NY Times Online Division Breaks Into the Black

The New York Times Co.'s online division — comprising NYTimes.com, Boston.com and an archive distribution business — recorded its first net profit of $8.3 million on revenue of $71.8 million for fiscal 2002.

Though that's a sliver of the publisher's $3.1 billion total revenue, the accomplishment makes the Times' online division one of the few in its league to bounce into the black, from last year's net loss of $7.3 million.

“I feel that the pressure has shifted from simply getting yourself into a profitable division to now growing at a rate that would make us a more meaningful component of the Times Co.,” said Martin Nisenholtz, CEO of New York Times Digital. “The pressure I feel this year has to do with the budget we constructed, which I know is aggressive given how the marketplace is growing at this point, and that's different from the pressure I felt last year.”

Indeed, just as many online publishers, big and small, lament the drip-drip growth of ad revenue, the Times' online sales numbers rose 18.5 percent. This resulted mainly from a bump in ad revenue across multiple categories.

Advertising for the Times' e-mail products has been steady, with 125 million opt-in e-mails sent monthly. As of December, nearly 3.6 million subscribers were registered for the “Today's Headlines” e-mail.

In addition, the Times' newest e-mail newsletter, “Sophisticated Shopper,” has enrolled 227,000 subscribers since its September debut. Recent advertisers supporting that product include luxury watchmaker Rolex and guidebook publisher Zagat.

The Real Estate Tracker is gaining traction as well. This free e-mail alert notifies users when pertinent broker listings become available. The company sent 45,000 alerts to 6,500 subscribers in December.

A relaunched weekly e-mail newsletter called “New York Style” has already snared more than 5,000 new subscribers since Feb. 5. It previously was “New York Happenings,” focusing on events. In its new garb, the newsletter carries articles on shopping, food, fashion and entertaining as well as drawing pieces from other Times sections like dining/dining out.

Display ads have progressed as well.

The Times' sites have more than 50 clients for Surround Sessions — where a single advertiser follows a tracked reader's progress on the Times site — accounting for $2.4 million in revenue last year. Seventeen campaigns ran in December from advertisers like Lufthansa German Airlines, IBM Corp. and accounting firm KPMG.

From a classifieds perspective, the automotive category on boston.com and real estate on nytimes.com saw an ad revenue lift.

“Even though the recruitment category continued to be very tough for all newspapers, we found good growth in the other two categories both in Boston and New York,” Nisenholtz said.

The online division soon will sell half-page ad units that occupy two of the four columns on NYTimes.com and Boston.com. It will be akin to magazine ads with a print-style reading experience. In this case, the site's navigation bar will run on top of the Web page.

Traffic, too, seems to be rising. January was a record-breaking month for NYTimes.com. Internal statistics show that the site drew 12.97 million unique visitors from the United States and overseas. An estimated 1.3 million unique worldwide visitors daily checked the site.

The December figure for NYTimes.com was 7.2 million, according to Nielsen//NetRatings, though the Times said it was 9.8 million when international traffic was added.

There's no way to measure, however, how much news from Iraq and North Korea affected the January increase.

Boston.com reported 2.4 million unique U.S. visitors in December, Nielsen//NetRatings said.

The focus this year is to make operations more profitable. Expense management is key to that, especially as Times Digital has been lowering operating costs since 2001. But beyond that, the news sites still have to prove their value to advertisers, even for big players like the Times.

“What we need to do as an industry is to provide innovative solutions to give them a more meaningful palate upon which to wrap their messages and guide them to the extent we can based on the consumer feedback we get with respect to what's working creatively and what isn't,” Nisenholtz said.

Online publishers also can rest easy that parent companies are less inclined to pull the plug on them. Many like the Times and Washington Post Co. already settled issues of making profit centers of their online operations. Others treat the sites as adjuncts to their core businesses.

The popularity of search marketing — said to account for more than one-quarter of the $6 billion in online ad revenue — does not faze Nisenholtz, either. It helps define which side of the fence the Times leans on.

“It's easy to confuse the Internet as a technology with the Internet as a medium,” he said. “I think the Internet is not a medium. I think the Internet is an enabling technology just like the printing press. And in that context, the search guys are no more a threat to us than the Yellow Pages people are a threat to the New York Times newspaper.

“Advertisers use the different media vehicles in the marketplace to achieve their own respective goals, and the search folks don't create an environment that is particularly attractive from a branding perspective. We're probably not the best option if you want click-throughs.”

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