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The newsonomics of The New York Times’ expanding global strategy

Where the father once worked to make the Times a national brand, the son has much broader ambitions.
Oct. 18, 2012, 10 a.m.

SAO PAULO — Arthur Sulzberger, the Times publisher, made his first trip to Brazil this week. It was a three-day visit to Sao Paulo, and it had a single big purpose: announcing that, in the second half of 2013, The New York Times will launch a new Portuguese-language website for this nation, now the sixth-largest economy (having surpassed the U.K.) in the world. The economy has slowed a bit in Brazil, alongside the latest global economic stuttering, but this emerging powerhouse is looking at lots of upside. Beyond its own dynamic growth engine, the world’s attention will turn here anew for 2014 World Cup and the 2016 Summer Olympics.

Sulzberger spoke to the continent’s long-standing (68th conference this year) association of journalism, SIP-IAPA (Sociedad Interamericana de Prensa-Inter American Press Association), and I was able to catch his speech and a bit of the reaction to it a few hours before I spoke to the group on the changing economics of the global news industry.

This has been the year of global expansion for the world’s biggest news companies. The Wall Street Journal launched its Deutschland digital edition in January, and Alisa Bowen, WSJ’s head of product, tells me additional international expansion, along with video, is a top 2013 priority. The Financial Times, which had retrenched from non-English language initiatives a number of years ago, just launched a new Latin American homepage on FT.com and rolled out a new mobile app for the region, while initiating “digital printing” through HP. Reuters and Bloomberg have both also upped their presence in the market. For the Times, the Brazil edition follows on its China edition launch in June. (For more on this developing phenomenon, see “The newsonomics of global media imperative”).

It is the early success of that Chinese edition that is serving as a model for the Times’ new global push, says Sulzberger. “In just the first 90 days, we reached the traffic goal that we hoped to achieve by spring 2013,” Sulzberger said.

The Brazil edition will follow a similar path, including:

  • Content: About two-thirds of the content will be translated New York Times stories, about 20-30 a day. The other third will come from local reporting staff, as the Times has done in China.
  • Local staff: The Times hired 30 to 35 people to staff the Chinese edition, a mix of journalists and technologists. It plans a similar investment in Brazil.
  • Sponsorship/ad model: Neither the Brazilian or Chinese sites will embrace the Times’ 10-article-a-month limit. They are free — for now at least — with early sponsorship (Omega, Bloomingdale’s, Salvatore Ferragamo) paying the bills. Importantly, readers in those countries who want full access to the English-language Times must pay for it.

Sulzberger came back to two words throughout his 20-minute talk, emphasizing them as the new mantra of Times strategy: digital and global, global and digital. That theme meshed with the obituaries that followed his dad Punch’s passing three weeks ago. Punch was also a builder, with an expansive vision. He used the technologies of his day to move the Times from New York-centric to national through satellite printing.

Now the Times’ national and global reach is fitting with the technologies of this decade and the digital circulation model that now makes it increasingly viable.

The Times is already partially global, even before it makes its moves into China and Brazil:

  • One-third of its readers live outside of the U.S.
  • Of the Times’ 2 million paying (print and digital) subscribers, about 10 percent live outside of the United States.
  • The Times supports 70 full-time reporters and correspondents “working in cities and countries outside of the United States. We have more foreign correspondents now than any point in our history,” Sulzberger said in Sao Paulo.
  • Those global readers are taking to mobile products far faster than the English-speaking core. “Predictably, the top four countries driving traffic to our website nytimes.com are English-speaking; the U.S. followed by Canada, the U.K., and Australia. But it’s a different story in terms of our mobile apps. Our iPhone traffic comes first and foremost from the United States, but that is followed by China, Canada, South Korea, and Japan.”

The strategy, then, makes elementary economic sense for the Times, the Journal, Reuters, Bloomberg, and the FT. Leverage that expensive investment in high-quality journalism by exposing it to lots more people, at a very small marginal distribution cost. That’s the translation of articles in the Chinese and Brazilian examples. Then modestly invest in new in-country content, icing the cake. Figure that in each of China and Brazil, the Times is making roughly a small $2.5 million annual investment.

This new strategy builds on the first generation of print-oriented Times expansion.

Indeed, The New York Times International Weekly still publishes in six languages, including Portuguese with partners Folha de Sao Paulo and O Povo in Fortaleza. Sulzberger says plans call for expanding into more Brazilian states soon.

That raises the immediate question of how Brazilian news media will react to the Times’ new foray into the market.

Sulzberger gave interviews to the local quality press while in town, and praised those news partners — Globo, Estadao, Fola, RBS, UOL, and MSN.Brazil — who have taken The New York Times News Service.

Those in the local press with whom I talked clearly see the Times’ move as new competition, but competition that they don’t expect to hurt them much. In hiring local journalists, it may set off a minor talent war — but the staff reductions of the last several years here have created a surplus of talent. “I think this movement does not have the potential to estimulate a talent war. The shrinking of the main newsrooms, through the recent years, have made many trained and skilled people available,” says Ricardo Gandour, executive editor and content director of Grupo Estado, the company that publishes O Estado de S.Paulo, one of Brazil’s major quality newspapers.

Advertising will also be a point of competition, but the Times will need a substantial new audience before it will take away national business; expect it, in the meantime, to focus on the international luxury category.

How about reader competition? The Times will try to establish itself as mandatory second or third read. In the U.S., many readers now go directly to nytimes.com for national and global news, bypassing metro papers that used to provide that as well as regional news.

In Brazil, the large new staffs of the quality dailies like Estadão, Folha, and Globo will greatly outproduce what the Times’ new hires will generate. Even in international news, these are papers that have a half-dozen or so global bureaus each and use a variety of wire services to bring a world perspective to their readers. Yet that quality press in Brazil is now enduring the problems of their peers worldwide, as print advertising turns down; this year, digital advertising passed print in the country for the first time, just as it has in the United States.

So that leaves room for the Times to reach an elite, that growing number of affluent, educated Brazilians. Its competition, though, will grow more intense. Yes, in the digital age, readers are reading more news, but those other big global brands see the same opportunity, here and elsewhere. The battle for this next generation of digital-mainly readers is on.

The Times’ move makes more complex the relationship between the North American and Latin American press. For decades, SIP-IAPA has fought the good fight in the region for press freedom. These are not the dark, junta-run days of the ’70s, but there are always continuing issues, the latest in Argentina, as Cuba and Venezuela remain major concerns.

The Times, The Washington Post, and some regionally oriented papers like The Miami Herald, have long supported and participated in SIP-IAPA, which in some ways serves as a South/North fraternal organization. This new competition may further complicate an always complicated relationship.

Further, international expansions offer all kinds of wild cards. In China, even international press freedoms are built on eggshells. In Brazil, media law calls for 70 percent Brazilian ownership, an issue Sulzberger didn’t confront directly, but said he will respect.

Consider the Times’ Brazil foray and the Journal’s move into Germany just the top of their lists. Both companies are concentrating less on producing more robust city-based editions in the U.S. and more on huge markets around the world. Forget San Francisco — Sao Paulo, here we come.

In a game of digital scale, that’s a no-brainer. The Bay Area added about five percent to its population over the last decade. In Brazil, 31 million people entered the middle class in about the same period. Other growing markets offer similar huge potential. Add India, South Korea, Mexico, Turkey, Taiwan, and Argentina to the list of targets over the next five years.

While only one in 10 paying Times subscribers today live outside the U.S., that number could well be 30 percent within 10 years. That’s why global media have scale in their favor. As print fades into the past, the digital future is bigger — and less expensive to build and grow. Finally, after more than a decade of pain — and pain that’s not yet over — high-quality global-oriented media can reassert one of those early Internet maxims. No, not “content wants to be free” — rather, “produce once, distribute many.”

Sao Paulo skyline photo by Fernando Stankuns used under a Creative Commons license.

POSTED     Oct. 18, 2012, 10 a.m.
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