The Paper That Survived the Internet
For the entire 20th Century, you’d be hard pressed to find a better business than an American newspaper — Warren Buffett famously described them as “franchises” — and no American newspaper stood taller than the New York Times. Controlled by a single family bound by a legal oath “to maintain the editorial independence and integrity of The New York Times and to continue it as an independent newspaper, entirely fearless, free of ulterior influence and unselfishly devoted to the public welfare”, the Times served as the paper of record for generations of Americans and people around the world.
But no good thing lasts forever, and the dawn of the 21st Century saw both the Times and this once-mighty industry devastated by the dual disruptive forces of the internet and the 2008 financial crisis. And yet by 2021, The Times, essentially alone of its former peers, has reemerged from the American newspaper wreckage and transformed itself into a thriving digital business with an order of magnitude more subscribers than its print heyday. Curious how it all happened? We dive into 170 years of history to find out!
More on the episode
Playbooks
1. When you find yourself sitting in front of a big approaching demand wave... ride it!!
- The New York (Daily) Times was founded during the newspaper boom of the 1850s, and similarly Adolph Ochs took over the local Chattanooga paper at the start of that city’s mining boom.
- The NYT made huge investments in its reporting during the two World Wars as the public’s appetite for news exploded, while its rivals missed the ball worrying over preserving advertising space. Likewise NYT launched The Daily (which would become the biggest podcast in the world) immediately following Trump’s inauguration in early 2017.
- Arguably NYT’s biggest business mistake was missing the cable wave -- which Rupert Murdoch leveraged brilliantly to build Fox News into the most valuable news media franchise in the world.
2. Where there’s an entrepreneurial will, there’s an entrepreneurial way.
Adolph Ochs bought the Chattanooga Times with $250 and sellers’ notes, and then acquired The New York Times out of bankruptcy with no personal money down and $100k of real estate debt. And turned them both into successes on a level no one (even himself at times) believed possible.
3. Recurring Acquired theme: the media business is still the second-best business of all time, behind technology.
Media’s ability to generate dual revenue streams (advertising and subscription) from the same content product generates enormous leverage on investment, AND most of those costs are fixed vs. variable (especially in a digital environment).
4. This is why “content is king” has always been true in the media industry.
NYT’s version of this strategy has always been to invest more in high-quality journalism than any of its peers. It was true in 1896 when Ochs took over, true during the World Wars and the Pentagon Papers, and perhaps has never been more true than today when NYT employs 1,700 journalists around the world and pays them an average of >2x the rest of the industry.
5. That said, distribution is critical as well. To build a world-class media organization you must be great at both content AND distribution.
- In the old media landscape, NYT built great distribution through its printing and delivery operations, as well as savvy investments like the Index which led to libraries and researchers across the country relying on the Times as the “paper of record”.
- However in today’s media landscape, the task of building great distribution falls on the newsroom and journalists themselves. The job is no longer finished once you hit publish -- reporters and editors must own the responsibility of getting their work in front of readers via social media and shareable story elements.
Links
Carve Outs
- Ben: Titan by Ron Chernow and Iteratively
- David: Sabaa Tahir’s Ember in the Ashes series