New York Times digital subscriptions rise despite ad-revenue slip
(Getty Images/Mario Tama)
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The New York Times posted its Q1 2016 earnings on Tuesday. The company's total revenues for the quarter were $379.5 million, down 1.2% from the $384.2 million reported in Q1 2015.
And digital-ad revenues, in particular, decreased by 1% compared to Q1 2015. Despite this slight dip in revenues, The Times boasted strong circulation revenues driven in part by a large uptick in digital-only news subscriptions: 67,000 new customers joined The Times' digital-only subscription, the largest net addition in subscribers since 2012.
The Times' digital-subscription strategy seems to be working. Revenues from The Times' digital-only subscriptions increased 14.2% year-over-year, reaching $54.2 million for the quarter. The publisher now counts approximately 1.35 million subscribers and expects to reach 1.5 million digital-only subscriptions by the year's end.
Paid subscriptions are a highly coveted revenue stream for publishers. They represent a reliable and steady source of revenue that is less exposed to the volatile nature of the ad industry. Further, subscriptions are one way that digital publishers can circumvent the growing threat of ad blockers, which can suffocate ad revenues.
Digital-ad revenue was stagnant, contrary to industry trends. This is somewhat surprising given that advertisers are pouring more funds into digital. Digital-ad revenue across the industry climbed from $49.5 billion in 2014 to $59.6 billion in 2015, according to the Interactive Advertising Bureau's latest internet-advertising revenue report.
The Times' failure to post digital-ad revenue growth makes it all the more important that it continue to develop its subscription business. Nevertheless, The Times is working on developing newer ad formats, including branded content offerings through its in-house creative team, T Brand Studio.
The unit has been one of fastest-growing units of the company's advertising business, according to the The Times' 2015 Annual Report. Spending for branded content advertising is expected to increase by 20% year-on-year (YoY), reaching $25 billion in 2019, according to Boston Consulting Group estimates.
As noted earlier, dollars are increasingly flowing from traditional ads to digital, as strong growth in mobile, video, and social spending continue to change the face of the US media market.
Over the next five years, marketers will especially embrace mobile. It will drive up spending on video, search, display, and social, and propel the migration of ad dollars away from traditional media, including newspapers and magazines.