The New York Times Company is a leading media company; its flagship paper, the New York Times is considered as its most valuable asset. News is a low outlay, frequently purchased good, with a value proposition of intangible or informational nature, and a high differentiation potential. The publishing industry, newspaper in particular, had adopted the "Chinese Wall" principle-- the separation of editorial operations and business operations as a gatekeeping function. The industry is cyclical: when the economy is depressed, advertising declines and publishers look to cut costs and personnel. New York Times derives majority of its revenues from advertising (65%). Other revenues primarily consist of circulation and revenues from wholesale delivery operations, operating leading news services and direct marketing. Its main operating expenses are employee-related costs, which include compensation and benefits, and raw materials. The company's strong core--quality news, information and entertainment--provides the company a leverage for multi-platform expansion, brand extensions and new business initiatives.
Accordingly, it has to maintain its brand recognition to continue to be competitive, hence, retaining and/or increasing its readership and advertising. Maintaining this brand recognition requires commitment to the existing "Chinese Wall."
This case analysis focuses on the New York Times Digital (NYTD), The New York Times Company's business unit, launched in 1995, that provides online news and information services in multimedia format, and includes NYTimes.com, Boston.com, and an archive distribution business. It operates by providing a high-quality, worldwide online audience with trusted editorial content from The New York Times and the Boston Globe. It is focused on leveraging its existing brands and relationships. The web operation is unique in that it is not constrained by newsprint, either in form or in the cost structure of the business.
The NYTimes.com remains mostly free for users, as long as they register and provide some personal...