A glimpse into the future – visit at The New York Times R&D Lab

As a researcher one tries to be objective dealing with facts and looking at posing questions hoping to get answers with regard to the future of journalism and new business models in the media industries. With this respect I have to confess I was rather emotional when watching the movie “Page One: Inside The New York Times and the Future of Journalism” produced and written by Kate Novack and Andrew Rossi. The movie – and the related book edited by David Folkenflik – really dramatizes the transformation of media and the difficulties traditional media companies were facing a few years ago. Both regular readers, the producers said they didn’t want to worship The Times, but wanted to tell the story of journalism with the notion of “The Times as an influential institution during a time of turmoil.” 

Back in January 2009 Michael Hirschorn had written the piece in The Atlantic entitled “End Times: Can America’s paper of record survive the death of newsprint? Can journalism?" asking the provocative question “what if The New York Times goes of business – like this May”. And the company was then making huge losses. Clay Shirky, the New York University professor of new media had been comparing the advent of the Internet to the invention of the printing press in the 15^th century, before most of us got to understand the magnitude of the transformation of the media landscape. Perhaps it’s against this background journalist David Carr – a brilliant journalist and a colorful character in the movie – put a headline for his section of the book: “Print is Dead: Long Live The New York Times”. He appropriately writes that “the paper matters precisely because people don’t just push a button when they have a random thought or merely give some Twitter-driven topspin to a nice little bit of news the see floating by on the Web.” He further states: “I still believe that the front page of The Times can convey authority unlike any other media artifact on the planet.” David Carr writes the Media Equation column for the Monday Business section of NYT and blogs regularly at Media Decoder. 

So how are The Times doing today? I had the opportunity to visit The New York Times Company Research & Development Lab (R&D Lab) hosted by Matt Boggie, Director of Technology Strategy and R&D at The New York Times. Matt has worked at The Times since 2010 and was previously involved with media as a Senior Manager at Accenture.

The R&D Lab "works to innovate around new technologies, anticipating consumer behaviors and building new interfaces for news". The R&D Lab has a charter of “being ahead of the crowd” i.e. a mission of looking three years ahead. The emphasis of R&D is on Development of new media concepts. The R&D Lab comprises of a team of 7 creative technologists, who are together with Matt trying to find new trends and create prototypes in order to illustrate what might work in the near future. Any concepts are then productized and launched to the market by the R&D Lab or in partnership with the newsroom, or with the NYT technology organization. So in this sense The New York Times Company has a very clear and markedly forward-looking attitude towards new innovation and service design. Media is regarded as a service to the audience involving an element of co-creation and serving the various needs of a fairly broad media audience forming the NYT community.

The “paywall” introduced in March 2011 has worked well, and more people are becoming digital subscribers or choose bundles e.g. with a Sunday print subscription supplemented by digital content on weekdays. The numbers show a continuing decline in print subscriptions, however, these are still relevant with regard to advertising income. With reference to other research this applies to the whole publishing industry, as advertising revenue has come down over the past 10 years and is now at the level of the 1950’s for newspapers (including online advertising). Traditionally advertising has made up 2/3 of the revenues for newspapers in the U.S.

Financial Information on recent developments 

The New York Times Company published its latest quarterly results in February, 2013: “Over all, the company’s advertising revenue declined 3.1 percent. Print advertising at the company’s newspapers, which include The New York Times, The Boston Globe and The International Herald Tribune, shrank 5.6 percent, and digital advertising revenue across the company rose 5.1 percent. Circulation revenue grew 16.1 percent."

Business Insider wrote a rather positive summary of the NYT financial report saying, that “its revenue from readers and subscribers overtook that of advertising for the first time in 2012, as the media group reported a boost in profits. For the full year, the group posted a profit of $133 million, compared with a loss of $39.7 million in 2011.”

Mark Thompson, the former BBC chief who became president and chief executive at the Times last November, claimed progress, noting that the number of digital subscribers grew 13 percent in the quarter to 668,000 (including BostonGlobe.com). He said in a statement: "For the first time in our history, annual circulation revenues surpassed those from advertising. Our pay model continued to prove itself.” The number of paid subscribers to the digital editions and the website of The Times and The International Herald Tribune represented 640,000 at the end of the year. Most American newspapers struggle with circulation revenue of approx. 30% of total revenues.

NYT has introduced a subscription model offering flexibility to readers including different platforms: print, online and mobile platforms with apps for tablets and smartphones. Visitors to the NYTimes.com website only get 10 articles for free each month. The New York Times is also available on new platforms such as Flipboard, where digital subscribers of NYT get access to the full content. 

Back to the R&D Lab

In terms of the development of new media concepts in the digital ecosystem NYT are not focusing on any particular ecosystem, as the players tend to change over time. A very different set of players dominate they tech industry today, compared with 5-10 years ago.

The focus for research is to break down the content into smaller pieces and repackage it into different experiences, powered by content consumed on platforms at home or for example moving about in New York City. An example of this would be how to improve your cooking experience at home and what you see in the streets of New York, i.e. information beyond the events and objects that you see. Work is also put down on guided services recommended by The New York Times or for example the best election coverage for those interested in politics. The New York Times also has a very good technology section including the Bits Blog, focusing on the business of new technology. These stories are produced by the newsroom, i.e. the R&D Lab is not involved with the actual content of the newspaper or its blogs on the NYTimes website. Demos built at the media lab are shared with the newsroom a couple of times each month.

The researcher was given a guided tour of the R&D Lab, together with a small group of students from Stanford University. Many of the demos are presented on the R&D Lab website and below I have described in brief two of the prototypes shown:

“Reveal" i.e. a "Magic Mirror" – you can speak to the mirror and ask for headlines, news in New York or the weather report for Manhattan,or even your personal health information. The intention is not that the mirror is the actual interface for reading news at length, but you can pick out the news whilst brushing your teeth and then read the complete news at your breakfast table.

Another interesting demo that I choose to call "Data Visualized" - i.e. data shown on a large screen across the wall, where you can see the number of articles published, the number of words, pages read, and tweets shared on a given day. This could be a tool for the newsroom to illustrate audience engagement. Other interesting development projects include the creative use of new technology platforms, such as Google Glass. 

                              

From a business model point of view NYT is planning to put up a number of new price points and diversified products, e.g. specific media services for elections, sports updates for big events like The Olympic Games etc. The focus is on new product groups that serve the needs of different people (not necessarily living in New York or in the U.S.). Although the “paywall” is driving digital subscriptions NYT is still looking at finding means to offer relevant content to people who are not necessarily able or willing to pay for the current packages offered. There are opportunities in developing the offering for parts of the content to certain target groups. NYT will be focusing on creating new mobile products, according to Matt Boggie. This needs to be looked at with a critical eye in order build specific content that people are willing to pay for.

Engagement is measured in a number of ways: how people spend their time with media during the day, e.g. mobile activity in the morning, online browsing during work hours and tablet usage in the evening. NYT is also analyzing data to understand better how consumers move towards digital subscriptions, as well as patterns of sharing on e.g. Twitter. Linking behavioral patterns to purchase behavior is a little more difficult, however, NYT are working on mobile tracking. Advertisers have been looking at The New York Times more as an attractive platform for brand advertising, and NYT has a much more diverse audience when compared with e.g. financial newspapers like FT or WSJ. NYT are looking more for textual and syntactic analysis of what people are reading – “if I read a certain type of articles e.g. opinions, what other kind of articles am I likely to read?” NYT has a recommendation engine in place today, and are looking to do more with recommendations later. It’s still early days in this process.

As to the innovation process within The New York Times Company it’s really everyone’s task, including the newsroom, R&D and other departments of the company. Based on the inspiring visit and my daily reading experience of The Times things are looking good and the researcher feels confident there is a bright future for quality journalism. I’m really looking forward to the launch of new media concepts and I wish NYT and the R&D Lab every success in finding the right trends and launching successful media services in the next few years.