The New York Times Tops 8 Million Subscriptions, but Growth Stutters

The New York Times is edging closer to its goal of 10 million subscriptions by 2025, according to its second-quarter earnings call. But while it drew in its lowest quarterly increase in subscriber numbers, there's a silver lining since its overall subscriber revenue is growing. While 8 million subscriptions is an emotional number, it only added 142,000 new digital subscriptions in the three-month period— its lowest since 2018—and nearly half from non-news products like Cooking and Games. For comparison, in the first quarter of this year, it added 301,000 digital subscriptions. The Times noted it expected low growth this quarter, especially compared with the stratospheric peaks in new subscribers in 2020. Despite lower additions, subscription revenues increased 15.7% to $339.2 million, compared with the second quarter of 2020. For a less volatile comparison, subscription revenues increased 25.4% compared with the second quarter of 2019. Condé Nast and Universal Music Group Partner to Combine Their Video Reach “While the news cycle will continue to have significant effects on our subscription growth, we are increasing our control over the levers of our subscription model,” said CEO Meredith Kopit Levien during its earnings call. First-party data drives ad growth Market recovery, plus investment in its first-party data products and its growing suite of audio products, led to better-than-expected digital ad growth. But, Times' execs note, it’s operating in a volatile world ruled by tech platforms, so expectations are measured. Second-quarter 2021 digital advertising revenue increased 79.6% compared with 2020—totaling $71.0 million, or 63% of total advertising revenues—when the digital ad ecosystem was in the doldrums. Looking at the second quarter 2019, digital ad revenue increased 22.4%. Cut-price deals Times' execs noted that growth in subscription revenue came from graduating subscribers coming in via promos to the full price, as well as investment in tech and talent. For the last three years, The Times has aggressively shipped its $1 for a week subscription over a year. The fact it’s still running this deal is a testament to it working, Levien said. Over the course of this year, it expects more than a million and a half subscribers will transition to higher prices from the $1 dollar a week deal, and another 500,000 will receive some price increase on their subscription. Bundles beat one-offs While news is—only just—still the main driver for audience engagement, non-news products Cooking and Games are nearing one million subscribers each. The three together make an enticing cocktail. Through tests, The Times found people subscribing to its All-Access Bundle, featuring News, Games and Cooking retain better than those subscribing to just one product. This forms the basis for its plans to migrate its affiliate service Wirecutter into a paid product in order to widen the appeal to readers. Covid-cohort churn holds steady Earlier this year, The Times noted an increase in churn rates since Covid cohorts weren’t retaining at the same rate as previous subscribers. This quarter, that level has held steady while international churn has slightly ticked up due to even cheaper prices for its products outside of non-core international markets (outside of Canada, the U.K. and Australia) and people churning out when hit with full price hikes. Nonetheless, The Times is confident its churn rates are healthy thanks to continued investment in its tech, product and testing. The route to 10 million In terms of the third quarter revenues, The Times paints a rosy picture. It expects digital subscription revenue to increase between 25% and 30%, while it expects digital ad revenue to increase between 40% and 45%. And with close to a billion dollars on the balance sheet, more strategic acquisitions are on the table. The publisher has spotlighted 100 million English language speaker readers that will pay for news, and has over 100 million registered users that it hopes to draw into paying readers. For now, subscriber acquisition marketing costs are low. “The overwhelming majority of starts, across the board, come in organically,” from its product engine rather than paid marketing, Levien said. As such, as it continues to move the needle on conversion rates and invest in acquisition, it has the runway to reach 10 million.