The New York Times: Out of print in ten years?

It isn’t anything particularly special to hear people talking about the declining market for print newspapers, and how market dynamics and demographic trends have put the traditional newspaper publishing model at risk.

At the same time, most newspaper publications have found it quite challenging to “migrate” their print customers to paid-subscription digital platforms. The plethora of free news sites online makes it difficult to entice people to pay for digital access to the news – even if the quality of the “free” coverage is lower.

New York Times CEO Mark Thompson, appearing on CNBC’s Power Lunch program (February 12, 2018).

But it was quite something to hear a forecast made by Mark Thompson, The New York Times’ CEO.  Earlier this month, Thompson made remarks during CNBC’s Power Lunch broadcast that amounted to a prediction that the NYT’s print edition won’t be around in another ten years.

Thompson went on to explain that his company’s objective is to build the digital product even while print is going away:

“The key thing for us is that we’re pivoting. Our plan is to go on serving our loyal print subscribers as long as we can.  But meanwhile, to build up the digital business so that we can have a successful growing company and a successful news operation long after print is gone.”

It’s one thing for newspapers in various cities across the country to be facing the eventuality of throwing in the towel on their print product. It’s quite another for a newspaper as vaunted as The New York Times to be candidly predicting this result happening.

It would seem that the NYT, along with the Washington Post, The Wall Street Journal and possibly USA Today would be the four papers most able to preserve their print editions because of their business models (USA Today’s hotel distribution program) or simply because of their vaunted reputations as America’s only daily newspapers with anything approaching nationwide distribution.

I guess this is what makes the Thompson remarks so eyebrow-raising. If there isn’t a long-term future for The New York Times when it comes to print, what does that say about the rest of the newspaper industry?  “Hopeless” seems like the watchword.

It will be interesting indeed if, a decade from now, we find no print newspapers being published in this country save for hyper-local news publications – the ones which rely on print subscribers seeing their friends and family in the paper for weddings, funerals, community activities, school sports and other such parochial (or vanity) purposes.

Interesting … but a little depressing, too.

Online ad blocking grows ever-more popular.

abThe ad blocking phenomenon on the Internet shows no signs of abating.

Underscoring this, marketing research and forecasting firm eMarketer has just published its most recent ad blocking stats and forecasts for the United States. It projects that ad blocking adoption will continue to rise by a double digit rate in 2016 to reach nearly 70 million users.

If those projections turn out to be accurate, it will mean that ad blocking will now be used by more than 26% of all Internet users in the United States, up from ~20% just a year earlier.

And for 2017? Those forecasts are looking a whole lot like this year, too; eMarketer forecasts that ad blocker adoption will grow to more than 86 million users by the end of 2017.

[For the record, eMarketer defines a user as an Internet user of any age who accesses the ‘net at least once per month via a desktop or laptop computer, tablet, smartphone or other mobile device that has an ad blocker enabled.]


According to the eMarketer analysis, the incidence of ad blocking is substantially more common on desktops and laptops; ~63 million people will use an ad blocker on these types of devices this year compared to ~21 million who will do so on a smartphone.

One reason for this is that ad blockers typically don’t work on apps, which is where mobile users spend much of their time. Moreover, some of the most irritating aspects of desktop/laptops advertising, such as ads with video and sound, are the kinds of advertising less likely to be served on mobile devices.

eMarketer expects many more people to begin installing ad blockers on their smartphones, however — to the tune of an increase of over 60% this year.

These projections must be alarming to publishers and advertisers. Paul Verna, a senior analyst at eMarketer, notes this:

“They’re seeing immediate revenue losses and [they] would be remiss to downplay what amounts to a large-scale rejection of their main monetization model.”

Separately, an analysis by Juniper Research sees more than $27 billion in advertising revenues lost over the next five years as a result of ad blockers.

Of course, that’s a far cry from the estimated ~$160 billion that digital advertising represents today.  But significant nonetheless.

As if on cue, The New York Times has just announced that it will introduce an ad-free subscription option. Reportedly, the publication will begin to offer subscriptions that cost more than a regular digital subscription, along with giving subscribers the option of opting out of seeing advertising if they wish to do so.

At present, NYT subscribers who use ad blockers are technically violating the publisher’s Terms of Use agreement — although I seriously doubt many people have had their knuckles rapped for doing so.

For now, all the Times does is kindly request that users “white-list” the NYT site so that the ads will appear even though an ad blocker has been installed.  According to news reports, about 40% of the people notified have actually done so.

Presumably, the new subscription option is targeted at people who really do wish to avoid seeing online advertising — and are willing to pay a premium for the benefit.

One wonders how much of a dollar premium subscribers will be asked to shell out for the privilege of keeping their screens from being inundated with advertising. (At present, annual NYT digital subscriptions range from ~$140 to ~$200.)  Will users balk at the higher rates?

Clearly, we’re in the middle of this movie … and it’ll be some time before we see how things shake out in the online media advertising game.  What are your thoughts about spending more for an ad-free subscription … and do you even have any online pay subscriptions at all?  (Many of my friends and business colleagues don’t.)

Twitter’s World: Click … or Clique?

Twitter traffic:  dominateed by a tiny fraction of users.
Half of all tweets are generated by fewer than one-half of one percent of Twitter accounts.
What’s happening these days with Twitter? The micro-blogging service continues to light up the newswires every time there’s a civil disturbance in a foreign land, because of how easily and effectively it facilitates planning and interaction among the dissidents.

But what we’re also finding out is that Twitter is overwhelmingly dominated by just a small fraction of its users.

In fact, Cornell University and Yahoo recently published results of an evaluation of ~260 million tweets during 2009 and 2010, which found that ~50% of the tweets were generated by just 20,000 Twitter users.

That is right: Fewer than one half of one percent of Twitter’s user base accounts for fully half of all tweet activity.

Just who makes up this “rarified realm” of elite users? It turns out that they fall into four major groups:

 Media properties (e.g., CNN, New York Times)
 Celebrities (e.g., Ashton Kutcher … Lady Gaga)
 Business organizations (e.g., Starbucks)
 Blogs

Even more interestingly, these “elite” users aren’t interfacing with the rest of us “regular Twitter folk” as much as they are simply following each other: Celebs follow celebs … media companies follow other media companies … bloggers follow other blogs.

The Cornell/Yahoo research report, titled Who Says What to Whom on Twitter, can be found here.

But one wonders if the report should be retitled Much Ado About Nothing?

Newspapers Turn on Each Other

Dinosaurs in Disney's FantasiaLast week, the Associated Press reported that U.S. newspaper advertising revenues declined dramatically in 2009, bringing ad receipts to the lowest level recorded in nearly 25 years.

In fact, newspaper publishers’ total advertising revenues last year came in below $28 billion, down $10 billion from 2008. According to the Newspaper Association of America, annual ad revenues have now fallen by nearly $22 billion – a whopping 44% — since 2006.

And now, amid this toxic environment comes word that The Wall Street Journal has declared an all-out war on The New York Times for local advertising. In mid-April, the Journal — up to now focused almost exclusively on national and international news — is set to introduce a New York-focused section as part of its paper. Outside observers believe this will put as much as ~20% of the New York Times’ retail advertising revenues at risk.

And this isn’t a minor foray on the part of the WSJ, either. It will be spending upwards of $15 million to produce the new 12-page section which will cover local business, real estate, sports and cultural events. The financial outlay includes salaries for ~35 editorial writers – surely one of the few instances of new editor jobs actually becoming available.

The WSJ action couldn’t come at a worse time for the Times, which has experienced sharper ad revenue declines than the industry average. It’s responding by launching a major trade marketing campaign of its own, touting its audience strength with female readers and “high culture” afficionados.

But just how effective this countermove will be is debatable, as recent moves by the paper haven’t exactly telegraphed a continuing commitment to the local news scene. In the last few years alone, the Times has consolidated weekly sections covering specific regions of the New York metro area (Long Island, Westchester, Northern New Jersey), as well as axing its stand-alone “City” and “Metro” sections.

Over the coming months, it’ll be interesting to see how effective the WSJ is with its new local-focused section – whether or not it’ll land a major blow on its rival.

Either way, the vision of two venerable newspapers engaged in a Herculean struggle, fighting over an ever-shrinking advertising pie is isn’t exactly a pretty sight.

It reminds me of the famous scenes in the Disney movie Fantasia of the huge dinosaurs furiously going after one other – even as the world’s changing ecosystem is rendering the entire species extinct.

The End of Privacy

An article by technology author Steve Lohr published last week in The New York Times caught my eye. Titled “How Privacy Vanishes Online,” it explores how conventional notions of “privacy” have become obsolete over the past several years as more people engage in cyber/social interaction and web e-commerce.

What’s happening is that seemingly innocuous bits of information are being collected, “read” and reassembled by computers to build a person’s identity without requiring direct access to the information.

In effect, technology has provided the tools whereby massive amounts of information can be collected and crunched to establish patterns and discern all sorts of “private” information.

The proliferation of activity on social networking sites such as Flickr, Facebook and LinkedIn is making it easier than ever to assemble profiles that are uncanny in their accuracy.

Pulling together disparate bits of information helps computers establish a “social signature” for an individual, which can then be used to determine any number of characteristics such as marital status, relationship status, names and ages of children, shopping habits, brand preferences, personal hobbies and other interests, favorite causes (controversial or not), charitable contributions, legal citations, and so on.

One of the more controversial experiments was conducted by MIT researchers last year, dubbed “Project Gaydar.” In a review of ~4,000 Facebook profiles, computers were able to use the information to predict male sexual preference with nearly 80% accuracy – even when no explicit declaration of sexual orientation was made on the profiles.

Others, however, have pointed to positive benefits of data mining and how it can benefit consumers. For instance, chain grocery stores can utilize data collected about product purchases made by people who use store loyalty cards, enabling the chains to provide shoppers relevant, valuable coupon offers for future visits.

Last year, media company Netflix awarded a substantial prize to a team of computer specialists who were able to develop software capabilities to analyze the movie rental behavior of ~500,000 Netflix subscribers … and significantly improve the predictive accuracy of product recommendations made to them.

To some, the Netflix program is hardly controversial. To others, it smacks of the “big brother” snooping that occurred in an earlier time during the Supreme Court confirmation hearings for Robert Bork and Clarence Thomas, when over-zealous Senate staffers got their hands on movie store rental records to determine what kind of fare was being watched by the nominees and their families.

Indeed, last week Netflix announced that it will not be moving forward with a subsequent similar initiative. (In all likelihood, this decision was influenced by pending private litigation more than any sort of altruism.)

Perhaps the most startling development on the privacy front comes courtesy of Carnegie Mellon University, where two researchers have run an experiment wherein they have been able to correctly predict the Social Security numbers for nearly 10% of everyone born between 1989 and 2003 – almost 5 million people.

How did they do it? They started by accessing publicly available information from various sources including social networking sites to collect two critical pieces of information: birthdate, plus city or state of birth. This enabled the researchers to determine the first three digits of each Social Security number, which then provided the baseline for running repeat cycles of statistical correlation and inference to “crack” the Social Security Administration’s proprietary number assignment system.

So as it turns out, it’s not enough anymore merely to be concerned about what you might have revealed in cyberspace on a self-indulgent MySpace page or in an ill-advised newsgroup post.

Social Security numbers … passwords … account numbers … financial data. Today, they’re all fair game.

The Latest NYT Financials are Atrocious

The latest quarterly financials have just been released by the New York Times Company … and the figures are worse than even the more pessimistic observers had forecast. Not only did the company lose nearly $75 million in the first quarter, it is also laboring under a $1.3 billion debt load. Rival newspaper The New York Post was quick to report that the Times’ cash position, net of upcoming debt maturities, is a mere $34 million.

The looming cash crunch is causing some analysts to speculate that the venerable Gray Lady is slouching towards insolvency.

Not surprisingly, the biggest cause of the financial tailspin is plummeting ad revenues. Declines in classified advertising led the pack (down ~45% compared to the same quarter last year). National advertising fell ~22% and retail advertising declined ~25%.

What’s even more startling was the weak performance of Internet advertising. Instead of growing as had been the case up to now, those revenues actually posted a decline of ~6%. This result blows a huge hole in the notion that online advertising will take up the slack in print advertising.

What’s become abundantly clear is that newspapers have yet to adjust to a world in which they no longer have a near-monopoly on the news in a city or a region. The fact is, for years newspapers were able to bankroll large editorial and administrative staffs precisely because there were few if any other ways for local or regional advertisers to reach their audience. So they were able to charge a pretty penny for advertising space and get away with it. A lucky few cities had two competing newspapers, but many have had single-paper monopolies for years. TV and radio advertising represented alternate promo options, of course, but not in the same medium.

[For those who think that the New York Times, by virtue of its reputation as one of the United States’ leading newspapers, is less a local/regional paper than a national one, they are correct — up to a point. National print advertising represents only around 45% of the paper’s advertising revenues.]

The simple fact is that people today have far more choices online for local, regional and national news – practically all of them free. At the same time, the advertisers have more options than ever before in choosing where to advertise.

So what’s next for the New York Times Company? More staff layoffs? Unpaid furloughs? Halting pension plan contributions? Perhaps all of these … plus trying to sell off other assets like the Boston Globe or the Boston Red Sox franchise.

The all-too-likely outcome: None of this will make much difference.