NY Times Knockout Q4 Bodes Well For Subscriber-First Publishers – The New York Times Company (NYSE:NYT)

On Thursday, The New York Times (NYT) reported impressive Q4 earnings, beating the highest analyst estimate on earnings per share of $0.43. It also beat revenue estimates with Q4 revenue of $508.4M.

Shares jumped 13% to a 15-year high, coming within striking distance of $40.


Much of the growth came from impressive momentum in its digital subscriptions business; digital ad revenue fell 11% year/year. The Times also said it will do its first-ever price increase of 13%. That goes into effect in March for about 25% of its users.

The Times’ success in shifting its digital offering from an ad-only approach to a self-declared “subscriber-first” approach has much to say about the future of publisher content. Its Q4 earnings call – which I suggest reading in its entirety – is illuminating. Seeking Alpha is similarly going through a transformation, with our growth shifting from ad sales to subscription sales. So I have a particular interest in the Times’ success and what it can teach publishers of high-value content like Seeking Alpha.

With that, some of my key takeaways from the call:

Back in 2015, we set ourselves a goal of doubling digital revenue to at least $800 million by the end of 2020. In fact, we managed to hit that goal of full year early with digital revenues of $801 million in 2019. Even more significantly, we were able to add more than one million net digital subscriptions last year, the largest number since the launch of the pay model in 2011.

But here’s the $801M question: How much of that growth is due to the volatility in U.S. and geo-politics?

CEO Mark Thompson acknowledged that 2019 was another big year for news, but also pointed to three other “important” factors:

  1. Insisting on registration in order to access free content; engaging new registered users through content; and converting them to subscribers.
  2. Bringing subscribers in through low-price offers and retaining them. Surprisingly, low-price cohorts are as likely to upgrade to higher prices as are cohorts that came in at higher price points.
  3. Cross-disciplinary teams with high degrees of autonomy are leveraging experimentation and machine-learning to achieve key objectives quickly.

There’s a lot to unpack here.


Many websites force you to register to read something. In isolation, all that gives them is a large email list to spam. Registration, whether forced or optional, should be focused on converting passers-by into regular users. Publishers need to offer new registrants low-friction ways to engage with their content if they hope to turn their roadblocks into the beginning of a user journey.

This is a lesson it took us time to learn. Until recently, new registrants were given a host of choices. Many chose to follow the most popular stocks, such as Tesla (TSLA) and General Electric (GE), and found themselves thrown into the deep-end of the SA community – stocks with large and vocal fans and dissenters and an enormous daily content flow. They then unfollowed those stocks, and we failed to convert them to regular users.

Recently we launched a daily Must Reads newsletter that already has more than 700,000 subscribers. It also has an open rate of 75%, which was far beyond our expectations for an email that was designed to ease new users into SA and re-engage dormant ones.

Price testing

We have not played with price offers, opting for now for a transparent and consistent price of $19.99/month for a yearly commitment. The price of Premium itself was not something we tested extensively. We made a strategic decision that we wanted Premium to be a must-have subscription for U.S. investors, and that its price point should be accessible to any serious investor.

Perhaps we’ll try price offers in the future. But for now I’m proud of the consistent transparency we’ve demonstrated around price. And, rather than trying to lop off successful features into new product tiers in order to make more money, we have focused on upping the value of an SA Premium subscription every month (you can follow our Product team’s regular updates here).

SA Marketplace authors do frequently offer discounts. And I think that makes a lot of sense. Much of SA Premium is about unlimited access to the content and features that users are familiar with. We offer a 14-day free trial to ensure it’s what you’re looking for, but aside from that have not offered price discounting. Marketplace services, in contrast, are where top Seeking Alpha authors build private communities and provide access to the non-public details of their portfolio management, best investment ideas, real-time trade alerts, community chat, etc. At an average of $50/month, they’re more than double the price of Premium, and some Marketplace authors want to give new subscribers more time to get comfortable with their pricing.

Cross-disciplinary teams with high degrees of autonomy

Thompson is opaque about what he means here. But I can speak to how we have been thinking about Premium growth internally.

In order to build a successful subscription business, teams need to be aligned in their objectives. Editorial needs to focus on delivering timely, high-value content to investors. Product needs to build features that genuinely help investors make better-informed investing decisions. Sales/marketing needs to understand the value of the products we build, and articulate them compellingly to potential subscribers. Customer service needs to embrace the mindset that a paying subscriber should get VIP treatment. And our engineering backlog needs to be prioritized by the projects that we think will deliver maximum value to our subscribers.

As an ad-supported product, we found that functions like Editorial were more siloed, and we lacked a clear sense of priority in Product when it came to feature building and improvement. Addressing the needs of a growing subscriber base has forced us to get teams out of their silos.

The future of digital advertising

Thompson noted that 2019 was a rough year for digital advertising, and was circumspect about its future as a growth engine:

The past few years in digital advertising have been generally tough for premium publishers with the major digital platforms taking nearly all of the growth in the market and the shifts from desktop to mobile and from direct sell to open market programmatic both accelerating… But the strong and sustained growth we’re seeing in our digital subscription business means that we remain confident about hitting our overall digital revenue targets, despite the more constrained immediate prospects for growth on the advertising side. Indeed the current strategic track of the business strongly endorses our declaration 4.5 years ago that The Times is a subscription-first publisher.

Interestingly, The Times’ recently stopped selling programmatic advertising on mobile, a move we at Seeking Alpha are in the middle of making on desktop:

That is why when confronted with the potential trade-off between our digital subscription and advertising businesses, we generally favor subscriptions and the best possible user experience. A case in point is the departure of open market programmatic advertising from our apps last week which we believe will significantly improve the user experience, while also increasing the value of our directly-sold advertising.

There are still growth opportunities in ad sales. They too will accrue to subscriber-first publishers who have the ability to build strong brands and loyal readerships. And programmatic advertising, which tends to degrade the user experience, will lead to weaker engagement and weaker relationships with top-tier advertisers who recognize the unique opportunity that high-value, high-engagement communities like Seeking Alpha present.

There’s much more industry intel on the call. Read the transcript »

Be the first to comment

Leave a Reply

Your email address will not be published.