WAN IFRA International Newsroom Summit: How The Crowd Saved Our Company

Good morning.

As career journalists and managers we have entered a new era where what we know and what we traditionally do has finally found its value in the marketplace and that value is about zero.

Our traditional journalism models and our journalistic efforts are inefficient and up against the Crowd – armed with mobile devices and internet connections- incomplete.

Our response to date as an industry has been as equally inefficient and in many cases emotional.

The French philosopher Roland Barthes argues that when culture becomes nature we are in the presence of myth. In our blustering for self-justification we have created a myth of our value. Without ever establishing its economic value, we have argued our value as journalists and journalism itself is self-evident and unassailable.

Well, the walls have been scaled and the fortress sacked. Fortunately, we are left with solid foundations from which to be rebuild.

At the Journal Register Company, we have some thoughts about how we can re-build to create true value. While we have had many successes over the last 17 months, as you will see in a moment, let me be clear this is all a work in progress.

Any attempt at re-building starts with an accurate assessment of what’s wrong.

If you haven’t seen this quote already or read Clay Shirky’s seminal essay, I urge you to read it as soon as possible.

Its key message is clear:

You don’t transform from broken.

You don’t tinker or tweak

You start again anew and build from the ground up.

For those in our industry who still believe we can continue with the same business models, I ask you to examine the evidence to the contrary.

U.S. newspaper advertising is now at 1985 levels –before inflation adjustment.

From 1985 to 2005, the average growth rate was 2.7% per year.

Take out the high-low and it is still low single-digit growth.

And those were the good old days.

From the US industry’s advertising peak in 2005 until now it is less than half of what it was.

And at the avg. growth rate of 2.7% it will take about another quarter of a century to get back to where it was – in 1985.

But that is not going to happen. The growth in marketing/advertising dollars will no longer be in traditional media in the longer term.

The damage from the last six years along with over-leveraged capital structures has left the US newspaper industry in ruins.

And finally, as if more evidence was needed, in the United States our key customers have abandoned us. Now, more Americans get their news via the web and this year more advertising dollars will be spent on the web than in newspapers.

The customers have spoken.

Perhaps the previous slide should have been entitled the “results” of a broken industry rather than the “why” because what might be less obvious to most observers are some underlying brutal realities:

Traditional journalism is dead.

The Crowd collectively knows more about any subject, city or event we choose to cover than we do.

Armed with the same tools – and in many cases – equal access to information and the search capabilities to provide history and context, the Crowd can do what we do.

I think any economist would argue – and certainly Dr. Picard, who will be speaking later this morning, has also pointed out – that when supply increases and the criteria we as journalists have ascribed to creating value – access to information/sources; research capabilities and context and distribution – is available to almost anyone, then value plummets.

Raised on a staple diet of “he said last night” journalism, coverage by the Crowd – via social media – is instant, increasingly contextual and in many cases more complete than a traditional media company could ever achieve.

With our core mission gone how do we add value? What’s the role of the journalist in this mix?

Look at the recent coverage by the New York Times’ Brian Stelter of the tornado in Joplin, Missouri. He was – via Twitter – a reporting machine but that work did not appear as a “story”.

At the evermore progressive Postmedia – Canada’s largest newspaper company – reporters on the campaign trail during the recent federal election did just that – report.

They filed directly to the web and via social media while editors back in the newsrooms crafted the live feed into traditional stories.

Our craft has been and continues to be profoundly changed.

The fact that our industry – with few notable exceptions – does not understand that and continues to plow on by slashing editorial, research, marketing and even sales resources to meet profit expectations is simply stupid.

Newspapers get the investors they deserve.

With newspaper management bankrupt of ideas they seek to please investors by slashing costs and driving short-term gains.

Investors, being no fools and recognizing newspaper managers have no plans to truly transform their business, are simply doing their jobs when they keep management focused on producing short-term gains.

Investors don’t buy into myth. They buy into math.

If you want investors to take a long-term view on our industry or our companies then you better give them a long-term plan that works. Give them a plan they will back.

And I would add it should be a plan built on the editorial floor where the core of our business lies.

The basic component of our survival and re-building can be found in the elements of our destruction.

The Crowd which has become our competitor is filling the web – the disintermediator of our industry – with news.

As a result, the web is a very crowded place for news. A filter is desired. It is even necessary.

Original and compelling journalism are key to standing out and it is the power of our brands, our reputation, that can spotlight – filter – for our audience where they should look for journalism they can trust.

Vint Cerf – called by some the Father of the Internet – and Google’s Chief Evangelist is very direct about this:

“People’s trust in journalism has always been about branding.”

So, what must we do?

First, if you have competitor so much bigger than you are such as the Crowd then you better make peace with it and partner.

Understand the Crowd’s value and add your value to theirs and turn the Crowd from a competitor into a colleague.

And if you listen to nothing else I have to say this morning then please listen to this:

Stop listening to Newspaper people.

We are well into our second decade of figuring out the web and by any measurement we have failed. We newspaper people are no good at it.

If you want to get good at it then stop listening to the Newspaper people and start listening to the rest of the world – the customers and advertisers who have already told you what they think and have moved on.

And, I would point out, as we have done at JRC – put the Digital people in charge. Of everything.

Find new voices and let them push you around.

In our case, we have invited the Crowd into our newsrooms – more on that in a moment – and have established an Advisory Board of leading Digital thinkers:

Jeff Jarvis, Jay Rosen, Emily Bell and Betsy Morgan, former CEO of Huffington Post.

Be Digital First and Print Last.

Stop focusing on the Print. It is in any newspaper’s DNA. It is not like you are going to forget to put out the newspaper.

Focus on the future. That future is not Print. It’s Digital.

Create a New Business Model.

A business model that   lets you transition into the growing digital markets of audience and revenue.

We know we can still add value to the journalistic process and we know our brands and their audience have value.

What we don’t know is exactly what the future will be like and this is where many newspaper companies falter.

Arguments about news’ sustainability as an economic model or future of the adjacency of advertising to news have nearly paralyzed our industry from taking, what I would describe as, sensible steps into driving new products on new platforms with the resulting new audiences that advertisers want.

In conference after conference, the handwringing of not being able to articulate an endgame has become stultifying. Unlike Print, our Digital competitors are not trying to solve for an endgame and therefore have the courage to experiment and build.

As I will discuss in a moment, at JRC we are doing just that successfully and preparing a sustainable, investable transition model to take on the challenge of the future.

This transition has to be self –funding and that means reducing Legacy media costs.

You have to slay the production god and the legacy costs that go with that old model.

Two-thirds of a newspaper’s costs are infrastructure – stuff you don’t want to do – and NOT in what you DO want to do such as create compelling content and effective sales.

Harness both the Cloud and the Crowd to drive down those costs.

At Journal Register Company we are getting out of anything that does not fall into our core competencies of content creation and the selling of our audience to advertisers.

Get rid of the bricks and iron. Focus on core competencies. And if it is not core then:

Reduce it or stop it.

Outsource it or sell it.

There are now companies who do most of this much better than any newspaper company does because those ARE the core competencies of the outsource companies.

You will need the expenses you save from those cuts to fund the new products and platforms you will need.

News now breaks Digitally both in its’ origin and creation by the audience using social media and spreads virally. To be in the news business now means you must run your business as Digital First.  And that means Print Last.

Print Last because that is how this new world works.

Print is a SLOW medium and digital is FAST. Atoms will never beat bits.

Each platform has its own advantages.

Each platform has an audience.

And each platform has a certain speed – Fast or Slow.

The quality of the journalism will be key.

Lousy journalism on multiple platforms is just lousy journalism in multiple ways.

Our Digital First transition strategy is centered on the cost- effective creation of content and sales and not the legacy modes of production.

It is a strategy that differentiates and prioritizes the allocation of resources – human and financial to the new realities of our business.

We can’t afford to allocate the new resources without reducing the old. Adding a new person or expense for every new Digital function is just putting more water into a sinking boat.

You have to multi-task.

And, again, you have to train your people to do so. If they can’t learn you have to let them go and hire those who can.

If done right, you will have a business model that:

Increases the quality and quantity of original content on the platforms of the consumers’ choice

Involves the Crowd

Expands Audience

Expands Revenue Opportunities

Lowers Costs

And Increases Profits

In a world where the Crowd knows so much more than we do – we have to experiment.

While we encourage all of our employees to do that, we actually pay some of them to do just that – experiment.

We call it our ideaLab.

The ideaLab is a select employee group – we asked them to apply online via my blog (and they did in the hundreds) – who are paid to experiment.

We supply them the tools (Droids, Smartphones, iPhones, iPads, Netbooks, etc); the time (25% off with pay) plus some extra pay as an incentive.

There are no rules.

They have come up with Customer Relationship Management Tools; Ad Tracking and Publishing systems all using free web-based tools.

Others have developed training programs for fellow employees to help them navigate this transition.

Others are concentrating on journalism itself.

Our Ben Franklin Project is another experiment.

On July 4th   – Independence Day – last year and across all of our 18 dailies, we:

Assigned

Reported

Edited

Produced: Web & Print Products

Using Only Free Web-Based Tools

We are changing our culture at JRC and are starting to play offense rather than defense.

With lousy I.T, and tools – but eager employees – this transition is happening.

We have built sales support systems using an iPhone and free Google tools.

We have successfully printed pages on a press using only free web tools.

Our Capital Expenditures have been reduced by more than half from $25M to $12M. Why pay for what you can do for free?

But more importantly, we have harnessed the power of our employees and the Crowd.

We are learning more about what the Crowd wants because we are asking and involving them in the process. And because of their input we expect to be producing more of what the Crowd does consider of value.

We share all of the learned information and tools publicly.

In the case of the Ben Franklin Project you can go the Ben Franklin site and you will find a link to our Ben Franklin In A Box Kit.

Click on it and try your own experiment. And share the results.

As I said at the beginning of my remarks while we are not getting all of this right we are getting some of it right at these results show.

We have gone from bankrupt to a profitable company.

We have doubled our Digital audience and are growing our Digital revenue at 7x the industry standard in the US. In fact, in about one-third of our divisions – with Print down mid single-digit percentage points – we are up year over year these past few months because of digital ad growth.

Compare that to an industry in the U.S. where advertising was down about 10% in Q1.

And all of this was done with fewer costs than in 2008 but not fewer editorial and sales resources I might add.

I believe strongly that this kind of financial performance is the direct result of our openness to partnering with the Crowd to improve our products and by linking/outsourcing and restructuring our cost structure to one that is flexible and effective.

And, more importantly, is the result of the appropriate allocation of resources to building our future rather than protecting our past.

For this success to continue, the walls have to come down.

Paywalls, if you have them, should come down. And any walls between you and the communities you serve through your journalism need to come down as well.

Going forward, I think it is clear that smart, original content, tagged with advertising will gain value by being shared through networks. Jeff Jarvis at CUNY in New York is doing important work around this very concept. He says this very clearly:

“In the future content will go to the audience rather than the other way around.”

Shared Content Equals Influence.

And Influence in the new eco system equals Engagement.

And Engagement equals Value to those advertisers and others trying to reach that Engaged Audience.

Good journalism today that does not link is not of equal value to good journalism that does. Walls stop links and walls stop networks and destroy value.

Shared Content has to be of the highest quality whether created, curated or aggregated.

And you must invest in a process that provides more of the only competitive advantage we have left – the mass creation of compelling, original content.

At the Journal Register Company, we believe our Project Thunderdome is the Open Source Content Machine to power the combination of value-creating, shared and original content.

I won’t dwell too much on this morning since our VP of Content Jonathan Cooper is here at the conference and will discuss our efforts on a panel later today.

Thunderdome allows our Company to partner with the Crowd, improve the quality of our shared content while reducing production costs and letting us re-invest in the creation of more, local, original content – our competitive advantage.

Cooper, along with Jim Brady and Steve Buttry are on an aggressive timeline to launch Thunderdome in the next six months. The long-term future of our Company depends upon it.

Key to all of our efforts is to open up our newsrooms and our newsgathering processes to increase audience engagement and to enhance the value of our content.

Instead of paywalls, we see greater value creation in the open sharing of our content. Our approach is to treat content like an API – available to any who want it.

At our open-to-the-public newsroom in Torrington, CT we have gone one-step further in including the Crowd in our news content creation efforts.

Community members are invited to sit in on news meetings, participate in our Community Media Lab – we now have 20 such labs across our Company – and to work at blogger stations set up in the newsroom itself.

A bit like democracy – it can sometimes be ugly to watch – but it is also exhilarating and is driving meaningful change. In Torrington that small daily now has nearly 6x more Digital customers than Print and it is profitable again.

We will be rolling out its open-concept to all of our daily newspapers.

I am proud to say that the Journal Register Company – once the poster child for what ails the US newspaper industry – is now a company with a plan and a plan for the future that is working.

Like all business plans in times of great upheaval, our plan isn’t without flaws and it isn’t unaffected by the economy but it is a better built foundation from which to grow. And it is a plan worth investing in.

Thank you for time and I would be pleased to answer any of your questions.

36 thoughts on “WAN IFRA International Newsroom Summit: How The Crowd Saved Our Company

  1. As a guy on the ground in the midst of this transition, I find it incredibly fascinating how easily many of my colleagues have embraced these ideals while still being afraid of them. Older folks who have worked in the same way for decades are making obvious efforts to grow and to change.

    Perhaps the most important point made above — and the most frightening — is “stop listening to newspaper people” and put the digital folks in charge. Let them push you around.

    That mindset, and the culture of experimentation, is what is driving this shift on the ground at JRC.

  2. So many news folks’ answer to this long crisis is, “I love newspapers.” So did I. But digital IS in charge now. I’ll follow this with hope.

  3. I’m going to remain anonymous, but this line kinda hurt as someone that IS IN that IT dept:

    “With lousy I.T, and tools – but eager employees – this transition is happening.”
    REALLY? Did he mean we’re lousy or what?
    If I can be so bold…this transition won’t happen without us!

    • Two thing:
      1. You never have to remain anonymous.
      2. As always when I refer to lousy I.T. – it is the poor systems (which we are replacing) and not our I.T. staff.

      John.

  4. Thank you for sharing, John. A fascinating case. You speak about balancing costs through efficiencies and new ways working in the newsroom, I look forward to further conversations about changes in the ways JRC has grown revenues from sources beyond the traditional streams of advertising and content sales (which is something I’ve been reseaching on this side of the Atlantic and presented at last year’s WAN-IFRA summit in London).

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  8. Here in Lawrence, KS, we’re great fans of JRC, and have talked about copying the physical open newsroom — we think our community would welcome it. For the last year, we’ve opened one of our sites virtually to the community. Our health site, WellCommons.com, was launched in April 2010 as a social journalism site — we provided the community the same tools to post to the site that we journos use. Their content goes into the same news stream as our content. To post, people have to use their real names, and most post from a group page that they created and that further identifies their point of view.

    Our goal was to have at least 10 posts a day, and half of the content coming from the community. We’re achieving that two or three days a week now. People in the community have told us that one reason they like WellCommons is that they know they they can post information that the community will see and that they know the community cares about. Before, many of their media releases sent to us never saw the light of day.

    About seven months into the WellCommons beta, the sustainability community asked for a similar site. We launched SunflowerHorizons.com about two months ago. The business community has also asked for a site.

    One of the things I learned long ago (pre-web) was that people didn’t pick up the paper just to read my stories. For some people, the classified section was the most important. For others, the obituaries. For others, the clothing store sale or the grocery coupons. Our job then was to create a safe place and a trusted source so that people could pretty much rely on the information.

    We hope that’s what we’re doing with our small experiment with social journalism. So far, so good. But we’ll keep listening, growing and changing.

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  15. So how does this strategy actually lead to revenue growth? The one thing no journalism entity seems to be able to figure out is how to derive enough money from the Web to fund a newsroom the size of a traditional print operation and finally ditch the dead trees. Despite all the new tools and free flow of information, good journalism’s biggest cost is still the time and effort of professionally trained reporters who gather information and make sense of it for the rest of us in a fair, objective manner. You have to pay for that work. There is no getting around it.

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  18. I don’t know if you’ve got the right recipe, but I’ll say one thing: you at least have the brains to know the old one was a failed souffle. Godspeed, and I hope you have the right idea. Journalism is too important to democracy to die. Good luck.

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