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The New York Times' latest cutbacks: Proof its digital strategy is failing?
The Grey Lady is shedding more newsroom employees, the latest evidence that the paper is still struggling to find its feet in the digital era
 
Traffic rushes past The New York Times headquarters in New York City.
Traffic rushes past The New York Times headquarters in New York City. Ramin Talaie/Getty Images

The New York Times on Monday announced that it would offer buyout packages to 30 newsroom employees, and that layoffs would ensue if the 30 spots were not voluntarily filled. Citing a difficult "economic environment" that has led in recent years to a 60 percent staff reduction on the paper's business side, Executive Editor Jill Abramson said, "There is no getting around the hard news that the size of the newsroom staff must be reduced." 

While the loss of 30 jobs pales in comparison to the ousting of roughly 100 newsroom staffers in 2008, it is the latest evidence that the Times continues to struggle despite putting up a subscriber paywall, which was intended to extract more revenue directly from online readers. The company added an impressive 83,000 digital subscribers in the third quarter, and is on track to have more digital subscribers than print subscribers in the next year or two. But print and digital revenues in the third quarter dropped by 10.9 percent and 2.2 percent, respectively. The problem is that "digital simply generates much less revenue than the print business," says Henry Blodget at Business Insider. "So, as the print business continues to shrink, the newsroom has to shrink."

Would the Times make more money from digital if it dropped its subscriber paywall? This is the question that was batted around endlessly before the Times decided to erect the paywall, and many argue that the Times made the right choice. Competitors that continue to offer their content for free — like The Washington Post and Britain's The Guardian — are on "a glide path to a desiccated newsroom," says Dean Starkman at the Columbia Journalism Review:

Print ads have been falling at a double-digit rate for six years (with a six percent decline in 2010 the exception), which is the industry norm. While much hope was invested — back in what seems like a different era — in the idea that digital ad growth would eventually make up the slack, the reality-based community has now moved on. Digital ad growth has tapered off at disappointingly low levels. 

There is so much competition for digital ads that advertisers can pay newspapers tiny rates that are only getting smaller. That means the Times is stuck between a rock and a hard place: Digital subscription growth is not enough to make up for losses from the print business, and neither is digital ad revenue.

What can the Times do? It could accept its fate as a smaller newspaper. It could bank wishfully on an explosion of digital subscriber growth. It could even sell itself to a profitable news business like Bloomberg. Or it could join Facebook and nearly every other online company in trying to come up with more creative ways to sell advertising to users. To that end, The New York Times should start getting "to know their readers better," says Matthew Ingram at GigaOm, and use that targeted information to charge higher rates.

 

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