The New York Times – Innovating in Times of Transformation on the Google Cloud
The New York Times offers an exemplar case study of a traditional organization reversing declining fortunes through adept digital strategy.
This iNews article tells the compelling story of the digital transformation journey for the New York Times.
It describes how Mark Thompson stood aside as director-general of the BBC to take on the new challenge as the papers president and chief executive.
In the years before Thompson’s arrival, it lost hundreds of millions of dollars in print advertising and had to sell, then lease back, its Manhattan headquarters.
By 2019 the company had grown it’s stock value by over 300% and it’s digital subscriber base to 4.5 million. Thompson bet the shop on digital, carving off the newspaper’s print products and services as a separate division, allowing him to instill a new vision for The Times:
“this new strategy makes The New York Times comparable to a company like Netflix while competing newspapers focus far too much on cutting costs.”
This featured cultural and operational changes. For example previously the newsroom was dead at 7:00am, but Thompson recognized that this was the peak time for smartphone consumption and so he made sure it was in full swing at this time to cater for that market.
Building a Digital New York Times: Subscriber First
Mark Thompson stepped down in 2020 and in this McKinsey interview they explore his experience of transforming the paper.
His pivotal decision was a ‘Subscriber First‘ strategy. Traditional thinking was to replicate the traditional paper model and simply grow traffic volumes and from that attract an associated increase in advertising revenues, but Thompson recognized this was a declining financial proposition and instead believed growing paying subscribers was key to success.
He then reorganized the business accordingly, transforming from a newspaper that also produced a web site, to a mobile app platform that republished to a web site and then also a newspaper, and ramping up the development of a wide range of content products from news through crosswords that populated the catalogue subscribers paid to access. He envisages a global expansion but not in a way that competes with local media, such as the Indian market as described in this interview.
A number of experts offer analysis of their digital business model.
Writing on Medium Denis Doeland charts the rise of their subscription system, Sailthru looks at their content personalization approach and use of email newsletters, the FourWeekMBA documents a snapshot of their revenues model, and the ProfitWell team examine their approach to audience segmentation.
Their transformation has been publicly documented in fine detail, famously publishing their internal digital strategy documents. This Niemans Lab article provides a deep analysis of these reports, and they are now revising their digital playbook, launching new ad tools to reverse the decline in media spend.
Digital Product Innovation
As all this highlights the linchpin to this strategy is the continual development of a portfolio of new digital products, a transformation journey explained through this presentation from Alex Maccallum, the Head of New Products.
Speaking at a Products That Count workshop in 2018 Alex describes how as recently as five years previously the NYT was predominately a print media business, supported by associated advertising, and what new organizational practices they have adopted to enable the shift to digital.
Beginning with their cooking product, a first for them in terms of bringing together an innovation team of product management, technical developers and editorial staff. Products are organized into categories like Puzzles and Parenting.
Alex describes there was already an R&D group who focused on longer term transformational changes, and her role was to build a product team intended to develop innovations in the ‘Adjacent’ sector of the HBR Innovation Ambition Matrix.
Her team focused on incremental products for incremental audiences, such as the cooking and crossword products, each operating as a standalone P&L business unit.
The product development process is quite intense – For example to develop the cooking product they conducted field research with various types of chefs and brought in focus groups of consumers to test out their reception to the content.
She also describes how these products are integrated into the main site to add value to the reader experience and maximize traffic for each product, and the business model for each, such as how they balance free and paywall access and how they seek to upgrade them through incentivised offers.
Harnessing the Cloud
The NYT has built this digital strategy atop the Google Cloud. Matt Digan, their Executive Director of Data Engineering, presents their case study on how they managed this transformation journey, explaining how they migrated an entire data ecosystem and exploring the difficulties of migrating data from on-premises to the cloud, and how Caserta helped solve these challenges.
Deep Kapadia, Executive Director for Delivery Engineering, presented at Google Cloud Next 18, sharing their journey of how NYTimes.com transitioned more than 100+ applications, powered by technology that was decades old, to containerized applications or on to serverless architectures. They’ve wholly embraced this ‘Cloud Native’ architecture, becoming a keynote adopter of Kubernetes.
A recent 2021 Google article provides an update, explaining the evolution of their data architecture, and as this video and this case study describes they’ve also utilized the Google Cloud to digitize their massive photo archive.
At open.nytimes.com they provide an ongoing journal of their work, documenting engineering projects such as their efforts to fortify the systems ahead of the 2020 election and how they use gRPC to optimize the performance of Vrbo landing pages.