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Here’s what the New York Times’ 1 million subscriber number means

August 6, 2015, 7:33 PM UTC

22. New York Times for iPad

All the news that's fit to print ... on an iPad.
photo: Ramin Talaie/Getty Images

The New York Times says it has racked up one million digital subscribers, according to a press release the newspaper company issued on Thursday. That’s one million people who pay for the web or mobile versions of the paper, instead of the old-fashioned print version. By any stretch, that’s a remarkable achievement — but what does the success of the Times‘ paywall mean for other newspaper or media companies?

Here’s what it means: Virtually nothing. Actually, that’s not strictly true. As technology and media analyst Ben Thompson pointed out on Twitter, because of the way that content works in the internet age, any success the New York Times has in getting people to pay means there are fewer people willing to pay for other sources. Every piece of content competes with every other piece for a user’s scarce attention.

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This is a crucial point that many newspapers and other publishers fail to take into account when thinking about their paywall strategy. How many media or news sources is the average person going to pay for? How many newspaper apps are they likely to download? How many newspaper paywalls will they cough up a monthly fee for? The answer is probably one, or more likely none at all.

Even apart from the ripple effects of the NYT’s million subscribers, there is little that the newspaper publisher’s paywall success can teach other smaller papers simply because it is so unique. Just as every magazine wants to be The Economist or Vanity Fair, every newspaper likes to think of itself as being similar to the New York Times. But there is only one NYT, and it is everywhere.

In a landmark report on the future of media published in 2012 by Columbia University’s Tow Center for Digital Journalism, entitled “Post-Industrial Journalism: Adapting to the Present,” authors Emily Bell (who chairs the Tow Center), Clay Shirky and C.W. Anderson said they deliberately avoided saying anything about the NYT because any lessons the newspaper might have wouldn’t be applicable to most other papers. As they put it:

“A remarkable amount of what has been written about the fortunes of American journalism over the past decade has centered on the question of what will happen to the Times. We believe this focus has been distracting…Any sentence that begins ‘Let’s take the New York Times as an example…’ is thus liable to explain or describe little about the rest of the landscape.”

As I’ve argued before, the media industry in general — and particularly the newspaper market — is starting to look like a barbell: If you are large and have a powerful brand name and global scale, the way that publishers like the New York Times and The Guardian do, you will probably be fine, eventually. And if you are a tiny, focused publisher who commands a topic niche or a geographical niche, you can probably also do well. Between those two lies the valley of death.

The other important factor to note when it comes to the NYT’s million-subscriber milestone is that those subscribers generate an order of magnitude less revenue than the paper’s traditional print subscribers do, either in terms of subscription fees or advertising.

Media analyst Ken Doctor points out that digital subscribers to the New York Times probably directly account for revenue of about $185 million, which is almost enough to pay for the costs of the newsroom. But the NYT is much more than a newsroom — it has annual operating costs of about $1.4 billion. And the amount of revenue it gets from digital subscriptions and digital ads is dwarfed by the amount it gets from print circulation and print advertising.

The gap between those two things is the hard part. It’s not that getting a million people to pay for the newspaper isn’t remarkable, it’s that even one of the most successful paywalls in the history of print media is still barely making up for the decline in print advertising revenue.

Newspaper advertising revenue

In the latest quarter, revenue from print ads fell by another 13% over the previous year, which means at the end of the year the NYT will have about $75 million less in revenue than it would otherwise. Even if the digital subscriber base continues to grow by 33,000 per quarter — as it did in the most recent quarter — the company will still be under water when it comes to revenues. Paywalls are more like a wall of sandbags than anything else, and the wall is still leaking.

Finding new sources of revenue, meanwhile, has proven even harder. The Times released a news aggregation app called NYT Now, and it was fairly well received, but not that many seemed to want to pay. The company eventually made it free, and recently said that the app only managed to attract 20,000 paying users, or about 10 times less than it was hoping for. All of that helps explain why the Times is willing to experiment with new ventures like Facebook’s Instant Articles, despite the risks.

In other words, the bottom line (in more ways than one) is that the New York Times‘ paywall has proven to be much more successful than anyone anticipated — possibly the most successful paywall model in newspaper history. At the same time, it can’t really teach other media companies anything they don’t already know about survival. It isn’t even the solution to the New York Times‘ long-term problems, let alone anyone else’s.