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Reader revenue overtakes advertising at The New York Times

Reader revenue overtakes advertising at The New York Times

Back when WAN-IFRA was still FIEJ (the Fédération Internationale des Editeurs de Journaux et Publications), the organisation’s 1962 News Bulletin carried an article that showed that the vast majority of British newspapers relied on advertising, not reader-generated revenue, to cover production and distribution costs. "Quality" newspapers garnered 73 percent of their income from advertising, as opposed to sales and circulation revenue at weekly titles. It is a trend that dates from well before the 1960s and continues to the present day, in both the UK and the United States.

At least, it was a trend that continued until very recently. Now there are growing signs that the tide is at last turning. This week, the New York Times co., publisher of The New York Times, The International Herald Tribune and The Boston Globe released second quarter figures showing that its titles’ circulation-generated revenue was higher than advertising revenue. Although dwindling income from print and digital advertising (which shrank by 6.6 percent and stands at $220 million) undoubtedly contributed to the shift, the Times’ famous paywall and an increase in price for print subscriptions saw circulation revenue at the NYT company’s news titles rise by 8.3 percent, to $233 million.

Just over a year ago launched its paywall, amidst fears that in doing so would cause irrevocable damage to the site’s traffic levels. Historically, newspapers have never been primarily funded by reader revenue, and many doubted that the paper’s metered paywall would generate enough income to bridge the ever-widening financial gap brought about by decreasing advertising revenue. Yet, despite a slight dip in visitors following its introduction, the paywall has gone from strength to strength. Executives at the Times have even had enough confidence in their ability to attract readers with the title’s digital content to reduce the threshold for the number of articles readers can access before encountering the paywall from 20 to 10.

However, although combined revenue for The New York Times, The Boston Globe and International Herald Tribune rose to $515.2 million, a 0.6 percent increase on Q1, all is far from well for the New York Times Company., the online content resource bought by the publisher in 2005, necessitated a $195 million goodwill write-down that took its toll on this quarter’s profits. In total, the company posted a loss of $88 million.

New York Times Co.’s managers are likely to be disappointed that their efforts to boost advertising revenue have come to nothing, but will no doubt seek to emphasise the positive elements to come out of the Q2 report, foremost of which is that the gamble taken on The New York Times paywall seems to be paying off. Only a few months ago media analyst Ken Doctor wrote that newspapers were now engaged in an “inexorable run toward majority reader revenue”: this week’s data shows The New York Times to be once again leading the way for other news publications.

Sources:  NYTimes, New York Magazine, Niemanlab, AllThingsD, Venturebeat


Amy Hadfield


2012-07-27 16:49

Shaping the Future of the News Publishing

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