Sunday, March 14, 2010

Media Summit 2010: Interview with Arthur Sulzberger, Jr., and Janet Robinson, of the New York Times

Paul Bascobart, the president of Bloomberg BusinessWeek, started off the second day of the 2010 Media Summit, Thursday, March 11, by indicating that today’s sessions were going to be more print-oriented, as opposed to yesterday, which had been more television and video-centric. He introduced James Ellis (henceforth to be referred to as E), the assistant managing editor of Bloomberg BusinessWeek, who was going to be interviewing Arthur O. Sulzberger, Jr. (referred to below as A), Chairman, The New York Times Company & Publisher, The New York Times, and Janet L. Robinson (noted below as J), President and Chief Executive Officer, The New York Times Company.

E: The New York Times is engaged in looking at new methods of delivery and involved in a search for a new business model. Among the media properties of the New York Times Company, the focus of the morning’s discussion would be on the challenges faced by the New York Times (NYT) - America’s premier media brand. In its160-year history, it has shown a tremendous ability to change, creating hope that it can do so again.

What does the NYT brand mean and how much of an advantage does it provide in dealing with the necessary changes?

A: He doesn’t believe that everything is changing, i.e., that up is down and vice versa. The challenge is converting what the NYT does so well to a whole new way of operating. This challenge goes beyond adapting to the new formats.

Instead, the real challenge is that of keeping the brand promise for all of its brands as they accelerate through the digital transition. Brand is critical as long as you don’t allow it to handcuff you. It’s not how people get info, but the quality of the news & info, and the integration of reporting into the social web.

E: The NYT brand is so closely associated with print – does that handcuff the brand?

J: It is an advantage to have the strength of the brand name. We can continue to endear ourselves to those who are loyal to the print product while developing loyalty with new users in the new formats.

The key to the NYT’s brand differentiation is its strong commitment to quality. People understand and applaud what they have done as we transition into a web format.

E: When people think about older brands on the web, they get tripped up on the distinction between journalism and content. Is it a more difficult challenge for a brand based on quality journalism to move into the content arena?

J: If we looked at the transition as simply to digital, as with a generic “,” then it would be a problem. The entire experience has to be extremely rich; it’s not just about transferring articles to a web format. The NYT invested early in the web, as far back as 1994-95; we embraced it as an opportunity, not a threat. There is no denying that it’s part of our future. Thanks to those efforts, we became the #1 newspaper website and the #5 overall news & info site early.

A: We recognized early that there was a lot that we didn’t know. J spearheaded the creation of a research & development department to provide a little more direction for the future.

E: When media companies refer to themselves as being platform-agnostic, it raises the ire of journalists.

A: That approach is positive because we can’t define ourselves by method of distribution. Otherwise, we would still be using pigeons. The New York Herald foresaw the death of newspapers in 1850 due to the advent of the telegraph.

We are platform-agnostic because we care about journalism, which creates a valued audience, which we sell to advertisers.

The iPad and the Kindle are critical parts of our future

E: How is the condition of the economy changing the need for the transition – is it making it faster?

J: The need for change is faster due to the economy, consumer trending and changing habits. As a result, the advertiser has become very careful in spending money. Lots of dollars were held back recently. More recently, people are recognizing an opportunity to capture market share, so there is an increased interest in getting their message out and choosing methods that work for them.

E: Is there a long-term decline in trend for ad spending?

J: There has to be a commercial marketplace. People have to get their messages out in order to sell goods and services. The speed of the ad recovery, however, is still to be determined, although we are starting to see people have strong interest in gaining share.

The history of recessions is that people who come out early can steal market share.

E: Historically, they have been investing during tough periods. Was this recession different?

J: We have continued to invest. We have done some cost restructuring also. We have invested in journalism, technology and our digital future.

The cost cutting was in the newspaper distribution and production side of the business. We needed to be a more productive and efficient operation. One could ask: Why not do that earlier? A crisis should not be wasted.

We also looked at our portfolio carefully and divested non-core properties.

E: Managers presumably understand cost cutting, but how about journalists? How do you communicate that message to the editorial side?

A: It wasn’t hard to communicate that because Bill Keller and the newsroom saw the painful work being done on the business side where the numbers shrank dramatically. Also, we are being selective in hiring but bringing in new people on the editorial side.

J: Newsrooms understand that there has to be a constant re-evaluation of resources. At the same time, quality journalism can’t be created without a healthy business operation.

Over all, the understanding between the editorial and the business sides is the best it’s ever been.

E: Did you think that digital would change the business this much and this quickly?

A: Everyone recognized the opportunity – get news and information out regardless of the location of the printing presses – we can now serve people at enormous distances.

The speed of the challenge, however, has moved faster than expected.

We are now moving into the secondary and tertiary phases – the social media phase. We are becoming parts of conversations happening all around us, not through us. This will require us to have a new mindset.

E: Is this a net plus?

A: It’s a net plus if you get it right

What are the best ways to keep a quality audience growing and keep them engaged with what we do? If it requires being on Facebook, then we have to be on Facebook.

E: The media is used to one-way conversations. The ability to have two-way conversations is exciting, but how do we preserve what is worthwhile to us and our advertisers?

A: The challenge is what to do about a two-way conversation that doesn’t include you. How do you make your information part of the conversation?

E: Let’s look at the old-media, traditional part of the business. Newspapers are challenged. Advertisers are looking at how they want to play the recovery. Will the end of the year look better for newspapers in general?

J: Everyone in our newspaper business has embraced the internet as a wonderful opportunity [Note: seems a little late.]

E: Who is your guide for managing through a bad economy?

J: Industries that restructured their traditional businesses in order to invest in new technology. Our peer group is still committed to quality – Washington Post, Financial Times, Conde Nast.

New companies like Facebook and Twitter are good at reading consumer trends.

E: Do we need to stop thinking about media so much as being ad-supported?

J: Yes. Our circulation revenue base has grown to 40% of total revenue.

Diversified revenue streams are good for the company in the long term. We put a lot of deliberation to our decision to go into a pay model for the website in 2011. We looked at lots of pay models in terms of their impact on our audience and our advertisers, and the willingness of consumers to pay for content.

We settled on a metered model – we think that we have found a balance for the appropriate amount of free and paid content. We feel there is an opportunity to gain a good deal of revenue from this pay model.

It takes this period of time to get everything right, so we had to announce this way before our launch date.

E: Lessons from Times Select?

A: People were willing to pay for content. Later, since digital advertising was skyrocketing, we took down the pay wall in order to take advantage of ad revenue opportunities.

The new pay wall is due to recent changes – it shows the power of testing and adapting. Will a pay wall be the right thing 10 years from now? Don’t know.

E: Murdoch and others are trying to deal with content aggregators. How do you feel about aggregators?

A: We can’t put all content aggregators in the same box. There’s a contrast between fair use and theft. Google is a powerful part of our ecosystem and we work with them well. Other sites lift content and don’t even link back to us – that’s theft.

E: How about new devices – are they trying to figure out the ad model so that ads work as well as on existing formats?

J: It’s early to predict the ad experience on the new devices. Ads will have an important role – it may be similar to web format or it may be comparatively different.

Media companies are working on making the content experience enjoyable – there is an opportunity for marketers to do the same for ad experiences. Advertisers have taken advantage of video and larger ad formats online.

The NYT R&D lab has been a useful place to bring advertising agencies and clients to show them future advertising opportunities. We had created the lab in order to be in the forefront of technology changes.

Furthermore, the NYT was the first company to integrate our print and digital efforts in both content and advertising.

E: Carlos Slim has a 6.5% ownership of the NYT Company. What about others who want to participate in ownership in this family-controlled company?

A: People who want to participate with the NYT can be shareholders [albeit of non-voting stock]. We are delighted to have Carlos as a major investor in the NYT Company. He believes in our mission and the quality of what we do [Note: sounds good, but who really believes this?]

E: Are you recruiting long-term investors?

A: Investors who don’t share our vision sell their shares. The Company is not going to be sold or split apart.

Audience Q: What is the most challenging aspect in serving a traditional base of customers and advertisers who are not as digitally connected?

J: Part of the rationale of the R&D lab is to show the effectiveness of the web to advertisers. Some advertisers very advanced, others are coming along. We also show advertisers what others are doing in their own space via the R&D lab.

The lab is a differentiating factor as is our journalism.

A: Print is not going away. We recently opened another print site – we have more print sites than we could have imagined.

The number of print subscribers who have been with us more than 2 years – who are generally considered lifetime customers – increased in the last several years from 650,000 up to 820,000.

Q: If the paid model doesn’t work, what are your options?

J: We would look at alternative models to adjust or diversify our revenue streams or create new revenue streams. For now, the metered model seemed best from a research perspective.

Q: How can we get ourselves and our clients to see the lab?

J: Call her.

Q: You are accustomed to a direct relationship with your customers – what happens in a device world where there are intermediaries between you and your customer?

A: The relationship with our customers is critical to our success – we will maintain that relationship.

J: A critical part of the analysis to understand how consumers use the paper and digital products – what’s the consumer behavior?

Q: It’s important for consumers to pay for content. But it is hard to change consumer behavior. How can you change the consumer propensity to get them to pay?

A: Focus on the ease of the consumer experience. It is not necessarily as hard as assumed to change consumer behavior. We expect that our core loyal audience will move over to the pay model.

J: We should give more credit to the consumer with regard to their judgment regarding quality. Consumers understand what is and is not quality. Also, consumers understand that quality journalism is expensive and has to be paid for. We will continue to invest in the experience – we will improve our product and add more goods and services.

Q: How much of your revenue is from digital?

J: 14% and expected to increase. A large group of advertisers buy both print and online, and that is why we integrated the newsrooms, sales and marketing.

1 comment:

  1. Nick Peters8:50 AM

    Interesting point by A: "The challenge is what to do about a two-way conversation that doesn’t include you. How do you make your information part of the conversation?"

    Presumably the 2-way conversation was STARTED by something the NYT reported, or a forum it hosted on a topic it covered. The ongoing conversation that ensues, potentially without further NYT involvement, presumably is of value because it builds member loyalty and site stickness, which in the long term builds the page views and click-thrus that advertisers want. Though more passively than before, the NYT can remain part of that member conversation thru links to other pertinent NYT articles or data.