Analysis: Jill Abramson and the paper of record are fighting to prop up digital revenues as print fades
Jill Abramson takes the helm of the New York Times’ editorial operations at a moment when the paper’s future depends not on the stories it breaks, but on making the Internet pay for them.
Battered by tectonic shifts in how people consume news, the new executive editor assumes command of the Gray Lady's newsroom while rising online ad revenues remain stubbornly unable to offset the erosion in print.
The Times hopes it has found a way to stop the bleeding: It revealed its strategy to bolster digital earnings with March's launch of its hotly anticipated paywall.
“Clearly there is a great deal of emphasis on making the paywall work. You might even say that the future of the New York Times depends on it,” Douglas Arthur, a media analyst at Evercore Partners, told TheWrap.
Tellingly, Abramson played a role in crafting the Times’ digital toll booth. Last year, Abramson took a months-long leave from her duties as the paper’s managing editor to focus on the paper’s web operations.
Even though the paywall has been lauded by some as an imaginative way to lure readers to the site by offering 20 free articles a month before turning off the spigot, there’s no escaping the fact that readers are moving online and abandoning print at an alarming clip. The future of legacy publications, even ones as venerable as the Times, remains murky.
Approximately 25 percent of people in the United States, aged 18 to 34 years old, read a hard copy of a daily newspaper today compared with 41 percent in 2000 and 55 percent in 1990, Craig Huber, an equity research analyst at Access 342, told TheWrap.
As for online revenues, they are still pennies on the dollar compared to what newspapers make from print. Digital earnings for an average newspaper are only 9 to 10 percent of total revenue, Huber said.
That demographic shift is partly to blame for the paper’s financial rut. Take its most recent quarter. During the first three months of the year, operating profit fell 41 percent to $31.1 million compared to $52.7 million in the first quarter of 2010. Net income cratered 57.6 percent to $5.4 million, compared with $12.8 million a year ago.
Still, there’s hope that the paper may have found an elixir with its paywall. The new system of paid content could boost the paper"s severely depressed share prices by as much as $2 to $3 over time, according to a report by Evercore Partners. The study also projects revenues of $68 million from the paywall after discounting is taken into account.
Despite those impressive early projections, examples of outlets that have inspired readers to pay for digital content are few. The Times is clearly banking on its reputation as the gold standard in American journalism to help reverse that trend, and it has an undeniably powerful brand behind it.
"There’s a 50-50 chance the paywall is going to work, but that's a much higher percentage than most any other newspaper in this country would have in terms of making a paywall work,” Huber told TheWrap.
Analysts say that the Times is such a well-oiled machine that they anticipate that Abramson’s appointment will have little impact on the paper’s editorial side. Where she might make the greatest difference — indeed where her legacy may be forged — is in how she draws on the months she spent immersing herself in the Times’ online arm to modernize the paper's approach to news-gathering.
The veteran editor and reporter may not dramatically alter the way the Paper of Record covers the world, but she could reshape the way it translates that coverage into the digital space.
At the bare minimum she should provide a welcome change to outgoing editor Bill Keller, whose criticism of the Huffington Post and Twitter, caused consternation in the newsroom and struck many as positively Jurassic.
Get ready for Jill Abramson, web visionary?
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