journalism

Politico’s Way

To cover American politics, Politico deploys an editorial staff of 150. This is more than any news organization in the United States for the same beat. It all started five years ago: a niche website launched by three seasoned political reporters who sharpened their claws in mainstream medias. As envisioned by John Harris, Jim VandeHei and Mike Allen, Politico was to start with a kernel of 12 hardcore political reporters who would aggressively run after all the balls.

Four years later, as a new presidential campaign gears up, Politico owns the news cycle, from 4:30am to midnight, on all vectors: web, mobile, television and… print. And it does so in rapid-fire mode.

Last week, I chatted with Bill Nichols, Politico’s managing editor. Before Politico, he spent 24 years at USA Today. There, among the many items on his impressive résumé, he covered six presidential campaigns as well as the State Department. Bill was in Paris to deliver the inaugural lecture at the Journalism School of Sciences-Po where I happen to have a gig (highlight of the lecture summed up in French on Slate.fr). His talk provided the students with a great start for their year; they were listening to a fifty-plus journalist who didn’t hesitate to leave the comfort of a great newspaper to jump into the unknown. Even in 2007, going after the Washington media establishment with a website was quite a bold move. Today, Nichols is obviously having a lot of fun — which is the best message to convey to a crowd of aspiring journalists.

The lessons to draw from Politico’s success are connected journalistic and business ones.

Politico has literally sliced and diced the news cycle with an array of dedicated products fitting all possible subjects, reading time and formats. Anyone serious in politics or government affairs will begin his day with a peek at the mobile version of the Politico Playbook. Described as ” Must-read briefing on what’s driving the day in Washington”, it is written by Mike Allen, the chief White House correspondent. The site features eight other “tip sheets”:

  • Huddle A play-by-play preview of the day’s congressional news
  • Pulse The latest in health care policy every weekday morning
  • Morning Money Political intelligence on the intersection of D.C. and Wall Street
  • Morning Score A pre-dawn guide to the permanent campaign
  • Morning Tech Daily download of technology news from D.C. and Silicon Valley
  • Morning Defense A daily briefing from inside D.C.’s national security apparatus
  • Morning Energy The one-stop source for energy and environment news
  • Influence Intelligence and analysis on lobbying

The idea is to hook the reader on the day’s “must-follow” items. Then, developing stories will be made available in all possible forms: stream of stories as the news dictate, a great deal of support through countless TV appearances (Politico maintains its own studio linked to all networks and all reporters are required to promote their work). Many times a day, breaking news, alerts, warnings are pushed on mobile. Then, to maximize the impact, top stories will be re-edited to feed the eponymous daily. It is published five days a week, only when congress in in session, and its 34,000 (free) copies are distributed at various strategic spots in DC.

Then, the Politico tone. As Bill Nichols acknowledges, Politico’s pitch is slightly more tabloidish than mainstream media. It doesn’t pontificate, nor does it endlessly circle around a subject. It reflects internal newsroom discussions and the talk of the town.  A few days ago, recounts Nichols, the editorial staff was discussing Republican Texas governor Rick Perry’s intellectual ability to run for the presidency; instead of going for a convoluted story loaded with nuances, Politico went straight with this headline: Is Rick Perry Dumb? This treatment was later supplemented by an informative 1600 words piece about Perry’s 2010 book “Fed Up!”, itself a great gift to his opponents. (To nail it, Politico published a Nine questions for Perry article listing subjects the candidate will have hard time eluding.)

That’s Politico’s way: aggressive, relentless, fun, witty, but also dedicated to providing in-depth, well-reported journalism. Last year, the New York Observer ran an interesting story on how The Atlantic (great magazine, along with an equally great site) was fighting back Politico on the Washington scene. David Bradley, owner of Atlantic Media company, had this comment:

“It was much happier to do what we were doing until Politico arrived in the world. Politico introduced a whole new standard of, I wouldn’t say quality, but I would say velocity and metabolism. I responded way too slowly. (…) They are going to be at the more racy, tabloid end of the spectrum. That seems to be the position they have chosen. I think we’ll be more of the authoritative end.”

To which Jim VandeHei retorted

“People come to us because we break news, we are authoritative and we help readers understand how Washington really works. I think Bradley’s description is clearly motivated by business interests. That said, we take all competitors seriously.”

Business is important as well to Politico and its powerful backer, the Allbritton family. As a privately held company it does not disclose financial data. Even with its large staff of 200 in total, it is said to be profitable thanks to its multi-pronged product strategy:

–The web site had an audience of 4 million unique visitors last July, according to Comscore (it should triple during the 2012 campaign). This is rather small compared behemoth such as the Huffington Post or the NYTimes that are more into the 50 million UVs range. But the value extracted from each visitor is quite high.

– Around half of its revenue is coming from the newspaper which sells high premium ads. Thanks to the geographical concentration of the Washington elite, the paper does not cost too much to distribute and its pagination and printing costs are adjusted to the advertising load.

– Last November, Politico launched “Politico Pro”, an in-depth paid-for service focusing on three critical (and lobbying-intensive) issues: energy, technology and healthcare. The price is $2,500 per month (story in the Columbia Journalism Review). “Pro” relies on several dozens of reporters and editors integrated with the rest of the newsroom.

– Recently, Politico added an event department: get-togethers for the Happy Few with big political names, moderated by staffers. The guests don’t pay, but big sponsors do — happily it seems. Events will be organized not only in Washington but on the campaign trail as well.

– Last June, Politico announced an e-Book venture with Random House. The concept: quick accounts, 20,000 to 30,000 words (80-120 pages), of the 2012 campaign. Produced at little additional cost, promoted by the brand, these could be pure gravy.

Politico’s potential revenue pool is huge. According to the Center for Responsive  Politics, the 13,000 registered lobbyists in Washington spent $3.51 billion (!!) in 2010. This is an affluent market, highly concentrated, both geographically and interests wise.

On the surface, Politico’s method of squeezing money from every slice of its market looks logical and reproducible. But its unique ecosystem makes Politico’s success difficult to replicate elsewhere.

frederic.filloux@mondaynote.com

It’s all about accountability

Compared to Anglo-Saxon journalism standards, French practices are regrettably lax. It doesn’t mean that France doesn’t have remarkable writers, editors or medias; but, too often, their practices are just sloppy. Here, journalists abuse anonymous quotes and are too cozy with their sources. Papers are insufficiently edited, reporters routinely go after a story with a pre-defined agenda – they know what they want to write and will twist facts, quotes and background accordingly.

In France, stories are never corrected. Or corrections can be used to further drill a point . If someone dares to exercise his legal “Droit de réponse” (the right to force the paper to publish a response to erroneous statements), he risks retribution. In 1984, as I was writing for Le Monde, some politician felt misrepresented and demanded a correction. My editor reacted:” Okay, we’ll publish his response. But we’ll append a “Six-bracket” that will make him cry…” He was referring to a small piece (typeface size: 6) appended below the response that usually blasts the righteous individual… That was my introduction to the ritual.

For the record, I’m not by any means putting myself above the crowd. I made my share of mistakes, I’ve not always acted in good faith and more… And, in management positions, I failed to go after the behaviors I just criticized – mostly by not hiring people eager to improve journalistic standards. The mistakes I made during my career still haunt me; we’ll see which ones resurface in this Monday Note’s Comments section…

The chain of command plays a key role in this collective failure, standards are set at the top. I know a couple of editors who encourage their reporters not to bother collecting the other side’s view on facts, as contradiction would impair the “mission”.
French editors have issued stupid rules such as the “journalism stops at the bedroom’s door”; read: beyond, it’s just muckraking. Sure thing. Except it encouraged the press to turn a blind eye on François Mitterrand’s morganatic family living in an opulent government-owned building and protected by a squad of dedicated gendarmes with their own rules. Or, until recently, French media chose to ignore that Dominique Strauss-Kahn was more a predator than a seducer. (Never wondered why DSK never go after female foreign correspondents? It’s because he knew they’d have reported any misbehavior, as opposed to France where her peers and her superiors will ask a harassed woman reporter to shut up). As for investigative reporting, it went down the drain a long time ago as police, magistrates and lawyers became extremely proficient at manipulating complacent reporters.

In 2009, Francois Dufour, the publisher and editor-in-chief of a successful set of publications for young readers (Mon Quotidien, see story in the New York Times), wrote a funny book titled: Are French Journalists Bad? (Les journalistes français sont-ils mauvais?) He didn’t answer the question directly, but the facts he presented were compelling.
French journalists are not genetically worse than others; it’s their culture, they are simply poorly trained and managed.
That year, I found myself involved in a debate with Dufour along with other journalists who had joined the cyber-zealots crowd. There, I got my first exposure to the “Permanent  correction” concept and to the “Publish first, check later and correct (PFCLC)” notion. Dufour and I took the same side, saying the ability to correct a story should not be a license to a kind of permanent approximation. After all, all-news medias have been around since the eighties; they always had the ability to permanently correct stories, but – even though they were far from perfect – they refrained from abusing the  PFCLC thing. (I don’t recall seeing a 7:00am news item airing rumors, unverified facts – at least to the best of the reporters’ ability – and issuing a correction an hour later).

The debate about the management of facts at “digital speed” is spurred by two important factors: the Distribution of responsibilities and the Merchant relationship.

1/  Along with social media comes the notion of distributed responsibility. As everyone reports what’s happening, no one will carry the full responsibility for it. In the event of a breaking or a developing news, when hundreds of people congregate around a Twitter feed hashtag, they don’t have – by definition – the safety net of someone with the role of deciding whether or not to publish (by asking basic questions, for instance). When everyone is in empowered to feed the echo chamber (sometimes with a pseudonym), no one is responsible.

2 / The absence of a merchant relationship also plays a significant role in the dilution of responsibility. In the digital cauldron, free is too often associated with a permission to be sloppy. A compulsive tweeter or blogger, propagating whatever s/he is able to grab, without any commercial relationship with readers, will feel no obligation whatsoever to quality. Being first becomes the main goal.
That is exactly the opposite for a newspaper, an online news organization, a TV or a radio network. Such organizations will (at least in theory) feel the obligation to respond to the trust that people are paying for – directly in the case of a paid-for service, or indirectly though advertising.

In the end, this is a matter of accountability. Having an entity, embodied by a group of people (an identifiable set of writers or editors), accountable for what is published or aired, is the best guarantee of acceptable standards. In the best cases, this accountability will apply to direct reporting. Or accountability will play a a key role in curating, in assessing the validity of third party contents coming from places unreachable by professionals.
One last thing, again, for the record. I was among the millions of people literally glued to live-blogging or Twitter feeds during major news events such as the Fukushima disaster, the Arab revolutions or the (less important) DSK affair. Therefore I’m NOT advocating some kind of regulation of the digital flow. For society, I’m still convinced its advantages far outweigh its drawbacks.

frederic.filloux@mondaynote.com

Losing value in the “Process”

Digital media zealots are confused: they mistake news activity for the health of the news business. Unfortunately, the two are not correlated. What they promote as a new kind of journalism carries almost no economic value. As great as they are from a user standpoint, live blogging / tweeting, crowdsourcing and hosting “experts” blogs bring very little money – if any, to the news organization that operates them. Advertising-wise and on a per page basis, these services yield only a fraction of what a premium content fetches. On some markets, a blog page will carry a CPM (Cost per Thousand page views) of one, while premium content will get 10 or 15 (euros or dollars). In net terms, the value can even be negative, as many such contents consume manpower in order to manage, moderate, curate or edit them.

More realistically, these contents also carry some indirect but worthy value: in a powerful way, they connect the brand to the user. Therefore, I still believe news organization should do more, no less of such coverage. But we should not blind ourselves: the economic value isn’t there. It lies in the genuine and unique added value of original journalism deployed by organizations of varying size and scope, ranging from traditional media painfully switching to the new world, to pure online players — all abiding by proven standards.

What’s behind the word standard is another area of disagreement with Jeff Jarvis, as he opposes the notion of standards to what he calls “process”, or “journalism in beta” (see his interesting post Product v. process journalism; The myth of perfection v. beta culture).  Personally, I’d rather stick to the quest for perfection rather than embrace the celebration of the “process”. The former is inherently more difficult to reach, more prone to the occasional ridicule (cf. the often quoted list of mishaps by large newspapers). As for the latter, it amounts to shielding behind the comfortable “We say this, but we are not sure; don’t worry, we’ll correct it over time”.

To some extent, such position condones mediocrity. It’s one thing to acknowledge live reporting or covering developing stories bear the risk of factual errors. But it is another to defend inaccuracies as a journalistic genre, as a French site did (until recently): it labeled its content with tags like “Verified”, “Readers’ info”, etc.

Approximation must remain accidental, it should not be advocated as a normal journalistic way.

In the digital world, the rise of the guesstimate is also a byproduct of the structure in which a professional reporter finds himself competing with the compulsive blogger or twitterer. Sometimes, the former will feel direct pressure from the latter (“Hey, Twitter is boiling with XY, could you quickly do something about it? — Not yet, I’m unable to verify… — Look pal, we need to do something, right?). Admittedly, such competition can be a good thing: we’ll never say enough how much the irruption of the reader benefited and stimulated the journalistic crowd.

Unfortunately, the craze of instant “churnalism” tends to accommodate all the trade’s deviances. Today, J-Schools consider following market demands and teaching the use of Twitter or live-blogging at the expense of learning more complex types of journalism. Twenty years ago, we were still hoping the trade of narrative writing could be taught in newsrooms populated with great editors, but this is no longer the case. Now, most of the 30-40 something who plunged into the live digital frenzy have already become unable to produce long form journalism. And the obsessive productivism of digital serfdom won’t make things better (as an illustration, see this tale of a burned-out AOL writer in Faster Times).

The business model will play an important role in solving this problem. Online organizations will soon realize there is little money to be made in “process-journalism”. But, as they find it is a formidable vector to drive traffic and to promote in-depth reporting, they will see it deserves careful strategizing.

Take Twitter. Its extraordinary growth makes it one of the most potent news referral engines. Two weeks ago, at the D9 conference, Twitter CEO Dick Costolo  (video here) released a stunning statistic: it took three years to send the first billion tweets; today, one billion tweets are send every six days.

No wonder many high profile journalists or writers enjoy tweeter audiences higher than many news organizations, or became a brand on their own, largely thanks to Twitter. The twice Pulitzer prize winner and NY Times columnist Nicholas Kristof has 1.1m followers, that is one third of the New York Times’ official Twitter accounts followers.  And Nobel Prize economist Paul Kurgman, who also writes for the New York Times, has more than 610,000 followers. Not bad for specialized writing.

In some cases, the journalist will have a larger Twitter audience that the section where he/she writes: again for the NY Times, the business reporter Andrew Ross Sorkin has 20 times more followers (370,000) than Dealbook, the sub-site he edits. According to its CEO Arthur Sulzberger, a NY Times story is tweeted every four seconds, and all Times Twitter accounts have four times more followers that any other paper in America. Similarly, the tech writer Kara Swisher has 50 times more Twitter followers (757,000) that her employer, the WSJ tech site AllThingsD .

There are several ways to read this. One can marvel at the power of a personal branding that thrives to the mother ship’s benefit. Then, on the bean counter floor, someone else will object this stream of  tweets is an unmonetized waste of time. Others, at the traffic analytic desk, will retort Twitter’s incoming traffic represents a sizable part of the audience, and can therefore be measured in hard currency. Well… your pick.

frederic.filloux@mondaynote.com


Jazz Is not a Byproduct of Rap Music

Defining article as a “luxury or a byproduct” as Jeff Jarvis did last month, is like suggesting jazz is secondary to rap music, or saying literature is a Deluxe version of slamming. Reading Jarvis’ Buzz Machine blog is always interesting, often entertaining and more than occasionally grating. His May 28th blog post titled The article as luxury or byproduct reverberated across the media sphere – as provocative pieces are meant to, regardless of the argument’s actual connection with facts. Quite frankly, I didn’t pay attention to Jarvis’ latest taunt until the issue was raised in a conference I was invited to.

Let’s take a closer look – in a gracious and constructive manner.

What Jarvis said:

  • Tweeting and retweetting events as they unfold is a far more superior way of reporting than painstakingly gathering the facts and going through a tedious writing and editing process.
  • Background can be done easily with links.
  • The article is: “An extra service to readers. A luxury, perhaps”.
  • “An article can be a byproduct of the process”.

In fairness to the City University of New York journalism professor, he fell short of saying that articles are useless or dead (we can breathe a sigh of relief).

To support his position, Jarvis mentions Brian Settler’s coverage of the Joplin tornado: the abundant stream-of-consciousness tweets provided raw material for good reporting. He also refers to the Arab Spring where legions of witnesses fed the social cauldron with an endless current of instant accounts, often supplementing the work of journalists.

Let’s get this straight: I’m not going to join the collective glorification of approximate journalism. Like Jeff Jarvis (but on a smaller scale), I teach journalism. In doing so, I’m careful to remind aspiring reporters that live blogging or compulsive tweeting is not the essence of journalism, merely a tool – sometimes an incredibly efficient one – created by modern internet technology.

The article actually is the essence of journalism. And by no means a “byproduct of the process”.

Two and a half years ago, the Airbus landing in the Hudson became the poster-child for crowd-powered breaking news. Then, the only true visual document was a cell phone picture taken by a ferry passenger. Today, the same event would have been live-tweeted by a dozen of witnesses using all the digital nomad firepower you can think of, from hi-res pics to HD video. And, by the time the genuine reporters show up, all relevant material would have been broadcast to the entire world.
Then, if we follow the Jarvis Doctrine, any additional reporting – let alone narrative reconstruction – would become extraneous or useless. (OK, I’m slightly over the top here).

Still, this “extraneous or useless” byproduct is precisely when and where the real craft enters the media stage. For me, William Langewiesche’s 11,000 words article in Vanity Fair became one of the most compelling stories ever written about this spectacular event.

Similarly, tweets about the Arab revolution are great, but I’m still awaiting for an in-depth profile of Mohamed Bouazizi, the individual who set himself on fire, thus triggering a cluster of unprecedented civil unrest events in the region. Similarly, no social media flow can explain why Western diplomacy is so indulgent towards Syrian president Bashar al-Assad.

“Articles are no longer necessary for every event”, states Jarvis. As a matter of fact, I think exactly the opposite. Articles are more necessary than ever to understand and to correct excesses and mistakes resulting from an ever expanding flurry of instant coverage. The substitution from one genre, article, to the other, tweets and the like, can only be done in a marginal way. Daily newspapers become increasingly unable to deal with breaking news or developing  stories. Publishers’ heads remain deeply buried into the sand; they don’t see their costly publications scream their irrelevancy every morning when hitting the streets. They still haven’t come to terms with the need for bold moves such as really separating what belongs to digital media from what works best on paper. (Practically, this means transforming daily newspapers into biweeklies offering strong value-added reporting and perspectives, and using electronic media for the rest.)

My biggest disagreement with Jarvis lies in his lack of appreciation for a story’s background. Don’t bother with the context, he said, just link to it:

In a do-what-you-do-best-and-link-to-the-rest ecosystem, if someone else has written a good article (or background wiki), isn’t it often more efficient to link than to write? Isn’t it more valuable to add reporting, filling in missing facts or correcting mistakes or adding perspectives, than to rewrite what someone else has already written?

Come on Jeff. You are way too smart to seriously believe what you’re saying. Or maybe you need clicks on the Buzz Machine to cash in on your AdSenses… You can’t ignore that  good journalistic coverage cannot exist without serious background. Are you suggesting background work ought to be subcontracted to third party providers?  On what criteria? What about the notion (outdated, I know) of accuracy, of fact-checking? Is this your vision of modern journalism?

Actually, Jarvis ‘piece doesn’t make any reference to the notion of journalistic sources. Weirdly enough, the most essential part of the reporting process – finding sources, determining who is reliable and who is not, who is genuine and who is manipulative – is completely absent from his pronouncements (not from his teaching, I hope).

The problem is not Jarvis’ views of journalism. He’s a talented provocateur who sometimes smokes his own exhaust. But punditry isn’t reporting or analysis. Still, his talks, books, multiple appearances and knack for self-promotion are quite influential with many young journalists. They shouldn’t be misled. It’s not because news organizations tend to spend less and less on original reporting or on expertise, that those assets ought to be declared unimportant. Also, it’s not because a growing proportion of journalists are actually unable to produce high value stories or articles that the genre is no longer needed. On these matters, Jarvis is reversing cause and effect.

frederic.filloux@mondaynote.com

Dangerous Blend

Last week, the Columbia School of Journalism released “The Story so Far (PDF here). For news zealots, this is tantamount to the Vatican publishing a sex manual. Still, this work is one of the best reports ever written on the state of modern journalism. Its authors, Bill Grueskin, Ava Seave and Lucas Graves, detail the effects of 15 years of making news available for free on the internet, and the consequences of unbundling news into morsels that lose their value in the social media whirlwind.  In this 143 pages paper, no complaints, no whining: just facts and insightful analysis of the current state of digital media. An absolute must-read.

Using observations and current examples, the report also ruffled feathers by laying out options for the future economics of online information.

In the most performing outlets such as the Huffington Post, more resources are allocated to audience valuation than to content creation. As the report explains, the giant news aggregator is built on a foundation of constant tracking what drives the most traffic; in audience numbers, it now rivals the New York Times:

Huffington Post also developed an ability to respond quickly to the data that it was getting on traffic and usage—something that is a crucial component of success in digital journalism. Indeed, data analysis has moved from being a required skill in media companies’ finance departments to being an essential part of the résumé for editors, writers and designers.

In many high-octane online newsrooms, the report continues, journalists are asked to keep an eye on dashboards tracking the real-time performances of stories and headlines. They get constant updates on what “clicks” and what doesn’t; everyone is encouraged to adjust their output accordingly. Inevitably, incentives set in, with bonuses tied to tracked performance.

Such obsession with traffic is fueled by the advertising culture that came to dominate the internet: revenue is directly tied to eyeballs, as media are mostly paid by CPM (cost per thousand viewers). The Columbia Journalism School indirectly challenges this system by quoting the remarkable work of Matt Shanahan, who runs Scout Analytics (see his blog here). Shanahan explains what happens on a mid-size newspaper web site: “fly-bys” (viewers who see one page and then go elsewhere) represent 75% of the visitors, versus only 4%  for true fans. But the most loyal group accounts for 56% page views. “Overall, each fan generated about 50 times more traffic per person than a fly-by”, says the report.

This shows how misguided current measurement systems are. Today’s obsession with the “Unique Visitor” metric drives the advertising market —and competition among news sites. Such fixation encourages an arms race in which, by all means necessary (games, fake URLs), news sites will shoot for an increase in their numbers of UVs and for the resulting ranking improvement. This is short-sighted: loyal readers—roughly the top 10% that will generate 80% of the page views —should be the measure of choice.

In this shallow numbers culture, the Chinese wall that prevents journalism from being influenced by advertising becomes porous. There lies the most controversial part of the Columbia report, as the authors were seen as not critical enough of the increasing news/advertising blending. (Why would they? These academics are meant to expose facts, best and the worse practices, not to defend a corporation).

And the facts speaks for themselves. “The Story So Far” documents the pathetic experience at the Examiner.com, a community site based on 72,000 freelance “writers” paid between $1 and $7.50 par thousand page views. Not only does the Examiner sell content against an editorial context (every media does that), but it will tailor its content to fit advertising needs. For example,  it encourages its contributors to write about animals in order to get Procter & Gamble’s pet foods ad campaign.

Blurring the line between advertising and editorial is becoming a standard practice on today’s internet. Invoking the rise of social medias, sites offer brands the ability to directly address their audience via sponsoring schemes. Managing more than 4 million comments a month, the Huffington Post has unsurprisingly become the grand master of the exercise, inviting brands to “engage in a conversation” with users while cashing in on who speaks to whom. The reports quotes Eric Hippeau, former CEO of the HuffPo:

Eric Hippeau calls this approach “turning your customers into publishers.” Advertisers, he says, will not only create content that will increase traffic, but this will represent “a great diversification of revenues” away from advertising sold by the page view. (…) He believes that once companies start interacting with the audience in this environment, they will be hooked.“Once a brand starts that process, they are not going to stop.This is a great benefit to the media companies.”

Similarly, Forbes provides all the digital tools to publish content in any form that fits the web.

This might startle journalists who expect strict separation between the editorial and business sides, but Lewis DVorkin [Forbes Chief Product Officer] sees this effort as a logical way to bring in advertisers who know they can create digital content elsewhere, through websites and email. Labeling the material as coming from advertisers helps inoculate the company from violating the church-state divide, DVorkin says, adding that Forbes’approach allows marketers not to be confined in the “ghetto” of freelance-written advertorial. The advertisers’material is not edited by Forbes and appears on line and in the magazine as “ForbesAdVoice.”(For the print edition, Dvorkin reads it for tone, but says he does no more than that.) The print AdVoice column—limited to one per issue—appears in the table of contents and may run next to a related story. An online column is featured near relevant editorial content.

DVorkin is a bit candid (or cynical, that is up to you) in defending the blending. In a 2010 post he advocated putting professional writers, contributors and marketers on the same level:

By taking to the Web, audience members with deep topic-specific expertise successfully took on quite a few professional journalists with far less knowledge. Marketers, experts in their own right, also became respected content providers in an increasingly information-obsessed society.

The Columbia report was criticized for not distancing itself enough from such practices, for taking for granted and acceptable the vanishing  “church vs. state” idea. Moreover, the authors suggest journalists ought to acquire more knowledge of the evolving economics of the trade. I think they are right on two counts: a) young journalists know too little about the business side of medias, they can’t turn a blind eye on the processes by which publishers will monetize their output; b) understanding such arcana will help in dealing with ethical issues: innocence won’t be a trap, or an excuse.

As digital medias unfold, as pure players gain more weight, ethics loose ground. Consider the current controversy surrounding Michael Arrington: the founder of TechCrunch was an angel investor before jumping into the publishing business. He actually disclosed it. Fine. But recently, he decided to resume his investment activity in tech companies and explained it in a disclosure post. Naturally, this choice triggered snappy comments from journalists who are bound by strict rules in the matter (neither the NY Times, nor The Wall Street Journal, nor Bloomberg would hire Arrington). Elegantly, in a post breezily tilted “The Tech Press: Screw Them All” Arrington spews venom, putting at his own conflicts of interest at the same level as the fact that a well-known tech reporter lives with a Google executive, or another with a Facebook consultant.

Arrington’s pretend amazement is not so amazing. The digital media has grown into a landscape in which journalism ethics are viewed as relics of the past. Today, any product can literally buy positive reviews in a blogosphere that, by being penniless, gets easily corrupted. When planning a product launch with their client, advertising agencies often suggest the deployment of a “blogger army” (that’s the official jargon) to spread the right message on blogs and social networks. In the tech world, “Influential Bloggers” often means “Influenced Bloggers”.

The Columbia School of Journalism report sheds an interesting light on where digital medias are heading.  Their economics are in such disarray that publishers are desperate for new revenue models. In this evolution, ethics are likely to suffer collateral damage. Rookies must understand this.

frederic.filloux@mondaynote.com

Lessons from the Bin Laden coverage

One after the other, the newscycles of momentous events keep reshaping the digital information landscape. The latest example of such alteration is the Bin Laden story, it just set a new reference point. For traditional media, this raises the pressure yet another notch; they must rethink everything: organizations and processes – as well as business strategies.

First, a quick recap of the Sunday May 1st events (all times Eastern Standard Time; add six hours for Western Europe and five hours for the UK):

4-4:30pm — 79 Navy Seals raid Osama Bin Laden’s compound in Abbottabad, Pakistan.

7:24pm — A former Navy intelligence officer name Keith Urbahn, currently Donald Rumsfeld’s chief of staff (we all discovered the former Defense secretary indeed has one) shot this tweet:

In Washington’s political game, this is a way to say: We, too, are in the know, we maintain our own network of sources within the military.
Within one minute Keith Urbahn’s shout was retweeted 80 times. Including by New York Times’ media reporter Brian Stelter. Another minute later, the original tweet had multiplied by 300, triggering instant global speculation.

9:46pm — The White House communication staff on duty sends a three word “Get to work” email to the press corps. At the same time, Dan Pfeiffer, the White House official serial twitterer sends the following:

10:40pm – As Barack Obama is still working on his speech, and after frantic phone calls to verify the story, the Times’ national security team and its Washington bureau decide to run a one line mention of Bin Laden’s Death. Ten minutes later, the website shows this:

10:45pm – All three TV networks interrupt their programming and break the news.

11:30pm – President Obama speaks live from the White House. 56.5 million viewers watch his address.

12:45am (May 2nd) — The East Coast edition of the New York Times closes. It contains a 10 pages section titled “The Death of Bin Laden” (NYT’s editor Bill Keller decided to drop the “Mr.”).

Observation #1: Twitter is king. A well-connected, politically driven staffer leaks the news first. No one knew Keith Urbahn before (see his profile in New York Observer), but his Twitter ID gave him credibility; for his Twitter followers, his post immediately raised a red flag: Rummy’s aide would not compromise his boss by leaking false information.

Between the White House’s first cryptic alert and Barack Obama’s actual announcement, about 15 million tweets has been exchanged. The number comes from Social Flow, a social media optimization platform. See their remarkable visual reconstruction of the tweets’ spread (below is the interaction between Urbahn and Stelter):

Incidentally, beat reporters now need a new skill: they must master the microblogging service in the most professional of ways. Tweeter has now reached a new status: main alert feed – as long as (and that is a big “if”) a proper credibility index is used to qualify the source. Such capability is supposed to be the key differentiation between a pro and an amateur.

For efficiency, several journalists I know are now morphing their social presence into a series of well-organized feeds streams. The same applies to their propagating scoops or promoting stories.  A smart use (both social and professional) of Twitter should be taught in J-Schools.

Observation #2: As notions, “edition” and deadline are dead. A newspaper editor’s worst nightmare is breaking news landing on a Sunday night at closing time. Such conjunction of content and timing carries a high risk of irrelevancy — if missed, or of good-faith false information hitting the streets the next day — if inaccurate. We all have memories of too-close-to-call elections, rumors of a personality’s death, etc.

Newspapers took time to make their mind up on the question of deadlines and editions (and many have yet to cross that Rubicon). But the leaders of the pack took the straightforward option: dump everything on the internet, as fast as you can and without regard for closing deadlines.

For the Bin Laden story, most big news organizations produced vast amounts of articles as their physical paper were being re-edited. By the time the updated edition hit the street, its had content been posted on the net, but every story had also been continuously updated and augmented.  Did it affect newsstand sales? Early data show this isn’t the case. Sales always rise, no matter how more up-to-date the publication website is. With high impact news, analyzing reader reactions shows people still enjoy the physical paper’s broad view — and, for those special occasions, there is the “collector’s item” feeling.

The fading notion of edition raises two questions: How should newspapers strategize their differentiation from the social wave?  And how could such evolution impact business strategies?

The answer to the first question lies in the ability to validate and confirm a piece of breaking news, followed by injecting exclusive coverage and expertise to the mix. For example, a national security specialist and a regional bureau will bring unparalleled added value.  This 2300 words  roundup story in the NY Times was assembled and filed in the hours following Obama’s speech; it carries no less than eight bylines, three seniors writers and five contributing reporters. Very few news organizations have the resources and the internal leadership to quickly deploy such journalistic firepower. For news organization,  survival rests on their ability to retain editorial capabilities, as opposed to succumbing to the aggregation temptation.

The coverage of Fukushima’s disaster provides another example of the increasing newscycle-deadline disconnect. I noticed every roundup story was indexed to the Tokyo bureau’s ability to produce articles – sometimes-sizable ones – in real time, not on a fixed newspaper production schedule.

Business wise, as many consider paid-for options to supplement the ailing advertising-model, the notion of paid-for editions also needs serious rethinking. Readers now expect live coverage, plus recap stories in a timely basis. Planning a commercial activity based on the sale of a single electronic edition becomes increasingly irrelevant. Readers might  prefer buying inexpensive access (preferably on a monthly basis, from a publisher’s perspective) to a sort of business class-equivalent content (I’m referring to Information Architects‘ Oliver Reichenstein’s analysis here). Alternatively, the most technologically advanced news organizations will develop hourly updated ePapers, encapsulated in an attractive layout. The Wall Street Journal provides a good example: on the iPad, it provides both a regular “As Printed” edition and a “Now” one.

Magazines are also likely to revisit the closed “edition”. No wonder Condé Nast plans to rethink its iPad strategy. As a longtime reader of Wired and Vanity Fair, I will stop purchasing issues online; not only do such editions download in the most painstaking of ways (with entire library vanishing with no reason), but I no longer see the added value it carries compared to the plain paper subscriptions coupled to an occasional look at their websites. (On this, readers actually voted with their feet.)

The way most news organizations are handling big news such as the Bin Laden killing or Japan’s tragedy is reassuring: these outfits demonstrate an ability to master social media as well as a will to cater to readers’ new needs. For once, editorial seems to evolve at a faster pace than the business side.

frederic.filloux@mondaynote.com

Bob Woodward: how many page views?

The legendary journalist was in Paris last week, promoting (“flogging”) his last book: “Obama’s Wars“. (Large excerpts in the Washington Post here). It was the standard book tour: TV and radio appearances; a well-timed cover story in Le Monde Magazine; same quotes, same anecdotes everywhere.
Still, I was curious. After all, he’s one of my heroes. In the 70′s, I was in high school when the Watergate story flared up. Later, thanks to Alan Pakula’s movie, All the President’s Men, I got a kick out of American journalism, out of the grandeur and power of large newspapers, of deadline fevers and of news folklore.

Almost forty years after Watergate, I was curious to see how the Net Generation, hooked on Twitter and Facebook, perceived Bob Woodward. To find out, I sat among 300 students in the amphitheater at the Sciences Po University in Paris.  Sciences Po is one of the most elitist and selective French universities with ties to several foreign colleges. Its curriculum includes a master in journalism (where I happen to have a small gig teaching professional blogging).

As expected, Woodward was really “on” – especially for those of us new to his stump speech. At 68, the trade still makes him tick.  He gleefully enjoys going after what people are trying to hide, “peeling the onion” as he puts it. He likes to tell how he showed up at a US general’s home at 8pm who greeted him by a loud “You! Are you still doing this shit?” Obviously, Woodward still does and still loves it. (A compilation of Woodward’s thoughts on journalism is available on Poynter.org, well worth your reading time).

© Hugo Passarello Luna

Bob Woodward is the embodiment of a disappearing form of journalism: source-based reporting as opposed to today’s echo-chamber news streams. His motto: Real stuff does not grow on the internet; it still comes from human sources who won’t expose themselves on Facebook or Twitter. As Woodward likes to recall, real journalism still depends on carefully planned and doggedly performed legwork. This results in a stronger position to get at the decisive facts. See this excerpt from the Poynter conference:

“In the case of Bush or Obama, I sent them long memos and said, ‘this is what I understand happened. What do you want to respond to?’ I remember sending Bush a 21-page memo. … The next day, Condoleezza Rice called me and said, ‘The president read it, I read it, and you’re going to write this book and these stories for the Post whether you talked to the president or not.’ I said, ‘Of course I am.’ She said, ‘He’ll see you tomorrow.’ ”

For students, even though Woodward stands by an idealistic (and ideal) view of journalism, such talk is both refreshing and invigorating.  Still, one J-school student tries to bring him down to today’s realities: “You say ‘go after sources, do the legwork’… But our future lies more in a desk job… In your view, how should we handle this reality?” Woodward’s answer was as expected:  a) get an iPad (for mobility – Woodward is known to be fond of it, unlike this self-depreciating Washington Post commercial would suggest); b) a great story always find its way and you should not be deterred to go for sources and original reporting. And no editor-in-chief will be insensitive to a great subject.

Touching but slightly out of touch.

The aspiring journalists deferentially listening to Woodward face an uncertain future, to say the least. Their world is likely to be productivity-obsessed. In journalism, stats are increasingly likely to define trends. See USA Today’s alleged intention to tie reporters’ bonuses to page views. This is yet another step in the current fashion now defining online journalism  (below is a slide from the infamous AOL Way Memo leaked by Business Insider):

The quest for profitability is not a bad thing in itself. Even Woodward believes that, to be free of influence, media should be a profitable business and not a subsidized one (even a non-profit organization like ProPublica). But linking part of reporters’ salary to traffic will corrupt journalism in many ways.

- First, it will accentuate the imbalance in news coverage. We all know the recipe: celebrity coverage (preferably prurient) and sports drive traffic; not politics or foreign affairs.

- Second, traffic-based compensation will deter young journalists from going after the most complex, difficult beats. Why try explaining what’s really going on at the Fukushima nuclear plant, or digging through the arcana of E.U. policy (even though it shapes the life of 450m people) if, two desks away, your colleague will make more money by recycling celeb gossip?

- Third, prioritizing revenue over relevancy will inevitably impact newsrooms resource allocation. Already, as the Gannett blog reported last year, USA Today has 27 reporters covering all forms of entertainment against 5 reporters covering the United States Congress and 4 in their investigation department. This says a lot about where journalism is heading. Should most news organizations decide to follow USA Today’s path, not only future Woodwards will end up making less than reporters treating lighter subjects, but they will soon become an extinct species. More

Bloggers, publishers and the Apple lockdown

Bloggers like simplicity. They view themselves as computer industry geniuses, as the embodiment of a fantasied future, vectors for all forms of intellectual life, culture, news, entertainment… Bloggers believe in a world where traditional publishing will soon meet a well-deserved death.

Last week, this Manichaean worldview reached a paroxysm: many self-proclaimed digital pundits were celebrating Apple’s move to lock the tablet business down, at the expense of the ever-caricatured “old media”. I’m of course referring to Cupertino’s new policy on subscriptions.

This “us vs. them” is both exasperating and completely misguided.

Last Thursday in London, I attended an INMA conference on tablets strategies — focused on dealing with Apple new rules. About fifty people, all of them using at least one Apple device, all of them eager to make their contents available on the iPad and the iPhone — as long as it is economically tolerable.

For traditional media, the transition to digital boils down to a simple equation. The industry needs to mutate from a business models that used to generate a revenue of 100, to a new one that will only yield 30 — while preserving its core product features and values.

Today’s problem is not one media versus another, it’s the future of journalism — it’s finding the best possible way to finance the gathering and the processing of independent, reliable, and original information. This is emphatically not the blogosphere’s mission statement.

We all agree: for anyone, the no-intermediary ability to reach a global audience is an exhilarating revolution. And, for old-fashion journalism, it’s been the most beneficial kick in the butt ever. Having said this, I don’t buy into the widespread delusion that legions of bloggers, compulsive twitterers or facebookers amount to a replacement for traditional journalism. No question: these new the tools accelerate the news cycle in a stunning fashion — as we can see today with Libyan tentative to cut the internet off, something the Egyptian government did with frightening efficiency ten days earlier. Social networks and microblogging services helpfully supplement the work of journalists when those are no longer able to do their job. But they can’t replace professional reporting. The echo chamber’s sound volume should not be confused with journalism’s unique combination of skills and resources.

Reporting is a métier. No one could become a decent magistrate after reading a couple of law books. In a similar way, good journalism can’t happen without training and experience. Nothing is trivial: handling sources, avoiding manipulation, watching out for ethical traps, managing the distance from facts, and their context…

Without five major newspapers lining up dozens of editors and foreign affairs specialists able to redact and contextualize the Wikileaks trove, the “cablegate” would still be a 300 million words useless swamp –  while still putting at risk the life of hundreds of people. (If you want to grasp the complexity of the operation, read Open Secret, War and American Diplomacy published by the New York Times, or the symmetrical Guardian account Wikileaks, Inside Julian Assange War on Secrecy.)

Blogging zealots will object: Julian Assange could have used the vast powers of crowdsourcing to retrieve and analyze the assembled material. Sure thing. Just consider how the “collective wisdom” would have handled cables pertaining to Middle East politics. Assange knew what he was doing when he decided to work with professional news organizations.

Similarly, consider last week’s investigative piece in the NY Times. It uncovers Google’s strange blindness to JC Penney “black hat” practices. The NY Times described some of the cheating used to unnaturally push a company or a product towards the top of ordinary, “unsponsored” search results. Such an exposé is the product of painstaking journalistic legwork. It didn’t come from the many blogs covering the search business.

This isn’t an exception, it is the rule: talented as they may be, bloggers can’t provide this type of service to society.

How does this relates to the business model of news? One word: Costs. Maintaining and nurturing competencies in a large newsroom costs millions…. which have yet to materialize in digital media. In the transition to the new internet-based world, the failure of advertising and of paid-for models both threaten to make digital journalism insolvent.

Which brings us back to Apple subscription policy. Why were my colleagues at the INMA conference so upset?

Five reasons

#1  The introduction of the iPad led publishers to believe that Steve’s tablet could — finally — be the magic trick to get readers to pay for news. They’re not so sure now.

#2  As we discussed in a previous Monday Note (see Apple’s bet on publishing), subscription is the model of choice for digital publishing, as it is for most of the content industry.

#3  Arguing that publishers who pay 40%-50% in printing and distribution costs should be elated to see Apple charging “only” 30% fee is ludicrous. For one, the true number is 39% here in Europe after taking in account the Luxembourg VAT. Secondly, readers expect (rightfully so) a big discount over the price they used to pay at their newsstand. A lower price tag combined with advertising yielding a third or a fifth of the dead-tree model would call for a platform costing no more than 10%-12%.
For that matter, I totally agree with James McQuivey’s analysis published by PaidContent who says the cost structure of a digital platform should be closer to the credit card processing business (McQuivey, a Forrester analyst, predicts distribution platforms fees falling below the 10% mark at some point).
A 30% rate could be acceptable for managing complex applications such as games that requires sophisticated development tools and technical approval; but not for contents-based apps such as newspapers.
No one says Apple should have left a backdoor for digital subscriptions open, but the Cupertino guys should probably consider a more flexible approach based on real costs.

#4 The same blogosphere misconception applies to the collection of customer data. Many digital pundits praise Apple’s Opt-In for allowing the release of customer data, arguing that medias are responsible for the deluging mailboxes with unwanted mail. That, again, is nonsense. A newspaper or a magazine subscriber costs as much as $300 to recruit. Does anyone really believe that a subscription department will try to squeeze a few dollars per record by leasing its precious database ? Of course not.

And by the way, I find quite funny to see such idea propagated by those who lay socially naked on Facebook, enjoy sharing their breakfast menu on Twitter or flock into email sucking engines such as Groupon.

#5  The least acceptable part of Apple subscription policy is the impossibility for a publisher to propose a cheaper subscription elsewhere. This is probably the most legally challengeable aspect of the newer terms of service. It goes against one of the most basic laws of retail: prices reflect the cost of the distribution platform. The Korean convenience store open 24/7 is more expensive than WalMart.
In itself, this restriction could be the main motive for publishers to quietly exit an overly constraining App Store.

At last week’s INMA conference in London, most the people I spoke with were considering alternatives to Apple’s lockdown. Others solutions are emerging. The most obvious ones rely on HTML5. Today, a set of pages and UI functionalities reproducing the deepest iOS features (such as GPS or sensors management) can be downloaded with a single http request and allow 15 or 20 megabytes of offline reading — sufficient for a digital publication with no video. Of course, such wizardry is still in its infancy and development requires a great deal of tinkering, but it’s improving fast.
There is no such thing as a durable lockdown in the internet world.

frederic.filloux@mondaynote.com

The Traffic Bubble

The new high tech-bubble might not be the one you’re thinking of. Measuring the bubble’s size and inner pressure of is a delicate exercise. For today, we’ll consider two sectors: social networks and online media — such as the Huffington Post acquired last week by AOL for a stunning $315m.

In the valuation game, social networks are in a league on their own. A month ago, Sharespost, the ghost-trading site for private companies, gave Facebook a valuation of $82.9bn (see this Bloomberg story). Now, for unknown reasons, the figure is back to $53bn. Twitter is said to be worth $5bn to $10bn, depending upon Facebook’s or Google’s competing appetites. Ordinary rules of arithmetics don’t apply when pondering the wisdom of such figures. To sort this out, let’s see if we can come up with other metrics.

With Facebook, investors buy size and dominance. 600m members all over the world; more than 60% of all web users; on some markets, a quarter of users’ internet time. Facebook is the nets’ biggest gravitational attractor, the web’s ultimate rizhome: sooner or later, most of the world’s sites will be connected to one or more of Facebook’s services.

The main danger lies in the usual toxins of success: arrogance, inability or unwillingness to   give more than lip service to users’ concerns and sensitivities, defiance of written and unwritten market rules. Facebook’s biggest threat is Facebook itself. But none of the above matters today and high expectations lead to a stunning valuation of $80 per member.

Is it excessive? Well, in october 2007, when Microsoft assigned a $15bn value to Facebook by investing $240m for a 1.6% slice, everyone mocked both the move and the number. At that time, each Facebook member carried a valuation of… $300, almost four times more than today’s — and the company was losing money.

In other words, Facebook looks (relatively) cheap today, especially since it is now profitable. On the operational side, though, Facebook’s ARPU (Average Revenue Per User) remains at around $3 per year and per member, quite high by internet standards.

Twitter’s ARPU is about one tenth of Facebook’s: $0.28 vs. $3.30. But the microblogging service carries a stunning valuation. If Facebook and Google are indeed about to wage a bidding war for the little bird and willing to cough up $8bn to $10bn, it could put a valuation of $50 to $60 on each of its 160m members (actual users are a fraction of that). For a company that doesn’t have a proven business model and  is hemorrhaging money, this feels ridiculously high. But Twitter’s simple yet extremely powerful medium could be a natural fit for Facebook and, to a lesser extent, for Google — as long as the search engine is able to get out of its current one-trick-pony situation.

The third strong player in the social network field is LinkedIn. The social network for professional is now preparing for its IPO (see story in DealBook and its SEC prospectus). Sharespost sets its value at $2.51bn. Each one of its 90m registered members carries a valuation of $28 and generates an ARPU of $2.00-$2.50. What investors are about to buy is a unique position in the professional social network sector, and a three digits annual growth rate which now threatens the highly lucrative business of jobs classifieds.

Is this a social network bubble? I’m not so sure. Thanks to its size, to its footprint on the internet, Facebook effectively bars anyone from getting into its own business. Twitter seems overvalued as a stand-alone business (no viable revenue stream), but not necessarily as complement to one of the web’s behemoths. And LinkedIn is likely to possess the greatest potential for growth.

If there is a bubble, it must lie in a collective hallucination over traffic and audience valuations. See what happened last week with the Huffington Post. The $315m acquisition by AOL puts a value of $13 per unique user, each bringing an ARPU about of $1.20. These numbers are in line with most news-related internet properties. (I already said what I think about the journalistic dimension of the Huffington Post; see Aggregators: the good ones vs. the looters.)

The HuffPo is a digital sandcastle. Its three pillars are:
- Unabashed aggregation machine recycling roughly 300 stories a day from other medias;
- A modest amount of original production (largely drawn from newswires) that forms the kernel for a vast debating space involving thousands of unpaid bloggers (who now feel cheated and are about to create their virtual Tahir Square);
- A powerful and well-managed stream of celebrity stories, thanks to Arianna Huffington’s connections in Hollywood and in left-wing political circles. (See blogs by Alec Baldwin and by Bill Clinton’s former Labour Secretary Robert Reich).

Amazingly, one of its staffers candidly exposed the Huffington Post’s M.O.

First, the aggregation process.

“All day long, [front page editors] receive emails from reporters, editors, publishers, publicists and flacks from organizations that include but are not limited to, the following: The New York Times, The Washington Post, The Wall Street Journal, The Chicago Tribune, McClatchy Newspapers, the London Guardian, USA Today, CNN, MSNBC, ABC News, CBS News, C-SPAN, Time, Newsweek, Rolling Stone, The Atlantic, etc. Those emails all ask the same thing: Would you consider placing this content on The Huffington Post? The front page editors work each day to separate the wheat from the chaff, and get the most timely and interesting stuff on the web. (And depending on how specific the section you are working in, say Books or Entertainment, the sorts of sources expand dramatically.)”

Great. Most of the HuffPo’s editorial tinkering consists in repackaging the work of others, producing stand-alone stories whose only aim is generating comments and internal blogging. In effect, original publishers are giving the “aggrelooter” the rope it will use to hang them.

And then :

“All of the above — the original content that drives the entire business and the aggregation that sends readers out into the world of news and information — helps to build an architecture that enables thousands of other people to have a space to come and write and play and inform and start conversations. Those people are the Huffington Post bloggers — who flock to the site for a chance of being heard.

If you are, say, the communications director of NARAL, you get paid for your contribution to the Huffington Post… by NARAL, the organization that gives you a salary to disseminate your message.”

How naïve is this exposure of the Huffington Post’s ethics! Put another way, the HuffPo doesn’t mind propagating the “message” of lobbies such as the pro-choice NARAL organization presented as a blog! (It could have been worse, a Sarah Palin affiliate for instance).

What ailing AOL bought is vapor. About 35% of the HuffPo’s users come form Google. They land on cleverly optimized content: stories borrowed from other (and consenting) medias that mostly generate blogging and comments. This is the machine that drove 28m unique visitors in January, which makes the HuffPo close to the New York Times/Herald Tribune audience of 30m UV.  With one key difference: each viewer of the NYT websites yields an ARPU of $11, ten times more than the Arianna thing. Based on the HuffPo’s valuation, the NYT Digital would be worth billions. That’s a consolation.

frederic.filloux@mondaynote.com

Le Monde: a blueprint of a turnaround

The iconic French newspaper Le Monde is about to begin a new chapter of its complicated history. Last September, what remains France’s most influential paper changed hands (see previous Monday Note Le Monde’s escape velocity and story in NY Times’ DealBook).

Le Monde is now owned by a triumvirate: Xavier Niel, a telecom entrepreneur, provided the bulk of the €110m ($130m) injected in the venture; Matthieu Pigasse, head of Lazard France, and Pierre Bergé, co-founder of Yves Saint-Laurent fashion house. Now, as the paper prepares to replace its editor, the new owners’ turnaround operation faces tough challenges.

But, before we continue, a disclosure that might influence the way you read this column:

Over the last few days, I have been on the receiving end of feelers from both insiders and outsiders: they wanted to gauge my interest in Le Monde’s editor job. (None of these informal conversations directly involved the owners.) For reasons I’ll discuss towards the end of this note, I made it clear I wasn’t interested.

With this out of the way, let’s look two sets of problems at Le Monde: editorial and industrial.

The editorial one is a relatively minor. Le Monde prides itself in remaining the “Paper of Record”. Unfortunately, such posture encourages more arrogance than it spurs innovation or a burning desire to win. Le Monde’s morning e-mail sent to digital subscribers exemplifies this hauteur; it says: “Que dit Le Monde?” (What Does Le Monde Say?) ; it’s not “What’s in today’s paper”, “What we’ve got”, “What we scooped”, “Selected legwork”, or “You might like…” No. It is: “The State of the World according to Le Monde”.

Quite logically, we get headlines that pontificate about yesterday’s news (Le Monde is an afternoon paper, oddly enough). Rolling your eyes, you still buy it at your favorite kiosk hoping to find good reading material. Most of the time, you actually do. Le Monde still manages to retain a great editorial team, one able to produce and edit high-quality content. But such capability is no longer sufficient to keep (and preferably expand) its readership.

On weighty topics, The Guardian or The New York Times are just as solid as Le Monde, but they are also way more fun to read. By “fun to read” I mean these newspapers are more willing to assign valuable journalistic resources to subjects popular with readers but belittled by French journalists. (For more on what readers actually like, see a previous Monday Note: What do they read – actually ? ).

Again, dusting off this slightly austere and pretentious worldview is no big challenge; it only requires minor adjustments to the daily mix. And probably a bit of reorganization. Le Monde is notorious for its uneven workload distribution. On one extreme, we have toilers who feed the beast on a daily basis, always on the edge of burn-out; on the other, there are those who maintain a more epicurean approach to their job. Among the latter, some will have evidently to be let go; others will have to accept changes to their working conditions and contracts.

The industrial problem is far more critical. In the next few months, management will make decisions likely to seal the paper’s fate. These decisions will pave the way to a new era, or lead to extinction. (So far, the latter has been the unfortunate “natural” course: we’ll recall Le Monde was on the verge of bankruptcy last Summer).

The new shareholders — who define themselves as owners — were first viewed as saviors. Plenty of money, a strong industrial and financial track record for Xavier Niel and Mathieu Pigasse. As for the older Pierre Bergé (81), he was portrayed as the gentle philanthropist who arranged for Le Monde’s staff to retain a minority stake in the new capital structure. These idyllic feelings quickly evaporated as the paper’s management proved unable to present a well-thought-through strategic plan to their new bosses. After dawdling for a few months, the owners jumped to action, the hard way. Xavier Niel, the entrepreneur, lost patience and launched one of his former lieutenants on an expeditious cost-cutting operation. The gent — a French-Israeli entrepreneur — went after low-hanging fruits such as management perks, travel expenses and stationery (really!). In passing, as a way to squelch resistance, the new owners resorted to the classy expedient of leaking juicy details about the cost-cutting operations. They knew media reporters would parrot every bit of gossip without bothering with lowly fact-checking. Good old eighties tactics: publicly humiliating management.

Until then, people at Le Monde had only seen pictures of cost-killers; they got a rude wake-up call: gone is the era of passive shareholders and out-of-the-way board of directors. The general manager of the group was demoted two weeks ago, and the current editor has been stripped of its top attributions and is about to leave.

Now comes the hard part. The cost-killer is back in Israel but the really important decisions remain to be made.

#1 The printing plant. Le Monde still owns a cathedral that is both obsolete and costly to operate. The facility, controlled by the omnipotent Printer’s Union, is plagued by productions inefficiencies and loses its clients one after the other. The plant currently employs 300 people where 100 would be more than enough. That’s about €12m a year in potential savings. The choice is between injecting dozens of millions of euros to modernize the plant or closing it down. By any measure, this is a no-brainer: the plant has to be closed. Any Western publisher dreams of dumping his printing plant (many groups such as the Norwegian Schibsted no longer own any printing facility).

In Le Monde’s case, as part of the industry’s restructuring plan, the French government has set aside adequate funds and is ready to pick-up most of the tab. (For the long run, the Sarkozy administration wants to reduce the subsidies that accounts for 12% of the French dailies revenues but, in the interim, will provide financial support for transitions towards more durable structures.) This could free Le Monde to hand over its print job to the new facility built by Le Figaro eighteen months ago — one that begs for an accelerated amortization (see our story about Le Figaro’s strategy).

#2 The digital strategy. Last summer, investment bankers came up with the following valuations for the Groupe Le Monde: €10m for the newspaper itself, €30m for the magazines and €80m for its digital subsidiary, Le Monde Interactif (MIA). Problem is: 34% of MIA is owned by Lagardère Groupe, a diversified media company still in search of a viable digital strategy (despite numerous and costly acquisitions). The reason for this odd capital structure? The old guard at the newspaper was reluctant to fund Le Monde Interactif, which had to find external financing.

Now, Le Monde faces a weird situation: a third of its most valuable asset is controlled by another company and, with each passing quarter, the price for that stake goes up. Any new management would have to make sure it reassumes full ownership of such a critically important business unit. The urgency could justify a bold arbitrage move such as selling the cultural weekly Telerama acquired years ago. No synergies whatsoever have emerged from that takeover — except siphoning cash from Telerama to the perennially money-losing daily.

Le Monde needs to regain control of its digital strategy both from a capital and a product aspect. Le Monde Interactif grew up feeling like the illegitimate offspring of a noble family. No wonder why it now fiercely defends its autonomy. With a dual ownership – largely played by MIA’s management for its own political ends – and a profitable operation, the digital arm of Le Monde operates in its own ways. Unfortunately, not for the best results. Editorially speaking, the site remains below the newspaper’s standards, and it doesn’t look good when compared to the Guardian Unlimited or the New York Times Digital. Its content is uneven (to say the least), often remotely related to the paper’s editorial treatments; many blogs are weak, and the entire interaction with readers is messy. In short, a platform with great potential, technically and financially strong, but one that calls for more discipline and a greater strategic editorial alignment with the flagship.

In addition, Le Monde Interactif prides itself with a rebellious online appendage: LePost.fr, a website targeted at young audiences. Originally designed as a kind of innovation lab, LePost in fact became a place for gossip and unverified stories (labelled as such!) — and for bleeding money (€2m operating costs for €200,00 revenue in 2009). This excrescence only needs to be sold or closed-down. (Its staff could be efficiently reassigned to beef up Le Monde’s  presence in social and participatory medias.)

Within five years, Le Monde will be read mostly on mobile devices – smartphones tablets – and supported by a mixture of free and paid-for contents. In the meantime, the newspaper will undoubtedly continue to lose some of its readers, even though a core audience, mature, educated and affluent, could slow down the process. The paper’s pricing/distribution therefore needs to be reassessed. It is likely that it could sustain significant price hikes without major readership erosion, probably coupled with distribution focused on major cities. At the same time, the weekend edition — a strong advertising vehicle — should be expanded.

There is no room for procrastination. Le Monde needs to act decisively to preserve its brand and editorial influence. It needs to reconsider its perimeter to address a critical issue: the Paper of Record is now challenged; it must morph into the Permanent Media of Record, online and offline. This requires a serious rethinking of asset allocation.

Why I felt I shouldn’t even think about the editor job:

1 / The editor’s job, as it is now defined, has been stripped of any influence on the company’s strategy. Such a job needs a say on essential matters such as the printing plant, or the way Le Monde controls its digital unit. We need to know the new owners will involve the editor in such matters. For their defense, most journalists are totally divorced from any kind of management culture. In my case, I don’t believe a media can be effectively managed solely by making decisions for the main editorial or the home page.

2 / The selection process is just terrible. First, candidates have to declare themselves publicly. Then, they are auditioned by a kind of ad hoc committee. Next, they are presented to the owners and to delegates from the newsroom. Finally, the appointee has to be approved by a majority of 60% of the staff. The result is the primary factor in picking a candidate will be his or her ability to get those staff votes. For the selection committee, using other criteria bears the risk of being discredited. Good luck with that.

The need to appoint an editor aligned with the newspaper’s core values is understandable. But, rather than electing an editor by popular vote, it would be much better to have a candidate: (a) probed and interviewed by a selection committee led by the board of directors — like in most companies — and, (b) approved by a board of trustees whose mandate is promoting the paper’s independence and integrity.

3 / There is no shortage of candidates inside and outside. The owners might prefer an outsider, which could further complicate the game. (The triumvirate is said to put a high priority on hiring a forty-something. Such focus is questionable: Alan Rusbridger, the Guardian editor, 57 years old, is at the top of his game on all facets of the paper’s business.

Unfortunately, the process as it stands today carries a high risk of morphing into a bitter campaign. The bloodied winner will then face a gauntlet of frustrated apparatchiks only too eager to question his/her authority since, of course, the defeated candidates won’t leave. It can’t work that way. Especially for a media group facing such daunting challenges.

frederic.filloux@mondaynote.com