editor, Dean Baquet, framed the undertaking this way:
He said The Times would always have a large newsroom, but it was “not going to get any bigger” and “we’re probably going to get a bit smaller.” He added that some areas of the newsroom, including those focused on multimedia and international coverage, could grow.
He did not rule out layoffs, but said he did not expect any in the immediate future.
So, my hunch is that Leonhardt is really charged with figuring out how the legacy newsroom could live within its digital means. Can the paper afford its traditional system of strong desks (especially if they slow the transmission of news onto the web)? Does the paper need to keep spending so much time and energy figuring out how to lay out Page 1 of the print edition? How many jobs could be pared out of sections like the Book Review, the Magazine, and T, if they were online-only?
Clearly, the Times cannot afford to haul the entire apparatus of printing a newspaper into the digital future. At some point, it will have to jettison some or all of its print operations and live entirely online. Any guesses as to when?
[Don’t take my word for it. Here is another take, by Michael Calderone at HuffPo Media.]