Business

For 1st Time, NYT Makes More from Readers than Ads

By Derek Thompson
Saved Stories

The New York Times Co. lost $35 million in the third quarter of 2009. That's better that losing $100 million in Q3 last year, and the elimination of 100 editorial jobs will help to bring down costs for the future. But the real story, Gawker's Hamilton Nolan points out, is that for the first time ever, advertising is no longer the Times' main source of revenue*:

The largest segment of the company reached a watershed moment, collecting more from readers than from advertisers, in an industry where advertising traditionally outweighed circulation in revenue by at least three to one. At the company's New York Times Media Group, which includes The Times and The International Herald Tribune, circulation revenue reached $175.2 million in the third quarter, while ad revenue dropped to $164.5 million.

Advertising will continue to improve into 2010, but you wonder whether this statistic makes Times' executives interested in beginning to soak their readers for more money. Namely, online readers. It wouldn't have to be an all-site pay-wall. Remember, the maligned TimesSelect --which walled off the paper's longest pieces and its prized columnists --raked in about $10 million a year when traffic to NYTimes.com was 14.6 million unique visitors in 2007. In the last year, despite some strangely down months, it's crossed the 21 million mark, a 50 percent increase.

Of course the decision to charge for some stories is going to decrease their traffic, which in turn decreases the advertising revenue from that traffic. But if this quarter's statistic becomes a trend and the Times sees the plurality of its revenue coming from readers rather than advertisers, it should consider introducing the dead tree pay model to its online brand.

*Update: I should point out that the traditional newspaper model takes up to 75 percent of its revenue from advertising. Peter Kafka says the paper's online fortunes aren't faring well, either:

But the story is less impressive at the Times' traditional web sites. Ad revenue there was down 18.5%, which is better than the 21.6% drop the previous quarter but nothing to write home about.