Inside The New York Times Business Model: How Bundling Saved Journalism

What's up everyone? I'm Joe Pompayano and this is the Joe Pomp Show. I hope everyone's having a great week so far. For today's podcast, we're gonna talk about how the New York Times has transformed its business model using bundling to save journalism. Now it's no secret that journalism is a tough business. The LA Times has gutted its newsroom, vice, fowler bankruptcy, and with a hundred million dollars in annual losses, the Washington Post recently eliminated its sports department by firing more than 300 employees, representing approximately one-third of its total workforce. But while virtually every news outlet struggles with a broken business model, the New York Times appears to be thriving, with 12.78 million total subscribers, 2.8 billion dollars in annual revenue, 550 million dollars in free cash flow, and a 12 billion dollar market cap. The New York Times has become an anomaly in the industry that is otherwise in free fall. Media insiders will tell you that the New York Times was able to do this because it is no longer a news company, games such as Wordal, Connections, and the Mini Crossword, now account from within 50% of time spent inside the New York Times app. When you combine that attention with valuable add-ons, like cooking recipes and wire cutter, the New York Times has essentially turned its newsroom into an auxiliary business, forcing customers by bundled subscriptions with better economics. Just think about it this way. The New York Times now has only 1.5 million news-only subscribers compared to 10.8 million on a bundle or other single-product plans. Diversifying your revenue is great, of course, but that's not the real story here. The real story is that the New York Times has put together a playbook that every major media brand is now trying to copy in order to survive in an increasingly uncertain world. First, let's start with the classic newspaper business. One of the biggest misconceptions about news is that it was once an incredibly profitable endeavor. That's not necessarily true. Newspapers were considered a licensed print money, but not everyone bought a newspaper to read the news. A print newspaper was a bundle by default. People bought it for all kinds of reasons, sports scores, TV listings, comics, crossroads, coupons, job ads. And those readers helped fund the expensive journalism, even if they didn't read it. For most of the 20th century, newspapers essentially sold two things. Readers via subscriptions and single copy sales, and access to readers via advertising. But advertising dominated the economics. The general rule of thumb is that retail classified in national ads traditionally accounted for about 80% of newspaper revenue, with subscriptions and new-stand sales making up most of the rest. Classifieds were the lint's pin. These short text-based paid advertisements were high margin because they required little creative work and led to a lot of repeat business. Hyperlocalization across jobs, apartments, and cars made them sticky. And with no pre-internet competition, the newspaper effectively became a marketplace. Then the internet came alive in the entire business model broke. Classifies got unbuttled first through Craigslist and other vertical sites. Google and Facebook made display ads more targeted and measurable. And since there was so much more inventory, CPMs crater leading to an infinite amount of supply online. In the late 1990s and 2000s, many newspapers tried to respond by putting their content online for free. The thought process was that the information is valuable. And if they put it online for free, digital ads could replace print ads. But what they failed to understand at the time was that digital ad rates would be much lower than print ad rates. And that, with the emergence of online search engines and social media companies, platforms would capture a large share of the value chain. This led to a massive drop in advertising revenue, turning what many had once called the cash printing machine into a business model that no investor would touch. Now, once it became clear that ad revenue wouldn't return to previous levels, news organizations began rebuilding around reader revenue, digital subscriptions, paywalls, memberships, and even donations became commonplace. If the old model was readers paying a minority while advertisers paid the majority, the new model became readers paying the majority while advertisers paid the minority. This transition has taken a long time simply because readers today have so many options. Large news organizations aim to hook readers in with free content while smaller sites rely on affiliate deals. And now that platforms like Substack have become a legitimate place for solo writers to make a living. Most consumers place an internal limit on how many subscriptions they are actually willing to pay for at once. But more importantly, most readers aren't willing to pay solely for news, at least not a global require to support the investment. Newsrooms are expensive to run. There are writers and editors, of course. But with the shift from print to digital, organizations like the New York Times now have more than 2,000 people involved in their journalism operation. That investment puts pressure not only on hard cause like employee salaries and benefits, but it also puts pressure on soft costs, like the travel budget for someone covering the Olympics or the multi-year Russia Ukraine war. In simple terms, if a major newsroom had to stay in on its own, its expenses would greatly outweigh its profits. This is what happened at the Washington Post. While some will argue that Jeff Bezos destroyed the Washington Post's brand after purchasing the organization in 2013, the truth is that he was only able to buy it for just $250 million in the first place because it was consistently unprofitable. And even after multiple rounds of layoffs and restructuring, the organization's losses have actually accelerated from $77 million in 2023 to $100 million in 2024. This is where rebuilding the bundle into a lifestyle subscription comes into play. Pretty much every major media organization from the New York Times and the Washington Post to Axios and Puck now relies on a blended revenue model. Reader supported revenues such as subscriptions, bundles and membership access the core for national brands and strong locals. Digital advertising can be more volatile, but it still accounts for a large percentage of the bottom line. Publishers then added in events, conferences, branded content, affiliate deals, licensing, syndication and podcast partnerships to create a strong diversified revenue mix. But as I said, everyone does this. What sets the New York Times apart is that it realized earlier than most that rebuilding the monetization stack was only one part of the equation. You also needed to rebuild the newspaper bundle for digital. For example, when you buy and all access New York Times subscription, not only do you have access to the core New York Times journalism product covering politics, business, culture, opinion and investigations, but you also get nearly a dozen games, thousands of annual recipes from the cooking platform, the athletic for sports journalism, wire cutter for product recommendations, and even an audio and video product, which houses dozens of shows covering every major topic. I don't know about you, but that sounds a lot like the old newspaper days, if not even better because it's online. The New York Times refers to this as a lifestyle subscription. They know that one subscriber may care only about the news while another is interested in cooking in games. But regardless of what product you were interested in, the New York Times quickly becomes a part of your daily routine. Think of the newsroom as an anchor. Just as the sun acts as an anchor for the planet's moons and asteroids, the New York Times newsroom acts as an anchor for its bundled subscription offering. With cultural authority built over 175 years, the New York Times brand carries enormous weight. That authority elevates world over candy crush. It implies a standard of quality for food journalism that bloggers can't match. And even though wire cutter is really just product reviews, monetize via affiliate deals, those reviews are backed by the New York Times brand, which inherently implies a level of thoroughness and independence not found elsewhere. Now by transitioning its business from a newsroom into a lifestyle app, the New York Times can focus on selling a bundled subscription. While many customers view the bundle as a discount compared to what they would pay for each service individually, the bundle strategy ultimately accomplishes three things at once. First is the acquisition funnel, non-news products, especially games, act as a top of funnel entry point. After acquiring word for a few million dollars, the New York Times kept it free to play because they knew millions of people would play it a few billion times per year. Many of those players would eventually convert into paying subscribers, often starting with games only subscription before upgrading to the bundle, increasing lifetime value from near zero to hundreds of dollars. The second is retention lock-in. While a subscriber paying for one product might churn if the value proposition weakens, a subscriber using four or five products daily, word on the morning, a recipe of dinner, news throughout the day, faces a much higher switching cause. As New York Times CEO Meredith Copp 11 put it last year, bundle subscribers engage more, stay longer, and pay more. Average revenue per user optimization is the third point. The average revenue per user for bundle subscribers is $12.92 over a 28-day cycle compared to just $3.36 for single product subscribers. Bundle subscribers also churn less frequently while positively impacting other revenue streams, like ad revenue, events, affiliate fees, and more. Some products in the New York Times bundle have been built in-house, but acquisitions have also played a big role. For instance, the New York Times added 1.2 million subscribers after acquiring the athletic for $550 million. In 2025, Wordl, which might be the most valuable acquisition, was played 4.2 billion times. And while Wirecutter tensed the flyer to the radar, it was the first major move into the New York Times platform strategy and now generates over $1 billion in gross merchandise value annually, contributing to the New York Times $100 million and quarterly affiliate in licensing revenue. This diversified offering has transformed the New York Times' business. On its most recent earnings call, the New York Times had bundled and multi-product subscribers now make up over 50% of its subscriber base, with news only at 12%. Other single product subscriptions at 33% and print at just 4% accounting for the remaining minority. This also isn't just marketing flaw. The financial results speak for themselves. Over the last two years, the New York Times has increased its total subscriber count from 10.4 million in 2023 to 12.78 million today. Annual revenues have accelerated from 2.43 billion to 2.83 billion. Free cash flow has increased from 338 million to 550 million. And the same company that used to trade at a $1 billion market cap throughout most of the 2010s, now trades at a market cap exceeding 12.5 billion. Now, I know some of you will inevitably ask why other media organizations aren't doing this, while others will claim that some are trying to. But in reality, it's not that simple. This model works so well for the New York Times because it has 175 years of editorial prestige, which cannot be replicated. The 50-100 million people who visit the New York Times website in mobile app each week creates a massive addressable market for conversion. A breadth of subscription-worthy products under one roof, combined with engagement driven by daily habit formation enhances the value proposition. And that's without even discussing the ability to convert free subscribers into paying subscribers by offering discounts based on personalized first-party data. The challenge that other news organizations face is that the New York Times model requires enormous scale to work. Organizations with subscriber bases in the hundreds of thousands literally cannot afford to build a game or cooking platform in-house. Nor can they spend 500 million to a billion dollars requiring sports and product-review platforms like the athletic and wire cutter. This creates a paradox for the industry. The New York Times' success is proof that journalism can be a viable business, but its model depends on journalism being a declining share of the overall value proposition. In a world that will soon become flooded with AI-generated content, that value proposition becomes more valuable every day. And brand equity might eventually be the only mode that really matters. Thank you so much for listening to today's podcast. If you enjoyed it, please share it with a friend. Otherwise, I hope everyone has a great weekend and we'll talk next week.