5 Reasons Why The New York Times Is a Unicorn

I’ve argued before that most SaaS companies here in Silicon Valley would kill for the Times’ digital subscription numbers, but Ken Doctor’s latest piece for NiemanLab confirms it — the New York Times now has over a million digital subscribers, and that’s a metric worth celebrating.

I encourage you to read the entire piece, but here are some highlights, along with some thoughts of my own.

• NYT digital subscribers now generate close to $200 million a year in revenue. That’s almost enough to completely support their entire newsroom, and certainly lays the metered paywall debate to rest. I’d also argue that most of NYT’s future growth is going to be based on developing and nurturing their current audience, more than attracting new subscribers.
• Subscribers account for 55% of all revenue, while advertising accounts for 39%. That flips the usual subscription/ad revenue ratio that most publications have on its head, and I think that’s a good thing — it protects the NYT from the whims of the economy (and subsequently the advertising market), while also allowing them to charge a premium for access to a dedicated, professional audience.
• 2% of the NYT’s digital audience pays for content. I see that as an upside potential of 98%, but it’s also a lesson that lots of SaaS companies here in the Valley have known for a long time — most of your profits are going to come from a minority of core users.
• 12 to 13 percent of NYT digital subscriber growth arrives from outside the U.S. Being able to account, process, and manage a diverse international subscriber base is an imperative for any news organization with global aspirations.
• Paywall 2.0 is about flexibility. Here at Zuora we’ve been talking about Paywall 2.0 for a long time. The basic paywall debate is settled — it’s time to start thinking about the subscription experience. Ken Doctor asks: “Other than full-priced subscriptions to around-the-clock firehose of NYT content, what will anyone pay for?” I’d suggest they look across the pond at The Guardian’s dedicated live events space. Paywalls are evolving into membership programs.

As a student of subscription metrics, of course there’s a lot more that I’d like to know. How effective the Times is in acquiring new readers? What is the cost of customer acquisition, and what is the monthly churn in the subscriber base? What’s the average level of engagement per subscriber?

But the bottom line is that The New York Times’ business model is looking much more like a smart, recurring revenue-based SaaS platform than a simple advertising billboard, which was the old print-based model.

And as the media expert Peter Kreisky told me, the broader message here is that quality journalism will continue to have solid support from a committed group of readers who care about informed insight and are happy to pay to get it anywhere, anytime, (particularly on their phones and tablets).

In the case of publications like The New York Times, The Wall Street Journal, The Financial Times and The Economist, the race is not for scale at all costs but for deep, paid engagement with their audience.

Ken Doctor sums it up: “Readers know quality, depth, and breadth when they see it, and they’re willing to pay for it.”

I’m a subscriber to the New York Times (and not just because I grew up in Brooklyn!) Are you? If so, why?