Newspapers: Profits are on this Side of the Pay Wall

To paraphrase the old Jeff Zucker quote, newspapers continue trading analog dollars for digital penuries. This time, The Guardian parted ways with Alan Rusbridger, the next chairman of the organization that owns the newspaper and its former editor for over twenty years, after disagreements over whether to start charging online subscribers. Mr. Rusbridger, who is credited with leading the Guardian to impressive growth with scoops such as the Snowden revelations, thinks pay walls go against the paper’s mission.

It is a pity because The Guardian is doing very well online, attracting a record 34.7 million unique users during the month of march 2016 in the US only. Yet, it might have lost as much as $65 million last year. This is just an estimate since the newspaper does not report financial figures, but financial results for The New York Times, a publicly traded company, provide additional insight. Print advertising at the NYT declined by 9% yearly in the quarter to march 2016, while digital advertising declined as well, albeit by 1.3%. You have to look at circulation for the good news. Digital-only subscriptions increased 14.2%, to a total of 1.357.000. To be clear, these are customers who only pay the NYT for digital delivery of news.

Together with print subscribers, circulation revenue now amounts to over 57% of the New York Times revenues. Not everything is rosy. The NYT also gave a net loss last quarter, though it was less than last year, and it did turn an operating profit of almost $28 million. The net loss was due to a $42 million charge for the closing of a paper mill joint venture. After five years, The New York Times pay wall seems to have given the company a viable business model for the digital age: one that relies more on readers than on advertisers for revenue. Newsrooms everywhere should follow that lead.

 

 

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