Back in the first half of 2012, when the Financial Times announced that digital subscribers were overtaking print subscriptions for the first time, the media saw it as an unusual exception. In just five years, however, the exception is becoming the new normal. Digital businesses of The New York Times, The Times, and The Guardian have achieved leapfrog development. Technology is changing the original way society operates. The epidemic has accelerated the arrival of the digital era of media.
As Tom Rosenstiel, executive director of the American Press Institute, said: “For most news organizations, the paperless pattern in the future. We have no choice. Go digital, or die.”
Digital Transformation is Irreversible
In recent years, the digital transformation of print media has become a recurring theme in the industry. Take the New York Times, for example, the digital business of print has grown by leaps and bounds, and digital revenues have surpassed those of newspapers. At this pace, it seems only a matter of time before digital media replace paper.
According to Bloomberg’s report, the New York Times’s digital revenue surpass print revenue for the first time in Q2 of 2020, marking a milestone for the 169-year-old newspaper. The Times reported $185.5 million in digital subscriptions and advertising revenue in Q2, compared with $175.4 million in print subscriptions and advertising revenue. In addition, the digital circulation of the New York Times rose 29.6 percent during the quarter, while print circulation fell 6.7 percent. Up until now, The Times has 5.7 million digital subscribers, and the total paying subscribers is about 6.5 million.
According to the report, subscription revenue overtook advertising as the No. 1 revenue source in New York Times’ revenue structure. Total subscription revenue of The Times rose 8.4 percent in Q2 year on year. Digital subscription revenue rose 29.6 percent, which is $146m now. Print subscription revenue fell 6.7 percent, being $147.2m now. Digital advertising revenue bucked the trend, rising to $39.53 million, accounting for 58.3% of its total advertising sales, which is higher than the 48.1% in the same period last year. This means that digital subscriptions are likely to become the new revenue engine for the New York Times by contributing more of its subscription revenue.
Mark Thompson, the chief executive of the New York Times, said a “watershed” had come for the old paper — “I don’t think we can go back.”
In addition to the New York Times, many media in the past two years has been on the road to digital transformation, such as Time magazine, Boston Globe, Daily Telegraph, etc.. The Time’s digital revenue surpassed print revenue for the first time in Q2, prompting the Time’s President Keith Grossman to announce a larger digital subscription promotion in a staff memo in September.
In addition, in 2019, the Boston Globe became the first local paper in the United States to have more digital subscribers than print. In the United States, it is rare for a local newspaper to have a large percentage of digital subscribers, which is partly due to the higher-than-average education and income levels of the Boston Globe’s target audience. By the end of 2019, for the first time in its 164-year history, The Daily Telegraph has more digital paying subscribers than print.
For The Times and The Sunday Times, the number of digital subscribers had surpassed the print edition as early as 2018. The Guardian joined the ranks around the same time, with digital revenues surpassing print for the first time in 2018.
At present, digital media has surpassed print media to become the second-largest advertising media after television. Advertising is estimated to grow 10.7 percent this year, with digital media growing rate at 26 percent, outpacing traditional media such as television, radio, and outdoor advertising, which are growing at 7-8 percent a year.
The Black Swan that changed the course of history
While many industries are speeding up their digital processes, print has long been sluggish. But the epidemic has changed all that.
Black swans are commonly used to describe unpredictable, unusual, and high-impact events. No black swan event is bigger than Novel Coronavirus pneumonia in 2020. As Hamza Mundasir, a visiting scholar of strategy at Cambridge Business School, said, “Black swan events such as recession and pandemic have changed the trajectory of economy, enterprises and the course of history.”
The change of historical process is true likewise of the media industry, according to the FIPP’s president and chief executive James Hewes, “Coronavirus Pneumonia now represents the biggest opportunity and challenge in our industry for 75 years, and we see consumers making rapid changes in accessing to our content. It accelerated the predicted trends by us in so many years.”
The first trend is that the news media’s digital business is growing faster than print. “The crisis is accelerating an already rapid trend in local journalism — the shift to digital and paid business models,” said Tim Franklin, the senior associate dean at Northwestern University’s Medill School of Journalism.
Take the aforementioned Time magazine as an example, its digital revenue grew 58% in Q2 of the 2020 year on year, while U.S. print subscription revenue grew only 6%, according to the Time’s president, Keith Grossman. The New York Times had added a record of 669,000 digital subscribers in Q2.
For the media, the epidemic is either the chance to accelerating change to take off or hinder declining and dying.
Globally, as of 4:24pm CEST, 7 September 2020, there have been 27,032,617 confirmed cases of COVID-19, including 881,464 deaths, reported to WHO.
The second trend is to force the media to innovate and survive. BBC Media Editor Amol Rajan said: “The COVID-19 epidemic is accelerating the pace of innovation, but this spirit of innovation is long overdue and needed to happen in the media. Although the news media industry has been in crisis for 15 years, and during this time it has endured the global financial crisis and the following economic downturn, many media have failed to respond adequately. To some extent, the sooner the media gets on the digital pay road, the better it is for themselves. After all, getting direct revenue from readers is more risk-resistant than taking money from advertisers. For those who fail to adapt in time, it is not too late for change.”
Nancy Lane, chief executive of the Press Association, was similarly quoted as saying: “The crisis has forced the media to implement a plan in three days that might have taken three years originally.”
The third trend is the establishment of new standards. “At the time when the world is moving at a rapid pace, businesses need to follow suit. The media industry needs to create new standards,” said Bosacks, president of the Precision Media Group. “Nowadays, it has become an indisputable fact that people are more accustomed to reading magazines, newspapers, and books on the Internet. Of course, there are a lot of users who like to read paper newspapers and magazines, but as the majority of readers turn to digital products, the cost of paper content will inevitably rise and become more high-quality, which is the leading model for the future development of paper journalism.”
Digitization with no choice
Mark Thompson, chief executive of the New York Times, predicts the end of print in 15 years. “I’m sure The Times will be in print for another 10 years, probably another 15 years – maybe even a little bit longer, but I would be very surprised if it were still in the paper in 20 years.”
Success rate of Digital Transformation, by key factors / From McKinsey&Company
Tim Franklin, senior associate dean of the Medill School of Journalism at Northwestern University, said: “I find it painful that some media are struggling with the death line. Many media have come through this crisis through reform, innovation, and diversion, and they may have a digital future.”
Novel Coronavirus pneumonia has added an accelerant to the media industry and its digitization process is accelerated. “We had no choice,” said Tom Rosenstiel, executive director of the Press Association of America. “Go digital, or die.”