Tuesday, July 22, 2014. Last Update: Tue 2:56 PM EST

The Audit

How Forbes got to $475 million

That’s what a Hong Kong investor has agreed to pay for a firm that two years ago had trouble paying its rent

Integrated Whale Media Investments of Hong Kong is now the majority owner of Forbes Media, valuing the company at a whopping $475 million.

What the buyers get is a dwindling print magazine, digital growth, and the Forbes brand, which has been seriously diluted in the last four years. It’s hard to imagine an American investor paying half the price.

Fortunately for the Forbes family (and for Bono), the brand apparently still has outsized allure for rich people in Asia. The $475 million valuation, if it’s accurate, is an enormous number for a company that projected late last year that it would take in $21 million in earnings before interest, taxes, depreciation, and amortization in 2013, according to a pitchbook obtained by Ken Doctor. Ebitda doesn’t include the cost of servicing debt, and Forbes’ is large enough that it went into technical default in 2011. It also had trouble paying its rent in 2012.

Its business fortunes have turned since then, but that has come at the expense of Forbes’ journalistic credibility.

It may be hard to recall now, but Forbes was a journalistic force not so long ago. Now it has a boss who says things like “content marketing just might be the full employment act for journalists.”

Four years ago, Forbes acqui-hired Lewis DVorkin and installed him as chief product officer. DVorkin implemented the model he had pioneered at True/Slant, where writers get paid by the traffic they bring, particularly repeat visitors.

This model allows Forbes to have a far larger stable of writers than it could ever employ under more traditional models of work that are subject to things like minimum wage laws. It’s sharecropper journalism. Writers effectively are tenants on Forbes.com, and Forbes gets a big cut of what they bring in. Or it gets everything: The median Forbes writer gets zip.

Forbes has just 40 staff reporters, but it churns out 400 pieces of content a day thanks to its 1,200 contributors. Four hundred of those are “paid freelance contributors,” who must write at least five times a month and interact with commenters. Sixty of them make more than $45,000 a year from Forbes, which means 85 percent of them make less than that. Throw in the unpaid contributors and that moves to 95 percent.

Effectively, Forbes has been paying people with its brand equity. But when you do too much of that, you dilute the brand.

Forbes has blurred the lines more than any other mainstream publisher between journalistic content and marketing/PR. Flacky garbage written by marketing executives and consultants is barely distinguishable at first glance from reported stories written by staff writers. This effect reached its nadir in this exchange reported by Pando Daily’s Erin Griffith:

A curious “interview request” arrived in my inbox today: A Forbes contributor would like to include my opinions in his post about equity crowdfunding. I was flattered for a minute, but then I realized what was really happening here: An executive who has been given a journalist’s platform is now asking — through a publicist — for a journalist to do his work.


I love the irony. Forbes has outsourced the production of content to non-journalists, who are now turning to actual journalists for content. And the topic? Crowdfunding. It’s a snake eating its own tail.

The pay for traffic system incentivizes writers to put out irresponsible clickbait like “Is The CDC Hiding Data About Mercury, Vaccines, And Autism?” It also results in most-read lists that look like this:

These kinds of things may increase your engagement and clicks, but they’re nothing but bad for a high-end brand like Forbes:

Even Jeff Jarvis doesn’t like it:

Now, when I see a link to Forbes on Twitter, I don’t know whether it is going to take me to (1) the good work of a Forbes journalists, (2) the good work of a Forbes contributor, (3) the bad work of one of many Forbes contributors, or (4) the paid and wordy shilling of a Forbes advertiser…

Thus, I hesitate three beats before clicking on a Forbes link. That is the definition of a devalued media brand

But while the strategy has been terrible for its journalism, it’s been decent for the bottom line. Forbes.com traffic has boomed under the strategy, with unique visitors nearly tripling and the company’s overall ad revenue up about $13 million since 2010. Ken Doctor reported earlier this year that Forbes.com’s ad revenue in 2012 was $42 million, and the company projected that to rise to $86 million by 2018. It estimated overall revenue last year at $144.6 million, with ebitda of $20.8 million. That would be a 14.4 percent ebitda margin, or about what The New York Times Company has.

Though it’s surely higher now, that $42 million in digital revenue is surprisingly small for a business site with hundreds of millions of pageviews a month. It implies an average CPM in the high single or low double digits. And that’s despite its aggressively annoying practices that goose ad revenue by auto-rolling video ads and showing interstitial ads every time you visit the site:

Put another way, back in 2009, David Carr reported in The New York Times that Forbes.com brought in an estimated $70 million to $80 million a year. In 2010, Dennis Kneale wrote that when he was Forbes’ managing editor, the site took in $75 million in 2005. Ad Age reported in 2009 an outlandish estimate that Forbes.com revenues were $288 million, which it at least prefaced with the line that “Internet revenue is even tougher for outside observers to estimate than web traffic.” The Forbes brothers themselves were projecting that the site’s revenue would surpass the magazine’s by 2007 to 2009 (while online ads recently surpassed print ads, overall revenue is still lower online).

In other words, in the ever-optimistic projections of Forbes, its online revenue might reach 2005 levels in 2017 or so.

Perhaps it will. Forbes has taken the path of least resistance in the internet media economy, where most of the risk is shifted away from the corporation: The workers are entrepreneurs, (almost) nobody has a job, and the owners make a mint collecting rents on their platform.

That’s not good for journalism or for the public, but it’s not a bad business model.

Murdoch moves on Time Warner

As pipes companies merge, another round of media consolidation

Seven years ago, when Rupert Murdoch stunned the media world by bidding for The Wall Street Journal, its parent company turned him down flat. Investors didn’t buy the rejection, and Dow Jones stocks jumped immediately to just under Murdoch’s unsolicited $60-a-share bid. Three months later, the Bancroft family signed over the company, and the rest is history.

Now Murdoch is after much bigger prey: Time Warner. Andrew Ross Sorkin reported in The New York Times this morning that Time Warner’s board rejected an unsolicited $85-a-share bid last week from Murdoch’s 21st Century Fox.

The arbs pouring into Time Warner shares today (70 million shares changed hands, 14 times the volume on a normal day) are betting that somebody will buy Time Warner, and that’s all but an inevitability now, as Murdoch knows. Time Warner shares closed yesterday at $83.13, up 17 percent on the day. They’re at $86 today, which means investors think Murdoch will be forced to raise his bid, either by an outside bidder or by Time Warner’s board.

If Murdoch wins, the media consolidation would be unprecedented. His combined company would be a $150-billion media colossus, with HBO, Fox, Fox News, Fox Sports, TNT, TBS, CW, Cartoon Network, Headline News, FX, 20th Century Fox, Warner Brothers, New Line Cinemas, DC Comics, Castle Rock Entertainment, Fox Searchlight, 28 local TV stations, and much more. Not to mention Murdoch’s WSJ, the New York Post, Harper Collins, and his overseas assets. Fox has signaled that it would sell CNN to avoid antitrust issues.

Murdoch’s deal doesn’t make much sense from an immediate business perspective. He claims the combined companies would save $1 billion in “synergies,” but news of the bid has knocked about $4 billion off the market value of 21st Century Fox.

And the deal would have a knock-on effect, driving other media companies to consolidate, as well. Consolidation begets consolidation, and Wall Street is already salivating over that prospect.

Murdoch’s bid itself is largely to defend against consolidation in the industry that controls how all that media content is piped into people’s homes. In recent months, Comcast and Time Warner Cable have agreed to merge, as have AT&T and DirecTV. If they succeed (both are being scrutinized by regulators), the two resulting firms would control more than half of the cable and internet market in the US. That will give them significantly more leverage in their battles with content companies over carriage fees, not to mention in how they price their services for customers.

Of course, with Murdoch, the bid isn’t just defensive. It’s also a power play. But it’s worth noting that he doesn’t always get his way. Four years ago, Murdoch went after the 61 percent of BSkyB, the European pay-TV company, that News Corp. didn’t already own, in a $12.5-billion bid. One year later, the hacking scandal forced him to withdraw in disgrace.

Now the scandal-tainted part of his empire has been spun off into a separate company that Murdoch still controls. But the scandal could flare up again, ruining Murdoch’s latest bid for world domination. As we learned last month, he’s a suspect now in the sprawling investigations into criminal corruption at his British tabloids.


A $52 million loss, but a good year for The Guardian

Digital revenue booms while print stabilizes and its trust fund surges

It’s quite something to note that a company that lost $52 million last year had a very good year.

But so it is with The Guardian, which is unique among major news organizations because it’s effectively a trust-fund paper—owned by a company whose sole objective is not to make shareholders happy but to make sure The Guardian operates in perpetuity.

To that end, the company sold off assets last year at sky-high prices, tripling its nest egg to more than $1.4 billion, and it still has a few hundred million dollars worth of assets to sell. That alone would allow The Guardian to run $50 million deficits until at least 2045—even if its assets earned no interest.

It’s an enviable position to be in, and it has allowed the paper to experiment and invest aggressively in digital expansion across the globe.

The Guardian will always run at some sort of a loss because it has the rich endowment to fund it. As CEO Andrew Miller says, measly 5 percent returns on its cash and investments would kick off more than $70 million a year—plenty to fund big Guardian losses while reinvesting to keep the nest egg ahead of inflation.

But if it can grow its revenue substantially, it could fund that much more journalism.

And that’s what it did last year, impressively. The Guardian’s total revenue jumped 7 percent, which is what counts as a giant gain these days in the newspaper industry. Its digital revenue soared 24 percent to $119 million. Critically, its print revenue, which is still two-thirds of all sales, stopped declining last year, remaining flat at just more than $240 million.

The question, as we noted in March, is how much The Guardian is spending to get that revenue.

While it lost $52 million, that’s down from a $58 million loss the year before. Meantime, its revenue was up about $23 million.That’s not a bad return, particularly for the early stages of an investment. But it’s unclear if the digital investment itself paid off or if losses were papered over, so to speak, by a blip in print fortunes.

The Guardian, using its preferred accounting measure, says its underlying losses were $33 million last year, a $12 million decline.

Regardless, with the paper’s enormous trust fund, fast-growing digital revenue, stabilized print paper, and its world-shaking journalism, The Guardian is in very, very good shape.

A Fourth of July inflation bugaboo

The press fixates on the “exploding” price of a barbecue

The press loves itself a good story about rising prices, particularly if it’s about the cost of food going up.

We see this just about every year with the flurry of stories based on an annual farm bureau press release that tallies up the cost of Thanksgiving dinner. When it’s up big, it’s evidence of impending hyperinflation to The Wall Street Journal editorial page. When it’s up slightly or down, it still gets hyped and twisted.

Now we’ve got the Fourth of July to keep an eye on, and the media is very worried that the cost of the classic 4th of July cookout has gone way up.

Bloomberg compiles the Bloomberg Barbecue Index, which it says shows the cost of a July 4th grill gala at a record. Ground beef prices are up 10 percent from a year ago, while hot dogs are up 5 percent, it says. “Veggies—this one really hurts—up half a percent. The reason why is ‘cause I love corn and butter, which I slather on my corn,” says Alix Steel.

Fortune has its own BBQ index, which it says shows the cost of an Independence Day cookout “skyrocketing” 28 percent in the last decade. An amateurish video accompanying the post extends the metaphor by deeming them “exploding prices.”

If none of these “indices” work for you, there’s the inaugural Rabobank BBQ Index, which got some play in the Los Angeles Times.

Problem is, all of these stories are at best incomplete and at worst misleading. Food prices are volatile, and cherry-picking a handful of food products as a symbol for the overall change in food costs is more likely to fool readers than to tell them what’s really happening.

And that’s true here. While the BBQ indices say the Fourth feast costs are up more than 5 percent this year, Bureau of Labor Statistics data show that overall food prices are up just 2.1 percent. The cost of a 4th of July cookout, up 28 percent over the last decade, is actually up a bit less than overall food prices, which have risen 30 percent.

But the bigger problem with all these reports is that they present these cherry-picked costs in isolation from the rest of the economy. It’s true that the price of hamburgers and chips went up 28 percent in a decade, but that’s in line with overall price increases, which are up 26 percent. In real terms, in other words, the Fourth of July price increases are basically a wash.

Meantime, median household income rose 20 percent over the same time and GDP per capita was up 34 percent. To put it another way, food costs have risen faster than paychecks for the average American over the last decade, but that’s primarily because the distribution of gross domestic product has continued to skew in favor of the very highest earners.

And anyway, these are not big jumps in the price of food over 10 years. From 1994 to 2004, food prices rose 28 percent, for instance. From 1984 to 1994, they rose 41 percent, and the decade before that they jumped 90 percent.

But it’s true prices have increased a bit more rapidly in the last year. The main contributor to that is the rise in the cost of beef. Cattle stocks have declined sharply since the late 1970s as Americans eat less beef. But supply and demand are out of whack now because of the devastating drought that’s hit cattle-heavy areas like Texas and Oklahoma and feed-growing areas in the Midwest. It will take a couple years for that to balance out. You won’t read about that in any of these stories, though.

Some of the weak coverage is simple angle inflation: Reporters get better play for their stories if they can play up some record price. Some of it is innumeracy: Fortune, for instance, calculates that its homemade quarter-pound burgers would cost $3.02 each, when they would cost half as much.

The American Farm Bureau Federation, the same group that puts out the Thanksgiving release, has its own 4th of July index, and it reports that the cost will run to about $5.87 a person for a feast that includes fully dressed cheeseburgers, hot dogs, pork ribs, chips, baked beans, potato salad, watermelon, lemonade, and chocolate milk.

“Feast costs less than 6 bucks a head” doesn’t grab readers like “Fourth of July barbecue costs sizzle after food prices rocket does, apparently.


The Loomis era

A note on the retirement of a business-press legend

Carol Loomis’ extraordinary career is being celebrated around the media world on word of her retirement after 60 (that’s six-oh) years at Fortune. As many, including the magazine’s managing editor, Andrew Serwer, have noted, people just don’t work at the same place for that long, or even a sixth that long, very much anymore.

Her career, starting in 1954 as a reporter researcher (then a women’s role; Fortune writers and editors at the time were virtually all men) and ending in 2014, spans almost the entirety of the postwar heyday of industrial-era journalism.

But Loomis’ place in journalism history is assured much less for her longevity than for her acuity, her fluency in translating business complexity for a mass audience, the obvious sense of decency and fair play that comes through in her work, and for her well-known tough-mindedness. She made into something of a specialty the art of calling powerful CEOs on the carpet, with, as I noted in my business-press-financial crisis book, a subspecialty of calling out earnings manipulation and other accounting shenanigans (e.g.: “ITT’s Disaster in Hartford,” May 1975; “Behind the Profits Glow at Aetna, November 1982). Her takedown of Carly Fiorina’s disastrous stewardship of Hewlett-Packard (February 2004) is the stuff of business-press legend.

A fine memoir piece the next year, “My 51 years (and counting) at Fortune,” is a well worth reading today. She recalls, for instance, how American Express chief James Robinson, the archetype of 1980s imperial CEO, once tried to pressure her to soften her findings, insisting she didn’t understand business or finance. The tactic didn’t work. “The problem was that I did understand how American business was being conducted,” she wrote, “and I didn’t like it.”

The Journal’s BNP Paribas ‘blunder’

Anonymous bank sources assure the paper they knew nothing about its crimes

Was BNP Paribas’s $8.9 billion settlement with the Justice Department caused by a long-running criminal conspiracy or was it just a boo-boo?

The Wall Street Journal implies it was the latter in a confusing page-one story headlined “Big Bank’s $9 Billion Blunder.”

From 2002 to 2012, the French banking giant laundered hundreds of billions of dollars for Iran, Sudan, and Cuba, running roughshod over US law. The WSJ’s headline feeds the notion—which has become standard operating procedure in the wake of the financial crisis—that BNP’s crimes were somehow not intentionally orchestrated by actual bankers. The DOJ, despite extracting a guilty plea and nearly $9 billion, didn’t charge any individuals.

A big part of the WSJ’s problem comes from its reliance on anonymous BNP sources:

U.S. authorities, acting on a tip from an informant, began their probe of BNP Paribas in 2009. Senior executives, who realized the bank would have to comb through trillions of dollars worth of transactions, believed it would turn out to be a misunderstanding, people familiar with the matter said.

In other words, senior executives tell the WSJ on background that they had no idea their bank was doing anything wrong. That dubious assertion comes immediately after this paragraph:

BNP Paribas executives came to the conclusion the bank could ill-afford to alienate U.S. authorities and jeopardize its American businesses, people familiar with the matter said. In June 2007, BNP Paribas’s chief executive at the time, Baudouin Prot, gave instructions to stop all transactions involving Sudan, one person said. Similar orders followed for Iran in September, the person said, and Cuba in December.

So the CEO knew enough in 2007 to order a stop to all transactions with Sudan, Iran, and Cuba, but two years later he thought it was all just a “misunderstanding”? The statement of facts in the case, which came out the day of this story and was signed by both the DOJ and BNP, suggests otherwise. It says the reason Prot issued the Sudanese stop in June 2007 was because the Office of Foreign Assets Control at the Treasury Department met with the bank a month earlier to ask for an internal investigation of the transactions, which BNP bankers processed with what they actually called “cover payments.”

It just doesn’t make sense that top executives didn’t understand what was happening. Particularly because so many in the bank knew what was going on, as the statement of facts makes clear.

“Concerning Cuba — It is true that we are not completely in line with the text of the U.S. regulations,” reads one message sent to senior bank officials in 2006. That came after an opinion from an outside law firm that said BNP was violating the law—an opinion which prompted email deletions and an order by a senior BNP attorney to “suspend any further work on this file.”

Even more damning, a compliance offer wrote in a 2005 email about one laundering method that “This practice effectively means that we are circumventing the US embargo on transactions in USD by Sudan.” Compliance officers then met with “the highest levels of the bank” to question the practices. What happened then? (emphasis mine):

At the meeting, a senior BNPP executive dismissed the concerns of the compliance officials and requested that no minutes of the meeting be taken.

Contrast that to the WSJ’s “Senior executives…believed it would turn out to be a misunderstanding, people familiar with the matter said.”

It wasn’t exactly a secret that BNP and other European banks were doing this. Even some in the press knew what was happening at the time. The Economist’s Intelligence Unit wrote this in November 2007:

As the US has continued to seek to eliminate loopholes, the banking sector as a whole is having increasing difficulty managing US dollar transactions. Formerly, much of this market went to a French bank, BNP Paribas, but that institution has now closed its accounts and is moving out.

The Journal itself reported in 2006 that BNP Paribas was under investigation for violating US sanctions against Iran.

And all this followed a Federal Reserve settlement with BNP in 2004 over its faulty money-laundering controls. Here’s the consent order signed by the New York State Department of Financial Services and BNP as part of this week’s settlement:

During that same 2004 period, internal documents obtained from the Bank demonstrate that BNPP’s most senior operations, compliance and legal staff knew of the Bank’s serous illegal conduct in violation of laws and regulations, and, rather than report the conduct to the Bank’s regulators, actively supported it.

So the Journal’s recitation of anonymous BNP executives’ assurances doesn’t hold water. And while its quote of a former board director saying, “They claim they knew nothing but then, who was running the bank?” helps, it doesn’t make up for it.

If BNP Paribas “blundered” here, it was in being far too forthright about its conspiracy in its almost comically forthright internal emails and memos.

Rupert Murdoch and News Corp.’s woes will continue

Rebekah Brooks’s acquittal is big, but there’s much more to come

Rupert Murdoch has known since sometime last year that he is a suspect in the investigations probing the systemic corruption at his British tabloids.

Which is why the $18 million he paid Rebekah Brooks when she resigned in disgrace from News Corp. and the tens of millions of dollars more he poured into her legal defense may be the best money he’s ever spent.

While one of Murdoch’s former top editors, Andy Coulson, will go to jail, Brooks had much more potential to bring the Dirty Digger himself down. She, like Coulson, was one of Murdoch’s top news executives while systematic hacking and bribery was filling her pages with salacious scoops. But she was later CEO of News International when the coverups of those crimes were ongoing and by all accounts a close confidant of the tycoon.

Brooks knew, despite her denials and her acquittal, what her newsroom was up to, at least on the more serious issue of bribing public officials. We know this from her own testimony:

That smoking gun, from a 2003 parliamentary inquiry into the press, wasn’t admissible in Brooks’s trial “because of rules around parliamentary privilege,” writes Nick Davies in an essential read on why she skated (Brooks later explained, improbably, that she had been speaking generally about the newspaper industry rather than her own paper).

Her acquittal makes it more difficult to connect any crimes or coverup to Murdoch himself.

Difficult, but not impossible. Because Murdoch has his own smoking gun to worry about: a recording of him admitting to his Sun journalists that he knew about payments to public officials by his papers:

We’re talking about payments for news tips from cops: that’s been going on a hundred years, absolutely. You didn’t instigate it….

I remember when I first bought the News of the World, the first day I went to the office… and there was a big wall-safe… And I said, “What’s that for?”

And they said, “We keep some cash in there.”

And I said, “What for?”

They said, “Well, sometimes the editor needs some on a Saturday night for powerful friends. And sometimes the chairman [the late Sir William Carr] is doing badly at the tables, (laughter) and he helps himself…”

That one presumably isn’t protected by some arcane privilege.

Nor are charges against Murdoch himself essential to damage him personally. News Corp. is essentially an extension of Murdoch’s ego whose “entire reason for being is to reflect, imitate, and amplify Murdoch himself,” as I wrote in 2011. And it is being investigated at the corporate level not only in the UK, but also here in the US, by both the Department of Justice, and by Congress. The Foreign Corrupt Practices Act prohibits American companies from paying bribes to government officials overseas, and News Corp. has admitted it did so.

The Daily Beast reports that the FBI “has copies of at least 80,000 emails taken from the servers at News Corp in New York,” implying prosecutors didn’t see them (something backed up by a thinly sourced Mirror article, though News Corp. told Reuters “we understand that material was fully available to the authorities in the UK.”

Beyond the corporate investigations, there are another dozen trials of News Corp. journalists on the way, with much more information to come (much of it the press knows but can’t report yet because of British law). And then there are the hundreds of civil lawsuits from hacking victims.

While this incredible story is far from over, it has always been and will continue to be a slog to challenge Murdoch’s resources.

Davies, The Guardian reporter who all-but-single-handedly broke the hacking scandal, writes that Murdoch’s legal team overwhelmed the underfunded crown prosecutors:

But when it came to handling the police evidence in court, Brooks and Coulson had squads of senior partners, junior solicitors and paralegals, as well as a highly efficient team monitoring all news and social media. The cost to Murdoch ran into millions. Against that, the Crown Prosecution Service had only one full-time solicitor attached to the trial and one admin assistant.

They’re going to need much more than that if they ever manage to get Rupert in the dock.

A reply to Clay Shirky

Who doesn’t distinguish between investing in journalism as opposed to print

NYU’s Clay Shirky calls Ken Doctor and me shills and nostalgists for our respective coverage of Aaron Kushner’s investment in The Orange County Register, and goes on to write that the “toxic runoff from CJR and Nieman’s form of unpaid PR is poisoning the minds of 19-year-olds.”

Young journalism students are still concerned about print’s future, Shirky writes, because folks like Doctor and me are “adults lying to” them about its prospects, an act akin to “child abuse,” in large part because we and our readers don’t like the implications of our secret knowledge that the future is largely digital.

More likely, the kids these days are wondering whether they’ll be able to pay their student loans in a miserable industry with few viable business models beyond the one they themselves don’t use. They might also wonder why leading thinkers like Shirky for years contributed intellectually to newspapers’ current state by opposing paid content long ago, coming around when it was all but too late.

Because if any of these 19 year olds have read Doctor or me at all on the state of the business (and something tells me very few of them have), they’ll know not to hang their hopes on the future of print.

I’ll let Doctor speak for himself, but we’ve both been very clear about the existential problems of print (as Shirky well knows) and the news industry’s dependence on it. Doctor puts it well, “My quest remains the same: finding new and more sustainable ways to pay good journalists to do their work.” I’d add: whatever the medium, though preferably a digital one.

The praiseworthy aspect of Kushner’s project for me and for CJR was his big investment in journalists, not in reams of paper. We’ll not apologize for that.

But Shirky can’t see the journalism for the dead trees.

And that’s the foulest part of Shirky’s screed: He’s glad, he says, that Kushner’s experiment (apparently) has failed. At a time when everyone was gutting their newsrooms, Kushner bought a newsroom with somewhere between 180 and 200 journalists and nearly doubled it in a little more than a year. Hiring reporters and editors, and lots of them? Was he crazy? Probably! But you have to give the man a hand for trying.

Shirky admits that I wrote that Kushner’s strategy would likely not end well, in part because of the overemphasis on print, but he complains that it was buried at the bottom of the story. Fair enough, though I thought we had tipped our hand with the headline, which was, “An ink-stained stretch.” In retrospect, perhaps we should have brought in Shirky to guest-edit it.

The really terrible thing is that both Chittum and Doctor understood from the beginning what made Kushner’s plan a disaster. They just couldn’t bring themselves to give it to their readers straight. In the same piece where he lauds Kushner, Chittum waits til 2/3rds of the way through to point out that the core of Freedom’s strategy “has been unsuccessful most places it’s been tried”, and buries his most important observation — it will probably fail — at the very end of the piece.

In a follow-up, the digital seer turns mind reader, giving my year-old piece an edit (turning it into something that no one would read) and writing this:

…you knew that Kushner’s plan was terrible, and you knew why it was terrible, but you pulled your punches, because you didn’t like the implications of the things you knew, and because your readers would like them even less.

Journalism has been groping for, and coming to, some kind of consensus on the way forward for a few years now, but this kind of thing doesn’t help. Nor does this.

But more importantly, Shirky is flat wrong that the hard paywall was the “core of Freedom’s strategy.” It wasn’t. Improving the quality of the paper was. Second, mine wasn’t an inverted-pyramid news story. It was a magazine piece, where it’s entirely appropriate to put your conclusion near the, well, conclusion. Third, if I had really been out, for some reason, to trick readers into thinking Kushner’s strategy was a sure thing, I probably wouldn’t have told them anywhere in the story that it was unlikely to work.

“Nothing will work. But everything might. Now is the time for experiments, lots and lots of experiments” as Shirky himself once wrote.

“Except,” he should have added (if I may add my own edit), “those I don’t think will work.”

Shirky would have you believe this is a simple story of a “terrible” strategy that has failed completely. But it’s not so neat. He actually misses the biggest flaw with my piece: The lack of information about Kushner’s financing. That’s often a problem when reporting on privately held companies, and it was here, as well. In the end, it is excessive debt—not the print-focused strategy—that is sinking Freedom. That doesn’t mean the Kushner strategy would have worked with more capital, but it does complicate matters.

Thanks to a Freedom investor presentation from November snagged earlier this month in the OC Weekly, we now know more about those numbers, as I wrote last week. The deal was basically an LBO financed with a large amount of debt. Kushner and partners didn’t have the capital to finance the big newsroom, ad staff, and print production investments, pay off the debt, put $33 million into the pension fund, and then launch expensive moves into Long Beach, Los Angeles, and Riverside. Kushner promised a “really long-term commitment,” but you have to have the capital to do that.

According to Kushner, the first full year of his ownership saw double-digit circulation revenue gains and even print ad increases. But the overall revenue gains weren’t enough to cover all these costs, especially the debt. The problem with sussing out exactly what happened here is that, again, it’s a private company and doesn’t have to disclose anything it doesn’t want to.

The thing is, as Doctor informs Shirky, print still matters, 20 years into the Web era. Calling it “nostalgia” is silly. I do virtually all my reading digitally, but tens of millions of people don’t, and they support what’s still far and away the largest newsgathering infrastructure. Print newspapers surely throw off more profit—still—than all digital news outlets have revenue. The key to any future for newspapers—and I’ve said repeatedly over the years that there may not be one for many or most of them—is managing that decline while building up their digital business. Sunday papers will be around for a long time. Monday papers will not.

If I were, say, on the advisory board of the newspaper company, I might have advised a little more caution and patience. But I’m not, which is why my advice is limited to questions about strategy in a magazine profile. Shirky should know a little something about this. He’s on the advisory board at Digital First Media, the management concern that took its newspaper operating company, the Journal Register Co., through two bankruptcies bankruptcy [CORRECTING: a second bankruptcy was by a JRC predecessor] and fired its entire Thunderdome digital team to appease its financiers. [Adding disclosure: Digital First’s CEO, John Paton, recently joined CJR’s Board of Overseers.] That particular company—aggressively—held itself out as the very avatar of experimentation. And, you know, we didn’t particularly believe in the model, but no one around here applauded when it ran into trouble. Who does that?

We haven’t heard word one from Shirky on DFM, his client, much less on the 19 year olds it presumably led astray.


A rockstar of the paywall set

A Q&A with the Financial Times’ Rob Grimshaw—“Ultimately, it does come back to the content”

LONDON—The New York Times’ efforts to adapt to the digital age gets all the attention, for better and for worse.

But actually, the most successful English-language news organization in navigating the transition from a print-centered to a digitally oriented operation is the Financial Times, the UK-based business paper.

And if there’s a man behind the curtain, it would be Rob Grimshaw.

Grimshaw is the managing director of FT.com and architect of the metered subscription model—allowing some free stories before asking readers to pay—that was launched in 2007 and which the Times copied four years later. He’s also guided the data-intensive marketing operation that turned the newspaper from an industrial company into what is now effectively an online retailer of its content. Along the way, the FT, a unit of Pearson PLC, achieved a few other important firsts: It was first to earn more revenue from readers (subscriptions) than from advertisers, reversing the model on which newspapers have relied for decades. It was first to earn more from digital operations than from print, going truly “digital first.” See this post of mine from 2012 for more details.

And most importantly, it was first to successfully replace falling print revenue with digital income. In other words, while it’s great to be digital first, it’s not so great if that only means that digital revenue caught up only because print was falling so fast. That has not been the case with the FT, as this graph shows (keeping in mind 2009 was an anomalously down year; the trend is basically flat):

That’s largely thanks to the paywall and the rise of digital subscriptions, which Ryan Chittum documented here:

And this, remember, was when the rest of the industry was in free-fall, so flat growth is no small achievement. Here’s a look at that via Pew:

Some chunk of the credit redounds to the self-effacing Grimshaw, 42, who joined the FT in 1998 after stints at other UK news organizations and became an FT.com executive in 2000. A graduate of the University of Warwick in philosophy and political science, Grimshaw’s professional background, importantly, is not in technology or editorial, but in advertising, a bit of a paradox given that the reader-centered model he engineered represents a move away from advertising. Along the way, the FT took a couple of big risks: lowering the meter to force more people to pay sooner, which risked alienating causal readers and causing ad-driving traffic to fall; and developing its own digital application using a common coding language, known as HTML5, rather than selling the FT through the Apple store, as other media outlets have done. Both worked out, and ever since, Grimshaw has been in demand to discuss the FT’s model around the industry.

The big question for the newspaper business is the degree to which the FT’s model is replicable to other newspapers, particularly American regional general-circulation newspapers. What parts of the model can be copied?

One notable element of the FT’s strategy, for instance, is that it has avoided the dramatic newsroom cuts carried out by the rest of the industry. The FT now has about 550 newsroom employees, up from 450 in 2006. Industry-wide, newsroom employment is down more than 30 percent in the same period. In this, the FT is similar to the Times and The Wall Street Journal, both, as it happen, also successful paid content providers.

Still, it’s important not to overstate the case. The FT’s audience is very well heeled and pays at least $325 a year in the US and $450 a year in the UK for a digital subscription alone. What’s more, the FT does a good business (which it doesn’t break out) selling subscriptions to corporations, essentially a business-to-business operation that isn’t replicable by general-circulation newspapers.

Still, Grimshaw is adamant the FT’s model can be copied. I sat down with him last month at his glass, cube-shaped office overlooking the Thames at the FT’s headquarters in London’s Southwark section. The conversation has been heavily edited for conciseness.

Dean Starkman: Which philosopher has been most useful to you?

Rob Grimshaw: (Laughs) That is a good question. You know Kierkegaard actually. I mean faith is quite important for the digital business. You have to believe it’s going to work out.

DS: Would you describe the period of trial-and-error that got you to this moment?

RG: We put the paywall online in May 2001, and it worked okay but it didn’t work that well for six years after its inception. There were a couple of reasons for that. We had got a poor model. It was a very straightforward paywall. Some stuff was behind it and some stuff was in front. We didn’t have the expertise as an online retailer to know why it wasn’t working as effectively as we thought it might. And also the advertising business in that stage was booming. The growth trajectory on [digital] advertising was very, very strong.

DS: People forget that.

RG: Absolutely. Through that period, whether it was us or whether it was anyone else in the marketplace, you were making very strong, double digit growth on digital advertising… until maybe 2006-2007 other than the exception of the years immediately after the dotcom bubble burst, 2001-2002. And remember, this is a time pre-social media. Google was [just] starting to be a force in the market. There were many people at the FT and elsewhere who were saying advertising is working, so why do we need to worry about this [subscription] stuff? I think we came to the end of that road quicker at the FT than other publications because we lacked scale. It’s obvious that we are not going to achieve the scale of a Yahoo. It became clear that unless we had a fundamental change in the way we approached editorial, we were always going to a niche site on the web. Our traffic figures were always going to be a constraining factor.

DS: So what was the turning point for the digital side, meaning emphasis moves from advertisers to subscribers?

RG: The turning point was two-fold: Firstly a new model being put in place, the famous model now being used by the Times and hundreds of publications across the US. And that went in in November 2007 and it was a model which was much better adapted to the web… We started to see upticks right away. But …it was implemented relatively timidly at first in order to avoid harming the advertising business.

The second big change came when the advertising guy took over the business, which is me. And actually having been very close to advertising, conscious of the fact that advertising wasn’t going to do the growth that everybody wanted it to, we needed an alternative. And that to me, meant being much more bold on the subscription side, and pushing, turning the dial on the meter model over toward subscription.

DS: Turning the meter down to give away fewer free stories?

RG: 2008 is the moment where we really accelerated down on the subs model, and we took a little gamble on the advertising side. My bet was that as people took up subscriptions they would spend more time on the site, and we would have tools that would help us to do that, because if someone is a subscriber, you can email them, you can bring them back to the site more often. That’s what happened. As a result, even though we got much more aggressive with the positioning of the barriers, traffic on the site really did not dip.

DS: That was the fear, yes?

RG: Absolutely. And we actually since that point in 2008 have grown our advertising revenues every single year. And generally, either in line with or ahead of the marketplace. There has been no or very little price to pay on that side of things. The gain on subscription side has been enormous, because what we found was, as soon as we pushed hard on this, and we turned the dials on the model to the point where many people were coming up to barriers, a lot of people went through, and more than that, they were happy to come through at price points that were far above what any of us had anticipated.

DS: Help me understand the HTML 5 issue: what was the choice there, what was the challenge?

RG: The challenge was Apple’s terms and conditions, which had two problems. The first is the Apple tax, they wanted to take 30 percent of every transaction around our subscriptions, every acquisition and renewal. And it doesn’t make a whole lot of sense to pay 30 percent to somebody else’s billing platform when you’ve already built your own at great expense, so that was a headache. The second big thing, which in many ways is more important, is Apple wanted to intermediate in our relationship with our customers. Now we knew, because we had a pretty mature model at that stage, that the relationship with the customer is absolutely crucial. If, for example, you wanted to manage your churn rate effectively, you need to be able to talk to your customers; you have to have that direct channel if you want to upsell, if you want to market other products, etc. etc. If you want to bring your customers back to the site on a more regular basis, you need to have that relationship…When you add it all together, we knew that around 60 percent of the value of a subscription to us would disappear if we went through the Apple channel.

DS: 30 percent plus the other 30 percent.

RG: Exactly. It’s a big deal.

DS: Why is data so important for publishers now?

RG: For example, we try to get hold of every customer who cancels, and what we find is that not every cancellation is the same. It’s very common for example for people to cancel simply because of a payment failure, their credit card we hold for them is out of date, they forget to update it, the payment doesn’t go through, and just by putting in a call or sending an email, it’s a prompt reminder that gets people to go, “Oh, I didn’t mean to cancel that. I’ll go and fix that.”

DS: Simple things.

RG: Very simple things. And a huge portion of the people we get hold of actually will resubscribe, and that business is worth millions and millions of pounds. Other areas is simply people not having full understanding of the product. So it’s not unusual for our customer services to have conversation along the lines of “Do you know why you’re canceling?” “Well I’m canceling because the mobile experience isn’t very good.” “Have you tried our app, sir?” “No. Where do I find that?” “Well you find it at FT.com.”

DS: Just to take the mystery out of data: we’re talking specifically about selling renewals and subscriptions and new products. Plus, I assume, data has a role to play in advertising.

RG: It does absolutely, and certainly the targeting that we’re able to often advertise is driven by the data on the inside. Now, to be absolutely clear, we are very very careful that the data we use is anonymous, and so we would target a particular segment by job title, for example, a particular industry sector. But that from an advertiser’s point of view is pure gold, and from a reader’s point of view, well, I would be wary of selling that as a benefit to readers but certainly it’s not particularly intrusive to have ads that are relevant to what you do.

DS: That’s Google’s model.

RG: And it works extremely well. The other crucial area that is important to emphasize is product development. We spend a lot of time looking at the data for how people use the site, and also from generating feedback from focus groups and those sort of things, so that as we put new developments through [an internal] product council and things, those all come with a set of documentation that says, “Actually, on the basis of our insight into the audience, and what readers have been telling us, we think this is the right next thing to do.”

DS: As in, “We need a fastFT.”

RG: Exactly. And without that direct relationship with the reader, you’re kind of guessing about that stuff.

DS: Can you explain your big push into video, which seems difficult, expensive, and not necessarily promising from a revenue point of view?

RG: Video for sure has more challenges than written journalism for a publisher, but there are some important counterpoints to what you’re saying. Firstly, in terms of the cost of producing video, it is coming down and it’s coming down because of changes in technology. Some of our video now is shot on smart phones. I cannot tell the difference when I’m watching that on the screen. There’s the editing process, which can be time-consuming, but even around there, there are models emerging from ourselves and other peers in the industry which use much lighter-touch editing and where we’re getting a much more relaxed about, for example, an individual reporter doing a short piece to smart phone and you just put it straight up on the web with a minimum of editing.

The other important thing is the dynamic in the advertising market. There are big differences between display advertising and video advertising, and actually these differences are quite basic and fundamental.

So to put it in very simple terms, on a single webpage, you can have maybe three big display positions; some other publishers push it further. And you can refresh those display positions, show a new ad every time someone moves to a new page. Given the way that people behave on the web, that’s often once every few seconds [and] that drives the proliferation of display inventory. By contrast, you can only show one video ad per page, and your next opportunity to show a video ad could be three, four minutes away. As a result, the propensity for video inventory to proliferate is much less than display. And the potential supply of ad revenue, if it’s coming from the TV part, which many people think it will do, is almost inexhaustible, for practical purposes. That, we think, is the reason why CPMs [ad prices; cost per thousand views] in the video market are actually holding up much better than anyone expected, and video certainly much better than the display marketplace.

DS: What’s the difference between the CPM rates in video versus display?

RG: The rates in display are now dropping to levels where it’s hardly worth anyone doing it. It is not unusual on exchanges to be able to buy ad across the web for, you know, 50 cents per thousand and less. We are operating in territory of 30, 40, 50 dollar CPM. My head of advertising hates it when I quote CPMs, because inevitably the next meeting he goes to, someone says, “You’re trying to charge me 80 dollar CPM, and your MD said that you trade at 40.” The reality is that the CPM is tailored to the campaign and the particular target audience, so it can vary an awful lot. But we operate in territory which is far above the rest of the marketplace.

DS: And versus FT video, what would the numbers be there?

RG:FT video, we’re doing similar CPMs, slightly higher than our display advertising, but what’s interesting is that our differential over the rest of the marketplace is much smaller than it is in display, so actually the rates for CPMs for video across the marketplace are pretty strong, you’re talking in $20-30 CPMs. It’s not untypical for good quality video programming across the web.

DS: It’s actually good news in some ways.

RG:It’s very good news, because what it means is that publishers are able to turn traffic into revenue.

DS: Last thing is the general question: when we were at a breakfast panel a few years ago, Clay Shirky asked the key question: Basically, to what degree is this applicable, and to what degree isn’t it, to the St. Louis Post-Dispatch or some regional paper. What do you tell the Boston Globe or Charlotte Observer when you visit? Or are many newspapers just past the point of no return?

RG: Firstly, there is nothing to lose, and certainly our experience and New York Times’ experience, the experience of all the titles who are using [paywall] platforms like Press Plus, is subscription is all upside. You don’t lose your advertising revenue. The two things can go together, so why not take that money that’s on the table? And I think there are close to a thousand local and metropolitan titles in the states who have found that now.

DS: But there’s subscription money, and then there’s serious subscription money.

RG: Exactly, and that what is unproven still. My strong belief is that the core of the model, or the core of a successful model, on the web is unique, differentiated content. It doesn’t matter whether that content is finance or business news or general news or local news. If you’ve got something that nobody else has, and there is a group of people who want that, then you have a business. And that something could be great stories about what the local college football team is doing, or so on and so forth. Now the scale of that business is an open question, and we’re yet to see what kind of scale the business can be built on the back of that.

DS: Mostly it’s about what kind of prices you can charge. You talk about scale, you can get a large group of people to come, but can you get hundreds of dollars a year from each?

RG: Those dynamics are very particular to an individual marketplace. But people will pay a lot for things they want. You know, people buy ring tones. The world is different. The publishing industry used to be the gateway. It was the distributor. It was the only way to get the news in a lot of these marketplaces. That role no longer exists, and certainly a publishing business based around republishing and distributing stories, for example, I think simply isn’t viable in a web environment. It isn’t necessary.

DS: Another thing you wonder about with the FT is that because it caters to this global financial elite, not everyone is going to have that market either. I’ve always resisted the idea that financial news was somehow magical, that it exists in some special category, but what do you think about that?

RG: I’ve never bought that as a notion. I think as a niche it has advantages and we probably benefit from that, but the benefit is not as substantial as some commentators made out. And the fact is that within our niche we have an enormous amount of competition, the number of, for example, financial or markets oriented blogs which are pushing out content for free is enormous.

DS: Really, you make it sound easy, and yet it’s not working for most local newspapers in the US, let’s face it.

RG: I don’t want to make it sound easy. Putting in a subs model, I think, is easy and straightforward. I’m not saying it immediately provides the whole solution because as you say, there is an issue of scale, and to sell one sub is not good enough, you need to sell thousands, maybe hundreds of thousands, to sustain the kind of news operations they’ve been used to having. And I do think they have real challenges in that regard because as I say, the part of what they did by acting as distributors for national or international news stories simply doesn’t exist as a necessary role in publishing anymore. The classifieds business, which was a huge part of the way they generated revenue from advertising, has melted away almost entirely and I don’t think it’s coming back.

DS: But they’re basically needing to do what you do; you don’t do classified ads; you sell content to readers. That’s the hope but that’s also the frustration, because it doesn’t seem to be working. Their content isn’t good enough, it’s cut back too far or, I actually don’t know. You tell me.

RG: Ultimately, it does come back to the content. It’s got to be good enough or unique enough for people to want to buy it, and unless those two things are true about it, then actually they won’t succeed either way. They won’t generate the audience they need for advertising, let alone sell a subscription, unless what they’re putting on the page is compelling and attractive to the audience. The subject, I don’t think it matters whether it’s finance or a football team. But it’s got to be something that draws that audience in. It puts much more emphasis on the editorial process and being able to craft something that is attractive.

DS: I guess the last thing is, if you’re trying to sell this idea to an investor, is there an optimistic picture that can be painted with growing margins on the digital side of the business as the print thing falls off and print expenses go down. Is there a story that could be told?

RG: We’re telling a story at the moment. FT’s margins have been improving continuously over the last few years.

DS: Because you’re distributing fewer papers.

RG: Exactly. You know, it reflects the transformation in the business and the fact that actually the digital revenue streams that we’re bringing online are very high margin.

DS: What kind of profit margins?

RG:I don’t think we have quoted margins…

DS: And what kind of margins overall do you quote?

RG: So we are now in high single digits, I think we were 7 percent margins last year. [UPDATE: Actually, the FT Group’s 2013 margins were 12.2 percent; the following sentence basically still holds true:] We are aiming to push that considerably higher this year.

DS: And basically because of the shift to digital it’s cheaper to produce.

RG: Absolutely.

DS: That’s an optimistic note.

Why the Orange County Register’s bold experiment hit the skids

Debt doomed Aaron Kushner’s dramatic expansion strategy, financial documents show

Aaron Kushner’s massive investment in The Orange County Register—one I argued a year ago was “the most interesting—and important—experiment in journalism right now”—has gone all pear-shaped.

The Register is laying off or buying out up to 100 journalists from its massively expanded newsroom and reducing page counts by a quarter, “to align our cost structure with what we now know we can achieve in revenue growth,” Kushner wrote last week in an email to the newsroom.

The layoffs and buyouts follow personnel moves earlier this year that resulted in the departures of four top editors along with 32 others in the newsroom.

All this amounts to a dramatic, 180-degree reversal for the Register, which had been closely watched around the newspaper industry for its contrarian strategy of rapid expansion based on the idea that newspapers’ problems stemmed in large part because they were cutting themselves to death.

As part of the strategy, Kushner had nearly doubled the size of the Register’s newsroom, adding 170 journalists, while bulking up the physical paper, increasing page count by more than half. He expanded its community sections, created innovative marketing programs, bought the Riverside Press-Enterprise, and launched newspaper wars in Long Beach and Los Angeles, opening competing editions in each city.

From the beginning, Kushner said it could take years for his plan to pay off and that he was investing for the long term. But the question then became: was Kushner’s group adequately capitalized to invest for the long term? The answer is clearly no.

Kushner and his partners bought Freedom Communications, the Register’s parent company, in 2012 for $50 million and the assumption of pension liabilities. We now know that was a highly leveraged deal, financed with $45 million in debt, presumably of the very high interest variety.

Those numbers comes from a November presentation, obtained by the OC Weekly to potential investors in Freedom, which provides a trove of financial information that helps explain why the operation has run aground.

Kushner and his partners immediately began selling several businesses, including the Colorado Springs Gazette, and used the $42 million proceeds to pay down more than half of that debt. They also spent $33 million shoring up the company’s underfunded pension plan, according to the presentation. That implies that they dipped into Freedom’s cashflow to do so.

So, Freedom aggressively paid down long-term obligations while it was, at the same time, dramatically increasing operating expenses by adding a total of 400 jobs and print production costs. Without a capital cushion, something had to give.

Critically, as the investor presentation shows, it also loaded up on super-high-risk debt—again—to buy the Press-Enterprise. Its pitch to investors offered a whopping 10 percent interest plus 8 percent payment-in-kind loan, which is a kind of balloon payment paid when the investment term ends. This at a time when the average junk bond yields a near record low 5 percent.

That kind of high-wire financing leaves no room for error.

Probably the most interesting part of the investor pitch is the growth it projects for the Register last year. It projected a 16-percent increase in circulation revenue and a whopping 17-percent jump in advertising, which would move revenue from $119 million in 2012 to $139 million in 2013. Trouble is, those were estimated numbers for 2013, not final ones, and it’s unclear what those estimates were based on. Freedom and the Register didn’t respond to requests for comment.

If the Register increased circulation and ads at even half that level—remember, those numbers are still falling in much of the rest of the industry—it would be a major achievement.

And it may even have happened. In his newsroom memo, Kushner wrote that revenue has grown at the Register, with circulation money up in double digits and ad sales up, as well. That’s a big deal. But clearly whatever growth there was was not enough to support the expanded-newsroom strategy.

Since parent Freedom Communications is private, it hasn’t had to offer any specifics. Transparency would do the company some good right now.

There were always clear problems with the Kushner thesis. Northeastern University’s Dan Kennedy writes that I had “hailed their print-centric approach,” but that misreads what I actually wrote in an article that was, after all, headlined “An ink-stained stretch.”

The bet on better journalism was always the key to success, not the emphasis on print itself. The company’s neglect of the digital side of the business was always troubling. As I wrote, the company may have been emphasizing print, “[y]et the most conceivable future for newspapers, 10 or 20 years hence, is one in which they have converted print and hybrid subscribers to digital-only subscribers, shedding much of the cost of production and distribution. The Register will pick up few digital-only subscribers at $30 a month, particularly when its website and tablet apps are so weak. If the bet is truly on content and not the medium, digital will require serious investment, too.”

That’s still true. And by investment, in this case, that meant equity, not debt.

Market power and the media baron

The anti-competitive practices of Washington Post owner Jeff Bezos

No one should be surprised that Amazon is employing anticompetitive tactics in its negotiations with the book publisher Hachette. As Brad Stone shows in his definitive history The Everything Store: Jeff Bezos and the Age of Amazon, that’s just how Amazon does business, particularly as it has grown in size and importance.

As it happens, Amazon’s founder, chief executive and largest shareholder, in addition to being the most powerful person in books, now controls the most powerful news organization in Washington. This is no small consideration, either for readers or for regulators.

Bezos became a publishing baron out of calculatedly commercial motives. He’s not the sort to fish through a sea of manuscripts and pull out one from a then-unknown David Foster Wallace, as Hachette’s CEO once did. Bezos got into books because they were the easiest-to-ship commodities with the highest inventory variety, which meant his warehouse-and-UPS model could offer customers exponentially more titles than even the biggest bricks-and-mortar bookstore. His ultimate goal was to build the Walmart of the Web, a model he dreamed up while working on Wall Street. And he has clearly succeeded.

On the book side alone, Amazon today sells 41 percent of all books in the US. In ebooks, where the Hachette dispute is centered, it has 67 percent of the market. That market power is boosted by the fact that books account for just 7 percent of Amazon’s revenue. It is not dependent on them. Hachette and its parent company are.

Amazon uses that market power wherever it can, as The Everything Store makes quite clear, and as European regulators, unlike their US counterparts, are now formally investigating.

Stone writes in The Everything Store that Amazon executives took “an almost sadistic delight” in using their heft to squash small publishers. Bezos pushed for what came to be known as the Gazelle Project, which called for Amazon to “approach these small publishers the way a cheetah would pursue a sickly gazelle,” using tactics like it is using against Hachette to sharply reduce a company’s sales. A similar program—forcing smaller-selling publishers to agree to more onerous terms—was actually called “Pay to Play until Amazon’s lawyers forced a change to the more innocuous “Vendor Realignment.”

In 2010, it removed the “buy” buttons from the publisher Macmillan’s books over a dispute on terms. That same year, seeing a threat from Diapers.com, it introduced a program that sold diapers at a huge loss in order to force its competitor to sell out or go out of business, Stone reports. Weeks after Amazon bought Diapers.com it closed the program, which had been losing hundreds of millions of dollars. That’s how John D. Rockefeller’s Standard Oil used to operate at century ago. The Federal Trade Commission looked into it and did nothing.

Amazon does something similar with books as it did with diapers, which is why the publishing industry views it as a mortal threat. Amazon has long discounted physical books, making little or no money on them (as it does with almost every product it sells). Most analysts believe the company loses money on ebooks, which it often sells below cost. It does this, Stone makes clear, to keep competitors out of its space, ensuring its dominant position.

Now Amazon has what’s known as monopsony power, meaning its market position is such that it has the power to dictate terms to suppliers. That reduces costs for consumers, at least in the short term, but it gravely wounds suppliers and makes them even more dependent on Amazon. Even the Wall Street Journal editorial page—no fan of antitrust enforcement—had to concede that “Amazon’s conduct would normally draw the ire of regulators as either predatory pricing or deceptive bait-and-switch marketing.”

The battle of Hachette, if Amazon prevails, could be the industry’s Waterloo.

With calls for government intervention increasing along with his company’s market power, Bezos’ position as the owner of the Washington Post becomes significant. No one really knows why Bezos bought the Washington Post from the Grahams last year for $250 million. But whatever the reason, the deal showed more clearly than any other the degree to which the power of the press is shifting into a Billionaire Savior era, for better and for worse.

The problem is that Bezos needn’t meddle in editorial decision-making to affect how readers perceive the paper’s coverage.

Yes, the Post here has an apparent conflict of interest, if not an actual one, which the paper acknowledges with italicized disclosures at the end of Amazon-related stories, including soft features like this one, speculating about the possibility that a “Bezos phone” may be on the way.

Disclosure is necessary, of course, but it may not sufficient.

For instance, while the Journal and The New York Times editorial boards have both weighed in on the battle with editorials and run anti-Amazon or pro-publishers op-eds, the Post’s editorial board hasn’t. It ran a Steven Pearlstein column that criticized the publishers much more than it did Amazon.

In a disclosure statement, Pearlstein good-naturedly declares himself “hopelessly conflicted,” both because of Bezos’ ownership of the Post and because Pearlstein has a handshake agreement to write a book for a division of Macmillan Publishing.

That’s fine, as far as it goes but clearly the motives of the Post as an organization are open to scrutiny in a way that those of rival news organizations are not.

That said, the Post’s news side has done fine covering the story, the issue with Bezos’ ownership of the paper is a murkier one involving issues of how power works in the new press age.

Where newspapers were once a mighty profit center in and of themselves, in the new model, “the press is not powerful in its own right,” Audit Chief Dean Starkman wrote a day after the Grahams announced the sale. “The titans’ power flows from elsewhere. The press is, in an economic sense, incidental to their wealth. Journalism under this new model is enveloped by, and dependent upon, interests far larger and quite different from its own.”

A big issue these days, we hear (I’m linking to the publisher here; take that, Amazon), is the concentration of economic power in the hands of a few, as well the related question of whether the government has the wherewithal to respond to the rise of individuals and companies with the power to control and ultimately capture whole markets.

The Washington Post certainly still has the journalistic firepower—both on the news side and the editorial side— to take on these questions, but it won’t get the benefit of the doubt until it does.

The New York Times can’t abandon print—yet

It would immediately swing to a big loss

Everyone in the news business feels a sense of urgency these days, as well they should.

But there’s urgency, and then there’s panic. The Timesinnovation report, which made a splash when it was leaked during the controversy surrounding Jill Abramson ouster, at times overstates the precariousness of the Times’ digital position and smacks of the latter.

The report’s dire tone, suggesting that the Times is losing out to more nimble upstarts, led some, like Frédéric Filloux, to suggest the paper needs to blow up its business model and go digital-only right away. That’s not going to happen, nor could it—yet.

The NYT’s giant newsroom costs somewhere around $200 million a year, and its digital-only revenue from ads and subscriptions is now well above that, at more than $312 million in 2013. The Times also brings in money from its news service, digital archives, and conferences. Much of this $86 million in “other” revenue would survive the demise of print. Assuming it would all survive shutting off the presses, the NYT has roughly $400 million in non-print revenue.

Unfortunately, it also has $1.41 billion in operating costs beyond the newsroom, and printing the paper likely accounts for less than half of that. Even if it shed all its print-production costs, the NYT would still have to pay for a large tech staff, ad sales, and business-side management. The Times would go from an operating profit of $156 million to a loss of at least $150 million a year if it dropped the print paper.

The NYT’s innovation report gives us a glimpse at the costs, for instance, of digital distribution, which, while a fraction of print costs, are still significant. The Times’ “reader experience” department, to take one big item, consists of engineers, programmers, designers, product managers, and analysts, totaling more than 630 employees. Those are on top of the 1,100 to 1,200 employees in the newsroom, and on top of the ad department and the rest of the business side.

It’s difficult to estimate precisely what the Times or other papers spend to print and distribute their physical newspapers, but looking at research from IBISWorld, we can estimate that, industrywide, the average figure is somewhere between 35 percent and 45 percent of revenue.

Using those numbers, the Times could lop off between $500 million and $650 million of its $1.4 billion annual operating costs by shutting down print. That would leave it with at least $750 million in operating costs, roughly twice its digital revenue.

How much could the Times gain by dropping print? A good number of its print subscribers would convert to digital if the paper suddenly disappeared. The Times has 1.2 million print customers on Sunday, according to the Alliance for Audited Media. Getting a third to a half of them to subscribe digitally would add $78 million to $117 million in additional revenue. That would bring the total up to between $475 million and $515 million, still far short of what it needs.

It’s likely that some Times print advertising would shift online if the paper were no longer there since advertisers would now only be able to reach Times readers online. But it’s not at all clear how significant that effect would be. Even if 20 percent of print ads migrated online—which would be a big success—that would add another $100 million in revenue, leaving the NYT roughly $150 million short.

Under this scenario, the Times would be in deep financial trouble by next year or 2016. It has $850 million in cash and short-term assets, but at a burn rate of at least $150 million, it would find it extremely difficult to refinance the more than half a billion dollars of debt it has maturing in the next two years. That would likely force a sale of the company.

The smarter choice would be to continue mostly on its current trajectory: Winding down the print business as slowly as possible, while building up its digital base to prepare for the day when print stops throwing off hundreds of millions of dollars in cash.

A less deadly scenario would be for the NYT to go weekly, as Steve Outing suggests, keeping the super-lucrative Sunday paper while ditching the daily print edition. I’d bet something like that will happen by the end of this decade.

And far from being the digital weakling, as the innovation report would have it, the Times is huge online. While the report makes much of the fact that the Huffington Post and BuzzFeed have surpassed the NYT’s digital traffic, it doesn’t talk much about revenue. But the nearly $400 million brought in by the NYT’s digital businesses last year was more than double the combined revenue of BuzzFeed, Upworthy, The Huffington Post, and Business Insider.

The innovation report is convincing in its arguments that the NYT needs a digital-business realignment, particularly by letting the 600-strong reader-experience department from the business side interact with the newsroom. That’s a no-brainer.

But don’t forget that the Times has a large and growing digital business that focuses on core readers, and it exists right alongside a still-lucrative print business. The report notwithstanding, the company is actually on the right path to eventually be an all-digital news organization.

Management isn’t journalism’s strong suit

And running a newsroom is hard and getting harder

Newsrooms have long hired and promoted based on journalistic chops, and often that alone. The problem, of course, is what makes for a great reporter doesn’t necessarily make for a great boss.

In all the to-and-fro about why The New York Times fired Jill Abramson no one questioned her journalistic ability. Her management style was said to be the issue, certainly by her detractors.

As any working journalist will tell you, such gripes are far from uncommon, and with the industry under massive financial pressure and with newsroom productivity at a premium, they’re getting more common by the day

Bad bosses are a fact of life in all businesses, of course, but journalism seems to be particularly poor at developing and training managers, and there are reasons for that. For one thing, as a percentage of payroll, non-news corporations spend nearly five times as much on training as do newspapers, according to 2008 graduate research by Teresa Schmedding, who’s now president of the American Copy Editor’s Editors Society, who wrote that “there does not appear to be a strong culture of management training at newspapers both among the managers themselves and within the corporate culture that sets the hiring practices and performance evaluations of managers.”

Another problem: personal traits that tend to foster reportorial excellence—independence, skepticism, aggressiveness, etc.—can be, shall we say, counterproductive in a boss.

Anne Doyle, a journalist-turned-management coach and the author of Powering Up! How America’s Women Achievers Become Leaders, says that newsrooms’ competitive, not-especially-collaborative cultures can contribute to the problem.

“In a big corporation, people … tend to be more interdependent,” she says in a phone interview. “For a journalist, information is power. To work in a corporate environment, someone who thinks that information is power and holds it close to the chest, is poison.”

The issue of whether women have a harder go of it as news managers has been much debated in the wake of the Abramson firing (see, for example, this op-ed by Amanda Bennett, a former top editor at The Wall Street Journal and Bloomberg, who wrote about being unceremoniously dumped as top editor of the Philadelphia Inquirer). The Times hierarchy, led by Chairman Arthur Sulzberger, denies gender was a factor, a point Abramson’s successor, Dean Baquet, reiterated interview Friday with NPR. Baquet acknowledged having a temper, but said his serial wall-punching is limited to disputes with his supervisors. Abramson herself isn’t talking, yet.

Jill Geisler, who, as head of the Poynter Institute’s Leadership and Management programs, has read thousands of “360” reviews from news managers’ underlings, says she hasn’t seen a pattern of women being judged more harshly than men. “I don’t see a difference—no disproportionate amount of women over men being told they’re too aggressive or pushy.”

Geisler, the author of Work Happy: What Great Bosses Know, says the difficult types are usually easy to identify, regardless of gender. “If the question is, ‘What does this person do well?’ and the answer is, ‘He has a real passion for journalism,’ I always skip down to the question that asks what this person does wrong: “Eh, he can be pretty brash.”

While being abrasive may have worked in the Abe Rosenthal era, newsroom culture has changed in recent decades. The imperial boss largely has been replaced by the consensus builder, or so the literature tells us, and workers expect to be treated more civilly. Or at least the over-the-top taskmaster style is on the outs and deviations from current newsroom mores are more quickly called out.

All of which leads to a suspicion that a big reason that journalists might tend to make for bad managers is that the job is just really, really hard. Nieman Reports reported that a non-journalist management expert hired to assist assigning editors said that “in 30 years of research he had never encountered a job with such intense problem-solving demands,” adding: “The assigning editors were not surprised to hear this.”

And that was in 2006, before the bottom fell out of the news business. Managers still have to deal with all the old problems along with decimated staffs, pay cuts, and the resulting rock-bottom morale. That’s compounded by the nature of digital-age journalism and the need to take care of the legacy business while figuring out the new one.

“You’re putting out stuff 24/7, while at the same time, you’re having to deal with reporters, designers, copy editors, photographers—all of these people who are concerned with where the industry is going,” says Earnest L. Perry, an associate professor at the Missouri School of Journalism and a management consultant to newsrooms. “It’s tough to be a middle manager now. They’re getting it from both ends.”

Then there’s the fact that journalists can be, well, difficult: “Managing journalists is particularly challenging, because if they’re any good, they question authority and challenge spin,” Geisler says. “We want to hire those who will question authority—except ours.”

The best managers of journalists help them work autonomously in a way that serves the needs of the larger organization. “The problem is, we have former journalists who become journalism managers who are still trying to manage the journalism instead of the people,” Perry says. “They’re micromanagers.”

That comes back to the issue of training. Journalists, for all the right reasons, tend to look askance at the sloganeering, jargon, and corporate-speak that tends to accompany management-training sessions. But that doesn’t mean leadership is somehow unteachable. As Douglas McCollam noted here two weeks ago, Sulzberger knew from the beginning that Abramson’s hard-edged management style was not to his liking. Abramson had spoken with a management coach not long before she was fired, but that appears to have been too late.

On the other hand, in 1999, The New Yorker reported that Howell Raines was sent to several weeks of executive training at Dartmouth by Sulzberger as part of his grooming for the top job.

Raines would ascend to the executive editor’s chair in 2001, lasting less than two years before resigning amid the Jason Jayson Blair scandal… and complaints about his imperious management style.

Reader revenue and the great newspaper ad bubble

Four decades of artificially high advertising goes pop

Newspaper advertising will almost surely fall to the lowest level on record this year, as ads continue to migrate to the Web.

Meanwhile, reader revenue—subscriptions and newsstand sales—is the industry’s rare bright spot, with circulation sales rising the last two years thanks to digital-subscription packages. Even before the paywall movement took hold three years ago, circulation revenue was fairly stable. Or at least it seemed that way:

nominalrevs.png

But inflation has obscured the fact that the industry’s real circulation revenue has also been tumbling and is lower today than it was nearly 60 years ago. And a clearer look at that gives us insights into advertising, as well.

Here’s a chart based on Newspaper Association of America data that tracks reader revenue since 1956:

Somewhat surprisingly, real circulation revenue peaked 40 years ago in 1974, nearly returned to that level in 1987, and then began a 24-year decline that brought it to record lows. Even with the upturn in the last two years, it’s still down a quarter over the last decade and well below where it was in 1956, when the population was a bit more than half today’s size.

Which raises the question of what newspaper circulation per capita looks like. The overall circulation gains of the post-war era, which peaked in 1984, obscured a steep decline in the average person’s newspaper purchases, which were caused largely by the rise of television and the resulting decline of afternoon papers. While the pace of decline was fastest from 2003 to 2009, per capita circulation in the US has been declining since recordkeeping began just after World War II:

dailynewspapercirc.png

That’s a reminder that television was the newspaper’s first mortal enemy. But while TV killed off most of the afternoon papers, that opened the way for newspapers’ golden age, when monopoly profits funded newsrooms across the country at a size that will never be seen again.

Of course, more people than ever read newspapers now online than they ever did in print (although physical circulation figures don’t account for the fact that multiple people read each copy). The problem is, they spend a fraction of the time they once did on print papers. Somebody who reads a print paper 30 minutes a day is worth vastly more than one who reads the paper’s website 30 minutes a month, which is what the average unique visitor spends.

That’s why newspapers are focusing on core readers—the 5 percent or so of their heaviest users. The core appeal of the meter model is capitalizing on heavy readers while collecting bits of ad revenue from the majority of unique visitors that have little or no loyalty to your site.

Ken Doctor has written about how reader revenue comprises a much bigger part of newspaper sales than it did a decade ago. And while paywall and all-access strategies have helped boost the reader-revenue ratio in the last couple of years, the trend is primarily due to the torrid pace of ad declines.

The rule of thumb in newspapers used to be that they got four dollars of ads for every dollar of circulation. Back in 2005, the ad-to-subscription ratio peaked at 4.6 to 1. Now it’s 1.9-to-1, which, while a record low, is actually fairly close to where newspapers were until the late 1970s:

It’s striking how much less dependent papers were on advertising before the 1980s than they were during and afterward. The rise of advertising was largely due to the decline of newspaper competition, which has fallen steadily since the late 1970s (the number of dailies is down about 22 percent in the last 35 years).

The last paper standing in a market could charge readers the same or less while corralling much of its former competitor’s advertising. While that was fun for a while, it undermined the long-term health of the industry. Newspapers became structurally dependent on sky-high advertising rates, ones that a true market couldn’t support.

In 1990, for instance, newspapers lost more than 6 percent of their ad lineage but also raised their ad rates by more than 6 percent. The New York Times, for instance, lost 38 percent of its advertising lineage from 1987 to 1992 but continued to raise rates.

These were no flukes: Newspapers raised their ad rates three times as fast as inflation from the early 1970s to the late 1980s, the newspaper analyst John Morton told Barron’s in 1990.

For three decades, newspapers were effectively in a bubble market, one that was obscured by the fact that they made money hand over fist thanks to a temporary, artificial market dynamic (the bubble metaphor isn’t precise since newspapers really were making scads of money at the time). Fifteen years ago, for instance, The New York Times Company paid $419 million (adjusted for inflation) for a 100,000-circ paper in Worcester, Massaschusetts. It changed hands last week for between $7 million and $15 million.

The next chart shows this “bubble” clearly. Look at how much money newspapers took in annually from each unit of circulation, which is basically subscribers plus newsstand sales, or in tech terms, ARPU (I’ve used daily circulation for these calculations):

Note how relatively steady circulation dollars per reader have been, particularly compared to ads. Here’s one that stacks the two to show total revenue per unit:

At the peak in 2000, the newspaper industry was hauling in $1449 a year per customer. And that doesn’t even include “other” revenue like third-party printing and rights fees. (A note on that: “Other” revenue now is a significant part of overall sales, accounting for more than 8 percent of total revenue. Unfortunately, NAA data on that begins just a couple years ago so it’s not clear how much that has risen or fallen over the decades).

Facebook’s average revenue per user in the US, by the way, is less than $6. But Facebook can make billions off that because of its massive scale and because its cost of content is zero.

Journalism, broadly speaking, has always required reader revenue, and now it will more than ever.

 

The New York Times’ digital limbo

An author says the paper’s digital efforts are stuck in 2010

The New York Times innovation report provides an inside look at the paper of record in the US—and fanned the firestorm of coverage in a week that saw the dramatic exit of top editor Jill Abramson.

What’s shocking to me about the report—having conducted a five month ethnography of the newsroom over 700 hours for my book, Making News at The New York Times—is, the way it reveals how little, really, the Times has changed in the four long years since I was there in 2010.

And ironically, the report, for all its merits, actually misses some of the good innovations and practices that actually are already happening at the Times and which the report suggests it should get started on right away.

So here is some cultural and historical context for the report based on my newsroom observations.

First, the report’s discussion of social media and how to promote the paper sounds in 2014 an awful lot like it did in 2010—basically a mix of bravado from the top and confusion among the rank-and-file.

In 2010, Arthur O. Sulzberger told an audience at the London School of Economics that The New York Times was the “most social” company in the world, ahead of even Google and Facebook based on the number of accounts and the number of followers at the company.

By 2011, at South by Southwest, Jill Abramson was talking about the Times’ successful development of “sub-brands,” namely star reporters. The Times pointed to people like media reporter Brian Stelter, who had by then carved out a name for himself (and found himself an object of newsroom envy) mainly because of his many bylines and high profile across social media.

Times brass pointed to Stelter, tech reporter David Pogue, media bigfoot David Carr, and foreign correspondent par excellence CJ Chivers to demonstrate what was going right at the paper. The problem is, in 2014 Stelter and Pogue are gone, and the Times hasn’t really added to, or advanced much beyond the names it had held up as shining examples four years earlier.

Another example: In 2010, I asked standards editor Phil Corbett for a copy of any formal or written standards the Times might have governing social media policy for its reporters. He declined. In 2014, the innovation report turns up the fact that in fact there actually were none, and that explains why journalists have often come across as confused about what is and isn’t allowed.

In 2010, that meant Hiroko Tabuchi tweeting her frustrations about covering Toyota was a no-go, at least sort of. She had been covering what seemed like a never-ending stream of stories about Toyota’s faulty brakes from Japan, working on New York time, and finally got fed up with the company’s harsh media restrictions. She tweeted about her frustrations, and got a lashing from the public editor. Flash forward to 2014: Reporters still don’t have a sense of what is ethically appropriate.

Next, there’s the problematic dominance of print concerns over digital ones. In 2010, I watched as top editors, including Jill Abramson, authoritatively ran the editorial meetings with solid, insightful questions, but focused far too much on the print paper at the expense of the Web.

In my observations of Page One meetings (about a month’s worth), I almost never heard anyone mention the homepage other than Jim Roberts, who was then the assistant managing editor, who gave a very quick briefing about what had been up throughout the day. The section editors rarely commented, if ever. Roberts explained to me:

It has happened [discussion about the Web in Page One meetings], but it doesn’t happen that often. We go into that meeting and … the website is displayed in larger-than-life fashion. If someone had an issue, I’m pretty sure I would hear about it. I think some of it is just a matter of just their own interest, and some of it is a matter that they seem to think that we are doing okay.

In the end, though, print, Roberts told me, was what still mattered.

My spot in the newsroom as an ethnographer was primarily on the business desk. But I was given largely free reign to spend as much time as I wanted observing the entire newsroom, as long as I didn’t reveal sources or competitive advantages, from business decisions to story tips.

This gave me the chance to observe the amazing, meticulous discussions among editors on the focus of each story. Many of these stories were indeed little masterpieces, which would be posted online late in the day on their way into print. The hunt for the display story—which would dominated the business section front—was a constant, time-consuming preoccupation—and the importance of laying out the section front was seen to be a valuable way to signal the importance of what editors thought mattered. The attention of the “backfield,” the section editors in charge of editing content and shaping stories, was primarily, if not entirely, focused on print.

And reporters told me, just as the innovation reports mentioned, that the main thing they kept tabs on were their Page One bylines. After all, they said, it was Page One bylines, not blogs or anything else, that mattered for promotion and that counted in end-of-year performance evaluations. And, remarkably, according to the 2014 report, this continues to be the case.

The paywall was announced during my time in the newsroom, and most people knew it was coming. But it still shocks me that those in the newsroom have failed to anticipate some of the consequences—including loss of traffic to the homepage.

There has been speculation on whether homepage is dying, but one reason not discussed in the report seems quite simple: If you are asking people to pay for content when they read your stuff, then coming to the home page becomes useless for them unless they want to pay. This is further amplified by the fact that readers can get all the articles they want via social media.

I could go on, but I think it’s also important to pause and note some of the smart innovations that have in fact been happening at the Times and which the innovation reporters, for all the hundreds of people interviewed, managed somehow to miss.

First and primarily, the Times may not need as big of a “reader experience” team as the report seems to think. A one-man analytics team, James Robinson, whose formal title is director of news analytics, does a pretty good job acting as a bridge between journalists and data, explaining their meaning and utility.

His rudimentary programming efforts are being developed into something more by former Guardian developer Alistair Dant, and have resulted in improvements in tracking reader behavior on the homepage. The efforts also have resulted in a tool to show how to better link stories with related topics (and helping solve the Times’ problem in connecting stories with similar content across the site) and an effort to mine audience data to improve a demographic-specific promotion strategy—which sounds like a scalable way to build advertising and loyalty.

And Brian Abelson, a 2013 Knight-Mozilla fellow, had been working intensely on using statistical models to help predict traffic.

These efforts at improving the use of analytics are already happening, with efforts to bridge the kind of culture gap with the newsroom that so concerns the report’s authors.

Second, I would argue the Times already has a responsive and reactive breaking news team, contrary to the report’s suggestions that it doesn’t. From David Joachim, Mark Getzfred, Mick Sussman and others running the ship in New York, these editors are responsive to crafting and posting news on the home page as appropriate and as it develops. You can find clear evidence of this in my book.

And Times reporters are hardly unused to jumping on rapidly breaking news—and not just on the blogs. Rather, journalists post incremental stories throughout the day (though they’re often not thrilled about having to do this) and work toward making their work responsive to the breaking news environment.

The report also missed the significance of the global dimension of the Times—which is that a constant flow of rich, 24-7 news is in ready supply from The International New York Times (née International Herald Tribune) outposts in Paris and Hong Kong.

In this and other ways, the Times’ innovation report misses the resources and capabilities it already has. There are also existing solutions inside the newsroom that do not require a wholesale reinvention or reorganization.

But for the moment, those solutions are at most potential that needs to be realized. Basically, for the newsroom as a whole to see the massive changes it wishes, the paper needs to move past 2010.

Brick by brick - After years of shrinking ambition at The Washington Post, Jeff Bezos has the paper thinking global domination

Gawker’s so-far successful experiment in making office chats public - Are group chat rooms a waste of time or essential to running a modern newsroom?

A new course in video games journalism - As an art form grows up, can the critics keep pace?

On the NSA, a White House credibility problem - The AP report on the destruction of The Guardian’s hard drives is just the latest evidence that reporters can’t trust the Obama administration on spying claims

Long all-volunteer, Guernica Mag looks toward paying its contributors - The 10-year-old online mag hired its first full-time employee and is launching a second Kickstarter


39 pieces of advice for journalists and writers of color (BuzzFeed)

“Make yourself indispensable. Dispel any rumors, however quiet, that you are just there for a ‘quota’”

In the digital sphere, ‘magazine’ = money (Digiday)

“A single page in a glossy magazine could be discounted by more than half its open rate and still get an effective CPM of about $70. Online display ad CPMs average under $3”

9 decades of The New Yorker (New Yorker)

With the relaunch comes the archive

Bloggingheads

Greg Marx discusses democracy and news with Tom Rosenstiel of the American Press Institute

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Who Owns What

The Business of Digital Journalism

A report from the Columbia University Graduate School of Journalism

Study Guides

Questions and exercises for journalism students.