New York Times (dossier) Digital, the Internet unit of the New York Times Company, announced Sunday that it plans to lay off 69 employees, about 17 percent of its workforce, as part of an overall strategy to reach cash-flow profitability in 2002.
The company said the move would help it save an estimated $6 million.
Like much of the online media market, New York Times Digital has had both aggressive growth and escalating losses. For the first nine months of 2000 it lost $46.2 million, up from $17.8 million a year earlier. Revenues for the first nine months were $37.2 million, up from $15 million the year prior.
The layoffs are the second major retreat for Gray Lady's dot-com unit in the past few months. In January 2000 the Times filed to create a tracking stock for the unit, but after the markets went sour, it eventually pulled the filing late last year.
Such retrenchment is by no means unusual for online media operations. Last week News Corp. nearly eliminated its digital units, and it may potentially lay off 250 employees.
For the Times, a softening in the net advertising market is only one of its worries. On the print side, the growth in ad spending is also slowing down. According to the Newspaper Association of America, spending on ads rose 4.3 percent last year, down from 5.5 percent in 1999. And rising print costs have also affected the print divisions of many media companies.
Despite these industry-wide trends, the Times remains "bullish" on the online advertising model, says spokeswoman Catherine Mathis. She said, "We believe our primary online ad model is viable in the long term."
NYTD draws 87 percent of its revenue from online ads and classified ads, Mathis says, adding that the company has no plans to pull away from this strategy. The percent of revenues drawn from advertising fell slightly from the beginning of last year. In the first quarter of 2000, 90 percent of revenues came from advertising. But by the second quarter, that figure dropped to 86 percent.
The Times digital unit also generates revenues from fees for crossword clues, news archival retrievals, e-mail and fees from print classified ads that appear online. Indeed, at one time the company had charged subscriptions to its international edition but decided to offer the Times online for free everywhere by July 1998. "It marginalized our brand," she says.
Mathis says there are no plans to change the ratio of online ads to other products at this time.
