The headlines about the New York Times' financial results on Wednesday were all about a record number of new digital signups, a gain that pushed the paper over the 2 million-mark. But beneath the euphoria lurks a darker fact: print revenue continues to drop at a precipitous rate.
This has been the yin and yang of the Grey Lady's results for the past several quarters. A steady increase in digital subscriptions, driven by what many believe is concern about President Donald Trump—a phenomenon known as a "Trump bump"—combined with the ongoing free-fall in print advertising.
The only upside of this collapse in print revenue is that it means print is becoming a smaller and smaller proportion of the newspaper's business, so the pain is gradually decreasing. Last year, print advertising revenue at the Times dropped by 9% in the first quarter, fell 14% in the second, collapsed by 19% in the third and plummeted by 20% in the fourth. It fell by another 18% in the most recent quarter.
Despite those declines, however, print still accounts for almost two-thirds of the paper's advertising revenue. And it likely has further to fall.
On the bright side, digital revenue is climbing rapidly. The latest numbers show that digital ads and digital subscriptions—combined with income from affiliate revenues generated by The Wirecutter, the product-recommendation site the Times bought last year—pulled in $126 million in revenue. That's up by $32 million or about 30% from last year.
Print advertising, meanwhile, dropped by roughly $18 million in the latest quarter to $80 million, down about 18% from the same quarter of 2016. What that means is the Times made significantly more from digital than it lost from print, which is a good sign.
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In the past, even the paper's digital revenue growth was not compensating for the rapid decline of print ad revenue. But as print ads become a smaller and smaller proportion of the company's overall business, it is easier for digital growth to make up the gap.
All the Times needs to do now is ensure that digital subscriptions continue to increase at the same rate. But that may not be possible, the company admitted in its latest quarterly update. It warned that digital subscription growth in the current quarter will likely be "slower than the prior two quarters," while ad sales are expected to fall.
Even with the most recent increases, print as a whole still accounts for a much larger proportion of the Times' business than digital does. If you include print subscriptions and print advertising, print-related revenue overall was $240 million in the latest quarter, or almost twice what digital brought in.
In other words, the paper isn't just relying on print advertising, it's also counting on the fact that subscriptions to the print version will continue to bring in a significant amount of money. But is that a winning bet? Print circulation fell in the latest quarter, although the company didn't say by how much.
Digital signups accounted for $76 million in the latest quarter, but circulation revenues overall were $242 million, which means that print subscriptions accounted for more than twice as much revenue as digital subscriptions did.
The Times has been cranking up the price of its print edition over the past few years to try and keep those circulation revenues flowing, but eventually that is likely to stop working. And if the pace of digital subscriptions starts to slow down as well, that could make it even harder to compensate for print's decline.
The paper has also promised to do much more than just make up for the decline of print. Times CEO Mark Thompson has said it it will have combined digital advertising and subscription revenue of $800 million by 2020. Last year, the comparable figure was a little over $400 million.