Our associate editor, Belinda Alzner, sat down with Digital First Media CEO John Paton for an exclusive interview. The front-man of the second-largest newspaper company in the United States talks about his digital first strategy (print comes last), on how Canadian newspapers are doing digitally (he's not impressed), and on how he has tried to change the culture of entire newsrooms (it hasn't been easy).
J-Source: Take me through the process of reporting with a digital-first strategy. A reporter has a story: What do they do first and what happens before it ends up in the paper?
John Paton: Well, right now, we do too much.
We follow a six-step news ecology. Any story of merit starts with an SMS alert, then we post to the web. Third, we use social media to tell people we’ve got this. We then use the SMS alerts and social media as the next steps to rinse and repeat that process while we’re adding media to that and enhancing the story.
The final process for us is print. Print last. I say print last not because I disrespect it – I’m a 36-year career newspaper man. I love print, but it’s changing.
The issue is that now everybody thinks they have to do everything, but they are doing most things badly. They tweet, and they use Facebook and they make half-assed videos and they’re doing this because we’re making them do all of this.
Jim Brady, the editor-in-chief of Digital First Media, he’s got a great line about this. He says, “we’re at that point we’re making everyone as if they’re like electricians: we’re making them use every tool in their belt and the electrician says, ‘I only need three tools to do this job!’” We have to get to that stage.
We need to get comfortable with the mediums so we can figure we don’t have to use all of them all of the time.
J-Source: Normally, businesses keep ideas that would give them an advantage over competitors to themselves. You write a blog about it. Why?
JP: Because my competitive advantage is being eroded, and I need help. I think now and in the future partnering and sharing content and sharing audiences will be key.
In the 70s, when I started off, you could get fired for sharing stuff; our advantage was considered to be those stories that we alone had. I don’t think anybody thinks that anymore.
I write about it to be transparent; I write about it to try to reflect the values of the web which are interactive and transparent – hence a blog. And I do it openly with my employees and with others – its fairly vibrant; there’s a lot of comments. And I get far more email than I do comments on the blog because people who work for you are reluctant to engage for fear of looking like they’re brown-nosing.
We have two core competencies: One is our ability to create local and compelling content and face-to-face local selling to try to attempt to monetize the local audience that we get.
Our company from a size perspective is 75 per cent the size of the Canadian newspaper industry … And so wherever we go, we generally have two things that are almost always true. We have a larger force locally to create original content and a larger sales force to try to monetize that, than our competitors do. Newspapers have scaled over 300 years to something of a monolithic size, even as hard as business is today for them.
Not only do we have more of the local resources for content and sales – its usually more than all of our competitors combined. When you think of this, and you think of how hard pressed say, theToronto Star is these days compared to what it used to be, that’s still hundreds of people in the newsroom, hundreds of people in the sales floor, still talking of hundreds of millions of dollars in revenue.
While all of it is under threat, there’s a moment where if we can learn to accept what the core competencies are – which are not print, not distribution and not infrastructure and overhead – and figure out how to work with startups in the local news base and the audience base, we have this moment where we can actually make a transition to the next thing.
But we have an industry that doesn’t want to make that change.
J-Source: The next thing being…
JP: The next thing being mostly digital. I think there always be a role for print in my lifetime and yours – and we’re considerably a different age – but what can that role be; what should it be?
When for 20 of the 24 hours that you weren’t printing, you were sending SMS alerts, to web products, to mobile landing pages, [broadcasting] what was happening. Then you’re supposed to do “he said last night” journalism in the paper? Doesn’t make any sense. The paper has to become a different thing.
And re-purposing the paper for the web is stupid. It’s a bad idea. It’s an ass-backwards idea. That thing in front of you [gesturing at my iPhone that is recording the interview] is a multi-purpose tool. I don’t want to read a newspaper on it. Content should be created for it, not re-purposed from one platform to another.
J-Source: The Journal Register Co. was coming out of bankruptcy as a private company when you took it over. It’s safe to say that it’s come out of that well.
JP: That’s the rumour!
J-Source: If the print model of revenue is broken beyond repair, how exactly can and should a digital revenue strategy differ?
JP: Digital first is a transition strategy, not an end-game strategy. I don’t know what the end-game is. Neither does anybody in the business.
So, there are a number of component parts to digital first, but the key part is allocating resources appropriately. You can’t do what you don’t put money to.
If you don’t allocate resources – both human and financial – to what you want to do, you won’t get it done.
So the first thing in digital first, we actually allocate resources to what we want done. And that’s very different because it’s allocating to a new news ecology as opposed to the legacy modes of production – which are chopping down trees and putting on a press so we look to limit that.
So that drives audience and we allocate resources for sales against that audience. At the Journal Register Company that means we’ve quintupled our digital revenue in two years and gone from bankrupt to profitability.
But the other part of that is all the cost-cutting that went on. If you’re going to become as nimble as your digital competitors, they don’t have that cost infrastructure. Two-thirds of all newspaper costs are in stuff you don’t want to be – only one-third is in content-creation and sales. The rest of it in production costs, distribution costs, massive buildings. Every newspaper company I know has a massive real estate portfolio. I’d rather sell the buildings and hire the people.
J-Source: How do you change the culture of a newsroom to reflect a digital first strategy?
JP: With great difficulty.
Culture change is the most important thing, it is the hardest to do, and is a continuous job.
Look, I blog to my employees, I email my employees, they email me back. I’m constantly on the road – I’ve been everywhere from Texas to California to Florida to New England in the last three weeks, and everywhere I go people say “our biggest issue is a lack of communication.” I accept that as a job that never gets done. And it’s key to the culture change.
There are some that are not going to change – they look at me when I’m up there talking about what we’re going to do and they think, “I’m going to squeeze another five years out, get early retirement. Screw him, I’m not going to change.” And then there’s a whole bunch of people, no matter what their age, that know that they need to change because they’re devoted to the craft and they’re devoted to the cause of journalism. Those are the people who lead the change. So we reward them as well.
The Journal Register Company was a bankrupt company. I told the staff that we need to hit a certain goal because we need to pay off banks, we need to do a bunch of things. And it’s not out of the woods yet – having a couple of good years does not make it a raging success yet. And if you’re going to reward change, and they’re going to make that journey with you, you’re going to have to be very open with them and you’re going to have to say, “get there, and there’s a prize at the end.” So we put profit-sharing in place, which resulted in an extra week’s pay for hitting a certain target.
It wasn’t a ton of money, but nobody wanted to give it back!
J-Source: The media ownership structure here in Canada differs a bit from that of the United States. That said, many claim to embrace a digital-first strategy. In your opinion, to what degree have they succeeded with this?
JP: Not very.
I think at Postmedia where I work [Paton is on the board] they’re having some real success; they know that they have to go a lot further and I’d say the advantage they have over their competitors is a) they’re trying really hard b) they’re acknowledging they have a long way to go. So, when Paul Godfrey, CEO of Postmedia, talks about pursuing a digital first strategy, he means it.
And transitions are messy. I have no idea how long it took from Gutenberg’s movable type to the point where they were seeing a better-educated populous because of the availability of books, but it must have been a hell of a mess to get from where it was to where it was going. And we’re in that timeframe now.
When I look at most Canadian newspapers, I don’t see an enormous amount of innovation on their sites, with the exception that I know Postmedia has been working hard at it.
I don’t mean this to sound as a criticism, I just don’t see the investment in it. To be very frank, I don’t understand The Globe and Mail’s commitment to its glossy covers. Looks lovely, but its an expensive solution to a problem I think it won’t solve.
Print is ever-shrinking and it’s not like the Internet is not going to come to Canada.
J-Source: In terms of digital strategy and relative success, who has the upper hand: Large institutions with the manpower and resources that produce for both print and web, or small start-ups that started out on the web and have worked to establish their presence and brand without a print counterpart?
JP: It’s a both and, it truly is.
My transition strategy is betting on two things [working]: our core competencies and abundance of resources and local content creation and face-to-face selling – these armies of people that we have. But there is no large media company that’s a legacy company – like broadcast or newspapers – that’s innovative, in my opinion.
They’re going to need to glom onto the innovative people, like OpenFile. OpenFile is going to start kicking some serious ass in the news business – and I would say pretty damn soon – as it starts to ramp itself up and gets ever-more successful.
The large legacy companies are going to have to be open to partnering because they have what start-ups need – the audience.
If we’re smart, we’re going to be able to partner with those startups, like an OpenFile, that really can do something for the company.
I think the issue is going to be the valuation. Everyone thinks they have something of value. Startups have yet to prove it; large media companies are loathe to lose it or share it. And therein lies the problem of transition.
I’ve decided to share and see where that goes.
Stay tuned. We will be posting a full transcript of our talk with Paton, which will include insight into Paton’s social media strategy, their innovative open-to-the-public newsroom, on choosing Flip cams over iPhones, and how to help journalists from having to be jack-of-all-trades.