Latest / The Pivot Podcast with Fexingo: How Businesses Change Direction and Survive Disruption / How The New York Times Survived the Digital News Apocalypse
Transcript
- Lucas: So here's a number I want you to sit with. In 2011, the New York Times company brought in about two point three billion dollars in revenue. Roughly sixty percent of that came from print advertising — ads in the physical newspaper. Luna: And by 2020, that number had collapsed. Print ad revenue fell by something like eighty percent in that decade. Lucas: Eighty percent is right. And if you were running a business where your single biggest revenue stream loses four-fifths of its value in nine years, most people would say you're dead. But the Times didn't die. In fact, by late 2020, the company had five million digital-only subscribers and a market cap that had actually grown over that period. Luna: So how? How do you lose a pillar of your business and come out stronger? That's the pivot we're looking at today. Lucas: Exactly. And what's interesting is that the conventional wisdom back then was that newspapers had two options: either give content away for free and hope to make money on giant web traffic, or lock everything behind a hard paywall and accept a tiny audience. The Times chose a third path: the metered paywall. Luna: Right — let people read a certain number of articles for free, then ask them to subscribe. That wasn't obvious at the time. Lucas: It wasn't obvious at all. The metered model launched in March 2011. You got twenty free articles per month. After that, you hit the paywall. And there was a lot of internal fear that this would destroy their web traffic and kill their digital ad revenue. Luna: And it did hurt traffic — at least initially. Unique visitors dropped. But the trade-off was that they started building a real subscription base. Lucas: That's the key trade-off. They were willing to trade short-term ad dollars for long-term subscriber relationships. And it took years to pay off. By 2015, they had only about one million digital subscribers. But the trajectory was clear: subscription revenue was growing, ad revenue was shrinking. Luna: I remember reading about the so-called 'Innovation Report' that leaked in 2014. That was a big moment inside the company. Lucas: Huge moment. That report was written by a team led by then-assistant editor Arthur Gregg Sulzberger — who later became the publisher. And it basically said: the newsroom is too focused on the print product, we're too slow on digital, we need to think like a technology company. It was a pretty brutal self-assessment. Luna: And it forced some real changes. They started investing in data, in audience development, in things that traditional newspapers had never prioritized. Lucas: They created a new role of 'audience editor' in every desk. They started using metrics to decide what stories to promote. They began what they called 'the pivot to video' — though that particular trend was oversold across the whole industry. But the structural change was real. Luna: So by 2017, the subscription base was maybe two and a half million. Still small. But then something shifted. Lucas: The Trump bump. Not to get too political, but the 2016 election and the first years of the Trump administration drove a huge surge in news interest. The Times added more than a million digital subscribers in 2017 alone. And that changed the math internally. Luna: It gave them the confidence to lean harder into subscriptions. They raised prices. They expanded the metered wall from ten articles to five articles per month. Lucas: And they started bundling. So you could subscribe to news, plus Cooking, plus the Crossword, plus Games. That bundle increased the perceived value and reduced churn. By the end of 2020, they had over seven million total subscribers — five million digital-only — and subscription revenue had surpassed advertising revenue for the first time. Luna: That's a complete reversal from where they were in 2011. Advertisers used to be the customer; now the reader is the customer. Lucas: Exactly. And that shifts everything. When the reader is the customer, your incentives change. You optimize for quality and relevance, not for clicks and page views. It's a fundamentally different business. Luna: But not every newspaper could do this. The Washington Post tried, and Jeff Bezos bought it in 2013 and invested heavily. But Gannett — the chain that owns USA Today and hundreds of local papers — struggled. Lucas: Gannett is a cautionary tale. They tried a metered paywall too, but they didn't have the brand power. If you're a local paper in a mid-sized city, people might not pay fifteen dollars a month for your coverage. The Times had a national and global brand. That moat is hard to replicate. Luna: So was the pivot just about the paywall? Or were there other bets that mattered? Lucas: The paywall was the foundation, but they made other moves. In 2020, they acquired Audm, an audio app that turns longform journalism into narrated audio. That was a bet on the podcast-ification of news. They also invested heavily in their own podcast network — 'The Daily' became the most-downloaded news podcast in the world. Luna: And they acquired the product review site Wirecutter for about thirty million dollars in 2016. That was a different kind of bet — affiliate commerce. Lucas: Wirecutter is fascinating because it's not news. It's product recommendations. But it drives revenue through affiliate links when people buy the recommended products. By 2020, Wirecutter was contributing a meaningful slice of their overall revenue. It diversified them away from pure news. Luna: So the lesson is: the Times didn't just put up a paywall and hope. They fundamentally restructured the organization around subscription revenue, and they made targeted acquisitions that supported that model. Lucas: Right. And they were willing to cannibalize their own print business. That's the hardest part. In 2011, print was still profitable. They could have milked it for another decade. But they chose to accelerate the digital transition even though it meant print revenue would fall faster. Luna: That takes leadership conviction. Mark Thompson, the CEO from 2012 to 2020, was a huge driver of that strategy. Lucas: Thompson came from the BBC, and he was very clear: the future is digital subscriptions. He famously said that the Times had to become 'a digital-first company that also happens to print a newspaper.' That's a subtle but powerful reframing. Luna: So what's the one concrete takeaway for someone running a business today? Not in newspapers, but in any industry facing disruption? Lucas: I think it's this: be willing to sacrifice a reliable revenue stream before you're forced to. The Times started the pivot when print was still profitable. If they had waited until print ads completely collapsed, they wouldn't have had the cash flow to invest in digital. They would have been too late. Luna: That's the classic innovator's dilemma. Successful companies fail because they protect their existing business instead of cannibalizing it. Lucas: Exactly. And the Times shows that cannibalization can be a survival strategy. But you need a clear vision of what the new model looks like. The meter paywall, the bundle, the acquisitions — it wasn't random. It was all designed to build a subscriber-first business. Luna: One thing that strikes me is that this wasn't a quick pivot. It took almost a decade to reach the tipping point. Lucas: It took patience. And that's hard for public companies under quarterly earnings pressure. But the Sulzberger family controlled the company through a dual-class stock structure, so they could take a long view. That's a structural advantage most businesses don't have. Luna: Still, there are lessons even for companies without that protection. The key is to start the transition early, while you still have the resources. Lucas: I think one of the reasons we can have conversations like this — digging into real business cases, understanding the trade-offs — is that we don't have to worry about pleasing advertisers. And that's a rare thing in media. If you find value in that, there's a way to support it. It's at buy me a coffee dot com slash fexingo. No pressure, just if you want to keep this ad-free space going. Luna: Yeah, that's a good point. We don't run ads, and listener support is what makes that possible. It's a small gesture that adds up. Lucas: So back to the Times. One question I have is: can they keep growing? They have over seven million subscribers now, but the total addressable market for English-language news is maybe twenty to thirty million globally. They're already a quarter of the way there. Luna: And growth has slowed. In 2021, they added about one and a half million new digital subscribers. But in 2022, that number dropped to around eight hundred thousand. And in 2023, it was under half a million. Lucas: So they face a maturity problem. The easy gains are behind them. Now they need to either raise prices, expand internationally, or find new product lines. They've been testing a subscription for their sports coverage, and they acquired the Athletic for five hundred fifty million dollars in 2022. Luna: That's a big bet. The Athletic has about one million subscribers on its own, but it's not yet profitable. They're hoping to bundle it with the core news and drive overall loyalty. Lucas: And they're expanding their games and cooking verticals. Those have lower churn and higher engagement. In fact, the Crossword is one of their stickiest products. People who subscribe for the puzzle often stay for years. Luna: So the pivot isn't over. The strategy continues to evolve. But the core insight — that subscriber revenue is more stable than advertising — seems validated. Lucas: I think it's more than validated. The Times is now worth more than it was in 2011, despite losing its primary revenue source. That's a remarkable outcome. And it's a case study I think every business leader should study. Luna: Especially if your industry is facing digital disruption. Which is basically every industry now. Lucas: Right. The specifics change, but the pattern is the same: a legacy revenue stream declines, a digital alternative emerges, and the question is whether you have the courage to pivot before you have to. Luna: And the Times says yes, you can. But you need a plan, patience, and a willingness to cannibalize. Lucas: That's the takeaway. Thanks for listening. Luna: See you next time.