1. On Digital Distribution’s Failure to Solve Newspaper’s Existential Crisis: Symptoms, Causes, Consequences and Remedies Neil Thurman Robert Picard Iris Chyi Merja Myllylahti Arne Krumsvik

2. Does digital bring home the bacon?
Dr Merja Myllylahti
@MyllyMe
AUT
ICA, San Diego
May 27, 2017

3. ‘Digital-first’ rhetoric versus the reality
News publishers frequently report ‘strong’ and ‘aggressive’ increases in their digital revenue, but one should we mindful about the ‘digital-first’ rhetoric.
I suggest that in terms of their revenue, newspapers may not be as digital as some of their claims suggest.
I argue that some of the statements about news publishers’ digital transformation sound a bit like a myth, “a captivating fiction, a promise unfulfilled and perhaps unfulfillable” (Mosco, 2004: 22).

4. Main interest in digital transformation
My research investigates print and digital revenues of The New York Times Co. (US) and Fairfax Media (Australia).
It explores The NYT Co. figures from 2012 to 2016 as there is comparable digital revenue data from that period, and Fairfax Media figures from 2011 to 2016 for the same reason.
In general, detailed information about news publishers digital revenues is difficult to obtain, and these two companies are some of the most advanced in their digital disclosure.

5. Case study 1: The New York Times Co
Main publications: The New York Times and The New York Times International
1Q 2017: Revenue US$399 million, profit: US$29 million
Paid digital-only subs: 2,201,000 (includes crossword product)
Weekday print circulation 571,500

6. What The NYT Co. says about digital revenue
When releasing Q results, Mark Thompson, CEO of The New York Times Co said: “These results show the current strength and future potential of our digital strategy not just to reach a large audience, but also to deliver substantial revenue.” He also said that the company’s digital growth was “unprecedented.” Additionally, the company’s Journalism That Stands Apart report stated that the company’s digital revenue “towers above that of any news competitor.”

7. The NYT: Print and other revenue 2012-2016

8. The NYT: Digital revenue from 2012 to 2016

9. The NYT: Total revenue versus digital growth

10. The NYT Co revenues in
As the graphs show, the digital revenue of the NYT Co grew 32.4%, and print earnings declined 11.5%
They also show that:
Digital revenue of total was 27.8% (2016)
Print (and other) 72.2% of total (2016)
The figures clearly demonstrates that the NYT Co. is still print reliant in terms of its revenue

11. Case study 2: Fairfax Media
Based in Australia
Main publications: The Sydney Morning Herald, The Age, Australian Financial Review
Revenue 1H 2017: US$621 million, profit: $US58 million
Digital-only subs: 226,000
Print circulation 228,667

12. What Fairfax says about its digital revenue
In 2016 Annual Report, CEO Greg Hywood said:
“Fairfax’s earnings are increasingly digitally derived, with 42% of earnings from digital and non-print sources in the financial year.”
“Digital and non-print earnings are growing and powering Fairfax’s future sustainable business model. Fairfax is now a modern media business. We are achieving what some said could not be done.”

13. Fairfax Media: Print and other revenue 2011 to 2016

14. Fairfax Media: Digital revenue 2011 to 2016

15. Fairfax Media: Total revenue versus digital growth

16. Fairfax Media revenues 2011-2016
As the graphs show, the digital revenue was up 69%, and print subscriptions were down 31.5%
They also show that:
Digital revenue of total was 21.4% (2016)
Print (and other) of total 78.6% (2016)
Yet again, the data demonstrates that Fairfax Media is still dependent of its print revenue

17. Different strategies …
The main revenue strategy of the NYT Co. is to grow its digital-only subscriptions. It puts little emphasis on digital advertising income.
The main strategy of Fairfax Media is to grow revenue from its digital property listing service Domain, and its focus is on digital advertising.
At the moment Fairfax Media is in a middle of bidding war as two American private equity funds have made bids to buy the company – because of Domain.

18. … and somewhat different outcomes
The New York Times Co. has invested, and continues to invest, in its newsrooms (even when implementing cost cutting measures). For example, the publisher has expanded internationally and its journalists are filing stories from over 150 countries (The New York Times 2017).
In contrast, Fairfax Media has been heavily cutting newsroom jobs, and its focus has been on shareholder value, not in journalism. At the moment, Fairfax Media is cutting 25 percent of its newsroom staff from its Australian flagship papers to save $A30 million.

19. Comparing to some others
Finally, it is useful to put the NYT Co. and Fairfax Media figures in context.
When comparing their digital revenue to the most advanced companies such as Schibsted and Axel Springer, their digital revenue is clearly lacking behind.
The digital revenue of Schibsted and Axel Springer is around 70 percent of their total revenue.
The two companies have diversified their holdings to classified advertising and listing businesses, and in case of Axel Springer to non-news digital businesses such as AirBnB.

20. To conclude
This presentation demonstrates that digital ‘doesn’t bring the bacon’ – yet. Or it only brings a tiny sliver of it.
In 2017, The NYT report Journalism That Stands Apart admitted that “for all the progress we have made, we still have not built a digital business large enough on its own to support a newsroom that can fulfill our ambitions” (The New York Times, 2017).
I fully agree with that statement.
In 2017, Fairfax Media reversed it earlier strategy and announced that it will continue to publish print newspapers for “some years yet.”
I think it is a smart move.

21. Some articles about digital revenue:
Myllylahti, M. (2014). “Newspaper paywalls – hype and the reality. A study of how paid news content impacts on media corporation revenues.” Digital Journalism. 2(2):
Myllylahti, M. (2017). “Newspaper paywalls and corporate revenues: A comparative study.” In Franklin, B. and Eldridge II, S. (eds). The Routledge Companion to Digital Journalism Studies. Oxon: Routledge: