Old Media, New Tricks

Can The New York Times' R&D Lab tech-heads help save the battered news brand?

"You’ll notice we’ve got lots of electronics around—most of which we’ve taken apart,” says New York Times R&D Lab creative technologist Alexis Lloyd, casually sidestepping two turquoise exercise balls. Walking toward Lloyd’s desk, where she’s working on an indecipherable screen of code, she explains that some of her co-workers have swapped their chairs for the rubber spheres to prevent back pain during protracted coding sessions. Atop the rows of desks, two disassembled mice sit next to a broken Kindle and a tangle of wires and batteries. Workbenches and soldering irons coexist with flat-screen monitors.

From the moment you step off the elevator onto the 28th floor of the Times Building, with its panoramic views of midtown Manhattan, it is clear this is not your father’s New York Times.

With the newsroom housed 24 floors below, the seven-year-old R&D Lab acts as a tech startup of sorts inside the New York Times Co., home of the 161-year-old, self-styled newspaper of record. With 20 staffers, the lab’s mix of crazy smart technologists, programmers, designers and business brains are charged with the Sisyphean task of developing tech innovations and new business models to help the struggling Times weather an uncertain future following five consecutive years of falling revenue and net losses totaling more than $300 million over seven years.

Across the floor on a neighboring wall hangs a modest looking white-rimmed mirror that, upon recognizing a familiar face, begins to spew personalized Times headlines. When technologist Brian House peers into the glass, rich text and photos scroll across a backlit surface. “If you find something you like, just touch your phone to it and you can take it with you on your commute,” says House, who then does just that. A celebratory robotic noise confirms that the article now lives on an app on House’s cellphone. The demo is well rehearsed, and damn cool.

Dubbed Reveal, the mirror is an example of the lab’s future-casting prototypes. Lately, however, the lab’s focus appears to have shifted from futuristic installations to more practical programs geared toward licensing and monetization. But with only two marketable products in the pilot-testing phase, can the R&D Lab innovate at the same breakneck speed as the same digital startups that threaten its existence?

Then there’s the question of funding. The financial burden of R&D is documented in the Times Co.’s 2011 annual report, which notes that the company “may be limited in our ability to invest funds and resources in digital products.” Those concerns are not lost on Michael Zimbalist, vp, research and development operations. “I don’t think there is anyone working in the media business right now that doesn’t feel pressure,” he says. “The landscape is so volatile.”

Ad revenue for the company is down for the seventh consecutive quarter, declining 7.1 percent year-to-date to $618.1 million versus last year. This, on a 6.1 percent decline for all of 2011 to $1.2 billion. Of course, the Times is hardly alone. Its slide is nearly on par with a 7.3 percent decline in ad revenue for newspapers overall last year. This year looks equally grim for publishers’ broadsheets, with newspaper ad revenue projected at its lowest inflation-adjusted level since the Newspaper Association of America, the industry trade group, started collecting data in 1950.

It’s been a rocky few years for the Gray Lady. And yet, the Times’ paywall proved to be a success in 2011, its first full year of adoption. Having secured more than 592,000 digital subscribers, the Times Co. has moved far beyond its low point in 2009, when it was forced to turn to Mexican billionaire Carlos Slim for a $250 million bailout.

The Times’ innovations—and potential meal tickets—include projects with names like Cascade and Ricochet, bundled in pilot programs with deep roots in social media.

Cascade’s draw is stunningly beautiful, real-time Twitter visualizations. Displayed on multiple monitors covering the walls of the hallway leading to the lab, it comes off somewhat as a digital map of a solar system, with social interactions dotting the screen like stars. Times reporters and inaugural clients like software giant SAP have used Cascade to demonstrate how a story travels virally across social channels. Tweets can be tracked to see which language and posting frequency works best, and who is paying attention.

But it is Ricochet that appears to hold the greatest marketing potential. The program allows brands to buy ad space around articles relevant to their messages that can be then distributed via a unique URL. The highly targeted program could potentially revolutionize now-imprecise ad exchange audience targeting.

For years, new-media pioneers have argued that legacy media players like the Times Co. would do well to take a page out of the startup playbook. In 2011, blogger and entrepreneur Anil Dash generated buzz after urging old media to “hack their organizations.” Traditional media companies could thrive, Dash suggested, “by redefining a market that exists at the intersection of media and technology.”

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