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July 30, 2020, 8:35 a.m.
Business Models

Newsonomics: The New York Times’ new CEO, Meredith Levien, on building a world-class digital media business — and a tech company

“Engineering now is the second largest functional area at the New York Times, only behind journalism, and the largest function by far on the business side.”

Meredith Kopit Levien knew early on that she’d like to head up a news publishing company. She just never expected she would end up as the CEO of The New York Times at the age of 49, a virtual prodigy in an industry long run by older men. She’s the second woman to head the business, and its youngest in history.

Last week, the Times announced Levien as its new CEO, succeeding her boss and mentor Mark Thompson, who retires after one of the most transformative runs of any publishing executive in modern times. The appointment surprised no one who has watched the Times. Soon upon his 2012 appointment, Thompson shook up his own executive corps and hired Levien the next year to review and renew the Times’ traditional ad operation. She came to the Times immediately from Forbes, with crucial early experience gained at entrepreneur David Bradley’s shops, first the Advisory Board and then the Atlantic.

She quickly transformed the Times’ ad operation – in the process, “turning over” 75% of the staff — and pivoted to a branded advertising/high-end storytelling strategy, targeting fewer but larger accounts. That decision anticipated the deepening domination of the Google/Facebook ad duopoly, which has taken most of the old “newspaper” ad dollars. While the Times’ digital advertising strategy has seen self-acknowledged choppy results over the years, it now stands as a vital and sustainable secondary revenue stream to reader payment. In my interview with Levien last Wednesday, below, we talk about the unification theory newly connecting digital reader engagement and the Times’ newer ad business.

Levien became chief revenue officer in 2015. She inherited a model digital subscription business that was successful and still in its early stages. Since then, the Times has been optimizing that system, resulting in its greater turn-the-corner successes of the last few years.

Over that period, Levien and Thompson have seemed to work in lockstep. Her ascension to COO three years ago made her the clear heir apparent.

Over the seven-year run, the team of Thompson and Levien have brought the Times to an enviable business position, which I’ve chronicled in the equivalent of a couple of books at Nieman Lab. In short, let’s consider a few numbers that broadly tell the tale:

60%: Reader revenue now accounts for six of every 10 dollars of the Times’ revenue. That one number tells the story of a transition from a print-centric product that long depended on advertising for 70% of its revenue, and on readers for only 30%.

6 million: The Times can now claim six million subscribers, more than five million of them digital ones, and the remainder high-paying (as much or more than $1,000 a year) print habituées. Of the digital subscriptions, about four million are for news; the Times recently hit 1,104,000 in subscriptions for its Crosswords and Cooking products. The Times is on track to meet its 2025 goal of 10 million total subscriptions, with two million of them expected to be sold outside the U.S.

1,700: That’s the size of the Times newsroom, up 200 from 2013, a crucial change in force that has served the country well through the Trump Era; note all of those multiple-byline stories.

700: That’s the number of people in the product teams. In and itself, it’s an amazing number, one that speaks to the very notion of news product, how to present it, and how to convert readers into subscribers. The journalism is the foundation, but it’s the digital business infrastructure built atop that has propelled this success.

$45: That’s the share price of the New York Times Co. at Friday’s close.  That’s up from a low of $26 within the last year, $4.97 in the depth of the Great Recession, and $10.90 four years ago. Investors believe in the Times story — and future cash flow.

$687 million: That’s the Times’ report on its cash-on-hand, a comforting number in this chaotic moment.

3 million: That’s the audience of The Daily, the Times’ precedent-setting morning podcast, stewarded by Michael Barbaro. Audio was an experiment just three years ago, and one the Times has steadily invested — for both reasons of subscriber conversion and engagement and of advertising, which has remained more resilient even as Covid closures have tanked print placements. In fact, on the same day the Times elevated Levien, it announced the acquisition of Serial and a strategic partnership with the multiple award-winning This American Life. That, combined with its purchase of Audm just four ago, certifies this key strategic focus over the next several years.

All in all, it’s been a stunning comeback for an old American news institution burnished in the modern age by Watergate, but then threatened by possible insolvency in the Great Recession. When the Times announced its paywall in 2011, it was met mainly with guffaws and groans: People paying for news?! Implemented in 2012, that reader revenue system to-be now has shown the only path leading some news companies to a successful and sustainable future.

The Times is joined by more than a dozen transforming well news companies on several continents. Many have diversified, powering up on non-news operations to offset problematic news models. The Times, perhaps alone, has doubled down on the basic business of news delivery, perfecting the productization and monetization of it in better ways than others. The more unique content it produces, the more subscriptions it sells. The more subscriptions it sells, the more it invests in content. It’s a new, highly virtuous, circle, and one needing much broader implementation across the news landscape from the communities across North America to the wider reading globe.

We only know some of the issues that lie ahead for Meredith Levien and the Times. The ad recovery from the Covid nightmare. The possibility that readers will need a break from the intensity of chilling, round-the-clock news alerts. Worldwide economic recession. Protests that have shaken the larger world the Times serves, and its inner workings.

Last week, I talked with Levien about her new role. As CEO, a job she’ll begin in September, she’ll now be in charge of “the company” — finance, human resources, legal, and print production — as well as the business side that she’d led as COO.

Importantly, given the Times’ unusual structure, Levien’s responsibilities do not include the newsroom. At the Times, both the executive editor, Dean Baquet (who, like Thompson, will likely be headed to retirement sooner than later) and the CEO report to publisher A.G. Sulzberger. It’s a structure that has worked well for the Times lately, given a new level of collaboration in a company culture long known for its fierce territoriality.

My interview with Levien, lightly edited and condensed for clarity, is below.

Ken Doctor: Did you ever imagine when you were at Forbes, that you would be the CEO of The New York Times?

Levien: Definitely not.

Doctor: It never crossed your mind?

Levien: It never occurred to me. If you asked me as a young person what would be my dream job, it would have been something like this. And probably specifically this. I wouldn’t have used the words “CEO of The New York Times,” but I loved The New York Times and I would have said “run a serious media organization.”

Doctor: And now you’re being written about as a 49-year-old child prodigy here.

Levien: The publisher [40-year-old A.G. Sulzberger] is a decade younger than me. The thing that I’ve always said about him, which I think is true about both of us, is that we’re both wired as old souls. Most of what we’re both trying to do is to think what this is going to feel like three years from now, five years from now. And I think he thinks, as the whole family thinks, what’s this going to mean 10 years from now, 20 years from now? We might not have the years, but we’re certainly pushing ourselves to have that mindset. It’s been my experience that everybody in the Sulzberger family has that mindset.

Doctor: Look at the huge difference between 2020 and 2012, and it is a world of difference. Should the people still think of The New York Times as a newspaper company?

Levien: To the extent that “newspaper company” means “company whose job is quality, original, independent journalism,” yes. I remember standing in a green room with [business columnist] Andrew Ross Sorkin as he was about to walk on stage for an advertising event and I literally pulled his arm and said, “Hey, don’t say ‘newspaper.’ You always call it ‘the paper.'” The truth is what ‘the paper’ means now — I don’t just mean The New York Times — what ‘the paper’ means is a journalism company that is not born of the digital age, that has legacies and traditions of doing high-quality work at scale and serving as the basis for a lot of other journalism.

Doctor: We have yet to come up with a new word. “Digital news startup” doesn’t quite have the romance or the explanation of newspaper, right?

Levien: That’s right. What do you name it? What I’ll say is, something like 3 million people listen to The Daily every day and something like close to 5 million people open The Morning every morning. [It’s] a newspaper in a different form.

Doctor: Let’s talk a minute about product. I was thinking about the difference between 2020 and 2012. The [New York Times staff-produced 2014] Innovation Report was kind of right in between there. It was an important turning point for the Times and the newsroom. I was thinking about how it really started to change the idea to product thinking. It was that big idea that The New York Times is based on very solid and growing journalism, of course, but it began thinking of itself as a series of products. You just mentioned The Morning and The Daily, obviously. There are also Crosswords, Cooking, Parenting, and others. That idea of product has been central to your work on the business side, right?

Tell us how that product thinking has changed your role at The Times, and what you’ve been able to do.

Levien: A big thing on my mind today, coming into the role as CEO, has been the center of my work as COO in more firmly establishing the Times as a world-class digital product and technology company, like we are a world-class journalism company. I think that is the key. There are two ways we’ll get to 10 million subscribers and hopefully well beyond. It’s the quality and the breadth and the depth of the journalism, and the digital product innovation to see that many, many, many more people find, experience, and form a habit around that journalism.

I think it’s mission-critical that we continue to up our game as a digital product and technology company. That has certainly been the central focus of my work for the last couple of years and our team’s work. Engineering now is the second largest functional area at the New York Times, only behind journalism, and the largest function by far on the business side.

Doctor: Describe the structure of what your job has been as COO. Right now, you’re in charge of the whole business side.

Levien: Yes. I’m in charge of or currently look after subscription and advertising revenue and all of the major digital functions. Product design, product engineering, the parts of data that’s sitting in a digital product organization. I don’t look after the corporate functions. What Mark would often say is that I looked after the business, and he looked after the company. Today, I don’t have HR or finance or legal or print production. [When I’m CEO], that will be the change.

Doctor: Have you decided what you’re going to do in terms of the structure now below you on the organizational chart?

Levien: The short answer is yes, we’re going to keep it going just as it’s going now. I’ve spent the better part of the last couple year trying to assemble a world-class team of leaders from the business of the Times. We’ve got an absolutely killer head of subscription growth [Hannah Yang]. We’ve got an amazing head of product now [Alex Hardiman]. We have a CMO [David Rubin]. We’ve got a head of standalone products [David Perpich], and we’ve got a head of advertising [Sebastian Tomich], and those folks work brilliantly as a team and do an excellent job running each of their core areas. That’s the team that will run the business.

Doctor: Will you not appoint a COO at this point?

Levien: I won’t. It‘s working really well now. Mark and I have worked hard to put something in place that would last for a while. The last reorganization that I did on the business side was the creation of what is our current digital product organization. That should hold, I think, for a long time.

Doctor: When we talk about digital product and all those functions, about how many people work at The Times in those functions?

Levien: The digital product organization is probably, all-in, 700 people. The largest function within it is product engineering. The next largest is probably data. And then we have product management, product design, marketing, a general management function as well.

Doctor: Take us back briefly to 2012. In 2012, I believe you inherited a fairly traditional advertising department. Is that right?

Levien: 2013, yeah. Very traditional advertising department. And in probably 15, 18 months, we turned over 75, 80% of [the staff]…We turned over that much because we needed to run a different kind of business.

Doctor: That’s a huge, quick change. There have been multiple changes going on in the news industry and multiple changes in society over this decade, but especially this year, so much social protest, social upheaval. One interesting question is about The Times’ role as a business leader at a time with a lot of self-questioning about diversity and inclusion. What are you doing, both internally and as a business leader?  I know these are issues that have concerned you for a while, but can you speak to what you’re thinking about at this moment, and as you go forward in this new job, about diversity, equity, and inclusion issues and Times leadership there?

Levien: I’m very happy to talk about that. Let me first say that diversity, equity, inclusion will be a top priority of mine as CEO, and it has been a top priority for the publisher and for my predecessor. Mark decided to start publishing our diversity data as a way to hold ourselves accountable. And I would say we’ve made real progress in diverse hiring, and we’ve got a really vibrant newsroom fellowship program that’s in part meant to see that there are more diverse pipelines developing for the ecosystems and journalists. But I would say that the efforts to date haven’t produced enough results. It’s not been nothing, but the results have not been sufficient, and they haven’t come fast enough. All of the things that have been done to date didn’t really get at one of the big issues — what does it feel like to work with The New York Times?

Two people working at The New York Times in similar jobs could be having very different experiences, and that is something we have to fix. This should be a place for the most talented people in journalism and digital product and technology to work, a place they can come and do the best work of their careers. It will be my job as CEO to ensure that that can happen. We’ve got a couple of really big, important searching bodies of work on how we do this more effectively as an employer and how we make the reports more inclusive.

Doctor: Let me just ask you last about advertising. With the pandemic and the abrupt end of so much commercial life, do you think this is going to be another inflection point in advertising?

Levien: I would say that what we have seen already and what I think we’re going to continue to see in advertising is just an acceleration of trends that were already there. Print is a declining medium. It’s so far declined at a faster rate, right?

Doctor: Right.

Levien: I don’t think it will be a straight line down. I think we will return to some period of stability, but what we saw in the Great Recession was that some portion of that did not come back. On the flip side, we’re seeing real resilience in areas like audio. People are still listening to The Daily. In fact, we’ve seen listenership go up in this period, and advertising continues to be very strong there.

I am long-term optimistic about the ad business as an important part of the economics for The New York Times. It’s downstream now to the consumer business. That won’t change. In many ways, its value is derivative of the consumer business. That’s actually a good thing that kind of unifies the company from a strategic standpoint.

In the old days, publishers wanted lots and lots of ads and marketers wanted a ton of stuff cheaply and efficiently, and the consumer didn’t want ads at all. And I think what we’re seeing now is those things will rejoin in a way. Certainly, our ad business is smaller than it was when I got here, but it’s likely more compelling, more competitive, and more sustainable.

Doctor: I think the important word you mentioned here is unification. A lot of news companies have said, “We’ll push on reader revenue; we’ll forget about ad revenue.” As you said, it’s both unifying and it’s derivative. And I think that’s what’s so interesting about this kind of unification theory. That you do everything you should do for readers in terms of engagement and not pageviews, you serve them better, you get data that they willingly give you, and that helps you actually sell advertising and effective advertising. So, they can fit together in a way that few people really understand.

Levien: I think that’s right. I think in many ways what happens then is that it’s a little bit back to the future. It’s an ad business in which you’re selling reach to a targeted audience with much more compelling data.

POSTED     July 30, 2020, 8:35 a.m.
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