Meanwhile, the steady national decline in newspapers and circulation picked up speed. In 2007, the Newspaper Association of America counted 1,387 newspapers, down from 1,457 in 2004. Over the same period, weekday circulation had fallen to 50.7 million from 54.6 million, with the steepest decline in 20073.6 percent. Sunday circulation had fallen to 51.2 million from 57.8 million, with a 4.6 drop in 2007 alone. Print advertising, which encouragingly rose from $46.7 billion in 2004 to $47.4 billion in 2005, had reversed direction, dropping to $46.6 billion in 2006 and more steeply in 2007 to $42.2 billion.

The New York Times circulation remained stronger than most, but began to fall in 2006; in 2007, weekday circulation dropped 1.9 percent and Sunday circulation 3.4 percent. ^[22] The Times was initially able to buffer the decline by raising the print price. Circulation revenues were going up as we raised the price and our readers thought it was worth it, says Keller. But I think everybody realized that we needed to do something.

In spring 2008, the losses had become unsustainable. In early March, Keller announced that the newsroom would lose about 100 jobsthe first time in its history that the paper had laid off journalists. A voluntary buyout period would last until April 22. If the Times didnt get 100 takers, there would be layoffs. It was horrible, says Geddes. Nobody doubted that it had to be done. But it was still hard, because it had never been done before. Meislin was among those who took a buyout.

On May 7, Keller sent a memo to the newsroom reporting that fewer than 100 had volunteered for the buyout, so there had also been some layoffs. News reports put the number of layoffs between 15 and 20. [23] We hope that the worst is now behind us our plan from the outset was to move through this difficult process as quickly as possible so we do not spend a year bleeding from serial cuts, Keller wrote. ^[24]

Advertising cliff. But it wasnt over. A deep and wide recession hit the global economy in 2008. As circulation continued to decline, print advertising fell off a cliff, dropping to $34.7 billion in 2008. Even online advertising, which had hit a high of $3.2 billion in 2007, dipped to $3.1 billion. Everything can be divided into before that recession and after that recession, says Nisenholtz, who was by then chief digital officer for the Times Company. The Times had become the largest newspaper website in the world 2001, and advertising growth at the Times had been double digits from 2002 until 2008. At the end of 2008, the world kind of collapsed, he says.

Nisenholtz on effects of the 2008 recession.

The entire advertising business tanked, and, not only did the print advertising fall off the side of the earth, but the digital did too. And that was a wake-up call, particularly for Arthur [Sulzberger], who is looking at the business over the long-term. You needed a second revenue stream to smooth out that incredibly cyclical advertising stream, which by the way hadn't been as downwardly cyclical as it was then since the Great Depression, so it was really bad. ^[25]

It was clear that ad markets were no longer reliable. When the digital advertising market dropped, the Times was already grappling with challenges on the print side. As you started to look out a couple of years at the financials, you said, okay, where is the revenue going to come from? says Sulzberger. In January 2009, the New York Times Company borrowed $250 million from Mexican telecommunications billionaire Carlos Slim at 14 percent interest. ^[26] Employees took a five percent pay cut to forestall further staff reductions. ^[27]

Bright spot. NYTimes.com traffic was the one bright spot, with growing traffic and regular new products. In July 2008, the Times had released the first version of an iPhone app and announced a strategic relationship with the professional social media website, LinkedIn. In September, it had launched its own social network, TimesPeople, and had put up its first live streaming video: the September 26, 2008, presidential debate. ^[28] By September 2008, the site averaged 19.2 million unique visitors a month.

Some on the business side, including CEO Robinson, said it was time again to take a good, hard look at a paywall. And we did, says Sulzberger.