ft.com

Time to Rethink the Newspaper. Seriously.

 

The newspaper’s lingering preeminence keeps pulling legacy media downward. Their inability to challenge the old sovereign’s status precludes every step of a critically needed modernization. (Part of a series).  

This column was scheduled to appear in the next two or three weeks. Then, on Thursday, the thick Innovation report by an ad hoc New Times task force came to the fore. Like many media watchers, I downloaded its 97 pages PDF , printed it (yes) and carefully annotated it. A lot has been written about it and I’m not going to add my own exegesis on top of numerous others. You can look at the always competent viewpoint from Nieman Lab’s Joshua Benton who sees The leaked New York Times innovation report as one of the key documents of this media age. (Other good coverage includes Politico and Capital New York — I’m linking to the NYT tag, then you’ll have all the stories pertaining to Jill Abramson’s brutal firing as well).

320-Innovation_full

This report is important one for two main reasons:

– The New York Times is viewed as one of the few traditional media to have successfully morphed into a spectacular digital machine. This backdrop gives a strong resonance to the report because many news organizations haven’t achieved half of what the NYT did, whether the metric is the performance of its digital subscription model, or its achievements in high-yield advertising – all while keeping its impregnable ability to collect Pulitzer prizes.

– We rarely, if ever, see an internal analysis expressed in such bold terms. Usually, to avoid ruffling feathers, such reports are heavily edited – which ends up being the best way to preserve the status quo. Even more, mastheads tend to distance themselves from endorsing conclusions coming from the “management crowd” – a coldly demeaning phrase. But, it the Times case, the report was expressly endorsed by the top editors (Abramson and her then second-in-command Dean Baquet who now leads the shop.)

Let’s then focus back to this column’s original intent: Why reinvent the newspaper, quickly and thoroughly.

Until last week, the reference on the matter was an email sent in January 2013 by Lionel Barber, the Financial Times editor (full-text in the Guardian), in which he sets a clear roadmap to shifting resources from print to digital:

I now want to set out in detail how we propose to reshape the FT for the digital age. (…)

[We] are proposing a shift of some resources from night work to day and from print to digital. This requires an FT-wide initiative to train our journalists to operate to the best of their abilities. And it requires decisive leadership. (…)

On unified news desks, we need to become content editors rather than page editors. We must rethink how we publish our content, when and in what form, whether conventional news, blogs, video or social media.

 A year later, key numbers for the FT are impressive:

– A 2013 profit of £55m ($92m, €67m) for the FT Group (which includes the 50% stake Pearson owns in the Economist Group); that’s an increase of 17%, while sales are slightly down by 1% to £449m ( $755m, €551m)

– 415,000 digital subscribers (+31% in one year) who now account for two-thirds of the FT’s total audience (652,000 altogether: +8%, including a staggering 60% growth in corporate users at 260,000)

– A rise in digital subscribers that offsets the decline in advertising now accounting for 32% of FT Group revenue vs. 52% in 2008.

– For the first time, in 2013, FT digital content revenue exceeded print content.

The FT might be on sale – but its management did quite well.

Echoing Lionel Barber’s view of resources reassignments are the equally strong terms from The New York Times’Innovation Report:

In the coming years, The New York Times needs to accelerate its transition from a newspaper that also produces a rich and impressive digital report to a digital publication that also produces a rich and impressive newspaper. This is not a matter of semantics. It is a critical, difficult and, at times, painful transformation that will require us to rethink much of what we do every day. [page 81] 

Stories are typically filed late in the day. Our mobile apps are organized by print sections. Desks meticulously lay out their sections but spend little time thinking about social strategies. Traditional reporting skills are the top priority in hiring and promotion. The habits and traditions built over a century and a half of putting out the paper are a powerful, conservative force as we transition to digital — none more so than the gravitational pull of Page One. [It] has become increasingly clear that we are not moving with enough urgency. [page 59]

The newsroom should begin an intensive review of its print traditions and digital needs — and create a road map for the difficult transition ahead. We need to know where we are, where we’re headed and where we want to go. [page 82]

These quotes from a news organization that never gave up on great journalism will be helpful to those who desperately struggle to transform newsrooms. It is also a plea for the necessity of dumping the obdurate print-first obsession:

– It precludes modernizing the recruiting process as journalists are still too often picked for their writing capabilities while many other talents are needed.

– It limits audience development initiatives. In today’s print-oriented newsrooms, most writers and editors consider their jobs done once the story is filed in the CMS (Content Management System). Unfortunately, in every fast-growing digital media outlets such as Buzzfeed, The HuffPo, Politico, Quartz, Vox Media, now part of the competitive landscape, throwing the story online is actually just the beginning. The ability to cause a news item to reverberate around the social sphere is now as important as being a good writer.

– As stated in the Times report, convincing the masthead on the mandatory resource-shifting in only part of the journey; most of the transformation’s weight lies on the shoulders of the rank and file in the newsroom.

– At the NYT as everywhere else, the old guard (regardless of age, actually), is the main obstacle to the necessary rapprochement between the editorial and the business side. For instance, by rejecting the idea that Branded Content would greatly benefit from the newsroom expertise (although everyone agrees that a news writer should never be asked to write advertorial), or that a conference is indeed an editorial initiative directed to a valuable audience segment, such conservative postures are actually shrinking the company down to its most fragile component.

– The same goes for the analytics arsenal. I heard scores of examples in which newsrooms call for more dashboards and indicators, but seldom use them. Editors should be supported by tactical analytics teams (including at the editorial meeting level) that will provide immediate and mi-terms trends, as well as editorial decision-making tools.

One of the most difficult part of the transformation of legacy media is not addressed in the Times Innovation report nor in the FT’s exposé. It pertains to the future of the physical newspapers itself (the layout of the Times remains terribly out-of-date): How should it evolve? What should be its primary goals in order to address and seduce a readership now overwhelmed by commodity news? What should be the main KPIs (Key Performance Indicators) of a modern newspapers? What about content: types of stories, length, timelessness, value-added? Should it actually remain a daily?

(To be continued…)

frederic.filloux@mondaynote.com

 

Cracking the Paywall

(This version corrects an error in the percentage for the price increase of the FT)

Every newspaper, magazine or website is working on a paywall of sorts and closely monitoring what everyone else is doing. In almost every news company, execs are morosely watching advertising projections and finding numbers that are not exactly encouraging. For digital media, there is no way around this year’s weak outlook: the bad economic climate only adds to the downward price pressure exerted by the ever growing inventory of web and mobile pages. In a best-case scenario, volumes and prices will remain flat. On the print circulation side, Western newspapers are likely to witness a continuing readership erosion at a rate of several percentage points.

But here is the interesting point: The strongest players don’t just bow to the inevitable, they accelerate their transition to digital. This week, I was struck by the fact two such leaders made the same move: The New York Times and the Financial Times both announced serious price hike for their newsstand price (respectively 25% and 13.6%) :
- The NYT moves from $2.00 (€1.57) to $2.50 (€1.96) from Monday to Saturday, with no change for the Sunday edition still priced at $5 (€3.92) in New York, and $6 (€4.72) elsewhere.
- The FT goes from £2.20 ($3.39 or €2.66) to £2.50 ($3.85 or €3.03) on weekdays, as the weekend edition moves from £2.80 ($4.32 or €3.39 ) to £3 ($4.62 or €3.63).

Those numbers are really meaningful: a 10% increase every two years or so can be seen as an inflation adjustment — a generous one considering the inflation rate in those countries to be about 2.5%-3.5%. At 25% increase is a strategic decision aimed at accelerating the switch to digital. (The paper version of the FT now costs 25% more than it did last October).

Interestingly enough, for a New York Times addict, reading the paper online with the cheapest package ($15 a month), is now 40% to 50% cheaper that the home-delivered version and 70% cheaper than buying the paper each day at a newsstand. As for the FT, the standard digital version is now 21% cheaper than the print subscription and 68% less than the newsstand price.

Both are working hard at converting readers to the digital paid-for model. The FT is heading full steam into digital, furiously data-mining its 4 million subscribers base to convert them into paid-for subscribers (250,000 according to the most recent count). The FT’s tactics is simple: readers are relentlessly pushed toward the paywall thanks to a diminishing number of stories available for free: from 30 free articles per month in 2007 it is now down to 8 articles; the other bold move is making registration mandatory in order to access even a single story.

Last year, the New York Times came up with a less readable strategy: the adjustable paywall. And it seems to work. The NYT has been able to collect 324,000 paid-for digital subscribers in nine months. Considering the NYT has about four times less non-paying digital registered users than the FT (therefore a lesser conversion potential), this is not bad.

The Times builds its paid-for strategy on three key factors:

1 / The uniqueness of its content. Let’s put it this way: The New York Times has no equivalent in the world when it comes to great journalism, period. This valued content helped collect 34 million uniques visitors a month in its domestic market, and 47 million worldwide. More than any other newspapers in the world, the NYT has a huge base of loyal users. If it manages to convert only 5% of its global audience, say 2.4 million people, and extracts an ARPU (combined subscription and advertising) of $150 per year, it will gross €360 million, which largely covers the cost of its newsroom ($200 million a year, by far the largest in the world).

2 / The managed porosity of its paywall. One key requirement in building the digital subscription system for the Times was keeping as many of its readers as possible. There are two main reasons for this: high audience numbers are critical for advertising revenue; and the visibility factor is crucial for a news brand. This led to a system that targets the heaviest users. But even those can easily game the system (by using several browsers on several devices, I never bump into the paywall, with no particular desire to avoid it). Similarly, prices vary from $15 to $35… for exactly the same content — this is typical of a price structure aimed at audiences with flexible purchasing powers (it is widely established that richer people tend to opt for the most expensive package, regardless of its true value).

3 / Getting in bed with Apple. Since the early iPad days, The New York Times has been working closely with Apple for applications, subscriptions, and the nascent Newsstand. Again: thanks to its unique brand and the trust it carries, the NYT experiences no trouble collecting the precious customer data the app’s default settings fail to provide. In doing so, the Times benefited from Apple’s huge promotional vortex. The Apple system is highly beneficial when it comes to building an audience. But it does so at the expense of the essential customer relationship, and at a huge cost of 30% when the goal should rather be in the 10% range.
That was the Financial Times’ rationale for breaking the Apple leash. Last week, the FT went even further: it acquired the software firm Assanka, well-known for the development of the FT.com’s remarkable web-app that insured its crucial independence from Apple (story in PaidContent). In itself, the move demonstrates the FT’s commitment to mobile products: HTML5 development remain difficult and the FT decided it was critical to integrate Assanka’s development tools.

Of these three factors, the uniqueness of content remains the most potent one. With the inflation of aggregators and of social reading habits, the natural replication of information has turned into an overwhelming flood. Then, the production of specific content — and its protection — becomes a key element in building value. As for price structures, there is no magic formula. Usually, the simpler the better (as Apple demonstrated) — especially for businesses that start from scratch. But, with pre-existing and different audience segments such as an individual and corporate users, pricing decisions become more complicated and a diversified price list can prevent cannibalization. As for the Apple vs. independent app issue, my personal take is that sleeping with Apple is a quick short-term win, an easier strategy. But, in the long run, the independent way (which, after all, is an article of faith for Apple itself) will yield better results.

frederic.filloux@mondaynote.com