By Dan Kennedy • The press, politics, technology, culture and other passions

Arthur and Janet’s $70 million question

Here’s the latest edition of On the Record, an e-mail circulated to employees of the New York Times Co. by chairman Arthur Sulzberger Jr. and president Janet Robinson. A copy was obtained by Media Nation. Enjoy.

On the Record … From Arthur & Janet

Vol. 3 Our Circulation Strategy

September 14, 2009

To Our Colleagues,

A reader recently wrote, “I feel that the importance of The Times is so great that I would pay $70 million for access to the most important paper in the free world.”

We appreciate the thought but while things are difficult for newspapers, they haven’t reached that point.

As our advertising revenues have declined, we have asked our readers to bear more of the cost of our journalism, as many other newspapers have done with their readers. They have demonstrated a willingness to do so. As a result, in the first half of this year we have seen gains in circulation revenues at The Times, the Globe, the Sarasota Herald-Tribune, the Santa Rosa Press Democrat and some of our other regional newspapers. In this issue of On the Record, we’ll talk about our circulation strategy and how it has improved our financial results.

Let’s start with our underlying premise. We believe that we provide very high-quality news, information and entertainment to our readers. We also believe that our premium quality journalism warrants a premium price. This is why we have experimented in the past with online subscription models. It’s also why we continue to explore ways to derive more revenue from our digital content than we get from the advertising and other secondary revenue streams we have today. We plan to discuss that in a future issue of On the Record.

Today circulation revenues make up a greater percentage of the Company’s revenues than they did in the past. Five years ago, advertising accounted for 67 percent of our total revenues and circulation made up 27 percent. In the second quarter of this year, advertising totaled 54 percent of our revenues and circulation was 39 percent. Circulation revenues have grown to the point that last year they were the highest they have been in our history.

We don’t mean to suggest that there have not been any cancellations or that circulation volume hasn’t declined. It has. But there have been far fewer cancellations from price increases than we expected at both The Times and the Globe. The reader retention rates for The Times and the Globe are enviable — for subscribers of two years or more, the rate is roughly 90 percent for both papers. In fact, The Times has more than 830,000 readers who have subscribed for two years or more, up from 650,000 in 2000.

Some of the volume declines at our newspapers are attributable to our deliberate strategy of focusing on individual readers who pay to get their paper rather than discounted copies, such as those distributed at hotels, conventions and other venues. Advertisers value these individual readers since they are deeply engaged with our newspapers.

Why do readers continue to embrace print? The reason newspapers have endured for more than 400 years is because they work. People understand how newspapers are organized — if a story is above the fold, it’s more important than below the fold. If it appears on the front page, it’s more newsworthy than one inside the paper. Readers enjoy the serendipity of finding something new that they didn’t realize they were interested in but discovered in the pages of their paper. Newspapers are portable. They offer a point in time assessment of the news.

In order to get The Times in the hands of even more readers, we are working with organizations across the country to print and distribute the paper. Most recently we announced a new agreement to print The Times in Nashville, enabling us to expand newsstand and home delivery to readers in the area and to better serve our current readers in Tennessee, northern Alabama, northern Mississippi, eastern Arkansas and western Kentucky. Today The Times is printed at 26 locations across North America.

We expect the print editions of The Times, the Globe and our regional newspapers will be around for years to come. But we are a news company, not a newspaper company. We are committed to offering our consumers our content wherever and whenever they want it and even in ways they may not have envisioned — in print or online — wired or mobile — in text, graphics, audio, video or even live events. Because of our high-quality journalism, we have very powerful and trusted brands that attract educated, affluent and influential audiences. These audiences are a true competitive advantage as we move into an increasingly digital world.

We hope this is helpful in understanding our circulation strategy. If you have any questions on this or other issues, please send us an e-mail at: arthur_and_janet@nytimes.com.

Arthur & Janet

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7 Comments

  1. mike_b1

    And just why didn’t they take the $70 million?

  2. Amused

    Why do “Arthur and Janet” refer to “The” Times, but “the” Globe?

    Both have the word “the” in the banner. Will the locals develop article-envy?

  3. Newshound

    Janet and Arthur are not spirited journalists or newspaper people to the heart and soul.

    They are manipulators and they could use their very same skills with about the same effectiveness if they were managing Rite-Aid instead.

  4. Al

    The $70 million quip sounds more like a negotiation tactic than a fact. About $35 million is what’s been offered, so far, well here’s a counter offer. I don’t believe it.

    As for newspapers having been successful for 400 years, that was the technology of the time. How viable is the town crier field these days. Things change. BTW, I’m a faithful print issue reader and subscriber. Online methods of reading papers don’t fit in my back pocket so I can read them at the coffee shop midway through my daily walk. If that changes, I’m adaptable to new technology.

    Lastly, I’m surprised that the Times has enough readers in TN and its environs to warrant a plant and daily delivery. It sounds like anti NYT territory.

  5. Interesting info about the rise in circulation. Impressive. Also, unexpected. Perhaps there’s some logic in [t]he Times’ thinking?

  6. Jerry

    1. John, there’s no rise in circulation. Just in revenue, because more people continued buying the paper at a higher price than cancelled out because the price went up.
    2. However, logic suggests that, at some point, papers that lose circulation will have to adjust their ad rates because their base readership is down – meaning they are reaching fewer people per dollar. Advertisers are always looking for the best deal.
    3. At the same time, I buy the argument that, at least ’til something better comes along, the print format provides a handy way for readers to sort their preferred wheat from the chaff. This works as long as you still trust the editors’ judgment. And I do.

  7. Whoops. I find it impressive that they went from 650k to 830k subscribers of over two years, and that there’s a 90% retention rate. Also, that they’ve adjusted their revenue streams to depend more on subscribers than revenues.

    Advertisers may be gone and never come back. Subscribers, on the other hand, seem to be steady.

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