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How does a newspaper create new digital products to attract new customers? Understanding your market and adapting your offering accordingly is key, according to Denise Warren from the New York Times.

At Digital Media Strategies 2014, Denise discussed new products, including NYT NOW and their development in the context of selling digital subscriptions.

As the pioneers of the paywall, what do the New York Times team have to say about making revenue from digital and innovation in product development?

Denise set the scene by asking if we can expect disruption and innovation to come from incumbents. The answer is plainly no, or at least not as likely, as only two of the top 10 innovators (according to the Fast Company list) are not pure-plays, these companies being Nike and Target.

Innovation is likely to come from companies such as Amazon, rather than an old school retailer or publisher.

But for the all the advantages that startups have over established organisations, listed below, there are some disadvantages, too. Less than 10% of seeded startups reach IPO, and they can’t rely on brand recognition or capitalization.

Pros of startups

pros of startups - nimble, focus on growth, risk taking

Pros of established organisations

pros of established orgs - experience, brand recognition, solid capitalization

The background of NYT digital

NYT has been digital for a relatively long time, debuting on the net in 1996. When the company moved behind a paywall in March 2011, many thought that this wouldn’t be a sustainable business model.

Now the New York Times has 760,000 paying digital subscribers and 950,000 print subscribers with access to digital.

Astoundingly, since New York Times became the first to implement a paywall three years ago (other than WSJ back in 1997), more than 300 US publishers now have one, too.

For publishers, new revenue streams are needed. At NYT it was acknowledged that structures needed to be changed as did cultures, and risks had to be taken.

International New York Times

One of the ways in which revenue can be tapped into is by expanding internationally.

Although the International Herald Tribune had a devout audience abroad, the decision was taken to rebrand it as International New York Times. This was because more than 10% of New York Times subscribers were already from abroad, and this had been achieved without any marketing.

NYT realised that the strength of the brand was great enough to push it into international markets in its digital subscriptions format.

international nyt

Unbundle and repackage

Looking at a distribution of customer numbers versus customer spend, it was clear that NYT had the opportunity to develop cheaper products for those unwilling to subscribe fully, and in time also enhanced products for those willing to pay more.

What was important in the development of the new product was to mitigate cannibalisation of the NYT audience. New and cheaper unbundled products should still be part of the full subscription, offering more value to full subscribers, but should also satisfy demand from new audiences.

NYT NOW

One of these new products is NYT NOW. The NYT product development team knew they wanted a digest style, lower priced, mobile product that doesn’t give away all of the NYT content.

How was the product developed?

Three things were crucial:

  • Talent. Pulitzer Prize winner Cliff Levy was brought on board to head the project.
  • Culture. The cross-functional team had to have autonomy.
  • Customer insight. Customer data and testing is equally important to the project’s success.

Allowed to fail

The first idea for NYT NOW was based on the idea of ‘finishing’ the news. The team wondered if there would be an appetite for flicking through news cards until one had exhausted their supply.

To test the market the team went to users with a provocation, or mini advert showcasing the premise.

This provocation said "don’t just catch up on the news. Finish it" and included an image of a desk full of papers, and another clear of papers.

In the end, this central idea for the product proved unpopular with readers in the test groups. In the spirit of product development the NYT team celebrated this failure. Far from a sad moment, the ability to iterate, reiterate and then discard a product idea was a sign that the right culture was in place.

NYT NOW is now in a new guise and will be released soon, the cost predicted to be around $8, roughly half of the $15 for the cheapest digital subscription.

Ben Davis

Published 5 March, 2014 by Ben Davis @ Econsultancy

Ben Davis is a senior writer at Econsultancy. He lives in Manchester, England. You can contact him at ben.davis@econsultancy.com, follow at @herrhuld or connect via LinkedIn.

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