The New York Times Is a Great Company in a Terrible Business

In 2000, circulation was 26 percent of the Times' business. Last quarter, it made up 54 percent. Digital ads, however ...

This morning, the New York Times announced higher circulation revenue, huge gains in digital subscribers, and the continued erosion of its print advertising business. If the Times were interested in saving paper and man-hours, it could start by copy-pasting that paragraph into a PDF every quarter.

Every few months, the Times re-learns that readers like it more than last year, and advertisers like it less. Here's a look at the last 14 years of Times revenue. In 2000, circulation was 26 percent of the business. Last quarter, it made up 54 percent. Meanwhile, advertising has ... well, just look.

New York Times: Great Paper, Awful Business
The components of the New York Times Company have changed over the last decade, so to keep the comparison as apples-to-apples as possible, ad and circ data here reflects only the New York Times Media Group (the Times, the International Herald Tribune, and related businesses) in years when the business also included the Boston Globe,, and other holdings. (Full data at New York Times Company investor relations page)

A few conclusions to chew over:

1) Quantity and Quality. A scary graph of the Times' advertising revenue shouldn't be taken as a reflection of the quality of the newspapers' reporting. Quite the opposite, I can't think of a more consistently impressive or influential big journalism operation in the game. The decline in newspaper ad revenue is endemic and the Times has fared better than most of its peers. (The newspaper business is the worst advertising industry in America right now.) It's not a bad company. It's an impressive company—more than 800,000 want to pay for it online—in a terrible industry.

2) The Digital Ad Conundrum. Readers aren't as valuable in digital as they are in print. Everybody knows that. But sometimes we gloss over it because, hey, there are just so many readers on desktop and mobile devices that theoretically publishers can claw their way back to the promised land with ginormous scale.

Digital advertising is why I have money to eat food, so I have every reason to root for its thrilling success. But I get nervous about my lunch money when I see Google, Facebook, Twitter, Pandora, and other non-publishers ravenously gobbling up the digital advertising pie. They have scale that publishers can only fever-dream about and more information about their users than a news organization has any right to hope for. With Facebook and Google commanding two-thirds of mobile ads, the smartphone ad market is shaping up to be such a small oligopoly it makes TV look like a wide-open Turkish bazaar.

A specialty site doesn't have as much to worry about, because it's easier to align costs with premium ads seeking a premium audience. But what does this mean for a big, international, news-gathering operation like the Times? It means that growing the digital subscriptions business—now growing by 100s of 1000s of people per year—is a smart and necessary hedge against the (seemingly inevitable) further erosion of the ad business as it moves online.

3) Beyond Display... The post-display business model of journalism doesn't have an authoritative textbook yet. There are some notable experiments, though. While many sites promise advertisers a specific audience, BuzzFeed markets its skills of "viral" distribution, which is a pretty clever tweak on an old model. Vice similarly offers consulting for corporate clients to make their ads fly online. Business Insider offers a paid research service. The Times is still growing its events business, still aggressively building out paid digital products, and still searching for products that bear the NYT insignia that help it grow in a post-ad world. But for many organizations, adjacent corporate messages might never again support the business they helped to build.