Now, the Times is putting its last remaining outside asset on the block. In a release issued on Wednesday afternoon, the company announced it is selling the Boston Globe and its sister paper, the Worcester Telegram & Gazette.

“Our plan to sell the New England Media Group demonstrates our commitment to concentrate our strategic focus and investment on The New York Times brand and its journalism,” said Times CEO Mark Thompson. Politico has an internal memo to Times staff which says “this was not an easy decision.”

As reported by Boston.com, the Times acquired the Globe for $1.1 billion in 1993 and tried unsuccessfully to sell it in 2009.

In recent years, the Globe has incurred the same struggles as other metropolitan newspapers; its ad revenue is falling fast and its digital prospects are limited by its regional coverage. As we reported this morning, the paper has only 28,000 digital only subscribers after putting in a digital paywall almost a year and a half ago.

In light of all this, the sale isn’t surprising. The Times’ brand power has allowed it to tap into national and international markets where it competes with the Wall Street Journal and the Financial Times. Selling the Globe will permit the Times to focus on its global strategy and also to amass more cash to weather a current rough patch in which circulation revenue is not coming in fast enough to offset declining ad sales.

As Bloomberg reports, the terms of any sale are likely to hinge on the Globe’s large pension liabilities.

In coming months, New York Times watchers will scrutinize what the Grey Lady does with its cash hoard which is likely to top $1 billion after the Globe sale. On its last earnings call, Thompson said it will use the cash for debt reduction and investment rather than reissuing the dividends which are an important source of income for the family members who control the company.

In a program called TimeSpace announced Tuesday morning, the Grey Lady said it will accept three to five early-stage companies for four month partnerships. Those selected will get an opportunity to demonstrate their products while teaching and learning alongside Times employees in the company’s 8th Avenue headquarters. The Times suggests the best candidates will come with seed stage funding and be focused on products like mobile, social, video, advertising technology, analytics and e-commerce.

So will all this help the Times navigate a path to digital prosperity? On one hand, these type of projects can feel more like sizzle than substance. The Times already has an ideas lab called beta620 while the Boston Globe is partnering with MIT students to inject more technology into the news process. So far, nothing earth-shattering has emerged from either project. Likewise, Philadelphia’s major news outlets have been tinkering with incubator-style projects for a while with mixed results.

On the other hand, these type of ventures deliver intangible cultural benefits. Startup companies, including those in the media space, typically have little idea how the news process works and how media companies actually run. Meanwhile, old-line media types are often suspicious or dismissive of new technologies and the people wielding them. Opportunities like TimeSpace, which will also give the startups a gloss of prestige, thus represent a welcome occasion for the two cultures to rub shoulders in a real world news and business environment.

Would-be New York Times partners have until February 19 to apply.

“Here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!” — The Red Queen, Alice in Wonderland

When it comes to the evolution of newspapers in a digital age, the New York Times is clearly something of a bellwether — and in particular, a sign of whether paywalls can (or can’t) make up for the ongoing dramatic decline in advertising revenue. Unfortunately for anyone in the industry who was hoping for a definitive answer, however, the paper’s latest financial results are a mixed bag. Subscription revenue rose, but both print and (perhaps most disturbingly) digital advertising continued to fall, raising the question of whether the Times will ever be able to close that gap, or whether it will have to become a much smaller and primarily reader-financed business.

The paper has already crossed the crucial point at which revenue from readers — whether through print subscriptions or digital subscriptions — has eclipsed the revenue the paper gets from advertising, a transition that other newspapers such as the Financial Times are also quickly approaching. But as more than one person has noted, there are two ways to reach that point: one is to have your subscription revenue increase, and the other is to have your advertising revenue decrease. Both of those are happening at the Times, and the only question is which one will slow down first.

Print ad revenue still falling, but digital down as well

As my colleague Jeff Roberts reported, overall advertising revenue for the company — which includes The Boston Globe — declined by 8.9 percent to $182 million, with print ads down by almost 11 percent and digital off by over 2 percent. For print, the story was the same as it has been for the past few years: continuing double-digit declines in real estate ads and other key classified categories that used to be bread-and-butter for newspapers. For digital, however, the picture was less clear. A spokesman for the paper said the drop in digital advertising was a result of:

“The challenging economic environment, ongoing secular trends and an increasingly complex and fragmented digital advertising marketplace.”

On the company’s conference call with stock analysts, the company tried to explain what one analyst called the “shockingly bad” advertising numbers, blaming “an abundance of inventory” and “efficient buying methods such as programmatic buying” offered by search engines and large advertising portals like Google and Yahoo. In other words, CPM rates — what advertisers are willing to pay for every thousand viewers of an ad — are continuing to fall, and the New York Times seems unable to shore that up at all (at least so far).

Subscription revenue was a much nicer story, since it rose by 7.4 percent to $235 million, but at least some of that has come from higher prices for the print product as well as an increase in subscribers to the digital product, where the paper now has 566,000 paying readers (although it’s not clear how many of these are subsidized in some way by discounts, etc.) And even though the boost in subscription revenue amounted to about $16 million for the quarter, that was still less than the $18-million or so drop in overall advertising revenue. So one of those factors is still falling faster than the other is rising.

The risk for the Times — and for a growing number of other newspapers that are making a similar bet on paywalls as a solution for their problems — is that advertising revenue could continue to fall, and even pick up speed, but the same probably can’t be said for the rise in subscription revenue. At some point, the number of people who want to subscribe to either print or digital will stop rising so quickly and begin to level off, the only real question is when.

A paywall can also reduce advertising revenue

There’s related risk with a paywall that the NYT and other newspapers face, but it’s one they don’t talk about much, and that is the effect that charging readers — which necessarily involves pushing some readers away — itself has on advertising. The Times has said that the decline in digital readership (and therefore the potential impact on advertising revenue) has been relatively modest, but results from comScore suggest otherwise: the numbers appear to show that pageviews have fallen by about 15 percent and unique visitors by almost 20 percent.

Newspapers like the Times could theoretically argue that each of their visitors or readers is much more valuable because a large proportion of them have paid to view the content, but it’s not clear whether advertisers will buy that argument, or be willing to pay higher rates for the privilege. It could be worse for the New York Times, of course — it could be reporting results like McClatchy, which saw both circulation and advertising revenues decline. But the question of what the NYT does as ad revenues fall and subscription revenues slow remains to be answered.

It’s true that no one is really doing a booming business in digital advertising right now, even Facebook, because the business is in the process of being disrupted. That’s why it would be nice to hear about how the Times is trying to change the way it does advertising as well as resting its hopes on a paywall — which is part of the reason why I think that if a paywall is your only strategy, you are probably doomed to be a much smaller business than you are now.

I’ve argued in the past that a membership model that provides added benefits for valued readers — whether it’s ebooks or live events or some combination of such features — is a better approach than a paywall, and the experience of some publishers such as The Atlantic seem to indicate that this is so. To me, newspapers like the Times would be better off trying to get to know their readers better so that they could offer them advertising or other features, rather than simply hitting them with an undifferentiated paywall.

In the end, newspapers watching the Times have to ask themselves not just whether they can duplicate the short-term revenue success of the paper’s paywall (which some or all of them may be unable to do), but also what happens when that still doesn’t make up for the decline in ad revenue.

Post and thumbnail images courtesy of Flickr users jphilipg and Flickr user Giuseppe Bognanni

On a call with investors, executives repeated their mantra that it’s “early innings” and reminded listeners that digital strategy is a long-term game. This may be true, but the ”wait and see” response is frustrating for those awaiting more specifics about its strategy.

A clearer picture may emerge next month when incoming CEO Mark Thompson takes the helm. Here are three questions he will have to answer:

Question 1: Just what explains that subscriber growth?

Subscriber growth is as an ongoing bright spot for the Times. To wit: overall circulation revenues (print and digital) rose 7.4 percent from a year ago, while the number of digital subscribers (to the New York Times, the International Herald Tribune and the Boston Globe combined)  was up 11 percent in the last quarter alone, to 592,000.

The figures appear promising but it’s unclear just how much of that is organic digital growth. That’s because the Times is not breaking out how much of that 7.4 percent revenue growth is from digital sales and how much comes from higher print prices. Keep in mind the company has hiked home delivery prices and also boosted newsstand copies to $2.50. Meanwhile, it’s not clear how many of the approximately 60,000 new digital subscribers (added via the New York Times, the IHT and the Boston Globe) are paying full fare and how many signed up instead through one of the company’s myriad promotions.

The point is: The digital subscriber narrative is promising but it may not be permanent.

Question 2: What will the New York Times do with its bulging cash hoard?

In the last year, the Times has been slimming down fast by divesting regional papers and non-core properties like About.com. The result is that the company is sitting on around $1 billion in cash (Bloomberg estimated in August the Times’ cash reserve to be $840 million, including the About.com sale, and today, the company said it will earn $167 million from the sale of Indeed.com).

This cash pile and a stable debt structure mean the Times is well poised to invest for the long term. Indeed, the company already has a minority interest in a dozen new media companies.

Investors are baying for the company to resume issuing dividends, which it suspended in 2009 at the height of the financial crisis. And it’s not only investors clamoring for a payout. As New York magazine reported this summer, many of the Sulzberger-Ochs clan who control the Times through preferred shares rely on the dividends for a personal allowance and want the payouts to resume ASAP. This means that incoming CEO Mark Thompson is likely to face informal but intense pressure to restart the dividend machine.

Question 3: How much longer will the Times keep the Boston Globe?

The Boston Globe is a storied paper with a smart pedigree but that doesn’t mean it will survive the digital age. The paper launched a major redesign protected by a paywall one year ago but the results have been underwhelming to say the least.

The Times’ today bravely announced that the Globe’s digital subscriptions had risen 13 percent — glossing over the fact the total number is a mere 26,000. For a major American city, and a newspaper one at that, this figure doesn’t seem sustainable.

These numbers drive home the fact that we are likely to be left with a handful of super-newspaper brands like the NYT, the Wall Street Journal and the Financial Times. The fate of regional papers like the Boston Globe is increasingly tied to online sports, community and events pages that have proven harder to monetize through subscriptions. The Times will have to decide soon whether it will continue to carry the Globe going forward or go forth on its own.

A grant from the Knight Foundation will let the Globe hire a coordinator and a technologist who will establish an ongoing two-way partnership with the school. It will also create fellowships to let MIT students get hands-on work experience at the Globe.

“It’s about finding new ways to distribute and monetize news,” said the Globe’s VP of Digital Initiatives, Jeff Moriarty, in a phone interview. He explained the partnership will provide MIT with access to millions of real life readers who will help determine whether untested news products are practical and can scale. It may also result in new platforms for readers to contribute content as well as an API of Globe stories for MIT researchers to explore.

It’s hard to see an immediate monetization plan here but the instinct seems right. If the project works, it will give MIT’s media boffins a real world environment to test out their products. In turn, it may allow a traditional media outlet be ahead of the curve on the technology front. If there is a way to strap on a business engine, this type of power partnership between universities and newspapers could be a model for other cities.

“We see great promise in building strong bridges between these institutions. The collaboration with MIT is an important, exciting step forward, but over time we envision a broad array of relationships with universities,” Globe Editor Martin Baron said in a statement.

You can read more about the partnership between the Globe and the MIT Center for Civic Media here.

All Things Digital first reported the news. The NYT’s Media Decoder blog notes:

Last month, the Times Company took a $194.7 million write-down of About.com. The company purchased the Web site in 2005 for just over $400 million. In its latest earnings news release, the company said that About Group’s revenues declined 8.7 percent to $25.4 million, largely because of a drop in display and cost-per-click advertising.

At AdExchanger, David Kaplan notes that ”Answers.com’s president and COO is none other than Peter Horan, the former About.com head who helped engineer the sale of the About to the NYTCo in the first place.”

Earlier this year, the New York Times sold off its last shares in the Fenway Sports Group, and in December 2011 the NYT sold its regional papers to Halifax Media Group for $143 million. The company still owns the Boston Globe and International Herald Tribune.

Update, 1:34 PM: The New York Times confirmed this afternoon that “it is engaged in discussions regarding the potential sale of its About Group. No definitive agreement has been reached. The negotiations are ongoing and there can be no assurances that an agreement will be reached or that a transaction will be completed.”