Industry Introduction:
The newspaper industry has a long history in US. It is considered to start in Boston in 1690, when Benjamin Harris published Publick Occurrences both Forreign and Domestick. Its product, newspaper, is a periodical publication containing news of current events, informative articles, diverse features, editorials, and advertising. It usually is printed on relatively inexpensive, low-grade paper such as newsprint. The newspaper industry now has annual revenue of 33.8billon, of which 2.5 billon is profit. It’s annual revenue growth during 07-12 is -8.1%, and annual growth anticipated for the next five years is -4.2%. Recent revenue comes mainly from advertising, with 69.9%, and others from sales and subscriptions 25.1%, printing services 2% and miscellaneous 3%. Recent major market is readers aged 55 or over 39.9%, readers aged 35 to 54 35.6%, and readers aged 18 to 34, 24.5%. Three major players in the industry are Gannet, Co. Tribune, and The New York Times.
The Newspaper Publishing industry faces escalating competition from other forms of media, particularly digital outlets. Consumers favor the real-time reporting capabilities of online news, including social networking platforms like Twitter. As a result, advertisers are spending less money on print and more on building their online presence, where they can create customizable campaigns and reach a wider audience. By 2007, there were 6,580 daily newspapers in the world selling 395 million copies a day. The worldwide recession of 2008, combined with the rapid growth of web-based alternatives, caused a serious decline in advertising and circulation, as many papers closed or sharply retrenched operations.

Porters’ Five:
Barriers to entry: High
Surviving newspaper companies has highly valued brand and stable readership. It is built in years and hard to be paralleled by new entrants.
Substitute: High.
The traditional print out newspaper has faced tremendous competition from the media platform such as Twitter.
Supplier power: Low
Suppliers such as paper mill and ink manufactory are in industries that has low concentration. It’s hard for them to bargain high margin with big news group such as New York Times.
Costomer Power: Medium.
Newspaper industry has low concentration and its customers have multiple choice including online media, however, customer has certain degree of loyalty toward brands.
Rivery in the industry: Medium
Most news reports of different papers have same core information, but differentiation is possible for editorial style, etc.

SWOT Analysis:
Strengths: The New York Times is among the three dominate players in the industry. It has high bargaining power to suppliers. It has highly valued brand and stable customer readership built in years. Its Digital division is working smoothly, catching the benefit of dotcom era.
Weakness: The New York Times core business has very conservative culture which may paralyze its adaptability to environmental changes.
Lack of qualified people
Internal Environment
Unclear financial report
Little control over profitablity
Opportunities: The dotcom era offers opportunities to exploit its fluctuate readership to advertising revenue online.
Subscription fees.
Content syndication
Demographic information
Threats: Substitutes of online media has taken away large number of advertisers. Advertisers favor online customer database to improve advertising efficiency. Downturn in economies can affect company profitability significantly, as in 2001.
Development of social networking platforms.

The NYTD has gone through a series of changes to be what it is today. In 1995 a four employee group was found to shovel newspaper content online. Since middle of 1995 when Martin Nisenhotz was hired to 1999, the then called New York Times Electronic Media Company was working like a software operation as opposed to the core business as news operation. In 1999, a new operating division NYTD was created to report directly to corporate, and tracking stock for NYTD was launched. The new NYTD included all the company’s website properties, which a year later was folded into NYTimes.com or sold. Six-member senior policy team oversight 2 general managers, to whom functional heads including product manager report.
Evoluation
Independent division
Focus on profitablitiy and efficiency
Strategy
Decentialized to centralized
Organizaiton
Consistent
Sub-departments report to GM
Senior member board

The NYTD has a strategy of integrating various website properties to enhance economic scale, keep proper distance from the core newspaper business to promote culture, staffing and organization structure that better suit building a world class IT infrastructure fro online media, and keep no subscription fee for ordinary readers.
Organization such as separate working location, culture committee that promotes coherent yet distinguished culture, different hiring policies, cross-function teams to build new products are good. However, its budgeting seems to be constrained by corporate and is quickly outdated.

The Impact NYTD has on the rest of the Company is significant. It has helped the company to take advantage of internet’s vast potential. It is having a substantial positive impact on the value of the New York Times brand, especially by expanding its reach geographically, and it promotes subscription for newspaper as well. It also provide advertising opportunities by collecting reader’s demographic information. However, its cross-function team brings risk to the brand’s credibility. Its culture is not consistent with the core business. All of these bring tension.
Distinct culture
Us versus them undertone
Tension with news
Chinese Wall constantly questioned
Change in employee makeover
High revenue, no profits
The way NYTD is managed is different from a venture capital firm manages a startup. When Venture Capital manages a startup, it provide resources to every aspect of management, human resource, finance and accounting, marketing and other everyday operating. NYTD has been enjoyed independence since its separation from the newspaper business. Thus, it has more autonomy to exploit vast possibilities of an internet operation.
Differences:
NYTD first started as an supporting department
Carries brand and culture
Mutual beneficial relation
Similarities:
Funded by the “parent”
Supported to innovate, add value.
Insights form comparison

VC has short sight and NYTD is the future of New York Times.
Internal perceptions of NYTD’s performance has gone through several stage. Initially the internal perception is that NYTD is the glamorous side of the business, significant resources were poured to it and the goal was to grow revenue whenever losses are tolerated and damages were not done to the core business and brand. During that time hiring was more of a constraint than money. Hiring and spending were bold. Over time, financials increased in the degree of performance perception. In 1999 the confederation of website was changed and centralized calls to save cost were put in place. When Wall Street changed its perspective in early 2001, the internal perception is on profitability more than ever.
Milestone:
1.An integral part of the newspaper
2.An independent operational divisions
3.Moved out from the headquarter building
Rerception forms the basis of performance evaluation
Numbers not reliable.
The NYTD’s existing organization structure is working well and the division is believed to approach profitability soon. However, there are some problems, especially its budgeting system has some defects that causes it to be less of a bearing. And its revenue is evaluated very conservatively because of the overlap with core business.
Restructuring of the 6-erson panel
Neutral Guidance
Consolidatation of similar projects
Responsibility centers may not be practical

The NYTD should be more independent of the core business in terms of budgeting, and transfer pricing should be put in place to correctly evaluate division value. The goals that corporate sets for NYTD to meet is apparently out of date soon. And investors of tracking stock needs to know the market based value for NYTD to raise money. Its performance should be judged both of financials and nonfinancial index. With transfer pricing in place, NYTD’s financial should be more positive than now. Its culture and leadership and the way new ideas are generated is consistent with dotcom company with minor side effects. Overall the methodology should be carried to the future.
a. Transition back to a more structured business
b. Increased reliance on a formal budget: Transfer pricing
c. Strong focus on profitability-Additional metrics based upon traffic and new advertisements
d. No changes.

For NYTD’s online readership to be free or not, now the customer value that NYTD built online is not reflected in the financials. Charging fee seems to be a solution but if we adjust the customer traffic and customer introduction to newspaper, it should outweigh the benefit of charging fee. Again, the transfer pricing should reflect NYTD’s true value, obvious or subtle.
Quantitative analysis
No adjustments unless following a competitor
Could offset some losses; Drive away new costomers;Limited customer loyalty.
Set up a study panel
Determine optimal pricing policy