Innovate Creatively or Die, New York Times

Cover, New York Times Innovation Report

Cover, New York Times Innovation Report

I love the New York Times. I learned how to read newspapers in school, with the Times as the teaching vehicle. What I recall learning:

  • It contains “All the News That’s Fit to Print”
  • The Times always gets the facts right
  • Citing the Times was OK with my teachers
  • You will never find a typo in the Times

In my eyes the Times was, and still is, the paper of record in the United States. No other paper comes close.

But the Old Grey Lady is at a perilous point in her history, with journalism rapidly moving to digital. Publisher A.G. Sulzberger asked for a report to develop ways to improve the Times through journalism. The internal report Innovation was issued on March 24, 2014. It’s a good start. Like all who have an interest in journalism, I have my own take on the report.

Problem 1: The Numbers

New York Times Revenues, Innovation report

New York Times Revenues, Innovation Report, page 81

The Times finds itself trapped in the success of the past, as shown by the chart at the right, which appears on page 81 of the report.

The lion’s share of both advertising and circulation revenue comes from the original business model, circa 1851. From print.

The problem is the blue wedges can’t and won’t grow. The National Newspaper Association hasn’t even bothered to publish circulation numbers since 2012. Daily circulation peaked in 1987 and began falling off the cliff in 2004. The advertising front, if anything, is even worse. Digital advertising in the US is close enough to $50 billion annually, per eMarketer, to dwarf the $17 billion spent in newspapers. Advertisers are simply following the eyeballs and moving the advertising spend to the mobile phone or tablet and, increasingly, advertising in new vehicles like Twitter.

New York Times Revenue by Type

New York Times Revenue by Type, MAP Consulting LLC

Pareto is still on the side of print at the New York Times. But because the print business is very different than the digital business, the resources aren’t fungible. Management just can’t reallocate a printing press or fleet of trucks to provide second-by-second updates to, say, the recent coup in Thailand.

Resources–including time and attention– tend to be aligned to revenue. That’s the fundamental problem, which you can see in the report. The vast resources of the New York Times are aligned with a shrinking business, because of the past success of that very business.

Problem 2: The Structure

The people at the Times aren’t the problem. The Old Grey Lady can still hire the best of the best from the world of journalism. She also certainly throws off enough cash to be able to afford to hire the best of the best in technology and marketing.

In a past corporate position, I found that nothing put a chill in the executive floor as much as hearing a Corporate Communications director say “[Times reporter] wants to speak to [product manager] about how we use PII. She’s on deadline.”  A call from the Times could create a first-class fire drill!

A Divided Company

A Divided Company, Innovation Report, Page 61

The problem I can see at the Times is the culture, as evidenced by the structure. The report features constant references to and diagrams that depict the walls between the newsroom and the other parts of the company, as seen at left.

Further, when you read the report you see recommendations for having less need for a newsroom employee to ask for permission to talk to a colleague in “the business” (I hate that term). Since when do adults need permission to talk to one another to solve problems for the organization they both represent? 

Even the second model in the chart above is wrong. The New York Times shouldn’t be organized around functions. The company should be organized around the customer, whether the customer is a reader, an advertiser or a distributor of content.

Problem 3: The Brand Identity

The internal report lists Buzzfeed first in the competitor cheat sheet, which generated $40MM in revenue last year. Other luminaries in that list include Circa, which has achieved the incredible milestone of securing $3.4MM in funding. I bet they both have really cool open-plan offices and maybe even foosball tables.

Don’t get me wrong. I think the Times is smart to scan the environment to learn from other companies and borrow the best. And those companies certainly do bring in advertising revenue that, in a pre-digital world, would have gone to the Times.

But the New York Times exists in a category of one. It is the only journalistic entity that can own the position of “All the News That’s Fit to Print.” It’s not competing with Buzzfeed cat videos. It should borrow–quickly–from the technology and organization structures that these companies have created to grow.

But the minute the Times treats them as competitors, they are. Buzzfeed and Circa are not competitors. They’ve created great platforms and processes. But they aren’t journalists and are certainly not in the league of the Times.

We have to remember one thing. Brand marketing isn’t about capturing “fair share” in a category.  The objective is to create a position where the brand is the category and then ensure others can’t enter that category.

The world has plenty of cat videos and inspiring viral stories of courage. What we need is more hard-hitting journalism and objective, fact-based reporting that challenges our preconceived notions. The Times can, and should, own this while using the processes developed by the viral buzz distribution companies to package their own content.

Problem 4: Segmentation

I was surprised that there was zero emphasis placed on segmentation in the report. The word doesn’t even appear in the report, and “segment” only occurs twice.

Not segmenting your audience is a mortal marketing sin. I hope the Times does not make that mistake. There is no way of prioritizing the technology, organizational, and strategic changes the company needs to make without first segmenting the audience for their product.

The company should segment their customers by type, perhaps as:

  1. Paying subscribers
  2. Users (non-paying)
  3. Advertisers
  4. Distributors (organizations that share Times content)

And in two dimensions:

  1. Real-time
  2. Appointment journalism

By doing so, you get audiences with very different needs, such as paying subscribers interested in real-time updates of breaking news or bloggers looking for in-depth articles as the scaffolding for stories about a specific industry or topic.

It’s Not All Bad: Growing the Audience

I believe the report is correct in the focus on growing the audience. It means marketing and product development, and lots of it. It also means that after segmenting the audience, marketing and product development resources need to be allocated to:

  • Acquisition
  • Retention
  • Reach-back
  • Winback
  • Recirculation
  • Cross-sell
  • Social media marketing

Every one of the activities above has to be attacked armed with detailed KPIs (including Allowable CPA, customer LTV, and usage metrics) so that the organization tasked with delivering those metrics can ruthlessly test and deliver the optimal marketing mix.

Cover, D-Day, Remembering the Battle That Won the War, Life Books

Cover, D-Day, Remembering the Battle That Won the War, Life Books

Further, a marketing focus on topics like recirculation brings to mind the need for constant product development. For example, I recently picked up this Life Books special at Costco, which I’ll read this weekend.

Why wasn’t a New York Times-branded special about D-Day on the same wire rack? After all, the Times has oodles of material that could be repackaged and republished in print, digital and video format for consumption. Coupled with the brand’s reputation for having the definitive facts on the battle, wouldn’t a series of D-Day products be a home run in digital and print? And even if it wasn’t, what’s the cost? (Hint: close to zero).

OK Genius, Save the Times

Although the Times still generates large revenues today in print, those will go to zero sooner than we think. But think of the current advantages: owning a category of one, a content library second to none and the cash to invest for the future.

It just takes the courage to:

  • Organize around the customer and a few key segments
  • Shift resources to digital, even if that means short-term pain in print
  • Focus on audience development in both marketing and product development
  • Not dilute the brand and continue to own the category
  • Aggressively create new ideas and kill them (but not the people) quickly when they fail

What are your thoughts on the Innovation report and what did I get wrong?

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4 Responses to Innovate Creatively or Die, New York Times

  1. Pingback: The Only Five Arrows That Matter for The New York Times | PilipBlog

  2. markpilip says:

    I finally got around to reading that Life D-Day special. I was expecting something great, and got that in the photographs. However the text was horrific. It was a bunch of disjointed text put together by a low-bid packager. Disappointing.

    If you’re looking for an exciting read to learn more about D-Day, pick up Stephen E. Ambrose’s terrific 1994 history “D-Day.” The book was a New York Times bestseller and the quality of the writing reflects that. Highly recommended.

    And of course, it still leaves me wondering. Why doesn’t the Times have D-Day and other books repackaged and sold? They should certainly start with a digital package, but they could also crank out a ton of excellent print publications for those interested in the topic.

    Like

  3. Nice summary! How do you feel the Times political leanings impact their audience growth?

    Like

    • markpilip says:

      As I have no political leaning, nor interest in politics, my answer may not take into account all possibilities. However, at the US is a large place (318MM residents), the ability to grow the online circulation for the Times has a tremendous upside before bumping into a ceiling imposed by adherents of any point of view refusing to spend money with them. If, for example, the editors of the Times took a negative position on the consumption of broccoli, they would have significant ability to grow revenue in the pro- or broccoli-neutral population, before their position became a constraint to growth.

      Like

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