How to Fix the New York Times
I’m a big fan of the New York Times web site, and the company in general. So when, the chairman, Chairman Arthur Sulzberger Jr., announced that they are seriously considering a paid model online again, I took it personally. It will surely end just as badly as last time they tried it.
Taking a page from Rupert Murdoch’s playbook will do more harm than good. What they need to do is fix their business in three areas: web product development, online ad revenues and print ad revenues.
And I’m going to tell them how…
Web Product Development
I’ve written before about how traditional media companies can improve their web development process. The New York Times is a prime example of how things can go badly wrong.
They have the best columnists, awesome technology and an incredibly strong brand, but still can not seem to make it all work together. They need to fix their development process before they can start making serious money online. No revenue model, free or paid, can fix a flawed product.
On Thursday, I will discuss three problem areas on NYTimes.com specifically: Reference Search (probably the greatest waste of fantastic technology I’ve ever seen), Social Network Integration and Home Page management. Each one demonstrates serious flaws in how they develop online.
While fixing these areas won’t immediately make NYTimes.com profitable, changing the process that led to them will put them on the road to greater success.
Online Ad Revenues
My print experience has mostly been in magazines, so that’s what I’ve written about in the past. However, online newspapers have many of the same problems that online magazines do and much of my advice for magazines online will work for the New York Times as well.
Here are four strategies that can put NYTimes.com on the road to profitability.
Inventory Management: In print media you sell space. In electronic media you manage inventory. The distinction is critical if you are to make money online.
It really doesn’t matter if you can sell a lot of ads on the home page, what really matters is how much revenue the premium areas of your site can drive to the fringe areas. Just like a TV station, your best margins come from your cheapest space.
Paul Krugman, David Brooks, Maureen Dowd and Tom Friedman are loss leaders. You won’t make money from them. If you can’t get them to drive revenues elsewhere on the site you will never be profitable.
All prime and no fringe is a formula for bankruptcy.
Packaging: The best way to manage inventory is through effective packaging. Premium areas will always sell; the rest of the space needs to make campaigns efficient or it won’t sell at all.
Some basic packages, such as Run On Site (what old media types call rotators) and thematic channels can help, but it probably won’t be enough for the NYTimes.com. Different areas of the site will need to use different metrics and creative packages will need to be custom designed for large advertisers.
They key here is not pricing space, but pricing campaigns. To do that, you need to design ad packaging with enough flexibility so that advertisers can get the premium space they want while also getting the efficiency they need.
Partnerships: Some areas of NYTimes.com are sacred and always should be. Other areas are not. Knowing the difference will be crucial if the business is to be profitable.
Allowing advertisers to sponsor features that are already there isn’t a partnership. Custom designing features and services that will help companies market their products is.
The NYTimes doesn’t need a “leaky wall” for readers, it needs one for marketers.
Satellites: Just a glance at the NYTimes.com ill conceived left column menu makes it obvious that there is much more content on the site than anyone can actually use.
Building satellite brands will enable users to find information easier and create additional revenues at minimal cost. Management needs to decide what content is core to the New York Times brand and what isn’t. (Hint: if it says New York Times, it’s not a satellite – it’s a brand extension).
By syndicating New York Times content onto satellite sites, communities can be built around specific areas. People are more comfortable discussing subjects they are passionate about on a site that caters to them specifically than on a general news site.
Satellite brands, if done well, can create both new premium inventory and additional fringe (mostly from social components) that will improve your ability to package and price effectively.
Print isn’t dead. The newspaper model is.
As I’ve written before, Magazines have a bright future (albeit a lousy present). The difference between the two businesses is that magazines make money on display advertising and newspapers have historically made their money on classifieds.
Those days are gone and they’re never coming back. The web is vastly superior producing direct response than anything the world has ever seen. Content just gets in the way.
The obvious answer is to reengineer the business towards display advertising. Free newspapers have understood this for years and their model is based on it. They actually expect to lose money on the daily and make up for it with high margin supplements.
However, a daily newspaper is a great medium for delivering premium content and no brand is stronger than The New York Times. Thematic supplements with upgraded production standards can attract profitable display advertising.
The Way Forward
The biggest change that needs to be made is how the company is managed. I’ve never worked at the New York Times, but I’ve run enough media business to know a flawed management model when I see it.
A top down approach is essential for preserving standards, but disastrous for forging new ones. The key to the future success of the New York Times business is to understand what is sacred and what is not.
Decision making needs to be pushed down further in the organization. Chinese Walls need to be torn down and cross functional teams need to drive an integrated process. Old animosities and suspicions between business side and editorial people need to be cast away.
In the new media reality, if you want to eat you will have to kill some sacred cows.