Subscriptions reached 70% of NYTimes’ total revenue as ads revenue dropped by 30% YoY

NYTimes is one of the newspapers that saw the writing on the wall a few years ago when it committed to the transition from an advertising-dependent model to a subscription-centric one. Let’s look at their performance.

In Q3 2020, The New York Times recorded more than $300 million in Subscriptions revenue, out of $427 million in total revenue. In other words, 70% of the company’s revenue came from subscriptions. In the meantime, advertising dropped significantly by 30% YoY and made up only 19% of the total pie, down from 26% from the same period last year.

Figure 1 – Segment Revenue as % of Total Revenue. Source: Company Filings
Figure 2- YoY Growth. Source: Company Filings

In hindsight, it was a great move of the newspaper to move to subscriptions. Had they not done that, Covid-19 would have wrecked their financials as companies cut back on advertising. The company still needs to look at their revenue growth. Even though 2020 can be excused because of Covid, last year still saw only about 2-3% of YoY revenue growth. Plus, while the company’s gross margin is about 50-60%, their operating margin hasn’t reached two digits for the last 4 third quarters. Since NYTimes doesn’t break out operating margin for segments, it’s hard to tell which fares better than the others.

Despite the fact that the outlet is now focused more on digital products, print advertising still made up for 40% of the company’s ads revenue. However, print advertising dollars dropped significantly this year by 47% YoY, to about $32 million, compared to the 13% drop by digital advertising.

Figure 3- YoY Ads Revenue Growth. Source: Company Filings
Figure 4 – Ads Revenue Breakdown. Source: Company Filings

With regard to paid digital subscriptions, the New York Times recorded 6.1 million paid digital subscriptions as of the end of Q3 2020, up from 4.1 million a year ago. When breaking down this digital subscriber base, digital news subscriptions grew by 46% YoY and other digital subs (crosswords and cooking) by 63%. The growth in digital news subscriptions was very encouraging for the news outlet, even though it’s likely that Covid-19 may have had a positive contribution.

 Q3 2017Q3 2018Q3 2019Q3 2020
Digital News Subs (in thousands)2131254131974665
Other Digital Subs (in thousands)3555548561398
Digital Subs (in thousands)2486309540536063
Print Subs (in thousands)  865831
Total Subs (in thousands)2486309549186894
Figure 5 – Subscription Breakdown. Source: Company Filings
Figure 6 – YoY Subscription Growth. Source: Company Filings

In short, things look relatively positive for the New York Times. The transition to the subscription-centric model seems like a success. Despite the unprecedented health crisis that we are facing, the company’s business looks resilient enough with great growth in digital subscriptions and momentum. Compared to other news outlets, the paper is miles ahead in terms of paid digital subscription. Even after Trump leaves office, the appetite for quality journalism, whatever “quality” means is in the eyes of the beholders, will still persist, I believe. Whether the company can maintain its appeal to readers or come up with other products to improve revenue growth and operating margin remains to be seen. Personally, I came so close to being a subscriber myself many times, but the Opinion column of the NYTimes put me off with some outlandish articles.

 Count (in millions)SourceAs of
Washington Post3AxiosNov-20
NYT Times6.1Company FiguresSep-20
Gannett1.03PoynterSep-20
Los Angeles Times0.26PoynterDec-20
Tribune Publishing0.3PoynterSep-20
WSJ2Company FiguresFeb-20
Bloomberg News0.25WSJNov-20

Weekly readings – 22nd August 2020

What I wrote last week

I compared what is happening in Vietnam and New Zealand in the fight against Covid-19 and why it looks very bleak for America

I wrote a bit of analysis on Square, the owner of Cash App

Business

Instacart dominated the grocery delivery in the US

Second Measure on pandemic grocery spending
Source: Second Measure

A startup that promises to deliver groceries in less than 13 minutes in Turkey

An interview with the CEO of New York Times. He grew the subscriber base from the rock bottom of 22,000 in Q2 2013 to 6.5 million today

How Uber Turned a Promising Bikeshare Company Into Literal Garbage

Technology

Ben Evans on App Store and antitrust issues

A deep dive into iPhone 5C plastic cases

John Gruber on TikTok as a security threat

What I find interesting

The Canva Backlink Empire: How SEO, Outreach & Content Led To A $6B Valuation

To all Americans who are told all the nasty and misleading facts about Socialism & Communism whenever social benefits and safety nets are mentioned, please read this from your fellow American, who considers his move to Vietnam the best decision

Confessions of a Xinjiang Camp Teacher

A dazzling civilization flourished in Sudan nearly 5,000 years ago. Why was it forgotten?

Weekly readings – 9th May 2020

The decline in trust in governments shows no signs of abating. Everywhere you look, there is suspicion that measures taken by governments to combat Covid-19 will soon be used for mass surveillance afterwards. India is no exception. For A Billion Indians, The Government’s Voluntary Contact Tracing App Might Actually Be Mandatory

The pandemic doesn’t seem to affect spending on cloud infrastructure badly

The man feeding a remote Alaska town with a Costco card and a ship

Apple Watch detecting coronary ischaemia during chest pain episodes or an apple a day may keep myocardial infarction away

VP of Amazon resigned to protest the firing of workers who spoke out on the working conditions at Amazon warehouses

Looking Back on Four Years at The Times, in the words of their former CTO

Amazon pulled no punches in its public blog post on Microsoft regarding the JEDI dispute

Spotify should pay musicians more? Let’s talk more about how

Weekly readings – 4th Jan 2020

Issues with speed reading

Algorithmic Radicalization — The Making of a New York Times Myth. A primary issue I have with this piece is that I wish it were presented in a more understandable manner, as in the diagrams and charts should have been easier to understand

Nestle Faces New Coffee Rival as Vietnam Targets Instant Market

Focus is a huge competitive advantage

Good Enough is Good Enough

Vietnam only looks good on paper

Electric Cars Threaten the Heart of Germany’s Economy

A massive and expensive problem called returns for retailers in the holiday season

Rise of digital subscriptions at The New York Times

Print circulation and print advertising used to the bread and butter of news outlets. The Internet came along and also turned the industry onto its head. Digital subscriptions suddenly became possible. Folks started to pay for online access more and more; which would cannibalize the print business. As fewer readers read the papers, print advertising took a hit. Advertising became annoying to users who were willing to pay for the luxury of reading content in peace.

News outlets have to respond to survive. Names such as New York Times, Wall Street Journals, Washington Post or The Atlantic are leading the charge among outlets to have a strong subscription business. I spent some time digging through the numbers from The Times’ earnings reports to see how its digital subscription transformed over the years. This is how you can understand NYT business

The digital sub count and digital news sub count reach all time high in Q3 2019

The gap between Digital News Subscription Revenue and Print Subscription has been contracting since 2016

In terms of its importance to the subscription segment, digital subscription revenue has been on the rise. In Q3 2019, it made up slightly more than 43% of the total subscription business, the all-time high mark

Hence, digital subscription increasingly became an important part of the total revenue

Weekly readings – 15th June 2019

iOS 13 now shows a map of where apps have been tracking you when requesting permission. Your location at any given time is sensitive information. This feature will allow you to protect your privacy from apps

They See It. They Like It. They Want It. They Rent It. An important shift in consumer behavior.

A mentalist’s guide to being happy

Internet Trends 2019. The annual highly anticipated report by Mary Meeker is here.

Shopify unveils first State of Commerce Report

The I in We How did WeWork’s Adam Neumann turn office space with “community” into a $47 billion company? Not by sharing. Personally, I am not a fan of the hype given to WeWork despite all the glaring issues the company has shown so far. Read the article and see if you are still comfortable with your own evaluation of WeWork

Maine Governor Signs Strictest Internet Protections in the U.S. I am in favor of this bill. Internet is now an indispensable part of our life and so is our privacy. Why do Internet service providers whose services we PAY have the rights to our data without our consent?

The New York Times has a course to teach its reporters data skills, and now they’ve open-sourced it. Kudos to the Times for investing in its reporters and props to them again for open-sourcing the materials.