{"id":15427,"date":"2016-11-17T00:43:18","date_gmt":"2016-11-17T05:43:18","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/the-new-york-times-in-the-digitalization-era\/"},"modified":"2016-11-17T00:46:17","modified_gmt":"2016-11-17T05:46:17","slug":"the-new-york-times-in-the-digitalization-era","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-new-york-times-in-the-digitalization-era\/","title":{"rendered":"The New York Times in the digitalization era"},"content":{"rendered":"<p>Digitalization have change how we interact with the world. Our habits have changed; we don\u2019t longer like to receive information as we did 10 or 15 years ago:<\/p>\n<ul>\n<li><strong>We don\u2019t like unilateral information<\/strong>. Gone are the days of old newspaper with whom nobody could interact. Today, people want to share their opinions, be involved in a multilateral conversation.<\/li>\n<li><strong>Wewant to know the last events exactly when they happened<\/strong>. If there was a huge political scandal, if some company found the cure for a horrible disease\u2026 we want to know, and we want to know it now. That means that we don\u2019t longer want to wait for the printed newspaper to arrive tomorrow morning.<\/li>\n<li><strong>We want to get informed only in the topics that we like<\/strong>. Today, everything happens fast. We don\u2019t have enough time to do the things that we like, or to spend time with the people we care about. We don\u2019t want to lose our time in things that don\u2019t add us value. The 100-pages newspaper with a Sport, National, International, and Culture section, does not capture the interest of the person who only wants to know about the economic situation of the country.<\/li>\n<\/ul>\n<p>These trends have put a lot of pressure in the news and media industry, whose product offer was totally misaligned with what people was asking for. Not only the printed newspaper didn\u2019t allow people to have the last customized information, but also the digital offering was not closing any gap. It was just a simple copy of its printed version.<\/p>\n<p>These changes also generated a reduction on the entry barriers in the industry. Previously, a company needed to invest millions of dollars to participate in the business (from the purchase of printers to the payment of publishing and advertising teams). Nowadays anyone with $10 can have a successful blog.<\/p>\n<p>Large news and media companies face fierce competition in the digital media. New players are engaging the public with a completely new approach. Google offer immediate customized content, Facebook and Twitter offer the possibility to participate in massive trending discussions, and Blogs allows readers to be part of a community.<\/p>\n<p>One company that suffered the impact of digitization was the <strong>New York Times<\/strong>. The company had its valuation peak in 2002, and maintained it until 2004. However, between 2004 and 2009, the company&#8217;s stock suffered a steep decline, going from a valuation of $39 to $3.9.\u00a0[1]<\/p>\n<p style=\"text-align: center\"><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Figure-1-8.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-15409\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Figure-1-8.png\" alt=\"figure-1\" width=\"600\" height=\"198\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Figure-1-8.png 976w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Figure-1-8-300x99.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Figure-1-8-768x253.png 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Figure-1-8-600x198.png 600w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/a>Figure 1: NYT Adjusted Stock Price from 1990 to 2016 (Close price adjusted for dividends and splits)<\/p>\n<p>To deal with these new reality, NYT defined a series of initiatives that affected its business and its operating model.<\/p>\n<p><strong>Business Model<\/strong><\/p>\n<p>NYT shift its content distribution through printed media towards the use of three platforms: print, web and mobile. Even when the company launched NYTimes.com in 1996, they only started charging customers for the content provided on the website and the mobile app in 2011.\u00a0[2]<\/p>\n<p>The second change was related to revenues sources. NYT distribute its incomes between circulation and advertising. A decade ago, advertising was their primary source of revenues, nevertheless, since 2012 circulation have accounted for more than 50% of the same. [3]\u00a0The reasons behind this are:<\/p>\n<ul>\n<li>Circulation revenues are increasing because of the growth in digital subscription and the price increase in printed copies (imposed to counteract the decline in printed copies sold)<\/li>\n<li>Advertising revenues are decreasing even when digital advertising revenues are increasing. This is because the cost of digital advertisement is significantly lower than the one of printed advertisement.<\/li>\n<\/ul>\n<p style=\"text-align: center\"><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Figure-2-9.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-15410\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Figure-2-9.png\" alt=\"figure-2\" width=\"600\" height=\"208\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Figure-2-9.png 975w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Figure-2-9-300x104.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Figure-2-9-768x266.png 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Figure-2-9-600x208.png 600w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/a>\u00a0Figure 2: NYT Revenues Distribution<\/p>\n<p><strong>Operating Model<\/strong><\/p>\n<p>The first goal of the company was to increase their target audience using a new discovery approach (don\u2019t have a copy of the printed version online, but something that customers can relate to), promotion (leverage social media to engage readers) and engagement with the customers (generate a two-way relationship).<\/p>\n<p>The second was to increase the collaboration between the newsroom and the business units focusing on the reader experience. That allowed to increase the creativity and insights of the newsroom team.\u00a0[4]<\/p>\n<p>At the end of 2015 NYT announced a new digital strategy memo, based on simplifying subscriptions to reach younger population, improve the quality of advertisements, optimize channels (print, web and mobile), and reach new international audiences to increase paying subscriber base.\u00a0[5]<\/p>\n<p>One additional action that NYT should do is to simplify its structure. They are now in an industry with narrow margins, where assuring low costs is critical. Also, because the reading of printed newspaper is heavily decreasing, I would recommend to decrease resources allocation in that segment to focus in digital platforms.<\/p>\n<p>Even though all of NYT&#8217;s efforts have had a positive impact, in my opinion, the company will never reach its 2002 levels. Digitization changed the dynamic in which news and media competes, increasing the number and variety of competitors, and pushing down revenue.<\/p>\n<p style=\"text-align: center\"><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Figure-3-2.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-15411\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Figure-3-2.png\" alt=\"figure-3\" width=\"600\" height=\"202\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Figure-3-2.png 975w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Figure-3-2-300x101.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Figure-3-2-768x258.png 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Figure-3-2-600x202.png 600w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/a>Figure 3: NYT Adjusted Stock Price from 2009 to 2016 (Close price adjusted for dividends and splits)<\/p>\n<p>(798 words)<\/p>\n<p>[1] NYT Historical Prices | New York Times Company (The) Co Stock &#8211; Yahoo Finance. 2016. NYT Historical Prices | New York Times Company (The) Co Stock &#8211; Yahoo Finance. [ONLINE] Available at: https:\/\/finance.yahoo.com\/quote\/NYT\/history?period1=1447650000&amp;period2=1479272400&amp;interval=1wk&amp;filter=history&amp;frequency=1wk. [Accessed 17 November 2016].<\/p>\n<p>[2] The New York Times Company &#8211; Investors &#8211; Financials \u2013 2015 Annual Report &amp; Form 10-K . 2016. The New York Times Company &#8211; Investors &#8211; Financials &#8211; Annual Reports . [ONLINE] Available at: http:\/\/s1.q4cdn.com\/156149269\/files\/doc_financials\/annual\/2015\/Bookmarked-2015-Annual-Report.pdf [Accessed 17 November 2016].<\/p>\n<p>[3] The New York Times Company &#8211; Investors &#8211; Financials \u2013 2012 Annual Report &amp; Form 10-K . 2016. The New York Times Company &#8211; Investors &#8211; Financials &#8211; Annual Reports . [ONLINE] Available at: http:\/\/s1.q4cdn.com\/156149269\/files\/doc_financils\/annual\/2012NYTannual.pdf \u00a0[Accessed 17 November 2016].<\/p>\n<p>[4] New York Times, New York Times, 2014. Report. The New York Times Innovation Report, [Online]. 1, 3-96. Available at: http:\/\/www.presscouncil.org.au\/uploads\/52321\/ufiles\/The_New_York_Times_Innovation_Report_-_March_2014.pdf [Accessed 16 November 2016].<\/p>\n<p>[5] Nieman Lab. 2016. 4 takeaways from The New York Times\u2019 new digital strategy memo \u00bb Nieman Journalism Lab. [ONLINE] Available at: http:\/\/www.niemanlab.org\/2015\/10\/4-takeaways-from-the-new-york-times-new-digital-strategy-memo\/. [Accessed 17 November 2016].<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Digitalization have change how we interact with the world. These have put a lot of pressure in the news and media industry, whose product offer was totally misaligned with what people was asking for.<\/p>\n","protected":false},"author":1829,"featured_media":15430,"comment_status":"open","ping_status":"closed","template":"","categories":[786],"class_list":["post-15427","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-newspaper"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/digitization-challenge-2016\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The New York Times in the digitalization era - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-new-york-times-in-the-digitalization-era\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The New York Times in the digitalization era - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"Digitalization have change how we interact with the world. 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