By Tien Tzuo, CEO
Two familiar media narratives have sprung up recently: the unstoppable ascent of digital-native media companies like Buzzfeed & the inevitable sad decline of their recently divested print counterparts.
Print advertising is definitely going away, but the assumption that print legacy media is dying along with it is misguided. It conflates format and content. Reports of its death continue to be greatly exaggerated.
The prevailing wisdom seems to be that digital-native media companies operate in some magical overhead-free universe, while the anchor of sinking print advertising will drag the legacy brands down permanently to the bottom of the ocean.
But “print vs digital” is the wrong frame. It assumes that the physical delivery of the content is more important than the content itself. The core of the New York Times is not its physical newspaper, but rather its journalists, its brand, its culture, its reach, its values. That is something that people will pay for.
If you start with the premise that you have loyal customers that identify with your brand, and you see this as a chance to engage them even deeper with a rich digital experience, then your new model becomes less reliant on the whims of advertising and more supported by stable, recurring subscription revenue.
In fact, lots of smart publishing groups are leveraging the loyalty of their existing print subscribers in their transition towards primarily digital revenue models. And they’re taking advantage of the flexible pricing & packaging models and bundled add-ons of the software industry to do it.
So in the midst of all this doom and gloom, why don’t we talk about some newspaper companies that are absolutely killing it?
Fairfax Media, the Australia/New Zealand publisher of the Sydney Morning Herald and The Age, is back in the black with $225 million in net profits last year, after reporting a loss of $16 million the year before.
As noted by Rick Edmunds of Poynter.Org, A. H. Belo, publisher of the Dallas Morning News, is a healthily profitable business thats stock is up 40% over the last six months after reporting that digital gains have offset print ad losses.
The New York Times recently reported its first year-over-year increase in ad revenue in three years, and is averaging twelve thousand new digital subscribers a month. According to CJR, on a year-over-year basis The Times’ digital subscriptions were up 19 percent in the second quarter and metered paywall revenue was up 13.5 percent.
The Financial Times made $92 million last year, a 17% year-over-year increase. Digital earnings account for over half of its total revenue, and subscription revenue outweigh advertising revenue by almost two to one. It has the highest paying readership in its 126 year-old history (see the chart above).
The fact is, all of these publishers now make more money from subscriptions than advertising, which pretty much flips the 150 year-old newspaper publishing model on its head.
Which brings me to the recent Buzzfeed investment. They’ve smartly positioned themselves to take advantage of the huge influence Facebook now has in terms of content delivery, but in my opinion they’re too focused on format, and not enough on unique, standalone content (I would have given the $50 million to Vice for their video work alone).
And what’s more, there is no monopoly on data-driven content creation & delivery. Everyone has ChartBeat, everyone’s tuning material for social media channels, everyone’s investing in video. And what happens when the social media winds shift?
As Claire Cain Miller noted in the New York Times, “While many people now find their news on Facebook, it’s easy to forget that very recently they found it on Google, and will surely find it somewhere else in the not-too-distant future. The danger for media companies, then, is to focus too much on the way stories are delivered and too little on what the pieces say.”
The real winners are going to marry the best social delivery practices of the day with thoroughly researched, beautifully crafted journalism, like the New York Times’ “Snowfall” and the Washington Post’s “Top Secret America.”
The truth is, the shift to digital actually creates huge opportunities for established newspaper brands — not just the four above, but also strong regional players like the L.A. Times, the Washington Post and the Chicago Tribune. All these brands have a strong home delivery client base. The Wall Street Journal has over 1.5 million home subscribers, the New York Times has roughly the same number of Sunday subscribers. These are loyal readers that they can use to weather the transition from print to digital, and to find new sources of growth.
All this reminds me of Mark Lotto’s recent Twitter joke: “This is your semi-annual reminder that if the New York Times had been founded 5 years ago, not 160, it would be valued at $40 billion.”