News executives acknowledge ‘toxic’ cultural divide between print and digital

After 18 months of work and countless pinky-shake vows of confidentiality, my colleagues at the Project for Excellence In Journalism have a fresh report out today on the newspaper industry’s search for a new business model.

The report, “The Search For a New Business Model,” burrows inside newspaper organizations for fresh internal data and commentary by top executives. The PEJ effort drew six participating companies, providing data for 38 newspapers.  Executives from seven more companies agreed to be interviewed on the findings, while keeping their data to themselves.

Having contributed modestly to the planning with some suggested questions, I’ll leave it to others to summarize the findings.

What jumped out at me was a candid discussion of how difficult culture change within the business is proving. Plenty of people looking in from the outside have said that, but the executives themselves (who were promised anonymity) confirm the gravity of the problem, with an exclamation point.

The 28-page Pew Report frames this issue this way:

“The industry is inhibited by several obstacles that executives themselves candidly acknowledge. One involves the difficulty of changing the behavior of people trained in the ways of a mature and monopolistic industry. Still another is the unavoidable fact that the part of the newspaper industry that is growing, digital, continues to provide only a small part of the revenue, while the part that is shrinking, print, provides most of the money — a paradox that is difficult to navigate and hard to resist. One pervasive feeling is that 15 years into the digital transition, executives still feel they are in the early stages of figuring out a how to proceed.”

And a few pages later:

“Newspaper executives described an industry still caught between the gravitational pull of the legacy tradition and the need to chart a faster digital course. A number of them worried that their companies simply had too many people — whether it be in the newsroom, the boardroom or on the sales staff — who were too attached to the old way of doing things.”

Earl Wilkinson, the well-traveled director of the International Newsmedia Marketing Association (INMA), has been insisting for some time that cultural change is the core of the industry’s problem, worldwide, not just falling print revenue and audience. At INMA’s annual conference last May, Wilkinson said, “Every time we try to mix these cultures, it is a toxic combination. I’d like to see more digital people actually touching print.” In his view, newspaper organizations generally “don’t have the people to operate [in] the multi-media environment.

The executives interviewed by PEJ echoed Wilkinson’s formulation:

“ ‘Probably the most difficult thing is to change a corporate culture because you don’t really have the power to do it,’ noted one executive. ‘You can change CEOs, executive VPs, digital VPs. You can wave this magic wand all you want. But at the end of the day, the troops in the field hunker down. From our company, and I would venture for other organizations as well, the most difficult thing to do is change it.’ ”

The report continues:

“One cultural change that several newspaper executives spoke about was the need to centralize the decision-making in the digital age — shifting some of that power from the individual newspapers to corporate headquarters. This trend marks a significant change. Some of those newspaper companies had prided themselves on the autonomy given to local papers over news and sales.

“ ‘Years ago we were founded on the concept of decentralization,’ said one executive. ‘Now I would not say that … We are probably far more centralized than we were in the past.’ “

For a striking example of that tension, check Gannett’s upbeat corporate announcements against the mutinous comments from the trenches in Jim Hopkins’ Gannett blog. One of the steady complaints from the troops is that initiatives that were doing well locally — like many of the Moms Like Me websites, now shut down – got ruined by cookie-cutter standardization from corporate.

And the report illustrates the flaw in simply asking existing staff to think digital and be more innovative:

“ ‘We haven’t needed innovative people,’ explained one executive. ‘So you get what you need. The kind of people that came into this industry were more operationally focused, executors instead of innovator risk takers.’

“Some of these cultural tensions may also have produced casualties. Several of the digital executives that we talked to in 2011 were no longer at their companies by the end of the year.”

PEJ turns to a Wharton business professor for a supporting opinion:

“John R. Kimberly, a professor of management at the University of Pennsylvania’s Wharton business school who was interviewed as part of the research, says these internal cultural tensions are ‘not at all atypical of industries that are undergoing disruptive change …The unhappy saga at Kodak, that’s a great example.’

“ “The problem is not hard to understand at one level,’ Kimberly said. ‘You have developed a set of skills that have been valued and all of a sudden, this isn’t so valued anymore.’ The pace of change at each news organization, he said, will largely depend on ‘who are going to be the leaders and who are going to be the followers.’ ”

My own view of the “going faster” vs. “going slower” debate, as the PEJ authors put it, is that the digital first strategy personified by CEOs John Paton at the Journal Register and Media News organization and Clark Gilbert at Deseret Media makes perfect sense under their circumstances. Both groups had weak, money-losing print franchises and, in Deseret’s case, a strong existing digital operation with great audience expansion opportunity.

For those whose print editions are still strong and profitable, the balance is trickier.  They too need technologists, digital sales staff and top leadership to drive new approaches and revenues. At the same time, they must give a lot more than a casual glance back, now and then, to get the most from print and extend its life expectancy.

The trajectory of the industry story is well-defined now, as gripping, in its own way, as “Homeland,” and the outcome far from obvious. I hope a wider group of participants signs on for the sequel to this PEJ report, so the next episodes are a bit more revealing.

Rick Edmonds has been co-author of the newspaper chapter in PEJ’s annual State of the News Media report, whose ninth edition will be published online March 12. He provided occasional suggestions for the business model report discussed in this post.

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  • robelroy

    The problem is that digital is not self supporting and wont be for several more years, sans paywalls. It IS the future, but that future is some ways off. Indeed, most “digital revenue” is no more than sleight of hand. Digital and Print revenues are rarely booked seperately. Clients usually buy print and then get a digital add on that they are indifferent to. The revenue is then split up in a totally arbitrary manner and digital is “given” revenues that they never really earned. This really pisses print people off a lot and makes them openly disrespect the only division of their paper that will grow in the future. But, while digital could never grow revenues, they could undercut print by giving the product away. Even worse, digital gets defensive about paywalls, because they are worried that they will lose whatever little ad revenue they have in the first place. So they undercut paywalls, just like one disgrunted digital editor supposedly did in Montana, broadcasting how to get around their own paywall. But paywalls have to be part of the solution since online ad rates are bound to be low for the next few years.

    Digital should have been split off from the beginning and dependent on its own efforts. Furthermore, paywall revenue needs to be awarded in commissions to digital departments, not circulation departments. It really is digitals money. This would make them embrace paywalls, not see them as a threat.