Newspapers grow their way into profitability

The New York Times is the most cited case of success, Jill Abramson describes in Merchants of Truth the turnaround the newspaper went through. Including the struggle with newcomers such as Buzzfeed, Vice and Facebook. But the NYT came out stronger than ever, with over 6 mio online and 830.000 print susbscribers, by far the largest readership in the USA. And a healthy profit, the last quarter it reported $56,5 mio. By hiring Ben Smith, founding editor of Buzzfeed, it also showed its win over the new boys on the block. No better demonstration that the best old skool media brand had become the best new media.

More positive news comes from The Washington Post, the storied newspaper owned by Amazon founder Jeff Bezos. At Amazon Bezos applies the flywheel model to make his company profitable. (Brian Dumaine describes this model in his book Bezonomics).  The use of new digital technologies like AI is part of keeping the flywheel spinning. He must have applied this to the Washington Post as well given the newspaper had become profitable in 2016, only three years after he had bought it for $250 million.

The Post recently announced it will hire more than 150 people in its newsroom next year. The additions will boost its head count to a record high of more than 1,000, according to an internal memo from Fred Ryan, publisher-CEO of the newspaper.

His announcement of the hiring plan may indicate  the newspaper is moving the flywheel of growing subscription revenue that supports spending on reporting and original content. Because the company is privately held, it's hard to tell how profitable it is, and whether its revenue is growing.

If other newspapers are any indication, WaPo likely has seen steep declines in print advertising, partly offset by digital ad growth. Ryan said the newspaper has more than 3 million subscribers, which might have than tripled since 2016.

About this change Ryan says: “We’ve grown our way into profitability instead of shrinking our way into profitability,” he said, describing how the newspaper had reversed years of job cuts by adding reporters and expanding its technology team. "You can’t shrink your way into relevance."

He also said the newspaper had tightened its paywall to positive effect. Instead of scaring away readers, subscriptions grew.

The hiring of additional staff coincides with the formation of a six-person experimental news team, the Lede Lab,  that will use emerging technologies, new storytelling techniques and creative partnerships to serve the growing audience.

Advertising remains an important source of revenues, albeit declining. Without doubt ad revenues are part of the flywheel. In order to get prepared for the no-cookie era the Post created an advertising sales product based upon contextual advertising: Project Signal. A tool that will help advertisers to find the ideal context to match the advertising.

The New York Times and The Washington Post demonstrate how newspaper brands, using a similar starting point – quality journalism in combination with new technologies - can again become profitable and a strong voice in democracy.

Source: MediaPost, Has 'Washington Post' Reached A Virtuous Cycle Of Growth?