If there was a bright spot in the latest quarterly results from the New York Times, it’s the fact that the newspaper’s metered paywall has attracted almost 325,000 subscribers willing to pay a monthly fee for the site. Despite all the celebrating from the pro-paywall camp, however, that bright spot was more than overshadowed by the other dark clouds in the numbers — including the fact that print advertising revenue continues to decline, and the paper’s former online jewel About.com got whacked by Google’s algorithm updates. Anyone who takes on the job of CEO at the media company is going to have to start thinking creatively about its business, because all the easy money has already been made.

Although the paywall and related print-subscription deals helped boost circulation revenue by almost 5 percent in the NYT’s media group — which includes the New York Times, the Boston Globe and the International Herald Tribune — and digital advertising revenue was also up by about 5 percent for the quarter, neither of those things were able to compensate for the continued drop-off in print advertising. Print ad revenue fell by almost 8 percent, which helped push the NYT’s fourth-quarter profit down by more than 12 percent, and for the full year the company reported a loss of million.

Paywall revenue isn’t even close to making up the gap

The New York Times didn’t provide any helpful charts that would make the reality of this situation more obvious, so one blogger decided to come up with his own. Paul McMorrow, an editor at CommonWealth magazine, put together a chart that shows the contrast between the NYT’s advertising revenue, circulation revenue and its total revenue:

According to newspaper-industry analyst Ken Doctor, the NYT is probably pulling in about million or so from its digital paywall — or “metered access,” as the paper likes to call it, since you get to read 20 articles for free before you get hit with a request for your credit card. But that’s not even close to being enough to make up for the decline in ad revenue, both print and digital, which dropped by 7 percent in the quarter.

One of the biggest problems for the Times is that its former online star About.com, which the company bought in 2005 for 0 million, has seen both its profitability and revenue-generating ability implode in the wake of an update to Google’s search algorithm — a change that was designed to penalize what the company called “low quality” content sites, or what some call “content farms.” In the most recent quarter, the NYT said About’s revenue fell by 26 percent, and profit fell by a staggering 67 percent.

As McMorrow’s chart shows, the Times is still far under water in terms of revenue, despite the benefit of its paywall. As I’ve argued before, there’s nothing wrong with having a paywall — although in many cases it amounts to building a wall of sandbags around the print newspaper edition, which provides most of the ad revenue — but if a paywall is your only strategy for responding to digital disruption of the media business, then you are almost certainly doomed, whether you are the New York Times or not.

Which way will the new CEO go — towards the past or the future?

So what should a new CEO be looking at to revitalize the NYT for a digital age? Ken Doctor suggests that the paper needs to look beyond just subcription revenue and focus on how it can target those 325,000 digital subscribers — since it knows who they are and where they live, and it already has their credit-card numbers.

I would take it one step further, however, and suggest that the new CEO think about some of the suggestions about “reverse paywalls” that have been made by journalism professor Jeff Jarvis, and also by former Washington Post managing editor Raju Narisetti (who is now at the Wall Street Journal in a digital role). The main principle behind this idea is that regular readers should get more than just a sales rep hitting them up for a monthly payment — the fact that they are a devoted fan should entitle them to earn rewards, whether it’s money off their subscription for interacting with the paper, or offers that others don’t get.

The NYT has taken a few steps towards trying to build relationships with its readers through what I’ve called the “levelling up” process that it recently added to its comment section, where readers can achieve preferred status for good behavior. Those are the building blocks of a relationship that the paper could use to its own benefit in all kinds of ways, many of which could generate new sources of revenue — real-life events, for example, which has been one of the things that has helped turn The Atlantic around, or a line of e-books based on the newspaper’s original reporting.

Another thing the NYT could — and should — be thinking about is what the role of an information provider is in the digital age. Is it to act as a gatekeeper for certain kinds of data and try to reimpose the scarcity that used to exist in the print era? Or is it to find partners to distribute that information in as many ways as possible, and to think of the paper as a data platform, as The Guardian has with its open-platform project? One way looks to the past, and the other to the future. Which way will the NYT go?

Post and thumbnail photos courtesy of Flickr users jphilipg and Giuseppe Bognanni

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As most media watchers know by now, the industry is going through an unprecedented upheaval, with newspapers in particular being disrupted by the shift to digital and what Om has called the “democracy of distribution” created by real-time social tools like blogs and Twitter, which make anyone into a publisher.

So while news used to be a tightly-controlled product from a few mainstream sources, there is now an explosion of content from virtually everywhere — some of it good and much of it not so good. At Google’s recent Zeitgeist symposium, legendary TV newsman Ted Koppel suggested that it is somehow Google’s duty to fix this problem, and CEO Larry Page seemed to agree. But relying on Google to choose what news we should read is a very slippery slope.

According to a report in the New York Times, the topic came up when Koppel — a former long-time anchorman for ABC News — said that too much of what passes for news nowadays is trivial and sensationalistic, with networks and media outlets spending all their time covering things like the Casey Anthony trial instead of more important topics such as war in the Middle East or famine in Africa. The NYT report paraphrases Koppel as saying that people are being “fed the news they want instead of the news they need because that makes news organizations money.”

Asked by New Yorker editor Nicholas Thompson whether Google should tweak its algorithms to focus on important news instead of the trivial, Koppel apparently said “that wouldn’t be a bad idea.” Later, Page said (although not in direct response to Koppel’s suggestion) that he thinks Google should filter and present the news so that people focus on “the real issues.”

I see this as our responsibility to some extent, trying to improve media… we have a responsibility to make those things work a lot better and get people focused on what are the real issues, what should you be thinking about. And I think we as a whole are not doing a good job of that at all.

Do we need Google to tell us what to read?

As the NYT points out, Google already edits its search results — both news-related and otherwise — for all sorts of reasons: it removes sources that it believes are scraping content, for example, or that are not producing “journalism” broadly speaking, such as a site that posted rewritten press releases from the California water authority. And it undoubtedly chooses to favor certain popular sources of content (including the New York Times, in all likelihood) over others. As Reuters digital editor Anthony De Rosa noted in a tweet, almost all algorithms are to some extent human filters that make choices to include or exclude certain things. And Google has added ways for media outlets to help filter — such as the “author” tag and the new “standout” tag for breaking or important news.

That said, however, do we really need Google (or Ted Koppel, for that matter) to tell us what is important, or what we “need” to know? That would just be exchanging one information gatekeeper for another — and one that would be using criteria that are a mystery to users, just as Google’s search algorithms are a mystery. Does my clicking +1 on a search result matter more because I have a Google+ account with lots of followers? I have no idea, nor will Google probably ever tell me. How exactly is Google going to determine what news topics or stories are ones that I “should” read?

One of the main benefits of the web from a news standpoint is the fact that the number of sources have expanded by orders of magnitude. Are there too many outlets obsessing over Casey Anthony, or the Kardashians, or the size and shape of a specific phone that may or may not be coming from Apple? Sure. But getting Google to hide some of them and promote others doesn’t seem like a great solution.

Getting Google to choose topics and/or sources that are “important” suffers from the same problem that licensing journalists does. That’s an idea that Britain’s Labour Party and some other jurisdictions have proposed, and one that some professional journalists have supported in a short-sighted response to hacking allegations against News Corp. (and an attempt to build a wall around their jobs). Who is going to choose the criteria such licenses are based on? And what about those who don’t get a license? They would wind up being silenced or relegated to some kind of journalistic ghetto, presumably.

Journalism gets better the more people there are doing it

I’m a firm believer in journalism professor Jay Rosen’s argument that journalism gets better when more people are doing it — whether those people have licenses, whether they are committing what NPR’s Andy Carvin calls “random acts of journalism,” and whether they even think of themselves as journalists or not. The rise of blogs and Twitter as tools for publishing news (however you define that term) is fundamentally a good thing. And we get to create our own filters now, instead of someone else doing it for us.

As for Koppel’s criticism that people are fed the news they want and not the news they need, this complaint is as old as the industry itself. There have been many periods when newspapers and other dominant media outlets tended towards the sensationalistic, with little regard for things like the truth, or what was allegedly important about the world. Newspaper mogul William Randolph Hearst, for example, was famous for this kind of coverage. His practice led to the coining of the term “yellow journalism.” Hearst was also famous for telling a reporter covering the Spanish-American war: “you provide the pictures, I’ll provide the war.”

There will be times when people want to read sensationalistic stories about trivial episodes involving Hollywood celebrities, just as there are times when people want to watch movies or TV shows filled with vapid blather and sophomoric writing. Does that mean we need Google to control which shows we watch or what movies we enjoy? Hardly. So why would we want a search engine to filter the news for us? Yes, the news is more important than TV or movies — which is all the more reason why we should be careful about who is telling us what to read.

Post and thumbnail photos courtesy of Flickr users George Kelly and Yan Arief Purwanto

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