NYT considers letting advertisers sponsor news
The beleaguered publisher reportedly may blur the once-immutable line between journalism and revenue raising.
This is a risk that chairman Arthur Sulzberger, whose family controls the publishing company, and his newly appointed CEO Mark Thompson have to take even though it blurs a line between news and advertising that has traditionally been seen as sacrosanct in the news business. In the coming months, the advertising on paper's website, which attracts about 35 million visitors a month, will probably become far less subtle.
It's unclear how aggressive the paper may be in its approach to advertiser-sponsored content. BuzzFeed goes so far as to allow companies such as Zipcar to write "11 annoying city living problems." The piece contained this groan-inducing pitch: "Buying in bulk and transporting appliances is easy with a Zipcar."
The Old Gray Lady has little choice. Although the publisher has made some revenue strides recently, largely thanks to its online paywall, the company is a shell of its former self financially because of its slumping advertising sales, which Bloomberg notes have been nearly halved to $711.8 million last year from $1.27 billion in 2006.
Even online ads, considered an avenue for potential growth, fell 4% in the most recent quarter because the paper remains too dependent on banner advertisements, which to many advertisers are basically a commodity. Times have changed, and The New York Times needs to change with them.
Even with this year's run-up in its stock price, shares of the company are still down 38% over the past five years. It continues to face huge challenges. For years, the paper had propped its flagship up with income from a wide variety of ancillary businesses such as About.com and The Boston Globe, which it has either sold or is in the process of selling. The Times needs to be in a stronger financial position to thrive over the long term.
The riskiness of the move described by Bloomberg, though, cannot be understated. Readers may get turned off if advertising becomes too intrusive. And advertisers won't like it if their sponsorships are not displayed prominently.
A balance can be struck if the process is managed correctly. If things go awry, then the paper's reputation will be tarnished -- and restoring that lost luster will be difficult, if not impossible.
Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
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Equity indices began the day in the red, but wasted no time regaining their flat lines. Small-cap stocks were not as fortunate as the Russell 2000 spent the day in the red.
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