Digital

Digital businesses include NYTimes.com, BostonGlobe.com, Boston.com, About.com, other Company Web sites and related digital products. In the third quarter of 2011, total digital advertising revenues decreased 4.5 percent to $74.8 million from $78.3 million. Digital advertising revenues at the News Media Group increased 6.2 percent to $50.3 million from $47.4 million due to growth in retail and national display advertising. Digital advertising revenues as a percentage of total Company advertising revenues were 28.6 percent for the third quarter of 2011 compared with 27.3 percent in the third quarter of 2010.

In the first nine months of 2011, the Company’s total digital advertising revenues increased 0.9 percent to $242.9 million from $240.7 million. Digital advertising revenues at the News Media Group increased 12.2 percent to $162.4 million from $144.7 million. Digital advertising revenues as a percentage of total Company advertising revenues were 28.2 percent for the first nine months of 2011 compared with 26.3 percent in the first nine months of 2010.

Paid digital subscribers to The Times digital subscription packages, e-readers and replica editions totaled approximately 324,000 as of the end of the third quarter of 2011. In addition to these paid digital subscribers, as of the end of the third quarter of 2011, The Times had more than 100,000 highly engaged users sponsored by Ford Motor Company’s luxury brand, Lincoln, who have free access to NYTimes.com and smartphone apps until the end of the year, and approximately 800,000 home-delivery subscribers with linked digital accounts, who receive free digital access. In total, The Times had paid and sponsored relationships with over 1.2 million digital users as of the end of the third quarter of 2011.

Source: The New York Times Company

My interpretation

• In the last quarter, there were 1.2 million registered users, of whom 324,000 paid something, and 100,000 were paid for by Ford (a great subscription model as long as there are no catches for either party) and 800,000 were covered by their print subscription. In other words, they have a churn of about 25%.
• The site has 45 million unique visitors per month as of January 2011 – it’s interesting that they use comScore to quote that 45 million. ComScore use an estimated data model, as opposed to NYT using their own actual data.
• Anyway, 45 million unique users and 324,000 have paid something – that’s a conversion rate of less than one percent, however paid for content is still very much in its infancy.
• Those 45 million users probably don’t include Smartphone users or e-readers (hats off to ComScore if that can get that data, however I suspect they can’t).
• Doing some extremely rough sums, subscriptions are 99 cents for the first 4 weeks and then $3.75 per week thereafter. Let’s ignore the special offer price and let’s assume Ford pay a full $3.75 per user. Ignoring the print subscribers who get the digital edition for free, that’s a total revenue of $1.59 million per week. Let’s assume NYT earned this revenue throughout the entire quarter (12 weeks), that’s a total of $19 million for the quarter.
• Digital advertising across the group (and this includes a number of other websites and newspapers) generated $74.8 million.

Lessons to take away from this quarterly statement

• The premium digital content model still has a way to go – advertising still generated four times the revenue as subscribers.
• ‘Wholesale’ or ‘sponsored’ user bases are key drivers for the number of paid for subscribers – Ford pay for 100,000 users and NYT have 324,000 paying individual subscribers. Think of the effort that goes into the Ford deal compared to the direct to consumer sales effort.