The New York Times now gets more revenues from subscriptions than advertising

According to New York Magazine, subscription revenue exceeded advertising revenue for the second quarter in a row at the New York Times Company. In Q2, print and digital advertising revenues from its newspapers declined 6.6% year-over-year to $220 million, but subscription revenue was up 8.3% to $233 million. This represents a dramatic shift for the Times Company, and for newspaper publishers in general, which have gotten the majority of their revenue from advertising for many decades.

Revenue from print advertising has been declining since the 2008 financial crisis, and the growth of online advertising revenues has stalled. On the other hand, the Times' aggressive program to increase digital subscribers has been successful--digital subscribers for all its newspapers increased from 454,000 in Q1 to 509,000 in Q2. The company also increased the price of its morning print newspaper, but it didn't have much impact on sales.

As Ken Doctor of Newsonomics told New York Magazine, "The future looks like it's going to be a majority reader revenue. What we don't know is at what level. And that's huge, because it tells us how big of a newsroom they can support."

Going, going...

If you're a newspaper publisher, the Newspaper Association of America issued some pretty horrifying news today. Total newspaper advertising revenues dropped $3 billion year-to-year in the first six months of 2008, to $18.8 billion dollars, and online newspaper ad revenues dropped for the first time. Alan Mutter, who writes the Reflections of a Newsosaur blog, plotted the decline for his readers:

 

In non-adjusted dollars. these are the worst results in 16 years, but Tim Windsor restated the results in constant 2008 dollars, and determined that these were the worst results since 1982. Here's Tim chart:

Using inflation-adjusted numbers, ad revenues are actually lower than they were in 1982. In addition, according to the NAA, national daily circulation has been falling steadily since 1988, and Sunday circulation has been falling since 1990.

We're in a recession, so that's magnifying the revenue fall-off, but it's very clear that a lot of newspapers are either reaching or have passed the tipping point at which they don't have the resources to attract and keep readers. With less advertising, the news hole either gets bigger or the newspaper gets smaller. If you can't afford to pay enough writers and editors to fill the news hole, the only option is to make the newspaper smaller. At some point, the newspaper goes away.

Broadcasters should take no solace from these numbers. The audience for news shows has been dropping for years, and the average age of the audience watching the national nightly news is over 60. CNN, Fox and MSNBC aren't enlarging the news audience, they're simply trading it among themselves.

Years ago, Ted Levitt, a marketing professor at the Harvard School of Business, asked the rhetorical question "What business are you in?" Newspaper publishers aren't in the newspaper business, they're in the information business. They've got to figure out profitable ways to get their information to customers. For a lot of publishers, that's not going to involve a printing press for much longer.