Analyst: NY Times will close gap between ad revenue losses, circulation gains by 2014

All Things Digital | News & Tech | The New York Times | Poynter
Circulation revenue at The New York Times will rise as ad losses decline, says analyst Kannan Venkateshwar of Barclays Capital. The gap between the two measures will flatten by mid-2014, Venkateshwar predicts. Peter Kafka, who reports Venkatheshwar’s outlook on The Times, says that while increasing ad revenue may be out of the paper’s hands, growing circulation revenue is not:

The Times would sure like to accelerate Venkateshwar’s timeline, and that’s probably not going to happen by fixing its ad problem. Meanwhile, the paper seems relatively confident that raising the pay wall equals marketing the pay wall. And the nice thing about the system the paper has built is that if it doesn’t work, it can fiddle with the controls some more.

More papers are moving to paywall systems (here’s a list). Gannett added five papers to its paid plan, News & Tech reported Monday. And The Toronto Globe and Mail has announced it is planning a paywall. Former Globe and Mail columnist Mathew Ingram says paywalls “may be a smart move in order to stem the decline in ad revenue,” but they do “nothing to help a paper adapt to the web and to changing market conditions.” At small and midsize papers, Ingram argues, “A paywall is just as likely to kill them off completely as to save them.”

But The Times tells a different story. On Monday, it profiled The Wave, a community paper in Rockaway, Queens, that has had a paywall in place since 2003: “If you don’t do it, what you’re saying is your news doesn’t have value. You shouldn’t diminish your news value by giving it out for free,” Sanford Bernstein, the paper’s general manager, told Christopher Reeve.

Last August Poynter’s Rick Edmonds interviewed Gatehouse Media veep Brad Dennison, who told him paywalls monetize reader loyalty. Those regular customers, “constitute about 60 to 65 percent of those accepting the offer to pay for more access, Dennison said.” A metered model such as the one in place at The Times tries to monetize regular customers, not every person who visits a paper’s website, perhaps as a result of a shared link. The drop in traffic that accompanies a paywall, Edmonds wrote, might in fact be a draw to advertisers who want to reach loyal readers.

On Friday, The New York Times Company announced the sale of its remaining share of the Fenway Sports Group (and the Boston Red Sox) for $63 million. On May 1, the paper reported a 73 percent rise in circulation over last year, a rise largely due to a rule change at the Audit Bureau of Circulations that allows newspapers to count digital subscriptions in addition to print subscriptions. The Times reported 807,026 average daily (Monday-Friday) digital users and 779,731 print copies.

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