Excerpt: 'The Return of the Moguls'

Excerpt from “The Return of the Moguls: How Jeff Bezos and John Henry Are Remaking Newspapers for the Twenty-First Century,” by Dan Kennedy. Published by ForeEdge, an imprint of University Press of New England. 

More from Poynter on how this book came together.

It is a staple of every discussion about journalism and the internet. If only newspaper owners had thought about online media sooner, so this line of argument goes, they could have figured out a business model. In fact, anyone who was paying attention for the past 40 years knows that is too simplistic. Newspapers were among the earliest adopters of digital technology.

On YouTube you can find a 1981 clip from KRON-TV in San Francisco on early efforts by the city’s two daily papers at that time, the Chronicle and the Examiner, to publish their content online. You may have seen it; from time to time the clip is recycled and becomes something of a viral sensation. It features a dignified, older looking gentleman in a suit and tie named Richard Halloran who owns what appears to be a Radio Shack TRS-80 computer. The reporter, Steve Newman, tells us that Halloran is dialing a local number that will connect him with a computer in Columbus, Ohio. At the same time, editors at the Examiner are “programming today’s copy of the paper into that same Ohio computer.” Next we see Halloran placing the receiver of his rotary-dial phone into a pair of acoustic couplers. “When the telephone connection is made,” Newman says, “the newest form of electronic journalism lights up Mr. Halloran’s television with just about everything the Examiner prints in its regular edition.” Just about everything, that is, except photos, ads, or comics.

It’s not exactly a reader-friendly experience; a close-up of Halloran’s terminal (not actually a television, by the way) shows white type on a black background in all capital letters. The Examiner’s David Cole tells Newman, “This is an experiment,” adding: “We’re not in it to make money. We’re probably not going to lose a lot, but we aren’t going to make much, either.” The report closes with the anchor offering some amusing information about how silly it all is: “It takes over two hours to receive the entire text of a newspaper over the phone,” she says, “and with an hourly use charge of five dollars, the new telepaper won’t be much competition for the 20-cent street edition.”

The experimentation continued. In the mid-1980s the Knight Ridder chain introduced its own electronic news service called VideoTron. VideoTron was not a success, no doubt because of the same technical limits documented in the KRON report  —  slow computers, slower modems, high cost, no graphics. “It was just basic text. It was not fast. There was nothing great about it,” Washington Post executive editor Marty Baron, then a business reporter at the Knight Ridder-owned Miami Herald, told researchers many years later. “It was interesting, but it’s not as if the general population was eating it up, saying, ‘Oh, we’ve got to have this.’” Starting in the early 1990s, as technology improved, newspapers tried offering some of their content on the burgeoning online services of the day  —  mainly CompuServe, Prodigy, and America Online. These services were slow, but they offered some graphics and were much more user-friendly than the text-based services of the 1980s.

Around the same time, a Knight Ridder executive named Roger Fidler developed an idea that was stunningly close to the tablets and smartphones of the 2010s. In the early 1990s, I attended a conference at Columbia University at which Fidler outlined his vision for a digital tablet on which we would read newspapers and magazines — something he had been thinking about for the previous dozen or so years. The screen would be the same resolution as a glossy magazine; the device would be flexible so you could roll it up and take it with you; and it would be so cheap that newspapers would give them away so that they could end the money-burning tasks of printing and distribution. How far ahead of his time was Fidler? Even as of 2017 we were nowhere near achieving any of those three goals.

Fidler also anticipated the choice and interactivity that would come with digital newspapers. For instance, he said that a subscriber might purchase a subscription to The New York Times’s international news, The Washington Post’s political news, and her local paper’s regional news. And the tablet would have interactive capabilities so that you could, for instance, click on a restaurant ad to make a reservation. “It was not quite like Roger had descended from another planet, but he was saying some things that were simply very hard to believe at the time,” John Woolley, who worked with Fidler, told a Washington Post reporter in 2012. “He had conjured up this idea of a tablet at a time when laptops were revolutionary. He was clearly a futurist. And he didn’t care what anyone believed. He never backed down.”

I have no notes from that conference, so I’m relying largely on my memory, as well as a video that Fidler put together in 1994 when he was head of the Knight Ridder Information Design Laboratory in Boulder, Colorado. The prototype in the video was simultaneously retro in that the display looked exactly like a printed newspaper and futuristic in its capabilities, which included better, faster interactive graphics than we generally see today as well as sophisticated voice controls.

But keep in mind Marshall McLuhan’s admonition that “the medium is the message.” Fidler envisioned a revolutionary leap forward in the way we interact with text, photography, graphics, audio, and video. What he did not envision was that the digital future would be altogether different from what had come before and that we would use it in ways that he could not imagine. In his talk at Columbia, he said that we’d download the content we had paid for by plugging our devices into, say, our cable television box before going to bed. In the video, he also raised the possibility of something that looked like a credit card that you could take with you and use to load more content onto your device if you were away from home. What he missed was that digital newspapers would be distributed via the open web rather than a closed system controlled by publishers. Fidler could see into the future in ways that were remarkable. But in 1994 he did not mention what would turn out to be the most revolutionary change of all. Even though he brilliantly anticipated the technological revolution that was to come, he failed to foresee the cultural revolution that would accompany it.

“For most people, a newspaper’s like a friend,” Fidler says in the video. “It’s somebody you know who you have come to trust. Over the last 15 years, there have been many attempts to develop electronic newspapers, and many of the technologists who have been pursuing these objectives assume that information is simply a commodity, and people really don’t care where that information comes from as long as it matches their set of personal interests. I disagree with that view.”

***

In fact, Fidler was wrong. Most news turned out to be so generic that it is difficult to imagine anyone would ever pay for it. As I am wrapping up this chapter in late March 2017, one of the big news stories of the day is the fate of President Donald Trump’s tax proposals following the Republican Congress’s failure to repeal the Affordable Care Act — a major plank in Trump’s platform. Entering <Trump taxes> at Google News brings more than 7.3 million results — the very definition of commodity news. More than 20 years after the narrator of Fidler’s video assured viewers that people wanted “a specific newspaper with a branded identity,” there are very few types of content that readers might be persuaded to pay for: certain types of local and investigative stories that no other news organizations are publishing; personalities that distinguish a paper from its competitors, such as popular columnists; and the intelligent judgment of editors regarding what news is the most important, what’s less important, and what can be left out of the paper altogether — in other words, the role of a good newspaper as a curator for what we need to know.

The value of curation was understood from the very beginning of the digital news era. In 1995, Arthur Sulzberger Jr., then the publisher of The New York Times, and Neil Postman, a well-known critic of media culture best known for his 1985 book about television, “Amusing Ourselves to Death,” shared a stage in Cambridge, Massachusetts, at an event hosted by the Nieman Foundation. (I covered their talk for The Boston Phoenix, where I was the media columnist.) Postman spoke up for the traditional role of a newspaper as curator and convener. “A newspaper is a theory of what constitutes an informed person,” Postman said. “A newspaper can make an essential contribution to the polity by functioning as a filter.” Postman was pessimistic, though, saying the driving thrust of technology was to isolate people from each other, allowing us to indulge our personal interests and thus undermining any sense of a common culture. “Everything is moving us away from a sense of co-present community life,” he said.

Sulzberger, by contrast, was the enthusiastic optimist that day, telling the audience, “He or she who has the best news should win this one. And that’s pretty exciting.” While acknowledging that the internet’s early adopters were cheering the demise of media gatekeeping, he predicted that the ordinary citizens who were just starting to get online would welcome traditional curation. “Those people want order out of chaos,” Sulzberger said. “People aren’t going to want to explore all the corners. They’re going to find the corners that help them and then they’re going to stop.”

The following January, the Times began publishing most of its content daily on the web. In an article that, looking back, is almost heartbreaking in its naive hopefulness, the paper declared: “With its entry on the Web, The Times is hoping to become a primary information provider in the computer age and to cut costs for newsprint, delivery and labor.”

Of course, the reason that the internet dreams of Arthur Sulzberger and other news executives didn’t come true was because the promise of digital advertising failed to become a reality. But I would argue that that specific failure is inextricably woven into the larger issues raised by Neil Postman, as well as Nicholas Carr in his book “The Shallows: What the Internet Is Doing to Our Brains” (2010) and Virginia Heffernan in “Magic and Loss: The Internet as Art” (2013). We’re jittery, distracted, trying to take in too much information at once, sorting out (or not sorting out) fake from real news, and not engaging deeply with any of it. Our “theory of what constitutes an informed person,” as Postman put it, is changing. And it’s not at all clear what role newspapers will have in whatever new theory emerges.

One way news organizations could fight back against the scan-and-skim culture of the internet — to act as a “counterweight,” as Carr has suggested — is to try to convince readers that they offer quality not available anywhere else. The idea behind charging for digital access is that readers should be willing to pay for good journalism that they can’t get elsewhere and that isn’t overly encumbered with intrusive ads. Presumably, you will value something you pay for, and thus you will slow down and read it. Unfortunately, the prevailing model for digital advertising could be called anti-quality, as it rewards clicks and page views rather than deep engagement with the journalism those ads are supposed to pay for.

It is a loser’s game, and it’s only getting worse. As the cost of online advertising, much of it mediated by Google, continues to drop, news organizations must pursue more and more clicks and more and more page views, which leads, in turn, to a further decline in ad prices. The finite space of a print newspaper establishes something of a floor under the cost of ads. The infinite space of the internet has led to a race to the bottom for advertising, pitting news organizations against each other as well as every other type of digital media. The floor has been removed. Newspapers traditionally relied upon market inefficiencies to raise the money they needed to pay for journalism, as advertisers paid a premium to reach their target audience as well as readers who had no interest in what they were selling. With digital, there is no shortage of advertising opportunities, no artificial constraints to keep the price of ads from falling.

“The expense of printing created an environment where Wal-Mart was willing to subsidize the Baghdad bureau,” wrote Clay Shirky in his 2009 blog post “Newspapers and Thinking the Unthinkable.” “This wasn’t because of any deep link between advertising and reporting, nor was it about any real desire on the part of Wal-Mart to have their marketing budget go to international correspondents. It was just an accident. Advertisers had little choice other than to have their money used that way, since they didn’t really have any other vehicle for display ads.” John Wanamaker, a pioneer in the rise of modern department stores and advertising, once put it this way: “I know that half of my advertising dollars are wasted. … I just don’t know which half.” The internet has ruthlessly wrung out those inefficiencies. That may be good if you’re a business owner trying to allocate your ad budget. But it’s proved devastating for journalism.

Nicco Mele, the former senior vice president and deputy publisher of the Los Angeles Times, who’s now the director of the Shorenstein Center on Media, Politics and Public Policy at Harvard’s Kennedy School, explained at a Shorenstein seminar why a digital advertising strategy based on clicks simply doesn’t work for news organizations that are built around original (which is to say expensive) journalism. “Google has fundamentally shaped the future of advertising by charging on a performance basis — cost per click,” he said. “And that has been a giant, unimaginable anchor weight dragging down all advertising pricing.”

For example, Mele said that a full-page weekday ad in the LA Times, which would reach 500,000 people, costs about $50,000. To reach the same 500,000 people on LATimes.com costs about $7,000. And if that ad appeared on LATimes.com via Google, it might bring in no more than $20. “Models built on scale make zero sense to me,” Mele said, “because I just don’t see any future there.” Yet it has led even our best newspapers to supplement their quality journalism with a pursuit of clicks for the sake of clicks, presumably on the theory that getting more from such programmatic ads is better than getting less.

A common name for this form of advertising is the CPM model, and it’s been the prevailing system online since the earliest days of the commercial web. CPM stands for cost per thousand (“M” is the Roman numeral for 1,000), and it means that an advertiser pays a certain amount of money for every 1,000 impressions or page views. Because the CPM model doesn’t differentiate between an in-depth investigative article or feature story that you might spend 20 minutes with versus a photo of a cute cat, some industry leaders are trying to move digital advertising in the direction of payment for high-quality content that readers actually value rather than mere clicks. A few digital news organizations, mainly at the smaller community level, have resisted CPMs, embracing instead a flat fee, which is the traditional model used by print newspapers. But CPM is the dominant system. Some are trying to change that.

***

In September 2014, I took a seat in a conference room at the annual conference of the Online News Association, which was being held in Chicago. The speaker that morning was an energetic thirtysomething named Tony Haile, the founder of Chartbeat, an analytics firm based in New York that helps news organizations measure every click, unique visitor, page view, and numerous other data points that drive the modern newsroom. Haile was on a mission. As he explained to the crowd, Chartbeat’s numbers were all too often being used for ill, with publishers pushing editors and editors pushing reporters for more clicks without regard to quality. The problem, he said, was that such measures were not only harming journalism, but they were also hurting those news organizations’ bottom line. It was the law of unintended consequences, and Haile explained to his audience that its negative effects were not limited to the news business.

“Sometimes the simplest, most logical metrics just backfire in ways you couldn’t even imagine,” he said. As an example, he cited American hospitals, which in the 1990s adopted a measure that would help them hold themselves more accountable. “They chose the mortality rate,” he said. “I mean, what better way for a hospital to judge how well it’s doing than how many people are dying? Trouble was, the fastest way to improve your mortality rate was to stop admitting the sickest patients. It was to stop doing the experimental surgeries.”

Haile left us in suspense regarding the fate of sick patients who were denied hospital care. Instead, he moved on to the point of his talk: using metrics to identify quality journalism and to persuade advertisers that quality was ultimately worth more than sheer volume. The best way of measuring quality, he said, was to calculate how much time readers spent with it. He explained that metrics had advanced to the point at which it was possible to measure more than clicks or how long someone spent on a page before clicking again — a fairly meaningless statistic, he said, since it often meant that the user had left without closing his browser.

Unlike the early days of CPM-based advertising, when metrics were crude and measures such as unique visitors ruled the day, Haile said, it had become possible to measure such activities as how quickly a user was browsing through a web page, which would indicate whether or not he was actually reading. Thus we had finally reached the point where news organizations could think about charging advertisers for how much time a reader actually spent with a piece of journalism. Indeed, The Washington Post already uses its in-house analytics tool Loxodo to measure such data points. “You can look at how far down users are scrolling. And you can even look at the speed at which they are scrolling,” the Post’s chief technologist, Shailesh Prakash, told me. “So you want stories where users go deep into the story and they scroll slowly, because that shows engagement.” Haile’s big idea is to transform that engagement into advertising dollars.

Creepy stuff for sure, and we can only hope that we don’t reach the point at which such measurements can be associated with individual users. But Haile’s remarks struck me as a promising alternative to the downward spiral of more page views bringing in ever-shrinking revenues. As Haile pointed out, the time-spent measure might also reintroduce the notion of scarcity, which had been lost in the transition from print to digital. The expensive industrial processes used to manufacture a print newspaper created scarcity in the form of limited competition — the barriers to entry were simply too high to allow more than one or two papers in a given area to thrive. A time-spent metric, Haile said, creates a different kind of scarcity. “The only unit of scarcity on the web is people’s time and attention. It is zero-sum,” he said. “If I’m spending five minutes on The Guardian, I’m not spending five minutes on The New York Times.”

Haile’s data show that, in fact, readers value quality over clickbait — that though they may click on a viral headline such as “This Cat Stuck in a Grate Is All of Us” (an actual BuzzFeed offering from July 2016), the chances of their actually reading it are low. In an essay for Time magazine, Haile wrote about what he dubbed the “Attention Web” and how it differs from the CPM-dominated media ecosystem we’ve grown accustomed to. A few of his findings were particularly worthy of note. In a study of 2 billion web visits over the course of a month, it turned out that 55 percent of those visits clocked in at fewer than 15 seconds. In addition, topics that readers spent some time with tended to be more newsworthy and substantive than those they clicked on and then quickly fled. For instance, “Edward Snowden” and “Obamacare” did better than “hairstyles” and “nude.”

“For quality publishers, valuing ads not simply on clicks but on the time and attention they accrue might just be the lifeline they’ve been looking for,” Haile wrote, adding: “This move to the Attention Web may sound like a collection of small signals and changes, but it has the potential to transform the web. It’s not just the publishers of quality content who win in the Attention Web, it’s all of us.”

We are still at the early stages of setting advertising prices on the basis of time spent rather than clicks. There is no guarantee that it will become anything more than a niche phenomenon, and there is no guarantee that it won’t create perverse, unintended incentives, just as the CPM model did. But some publishers are trying it — including the Financial Times, the very sort of prestige newspaper that presumably could most benefit from charging for quality rather than quantity. Time Inc., Hearst, and Condé Nast have also dipped their toes in the water. “The only way you can actually look at the amount of value someone’s placed on content is how much time they’re spending with it,” said Brendan Spain, the U.S. commercial director of the FT, in an interview with the International Business Times.

It is exceedingly unlikely that wide-scale embrace of the Attention Web would lead to the nirvana envisioned in the early days of online news, with lucrative multimedia advertising covering the costs of websites and with all-digital newspapers freed from the costs of printing and distribution. Nor is it realistic to think that a mere change in the business model could undo the neural changes taking place in our brains as we interact with digital media. Nevertheless, coming up with a way to reward deep engagement at least gives news organizations the right financial incentives.

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