Peter Kafka

Recent Posts by Peter Kafka

A Ray of Light for the New York Times

It’s easy to write dour predictions about the state of the newspaper industry. So here’s a relatively sunny one: One day, not that far away, the New York Times’ growing subscriber base will make up for its shrinking ad business.

That will happen in the middle of 2014, says Barclays analyst Kannan Venkateshwar, when circulation growth at the paper will start offsetting the decline in the Times’ ad sales. Here’s what that looks like in chart form:

True, one reason that circ growth will lap ad losses is that the losses will be slowing after much steeper declines. Still, the best-case scenario for most old-line media businesses is that digital sales increase faster than physical sales drop, and that’s essentially what Venkateshwar says is happening here. A year after the Times introduced its pay wall, it now has 450,000 digital subscribers — a number that impresses lots of industry skeptics.

Earlier this spring, when the Times said it was making it harder to read the paper online without paying for it, by dropping its free article limit from 20 per month to 10 per month, I wondered if the Times had made the move out of necessity — because it needed to boost its digital sales — or optimism — because it was confident it could boost its sales with a taller pay wall.

But after some thought, and bouncing the idea off a few industry folks, I’ve come to the conclusion that it’s both. The Times would sure like to accelerate Venkateshwar’s timeline, and that’s probably not going to happen by fixing its ad problem. Meanwhile, the paper seems relatively confident that raising the pay wall equals marketing the pay wall. And the nice thing about the system the paper has built is that if it doesn’t work, it can fiddle with the controls some more.

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