Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

NYTimes Cutting 100 Jobs As Apps And Native Ads Fail To Stem Losses

Posted by Tom Foremski - October 1, 2014

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The New York Times is cutting 100 newsroom jobs to ensure long-term profitability because of disappointing performance of new initiatives such as news apps and native advertising to reverse declining revenues.

Jeremy Bar at Capital New York reported:

The New York Times will reduce its newsroom head count by 100 through a combination of buy-outs and, if not enough staffers volunteer, layoffs, according to a memo sent to staff by publisher Arthur Sulzberger Jr. and C.E.O. Mark Thompson.

The company will also cut a few positions from its business side and from its larger editorial operation, the Times' Ravi Somaiya reported.The Times is also ending its NYT Opinion app, which launched in June, due to a lack of consumer interest.

The 100 position reductions will comprise some 7.5 percent of the Times' 1,330-strong newsroom, Somaiya noted.

New York Times to offer newsroom buyouts | Capital New York

 

Foremski's Take: Media disruption continues to bite into newsroom jobs and if the New York Times is having problems stemming declines in revenues through initiatives such as news apps and "native advertising," where brands pay the advertising department to produce stories that look similar to those produced by journalists, then the rest of the newspaper industry is likely facing the same issues.

It's now very clear that native advertising and news apps won't save US newspapers from the continuing disruption to their business from giant competing publishing platforms such as Google, Facebook and thousands of other web sites. They can thrive on low advertising rates but newspapers cannot because their costs of business are far higher: people producing content is more expensive than servers and software.

However, as newspapers clutch at native advertising and news apps to generate lost revenues, they will sabotage their future and accelerate their demise. They lose reader's trust because of native advertising, and scarce resources are depleted in expensive investments in developing apps.

Faith in "apps" as a savior of newspapers, was widely seen in commentary last year, around Amazon's Jeff Bezos and eBay's Pierre Omidyar announcements of their combined half-a-billion dollars in media investments.  These billionaire technologists were expected to come up with innovative apps to reverse the declines in the news business. They didn't come up with anything new and Omidyar has been forced to drastically scale back his plans because of no clear revenue model. [Analysis: No 'Magic App' For Journalism As Omidyar's $250m First Look Venture Takes A Second Look]

Apps won't save newspapers and nor will native advertising, on which the New York Times' management have placed great hopes. 

Joe Pompeo reporting for Capital New York, writes that marketers have been paying the New York Times advertising department as much as $200,000 to create the content for a native ad — this doesn't include the costs of running the ad.

Pompeo reports that, "The most successful campaigns have netted hundreds of thousands of views."

That's a staggeringly poor return for a hugely expensive native ad, which is essentially just one story. Unlike normal ads which can be re-published many times, and the creative can be used across many publications, native ads are designed to be specific to one publication. Ads require multiple views to make an impression, as much as nine to be effective.

Native ads are an unsustainable business model for newspapers. The costs are too high even for top brands and they'll quickly abandon the practice as enthusiasm for the native ad format across the ad sector, is punctured by the reality of high costs and poor returns. But the damage to a newspaper's credibility will be hard to reverse.

In the largest ever study of native ads by Edelman, the world's largest privately held PR firm, with 5,000 readers polled, brands benefited at the expense of the publication. The majority opinion of the newspaper carrying the native ad declined while that of the brand improved.

The New York Times management is selling its hard won readers' trust in its journalists, for a handful of beans — and there's no magic beanstalk with a goose laying golden eggs in this story — just more pain and newsroom cuts.

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Please see:

Desperate Moves: NYTimes Reduces Labeling On Native Ads To Appease Brands -SVW

 Largest Native Advertising Study Finds Benefits For Brands At The Expense Of Publishers -SVW

 

 

 

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