Subscription Versus Advertising and The New York Times vs. The Twitter

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Ok onward…

Today The New York Times ($NYT) is breaking out:

It turns out fake news and ‘failing’ is good if you have a subscription business.

The Twitter on the other hand is breaking down:

It turns out if Trump loves your product and you have an advertising model you are doomed!

A few years back Twitter was valued at 20x more than the New York Times but today it’s just 3x.

I would rather own Twitter at this relative value, but New York Times has momentum and a growing subscription business that investors love (unless you are Facebook or Google).

This quarter was going to be a disaster and I chimed in early in the week, on this blog, with my thoughts:

Finally – Twitter has crept back to $18 and they report their ‘lack of earnings’ on Thursday. It will be very interesting how their slow growth and all the revenue team changes. They have to switch the narrative and Thursday needs to be the day. Snapchat S1 and $25 billion valuation is all about ‘future’ invention and potential ARPU growth. Twitter can’t compete with Snapchat young audience engagement story or compare themselves to Facebook. I hope they admit their limitations, take massive writedowns/layoffs and focus on getting massive ARPU growth from the huge, addicted users/audience they have today! Being a cash machine is not a bad thing.

Twitter is the best niche digital product of all time, it has just never been run that way. The markets are incredibly efficient pricing machines when growth slows and now it is up to Twitter to make some bold moves or embrace and milk their incredible niche. I still believe Twitter will get bought by Netflix or Amazon, the question is does it happen after the stock drops to $7 billion or rises to $12 billion.

If they continue down an advertising path without an acquisition that changes their growth trajectory, the New York Times may end up passing them in value.

Speaking of advertising versus subscriptions, this piece by Bibblio on the subject was great. Read it and share it with any of your media friends.

I was picking up my daughter at the airport as she came home for the weekend and we were chatting about the media and Trump. She has been glued to Buzzfeed. She loves Buzzfeed. She gets five to six articles about Trump a day and is addicted. She loves ‘Try Guys’. Buzzfeed is the next generations news and entertainment media business for sure. I wonder if they could pull off a subscription business or just drag the media advertising model into the future.

Have a great weekend.


Also published on Medium.