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Here’s What’s Really Holding Back The New York Times

2014 May 28
Chinese Wall

It’s not clear whether The New York Times Innovation Report was leaked on purpose or not, but it is an astounding document nonetheless.  It is impressively honest, insightful and soul searching.  Perhaps most importantly, it shows true digital literacy.

It’s not often that you see a company with such a rich heritage and history of success take a good, hard look at itself and chart a new path forward.  That’s hard to do for any organization—or anyone for that matter—much less an enterprise that has so much to be proud of.

Yet for all of its courage and intelligence, it still falls short.  The New York Times, like much of the publishing industry, still remains an organization at war with itself.  The time honored tradition of the “Chinese wall” has created an enterprise where the publishing and business sides have separate missions, cultures and values.  That needs to change.

A Short History Of The Newspaper Business

Newspapers have historically been a fabulous business.  They served their communities well by offering hard-hitting reporting that informed the public and spoke truth to power.  It was also fantastically profitable, enjoying a near monopoly in classified advertising.  Anyone trying to sell a car or fill a job opening would go to their local paper to place an ad.

In order to maintain the integrity of its reporting, the newspaper industry adopted the tradition of a “Chinese wall” that would separate journalistic and business operations. Reporters on the one side were under strict orders not to communicate with ad salespeople and marketers on the other.  The Chinese wall was considered sacrosanct.

Yet it was not a sustainable model.  It worked mainly because the classified business was so strong that not much coordination was needed between the two sides.  Unfortunately, while it protected journalists, it also caused publishers to lose their way.  Disconnected from the core mission of the business, they lost sight of their role in it.

When digital technology obliterated the print classified business, the entire enterprise began to unravel (despite their newfound fondness for paywalls, newspapers never made money on print and distribution).  Perhaps not surprisingly, given how collaboration was purposely squelched, newspapers failed to adapt effectively to the digital age.

The Problem In A Nutshell

The New York Times remains one of the world’s great journalistic treasures.  Yet as the report acknowledges, it has failed to aggressively pursue “readers’ digital doorsteps” as it used to seek out their “physical doorsteps.”  Clearly, the paper’s core mission of informing the public can only be accomplished if people read it.

The reason why the enterprise has struggled to seize opportunities is encapsulated in two quotes from the report:

 

We heard from editors who said the fear of impropriety meant that they actively avoided communicating with business colleagues altogether.

The fear that a single stray word can derail a conversation is keenly felt, particularly on the business side.

 

No business can successfully function that way.  People need to collaborate closely in order to solve problems and imagine new possibilities.  Active, frequent and honest communication is essential to building the kinds of relationships that make effective collaboration possible.

The report makes several proposals that would alleviate many of the problems with respect to audience development and reader experience, but conspicuously leaves the Chinese wall intact with respect to revenue operations.

Unfortunately, the world doesn’t work that way anymore.  Digital technology has made the concept of dividing issues into “church and state” not only unrealistic, but untenable.  While it’s admirable that The New York Times takes its integrity so seriously, you can no longer deal with the problem simply by wishing it away.

Some Glaring Gaps

No business can ignore revenues and every enterprise, if it is to be sustainable, must pursue profits in a manner consistent with its values and mission.  By leaving revenue operations completely out of the discussion, the report avoids dealing with some core issues that transcend the Chinese wall.

The Paywall:  While the report goes to great lengths in describing its failure to develop audience, it ignores that its efforts are being undermined by the paywall.  Clearly, it puts the paper at a disadvantage competing for audience with others mentioned in the report, such as Huffington Post, Business Insider and Vox.

Further, as I’ve explained before, it’s not clear that the paywall improves the financial well being of the enterprise.  At best, the increased subscription revenues are merely replacing the ad dollars lost from diminished audience and it may be hobbling the business for years to come.  It’s hard to see how limiting access furthers the mission of informing the public.

Video:  For years, publishers complained bitterly about the enormous ad dollars that went to TV.  Now, with web video, they can compete with TV on relatively equal terms.  Yet, building video assets was not dealt with at all in the report.

Make no mistake, video is by far the biggest opportunity in digital publishing.  Any strategy that does not include it falls woefully short.

Satellite Brands:  Another viable strategy is satellite brands.  The New York Times has many valuable assets beyond hard hitting reporting, such as its valuable archives of book, arts and restaurant reviews.  Each one of these is a potentially lucrative business in and of itself.

By creating vertical brands that share reporting with the flagship brand, the paper can build distinct communities and experiment with different ways of engaging with the audience and earning incremental revenues.  It’s easier to innovate when you don’t have over a century of history to contend with.

None of these issues cannot be neatly divided into “church and state” because decisions about content, reader experience, audience development and revenue are all intertwined.  It is simply impossible think seriously about one without taking the others into account. Collaboration is not an option, it’s an imperative.

Reclaiming The Mission

The New York Times is, at its heart, a conservative organization and I hope it stays that way. It is a national treasure and shouldn’t be trifled with.  Startups find it easy to experiment because they’re working with a clean slate, but it’s much harder when you have a storied history to live up to.

So in that sense, the innovation report is to be commended.  It confronted real problems with courage, diligence and candor and offered sensible, productive solutions.  The New York Times organization, as well as the product, will be much better for it.  Yet still, there is a long road ahead.

The almost complete absence of any discussion about revenues, along with the fact that no business side operations people were involved in the process, is troubling.  By walling of an integral part of the business, the values and mission of the enterprise are undermined. Revenue side people might as well be selling widgets and will act as if they are.

The truth is that the greatest threat to journalistic excellence is a poorly run publishing business.  Revenues and integrity are only in conflict if you let them be.  After all, profits are what makes independence possible and by instilling a sense of mission throughout the organization, you strengthen the values and culture that enables great reporting to thrive.

- Greg
 

2 Responses leave one →
  1. Kuldip Singh permalink
    June 5, 2014

    I must confess. I am thoroughly confused. The NY Times goes to such great lengths to show integrity.
    Yet, I read, from time to time, how the NY Times best seller list can be gamed. In today’s world, integrity seems to be very selective!

    [Reply]

    Greg Reply:

    I’m not sure that’s exactly fair. The New York Times takes its integrity very seriously. However, it is true that they have had lapses, especially with regard to editorial scandals.

    I think the problem lies more in assuming that the “Chinese wall” is the best and only way to pursue integrity and not exploring other avenues, even when its becoming clear that it might not be the best thing for its business.

    - Greg

    [Reply]

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