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If Journalism Is Going To Survive As A Business, We Need To Rethink The Chinese Wall

2015 April 15
by Greg Satell

There’s no doubt that journalism in crisis.  Great institutions like The New York Times and The Washington Post, once fantastically profitable, now struggle to stay afloat.  News bureaus, both international and local, are being drawn down as budgets are cut to the bone.

The recent debacle at The New Republic shows the pitfalls. A well-heeled white knight comes in to save the company and decides he wants to be editor-in-chief.  His handpicked CEO vows to “break shit” and build a “vertically integrated digital-media company.” Top journalists balk and leave.

It has become fashionable to say that publishers must innovate in order to survive, yet that will only take us so far.  We also need to shift our mental models of how journalism operates as a business.  In order for top quality journalism to survive, it needs to permeate the entire enterprise and that means killing the time honored practice of Chinese walls.

Why The Wall Was Built

We’ve become used to the idea that journalists are supposed to be independent, but it wasn’t always that way.  As Ira Basen points out in an article for the University of Wisconsin’s Center For Journalism Ethics, in the 19th century most newspapers were political vehicles. In fact, in 1873 only 13% of US dailies considered themselves independent.

Marketing money changed all that.  By 1900, advertising made up 55% of total newspaper revenues and 47% considered themselves politically independent.  Yet the influx of revenue created a new challenge.  If publishers were to be both profitable and credible, they needed to balance the interests of advertisers with the interests of readers.

It was this conflict that led to the Chinese wall as a way to separate “church and state.” Journalists would be insulated from the business side of publishing.   Advertising salespeople and marketers would not only have no say about what got printed, they would, in most cases, have no knowledge of what stories would be run.

While this accomplished the aim of promoting credibility and integrity in journalism, it created two separate and distinct cultures within publishing businesses.  That, as it turns out, is a serious problem.

How Publishers Lost Their Way

For decades. largely due to structural reasons, publishing was a great business, but underneath the surface cracks were beginning to show.  First, as Ben Thompson has noted on his Stratechery blog, the product became the end user.  Journalists, to a certain extent, became more interested in pleasing their colleagues and than their consumers.

An even more pervasive problem, however, was that publishers themselves lost their way. With no real connection to the product, they could pretend that they were in another business entirely.  Rather than publishers, they began to imagine that they were like Wall Street traders, with “eyeballs” as their currency.

When the Web began to transform publishing, they began to talk like Silicon Valley types, spewing out neologisms and acronyms.  They now saw themselves as merchants of “content,” looking for ever more clever ways ways to create, leverage and distribute it.  Before you knew it, creating products that inform, excite and inspire became a secondary concern.

The situation at The New Republic shows what happens once a business loses sight of its core mission—Publishing CEO’s who think their job is to create “vertically integrated digital-media companies,” and journalists who think their job is to win Pulitzers.  It’s hard to move forward when two separate cultures are pursuing their own separate objectives.

The Failed Drive To Innovate

It’s not that publishers or journalists have been blind to the problems plaguing their industry. In fact, they have been hard at work trying to build a new model.  Yet those efforts have been seriously hampered because the Chinese wall has created two isolated and distinct cultures that are often unable to talk to each other, much less work together.

To get an idea how pervasive the problem has become, take a look at these two quotes from The New York Times Innovation 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 work together closely in order to solve problems and imagine new possibilities.  You can’t collaborate effectively if you don’t talk to each other.  More than anything else, communication is what drives innovation.

The Chinese wall has endured because of the assumption that it is the only solution to the problem of integrity in journalism.  That’s absurd.  The reality is that it is a once viable solution that has become untenable.  New times call for new solutions and the answer to this problem is both incredibly simple and exceedingly difficult: A shared culture and mission.

A Need For Shared Values

The core challenge in journalism today is that everyone is trying to finesse the problem of Chinese walls without addressing it entirely.  Bob Steele at the Poynter Institute says that what we really need is a “picket fence” that allows information to flow through.  Others just think we need better rules for branded content.

Both are wrong.  The truth is that to create a successful business today, the mission must drive the strategy.  For some publishers, that mission will be an editorial mission.  For others, servicing the needs of marketers will be primary.  Still others will focus on advocating for a particular lifestyle or area of interest.  In all cases, the mission needs to be shared across the enterprise and that means killing Chinese walls.

When I was managing Korrespondent, which at the time was the leading newsmagazine in Ukraine, we didn’t have a Chinese Wall or a picket fence.  In fact, our journalists, marketers and salespeople regularly worked together effectively and we continued to produce hard hitting, independent journalism.

Ironically, Ukraine’s famously corrupt environment was actually an advantage.  Our business side people were just as proud of our journalistic integrity as the editorial department was and considered its values no less sacrosanct.  We didn’t need to separate “church and state” because we were all after the same thing—a profitable business that spoke truth to power.

Great businesses are never built through excessive reverence of a storied past.  In an age of disruption, the only viable strategy is to adapt.

– Greg

4 Responses leave one →
  1. Eli Cummings permalink
    April 18, 2015

    A good attempt to address an ongoing issue with journalism but I think the issue is larger than journalism itself. Consider the loss of value inherent in a hand copied scroll after the wide spread adoption of the printing press. The object that encapsulated journalism, hard copy print, is like those hand copied scrolls.

    If one wants to know the time these days one doesn’t need a watch. Time objects surround us. Likewise if one wants to know the headlines of the day and get a modicum of analyses, neither traditional newspapers nor magazines are needed. Twenty four hour television news channels along with channels dedicated to political analyses are available whether those programs are serious or with a comedic twist. Add the internet to that and its easy to see why print news product is little more than a dying venue for advertisers trying to reach those who are die hard readers of hand held print.

    Even the patina of “independent” authority that print news had is being eroded.

    Print journalism like so many other areas of the economy is less profitable today than in the past and that is going to impact how journalism is done.

    Some print journalism thinks it can survive by focusing more on local issues but this ignores the fact that local is a niche audience. In general people are more interested in national and global than local. Local has become to global about as important as a school district to the Department of Education. Everybody knows that there are greater powers pushing the local situation. The local situation is more pawn than back row chess piece.

    Now lets throw on top of all that people working longer hours and the overwhelming amount of information that is thrown at people.

    I consume news and it is beyond me how it gets funded. I certainly never pay for it. And I think we should be aware that advertising on the internet is already being eroded with the increased adoption of ad blockers.

    The actual writing of stories is even being handled by machines. There is already software out there that can automatically write a decent news story as well as any experienced journalist.

    Journalism at best is now a commodity business and like all commodity businesses the profit margins are razor thin. This is not going to change.

    There will be a handful of journalists are make some big money but for most there will be fewer jobs and less money for those jobs.

    [Reply]

    Greg Reply:

    Actually, that’s a common misconception. Publishers are actually doing reasonably well. In fact, they’re even launching successful new titles. I wrote about this issue a while back in Harvard Business Review: https://hbr.org/2014/08/publishing-is-not-dying

    – Greg

    [Reply]

  2. Eli Cummings permalink
    April 20, 2015

    Greg. These sources suggest that all is not as rosy as one might think.

    http://www.bls.gov/ooh/Media-and-Communication/Reporters-correspondents-and-broadcast-news-analysts.htm#tab-6

    http://www.bls.gov/emp/ep_table_203.htm

    http://www.econtentmag.com/Articles/News/News-Item/Publishing-Profitability-Survey-Shows-Publishers-Out-of-Touch-with-Data-96940.htm

    [Reply]

    Greg Reply:

    I didn’t say that the situation was rosy. Publishers need to adapt, but that’s true of every industry. Many are adapting successfully, many others are not. The ones that are not are quickly being replaced by new market entrants.

    [Reply]

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