by Trevor Butterworth
To adapt Robin Williams’ immortal comment on cocaine, buying a newspaper could be God’s way of telling you you’re making too much money. (But not for long — ha-ha.) The sales of the Boston Globe to Red Sox owner John Henry and the Washington Post to Amazon’s Jeff Bezos at prices reflecting but a glimmer of the gold they once traded for has triggered a bull market in speculation over the general future of newspapers and the fate of the New York Times, in particular.
The oracular spectacular (nicely annotated for posterity by Tom McGeveran in Capital New York) led the paper to issue a memo emphatically saying this lady ain’t for sale. Of course, in business, many a “no” is but a decimal point away from becoming a “yes,” and the shockingly covert negotiations by the Graham family in selling the Post simply underscore the provisional quality of all business rhetoric.
But there is one line of thinking about the Times that is both comically wrong and insightful into how journalists understand — or misunderstand — the future of the news business. It goes like this: if the Sulzbergers don’t sell their beloved paper now — now! — they will see its value torched in the most pathetic fire sale in the history of the world. This is, for obvious reasons, an especially delicious, break-out-the-smores scenario for conservatives, with Powerline and the National Review announcing that the countdown clock to the end of the Times has started ticking.
Stop. Silence the violins (whether dirge or jig). Cancel the coffin. The New York Times doesn’t need to sell. Or to put it another way: it has reached a technological point in its evolution where it would be madness to sell.
We have become so accustomed to watching newspapers do the wrong thing since the dawn of the Internet that it’s hard to credit any publication with doing something right. So here’s why I would bet on the Times as the dog bites man story in the decline of the newspaper: forget about the share price, focus on the technology.
The Times largely copied the Financial Times paywall/subscriber system, which showed that people — certain people — would pay for content. This, at the time, was ridiculed, but the point of a subscriber system is not simply the money the subscriber fronts to buy the paper. More interesting is the detail the paper gets from what they do with their subscription: who they are and what they read in real time. And real time is the kicker given multi-screen and mobile news consumption.
The Times has been investing heavily in its platform technology over the past few years to provide just this kind of real time analysis. This means they can tie a unique audience database to “super premium” advertising. Follow the right kind of reader — one who has money — through your paper and you have a ladder to move up the advertising chain. The Times has only just begun to mine this data and focus on microtargeting delivery.
What does this mean for content? Well, six months ago I would have said the paper was insane to keep its super expensive network of foreign bureaus, when it — or someone else — could easily aggregate “local” foreign news. Now, that network looks like a really smart investment. It’s the jewel in the Times crown. Given that the paper has a global audience and a global subscriber base — even as it scrunches itself right now into fewer floors in its building — it has an opportunity to build that readership by offering more and better material to keep those readers within Times space, so to speak. The equation works something like this: The more necessary that material, the more subscribers, the more detailed the audience database, the more valuable the audience data.
In this, the Times has an advantage over the Guardian, which is as digitally smart and likely more innovative and imaginative, but is constrained by newsroom resources — hence its repeated forays in the UK into user-generated content. (The Times and the Guardian are both in the same race: to see if digital revenue growth can offset print declines. At the Times digital advertising is now 25% of the company’s ad income; at the Guardian, “digital revenue exceeded the decline in print revenue this year.”) Other large newspapers, such as the Los Angeles Times, are not so lucky in terms of their reader numbers or stock of premium content. And while the Daily Mail is traffic rich, it doesn’t have a subscriber system to disaggregate its readers into valuable data. What is the point of having a mass, amorphous readership if you can’t target and serve them with specific advertising? Information doesn’t want to be free, to borrow the classic anthropomorphism of the 20th century; information wants to know who wants to know this precise information.
Real time reader data is the model that can return profitability to the news business. User data is the backbone of making money on the Internet, after all. This is what the Washington Post didn’t or couldn’t pursue under the Graham family: it sat on an oil field of consumer data and didn’t drill. As Dean Starkman correctly put it in CJR last year, this was the Grahams’ key strategic error. Perhaps buying the Post means something to Bezos politically, and perhaps, once he has settled in, the paper’s attempts to influence public opinion will change complexion. But it doesn’t make sense to put the press baron archetype ahead of the retail impresario as the unit of analysis: Bezos is possibly the smartest salesman of his generation. It is hard to see how he doesn’t see the Post as being, above all else, an untapped Alaska of consumer data.
The news media is entering a new era of customer service in which the specific kind of reader — which is to say, one who is prepared to buy a subscription — is the product. News is just a means to be able to sell that reader to people who want to reach them — and that reader can only be effectively sold through their real time data imprint. If this sounds so NSA, companies like the Times have a distinct advantage: brand credibility. One of the other significant media events of the past few weeks was the release of a detailed Forrester Research survey of 1053 Internet users on their attitudes toward data privacy and marketing. Commissioned by data analytics firm Neustar, the survey found that people are more likely to share data with brands they trust — and if those brands are up front about the terms of service. This sort of care and transparency should be bread and butter to a prestige news organization because trust and credibility are the underlying values driving journalism.
All this puts the New York Times within reach of monetizing the largest number of wealthy readers in the English-speaking world. (The Journal currently has more.) It has to keep building out its platform and mining its databases; it may have to alter and expand the kind of content it produces (the subscriber has a power he or she did not have in the glory days of print advertising); and it will surely have to contend with those journalists who don’t get the digital future or actively resist it (as a reminder just how obdurately destructive journalists can be to innovation, Kara Swisher recently penned a wonderful, wince-inducing essay).
Still, the Times has very few competitors. If it were to buy the Financial Times from Pearson, it would be able to challenge Bloomberg and the Wall Street Journal for the key market it is presently weakest in: financial news consumers. But even if that is a fantasy acquisition, the odds that Apple and Google will need the Times more than it needs them have, improbably, at last, shortened. Sell the Grey Lady now? That would be stupid.