Business Model Analysis of New York Times Company


#1

Go to www.nytco.com/investors and check New York Times Company’s recent financial reports.

Is the business model working effectively? Can the company’s business model remain sound as more consumers go to the Internet to find general information and stay abreast of current events and news stories? Is its revenue stream from advertisements growing or declining? Are its subscription fees and circulation increasing or declining?


#2

New York Time’s company makes use of a fusion of a subscription-based model and advertisement based one (2017 Annual Report, 2018). The same annual report is taken in account for all the statistics presented in the post. They charge the customers for content and also companies/advertisers. It could be observed that the business has shifted or trusted more on a subscription-first business model with more than a billion dollars coming last year from this method alone. This model tends to put a charge for the content for the users (Postmus, Wijngaard & Wortmann, 2009). The company also appears to retain staffs who have been with the business for long and use their knowledge and experience to transform the company for better. This was evident with one of their very old staff who worked as publisher since 1992, when retired, was offered and hired as chairman of the company’s board of director.

The company has a huge digital base and with more than 135 million viewership online, the shift of people going to the internet to find general information on the current events and news stories will help further power the movement and strategy that NY Times Company has in place. They don’t only provide a paid version of newspaper or news online but also make it available to readers for free to a certain number of news per month. That way people can still explore the news, have the news indexed in all the search engines and allow users easy access to it. People without knowing what they’re getting into may not be able to make a decision if they really want to be subscribed but this model would definitely help them attract more paid subscribers. They have a total of 3.6 million total subscribers in the 2017 year end. That includes of around 73% of digital-only subscribers. Print media contributes to the remaining 27%. The number of paid digital-only subscribers rose by 42% since 2016. With such a rise in the subscribers, it’s obvious that the revenue generated from it would increase as well, which it did. The revenue from subscribers crossed over a billion dollar which is an increment of around 13% if compared to the previous year.

While looking at the advertisement, ups and downs can be seen with digital media catching up the revenue generated from print with an increase of 12.4%. During the same period, print media saw a slide of 13.91% to end up at 320.22 million dollars of revenue. That meant that the NY Times Company saw a decrease in the overall advertisement revenue by 3.82% and was 558.513 million dollars. Though a decline, it signed that the digital media is more in demand and the rise of advertisers and subscribers in that media signals for better things to come for the business given their business model and strategy.

The increase of interest of customers towards digital media compared to print has been significantly contributed by an interactive environment, real-time reporting as one doesn’t have to wait for the entire day and night to wait for another edition and alike. Business acquisition of other names as in Sweethome and Wirecutter have helped the business wider their scope. Looking at the way the business has structured itself, it looks as if the company is adapting to the continuously and rapidly changing environment to devise strategies accordingly. That is further stressed by the business moving towards subscription first model but also providing free content to the user. Had they put the system under a closed platform, they would have missed out on 135 million readers who are non-paid viewers. They could be used by business as a way to leverage more out of advertisers and also ensures that their contents are indexed in the search engines. I believe their model is working and will continue working while generating revenue, increase subscribers and grow in the days to come.


References

Postmus, D., Wijngaard, J., & Wortmann, H. (2009). An economic model to compare the profitability of pay-per-use and fixed-fee licensing. Information And Software Technology , 51 (3), 581-584.

The New York Times Company. (2018). 2017 Annual Report . Retrieved from https://s1.q4cdn.com/156149269/files/doc_financials/annual/2017/Final-2017-Annual-Report.pdf


#3

New York Times, one of the leading global newspaper, has been selling news for almost 123 years after its incorporation in 26 August 1896. At present it has started to feel the need for innovative strategies to adopt to the changing times. The big bang of the internet into the communication scene, in the past 20 years, has seen a revolutionary change in the way people access information. With this change in trend, all business have felt a void in their strategy and have started to involve themselves through the internet. As such, New York Times is no stranger to this tidal change.

Advertising and subscription are the main bread earner for this newspaper. With stiff competition faced from The Washington Post, The Wall Street Journal on the local turf and papers such as the Financial Times, Times, Bloomberg Business Week and The Economist in the international playground the market is a fighting scene for retaining old and bringing the new from the same pool of customers. (Company, 2017)

With their adoption on online news and mobile apps, the company has extended its product from press to digital in the past decade. Their 2017 annual report shown a growth in gross revenue from 1.5 million dollars to 1.6 million. Although there seems to be growth in revenue their net income shows a decrease from $29,068 to $4,296 mainly resulting from higher cost incurred in the payment of operating cost, postretirement fund and pension settlements.

The revenue from advertisement shows a declining trend. In 2016 the company show a revenue from advertisement of $580,732 which decreased to $ 558,513 in 2017. Although decrease has been seen, it has resulted from decrease in revenue from printing. It has however shown an increase in digital advertising from $ 208,752 in 2016 to $238,291 in 2017.

Subscription and advertising has contributed to the revenue by 60% and 33% respectively with other revenue coming from licensing etc. Unexpired subscription has increased from $880,543 to $1,008,431. Their print newspaper are home-delivered to subscribers both domestically and internationally. Their strategy has been to provide free digital access to news to all print subscribing customers. Therefore only 7% of the total digital subscribers are pure paid digital subscribers. Never the less the trend of people surfing the internet for news has increased as compared to the traditional print.

The high influx of digital news has changes the traditional way of news that generally serves its customers in the morning. Digitalized news has real time coverage that gets shared through the social media and even conversation and debate undertaken by readers unlike in print. (Parry & Staff , 12) Thus is right for New York Times to increases it subscribers into the digital market as the numbers show more growth as compared to print. However this does not mean that the paper should stop its print production but instead give priority to the digital platform which has more applications and demand from readers these days.


References

Company, T. N. (2017). 2017 Annual Report. New York: The New York Times Company.

Parry, K., & Staff , W. (12, November 2006). A convergence of trends online and in print ; The tech-savvy reader who seeks headlines online and depth in print becomes more rule than exception.: [METRO Edition]. Star Tribune .


#4

The New York Times Company is most popular global media organization dedicated to enhancing society by creating, collecting and delivering real and fact news and information (Report, 2017). Now, New York Times has associated with different other like international New York Times, NYtimes.com, New York Times was also able to develop the first Online News Platform. The company includes newspapers, Print and digital products and investments.

The revenues generate form subscription and advertising. Subscription revenues consists of revenues from subscription to their print product (Like News product, Crossword product and Cooking Product). Similarly, Advertising revenue is derived from the sale of advertising product and service on their print paper and product and digital platform (like online news platform and mob application). The main business model of New York Times business is daily, monthly, annual subscription and Advertising sales to national and international business.

Now, a globe is narrower day by day and its content reaches all over the world within a second through print copy, web and mobile application platform. So no. of reporter and covered countries is also important asset for the News houses. They have more than 1400 news reporter and almost covers 180 plus countries. From December 31st 2017 annual report, they had approximately 3.6 million paid subscription across more than 200 plus countries. The paid digital subscription was 264400 as of December 31st 2017 which is 47% higher rate as compare to December 25th 2016. The amount includes standalone paid subscriptions to their Crossword and Cooking products which reached approx. 413000 subscriber as of December 31st 2017. So from this picture we can clearly say that they had good sales in 2017 and the sales volume is increase day by day.

They have clear revenue generation model from advertising. Maximum they have only big brand product or service advertising like financial institution, movie studios, department stores, American and international fashion and technology. In 2017 the times had the largest market share in print advertising revenue among a national newspaper set consist of USA today. The 87% advertising revenue is collected from digital and print display advertisement. Other remain 13% advertising revenue is generated from other advertising primarily includes creative service free associated with their branded content studios and their digital marketing agencies including HelloSocity, and Fake love.

From their December 31st 2017 annual report we can conclude that. The times is first digital international news platform. So it has higher global subscriber of more than 135 million people and 3.6 million are paid subscriptions. In 2017 they won three Pulitzer prizes which help to increase their brand value in media business. They have always clear strategy and planning for upcoming years. So if they continue to follow the strategy they believed that they meet their goal of $800 million of annual digital revenue by 2020 (Govindarajan, Rajgopal, & Srivastava, 2018). So that I can clearly say that they have clear revenue model and their sales is growing rapidly. And the main source of revenue collection from subscription and advertisement.

References

Govindarajan, V., Rajgopal, S., & Srivastava, V. (2018). Why Financial Statements Don’t Work for Digital Companies. Harvard Business Review .

Report, A. (2017). SUBSCRIPTIONS AND AUDIENCE. The New York Times Company 2017 Annual Report .


#5

The New York Times (NYT) Company is a global media organization that aims to make journalism insightful, meaningful and essential to the daily lives of global community it serves. The products/services of the company includes physical delivery of The New York Times (NYT) or The New York Times International Edition, apps for array of smartphones and tablets for getting acquainted with the news published in these papers, NYT cooking app with more than 16,000 recipes, digital subscription packages, Times Insider for behind the scenes updates and premium crosswords and other games through NYT store. The company is also listed in New York Stock Exchange (The New York Times, n.d.).

The following table summarizes the revenues of the company for the year ending 2017 and 2016 derived from Annual Report of New York Times:

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Comparing the financial reports, we can see that overall revenue has increased by 7.73%, reflecting a 14.52% increase in revenue from subscription, 3.83% decline in revenue from advertising and 15.55% increase in revenue from other sources.

The revenue from advertising comprises of the revenue from display and classified advertisement in printed and digitized format. The print advertisement has decreased by 13.91% due to significant decline in display advertisement by 6.35% while there is an increase of 14.15% in digital advertisement resulting from enhanced revenue from smartphone advertisements, branded content and revenue associated with digital marketing agencies, HelloSociety and Fakelove. It shows that the company is gradually shifting from the traditional print advertising to digital advertising. However the overall revenue from advertisement has decreased.

The annual report shows that subscription and circulation fees from print and digital products calculated on the basis of number of copies sold and rates charged has increased by 14.5%. This is due to the increase in digital only subscriptions of news and other products by 45.9% and 53.6% respectively. The digital subscribers of news products has increased by 613,000 and that of other products has gone up by 166,000 that has resulted in the growth of subscription revenue.

In addition to advertisement and subscription, the company also generates revenue from other sources like news services/syndication, digital archive licensing, building rental income, affiliate results, NYT live and retail commerce. The revenue from other sources has also increased by 15.6%. The acquisition of Wirecutter in October 2016 is proving to be beneficial for the NYT as it has contributed in increasing revenue primarily with the means of affiliate referral revenue.

Analyzing on the basis of financial statements, the business model adopted by NYC is working effectively. In simple terms, business model is a sustainable way of doing business (Nielsen & Lund, 2014). It is the combination of strategy and revenue model to run the organization profitably in long-run by delivering products that are valuable for the customers (Dasilva & Trkman, 2013). NYT is adapting the changes in the business environment to retain the existing customers as well as gain new ones. The main source of income for the company is advertisements and subscriptions. To adjust itself with the technological development, it is shifting its attention towards increasing digital advertisement and subscriptions which is helping the company in maximizing the revenue. The revenue of the company has increased by 7.7% which is the proof that the business model is working for it. Instead of concentrating on the print media only, it is also using digital platform to grab more audience and address the need of diverse people. Similarly, in addition to the core news related products, cooking and games application are developed taking various interest groups into consideration.

The advancement of technology has made it easier for people to remain up-to-date with current happenings around the world. General information, current events and news can be accessed free of cost through different medias. However, the long history has established NYT as a reliable source of information so people will still be willing to subscribe it. In addition, there are certain people who prefer print media instead of digitized one, so NYT is capable of capturing this segment also. The diverse product offerings has surely increased the reach of the company that will help it sustain despite the increasing competition. But, it is necessary for the company to operate flexibly incorporating the changes in technological and business environment.


References

Dasilva, C., & Trkman, P. (2013). Business Model: What it is and What it is Not. Long Range Planning, 1 (1). doi:10.2139/ssrn.2181113

New York Times. (2017). Annual Report . Retrieved from https://s1.q4cdn.com/156149269/files/doc_financials/annual/2017/Final-2017-Annual-Report.pdf

Nielsen, C., & Lund, M. (2014, March). An Introduction to Business Models. The Basics of Business Models , 1 (1). doi:10.2139/ssrn.2579454

The New York Times. (n.d.). Retrieved August 31, 2018, from https://www.nytco.com/