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March 18, 2015 | Authored by: Vindicia Team

Major Media Outlet Uses Digital Subscription as Source of Revenue

According to a statement on its website, The New York Times saw digital advertising and subscription growth in all four quarters in 2014, as compared year over year.

"2014 was an encouraging year with sufficient progress in digital advertising and subscription revenues to deliver modest overall revenue growth for the Company," said Mark Thompson, president and chief executive officer. "We continued to build our digital subscriber total in 2014 and finished the year with 910,000 paid digital subscribers, an increase of 150,000 from the previous year, beating our tally of net new additions in 2013 by 25 percent and putting us on track to exceed the one million digital subscriber milestone in 2015."

Thompson added that The Times is looking to further digital subscription rates, among other things, this year and deepen its audience more effectively through print and digital innovation.

Digital subscriptions as source of revenue

While digital subscriptions for newspapers across the country aren't a new concept, The Times is one of the first major media outlets to successfully improve year-over-year subscribers. Advertisements have traditionally generated a large share of newspaper revenue, especially when print was the main product offering. However, thanks in part to the rapid expansion and development of digital technology, online subscriptions are increasing revenue share at The Times.

"Digital subscriptions are increasing revenue share at The New York Times."

According to Capital New York, 54 percent of all revenue at The Times right now comes from its readers. Another 30 percent comes from digital. Year-over-year profits declined at the country's largest newspaper - a modest 5.7 percent, thanks in part to last year's round of buyouts and severance packages - but circulation revenue also increased, albeit at a marginal 1.5 percent. Nevertheless, digital subscriptions and slightly increasing readership figures arguably offer more promising value than advertising dollars do. Readers paying for quality product may be more likely to continue their subscriptions, whereas advertising revenue can shift from time to time. More specifically, print advertising fell 9 percent in the fourth quarter last year for The Times, and growing that source of revenue remains challenging as print copies sold fell nearly 7 percent in the same timeframe.

However, while print media is fighting its own battle, the online side of news is growing. Digital-only subscriptions now exceed print subscriptions by nearly 250,000 readers. Digital subscriptions also help grow media outlets' global reach. Just one in eight digital subs come from outside of the U.S. On the other hand, 33 percent of its unique visitors are international. Both figures are likely to grow as product offerings and pricing alternatives advance at The Times.

While other large media outlets online are going all-in on digital ad growth and revenue, The Times is wisely biding its time with digital subscriptions. Certainly, digital-only outlets like the Huffington Post - which don't have subscription-based services - obtain high volumes of traffic, but they are largely dependent on cumbersome and often invasive advertisements. Digital subscriptions are more likely to acquire interested and engaged users, or those who come to a site to read its product offerings.

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Vindicia Team

Vindicia Team

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