NYT’s new digital apps and subscriptions are off to a bumpy start

On the surface, the New York Times Co. had a very positive headline number as part of its second quarter earnings report today — a 32,000 digital circulation increase, driven by three newly introduced digital services.

But in a subsequent conference call with analysts, executives were quick to concede that the launch of NYT Now, NYT Opinion and Times Premier has been anything but smooth.

Several months in, the Times is still trying to get offers, terms and audience targeting right, especially with the NYT Now app aimed at smartphone users, said Denise Warren, who directs digital products for the company. As result, the company fell short of its initial goals for new subscribers and revenues. NYT Opinion is also a smartphone app with a separate subscription tier.

Times Premier offers extra helpings of content, seemingly aimed at upselling to existing subscribers. It includes several features — including Times Insider reports on stories behind the journalism — that have been marketing separately. And a cooking app is coming soon.

CEO Mark Thompson acknowledged these multiple options have “left some customers confused.” NYT Now is meant to reach younger non-subscribers and has, Thompson said, but there also has been some cannibalization of more expensive full digital and print subscriptions.

RELATED: Are you paying too much for the NYT?

Near the end of the call, Thompson declined to directly answer an analyst’s question, “what’s a good time period to (expect you) to get the kinks out?” But he did offer a contrast to the Times’s highly successful rollout of the its digital paywall and subscription plan in spring 2011.

There the object was to convert existing customers who had been reading the Times online free to paying status, he said. Expanding to new offerings and targeting new customers is much tougher, he continued. “We’re on our own, doing things no one else in our industry has tried.”

The rollout difficulties were not the only bad news for the quarter, Thompson and Warren said.

  • Print circulation was off markedly, down 5.5 percent daily and 3.7 percent Sunday compared to the same period a year ago.
  • Digital ad revenues grew but not nearly enough to offset a nearly 7 percent decline in print advertising.  Print ads, which had performed strongly for the Times in the first quarter, also look soft for the balance of the year.
  • Core digital circulation growth slowed, falling below target.
  • The simultaneous introduction of the new products also caused expenses to rise, though the company expects to keep them flat in the third and fourth quarters.

The sum of these problems was a worse-than expected 21 percent dip in profits compared to the second period of 2013. As a result, New York Times Co. stock was down more than 8 percent when the markets closed at 4.

None of this, Thompson said in the earnings press release, causes the Times to question that “long-term digital revenue growth” is essential to the company’s future and that new products along with international expansion is the way to get there.

But that path does involve trading the higher ad and circulation revenues of print for less lucrative digital equivalents. Difficult quarters like this one probably come with the territory.

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