What we have/need

TRANSCRIPT: John: I'm on a Skype call with Julia Angwin of ProPublica. Thank you for joining me, Julia. Why don't you tell me how you got into journalism, how you started covering tech, what your career path has been? Julia: I have an interesting career path, in that I got into journalism to get away from tech and obviously I was unsuccessful. I grew up in Palo Alto. My parents were programmers. I learned to program a computer in fifth grade. I was really part of this very early PC revolution in the '80s in California and so my parents we had five computers at home. I thought, there was only two careers you could choose from, engineer or software developer. So I was chugging along on my journey towards the technology industry. I went to college, and I worked my summers at Hewlett Packard. But I also started to get interested in the newspaper. I started working on the college newspaper. Newspaper was my rebellion... ...against technology. After I graduated, I had an offer to go to Hewlett Packard but I thought, "I'm going to have some fun for a little while." So I went to Washington D.C. I worked at the Washington Post as an intern and then the State's News Service, which was this tiny little wire service where you do not make enough money to eat. I did that for a couple years. Then what happened is, that was the late 90s, people started to care about technology and I needed a job. Suddenly, I realize that being a Washington reporter, which is what I had been doing, was a commodity. And I had this one skill, that I understood computers, you know, if only vaguely but more than most people in most newsrooms. I was hired by the San Francisco Chronicle to come back to California and to write about...they hired me to write about... It was dotcom boom, so it was online retailing and stuff like that. I went and did that. I very quickly became a full tech reporter covering Microsoft and Netscape and mostly because I had had some sense of tech literacy. John: Wonderful. You went from the Chronicle to the Journal at that point? Julia: After I had been at the Chronicle for a couple years, I remember when Microsoft came out...I covered Microsoft. When their earnings came out, I remember I came to my boss and I said, "I don't understand. I'm looking at these two things. There's an income statement and balance sheet and I don't really understand the difference. What am I supposed to be looking at?" Because I have a math background and a math major, and I'm techy, that they thought I understood business, so her face went white. Like, "Oh my god, we thought you knew numbers." But I know, like, how to add them. Right? I didn't know accounting. She said to me, "You should go to this Bagehot program at Columbia." I went to that and did that. I got my MBA, and then I got hired by the Journal. They hired me in 2000, in January of 2000, which was like, literally, the peak of the dot com bubble was, like, March of 2000. They were vacuuming up tech reporters as fast as they could. I remember they hired me, and I said, "What am I going to cover?" They said, "Oh, the Internet." I was like, "Any particular part?" "No. Anything. It's all, we need as many bodies on this beat as possible." John: No. Great. You were there for the following decade and then you've left and you've gone to ProPublica. Julia: Yeah, at the Journal for 14 years. John: 14 years, OK. Julia: Yeah. John: That's good. That's good. Almost rivals mine, my tenure, at different times. What did you notice? You escaped tech and then you used that expertise as your trump card to get back into journalism, or to move up in journalism. What did you notice in the world of tech? What changed in those years as far as, how did companies deal with you? Julia: It was so great, to go from Washington, where it was, especially for me, as a junior, junior, junior person, it was really pack journalism. Right? It was the definition of pack journalism. I would go in press conferences with a dozen other reporters and I would write like this little piece that's, like, 10 percent different than the things, other things that had been written. I went from that environment to tech journalism, and there really was no pack. It was so great. Right? You could talk to these executives directly. They had PR people. But it was a different time where I was also young, and so I would go out drinking with the same people who I covered in a way that I had no access to with Congressmen that I wrote about. I imagine that was a unique moment in time. It's very different now. But it was a really lovely time. John: Because some would argue now, tech journalism is more like political journalism. The change in the last 12 years has been, now there's a pack of people covering tech. It's akin somewhat to politics. Do you agree? Do you not? Julia: It's worse. John: You think it's worse. Julia: Worse. It's worse. John: Why? Julia: I'll tell you why. Because political journalism, there's a pack, there's a lot of reporters. But to put it very bluntly, they're not funded by the people they write about. Right? Tech journalism, many tech journalists are funded by companies that are start-ups with venture capital backing. They are part of the industry they cover in a way that is totally different than political reporting. It's a problem, and so that's one thing. Also, I would say this. When I started in tech journalism, I was unique in being a woman. I was also unique, though, that I didn't get into it because I was a gadget freak. The early days of tech journalism, in my opinion, were sports journalism. It was fan journalism. Right? Sports journalism, it in the fan way, not, there is legitimately great sports journalism. Right? But it was a reporting on the event. It was like, I went to the game. I went to the Apple press conference and here's like how the players acted and here's how shiny and glossy it was at the end. A lot of the early tech reporters got into tech because they were the one person in the newsroom who liked to play with gadgets. Right? I was not. I got into it, I've never been a gadget person. First of all, I'm a girl, so my gadget threshold is lower, and secondarily, I'm not, I love technology, but I love it in a more abstract way. I don't need to sleep with it. When I started in tech journalism, I felt very different than most tech journalists. There's still a little bit of that in tech journalism today. Which is, there's a lot of shiny object coverage and much less traditional business reporting, which is what I came into it with a business approach. John: Yeah. It's interesting, because some of the, you're arguing, in some ways, the same way that some of the people who are in it for 15 years longer than you have have said about, that they're cheer-leading. What they've noticed over the years is the proximity of wealth to journalism can be very corrupting. Julia: I'm not sure that that's true. That journalists can and have, over history, in many different settings, been close to wealth and written objectively and fairly. I would say that I really view the tech issue differently, which is, there, it's a structural problem. Right now, the current structural problem is, you have companies that are funded by the industry they cover. The journalists are beholden. Right? And you have an industry, journalism, that is obsessed with traffic metrics. Those traffic metrics are driven by shiny object journalism. Shiny objects do very well on the Internet. They are the same as cat videos. Cat videos and shiny gadgets are a win. This is a system that feeds on itself, and I always look for systematic issues instead of people personally being corrupt. John: Now, that's a very good point, the structural problem that you see when people are measuring this. But you don't, you think that, absent that, there would still be enough rigor for journalists to keep their distance from what they cover? Or do you not? Julia: I'm trying to think of what would be an appropriate comparison. Right? Where have we seen great wealth creation in such a short time in this country? Maybe Detroit? John: Yeah, maybe Pittsburgh. It's pick your era, pick your era. Right. Julia: What have we seen there? It was a different era in journalism, but a similar one, because all of the actual papers were owned by, literally owned by the people who produced these things. We didn't see a lot of great journalism from those people. But you know what we did see? We saw it from other journalists. Right? We saw the muckrakers in the progressive era, and the thing about tech is there is some other...it's not as if there's no great tech reporting out there. There is, but it's not necessarily being done by what I would call, "The trade press, the tech press." That's probably too much to ask of any trade press, maybe. John: That's a fair assessment. That's a fair assessment. Do you think that companies are bypassing journalists more than in the past because they have a tool to reach directly around them and go directly to their audience? Julia: Oh, absolutely. Sure. For sure they are, right? Google puts things up on its blogs, its biggest news, even big news that's detrimental to them...when they were caught scanning for WiFi signals and pulling in people's passwords by mistake, they launched that on their blog to get ahead of the news. It was the classic "We might as well our lumps ourselves," right? Apple is one of the ones that's more interesting that way. Everyone says, "Apple is so secretive," but Apple really announces its news to the press, right? They don't do as much in that way, because they have a very favorable press... situation. John: No, that's true. Everyone comments that "Apple has its share of fan boys in every sector," and that's... Julia: Oh, yeah. John: What goes on. Have there been any points in your coverage where you've had "Eureka" moments that technologically, tomorrow is going to different from today? You've been covering this for 18 years. What have been the things that gave you a pause and said, "Holy mackerel?" Have there been any? Julia: I have to say, I've always been wrong, right? I've always...no, seriously. It turns out that what I've learned by being a tech journalist is I have no idea what's going to be big. The things are going to be big are not, and the things that are terrible are. I'm a barometer...they should use me as a negative barometer for success, right? When the eBay guys came in to pitch me about eBay at the San Francisco Chronicle, I was like "I have already seen eight other auction sites that have eight better features. Yours is not going to work," right? Wrong. When Google came out, I was like "Why would I want a computer-curated search? I have these lovely people at Alta Vista who human curate the web for me." I've been always wrong, and so most of my "Eureka" moments are realizing how wrong I am. ] John: Did you expect social and that changed the audience to be as huge it's...remember, you started at a time when, yes, the Internet had come in, but you still occasionally get snail mail, you got an email once in a while, and now that audience is right there with you all the time. Julia: Yeah. John: How has that effected you, that nearness to the audience, that proximity. Julia: I personally love the proximity. I will say this, I was right about social. I want to give myself a slight amount of credit, because I was covering News Corp at the Wall Street Journal and when they bought MySpace, I told my editors, "This is going to be huge." I realized that they captured something that hadn't occurred to me, people just found it too hard to set up a web page. This process of automating and linking people's pages to each other through friendship I realized was going to be big, but it was a tiny, tiny part of the company, of News Corp. My beat was really to write about Direct TV and the TV stations, and so that's why I left, to write this book about MySpace in 2007. I always joke that I was totally right that social was going to be big. I was completely wrong about the social network that I picked, but whatever. You know, closer than my usual score. I love being close to the audience. That is one of the greatest gifts for journalists. It used to be you would get a letter every once in a while from a reader. I always meant to write back, but maybe I didn't always write. Now, I get tips. It's like a conversation. It's a great thing for journalists. John: Do you think it will get tougher if you get even more intimate with the audience? I mean the following thing. You were talking earlier about the corruptive influence of traffic on the page and how that can change things. As the metrics get further where you'll be able to tell how far down in one of your stories someone reads, is that TMI? Julia: Yeah. I'm really conflicted about that. I don't want to be the person that says, "I don't want to know any data." I'm not constitutionally that way, but that we have a tendency to put too much impact on the data we have and not to think about the data we don't have. Traffic is the data we have or reading to a certain part of the page is data we have, but there's other data out there about your stories, right? For instance, maybe it really engaged readers and caused them to change, right, to do something? John: Yeah, behavior. Julia: Maybe it caused legislative change. Maybe there's impact that is way down the road like the long tail. One thing, at the Wall Street Journal, I led this series called, "What they know” about privacy." What was interesting was that it had a hugely long tail. The day one stories were a classic day one spike page one story. It wasn't better or any worse than a page one story, but the long tail was huge, right? News organizations don't fully measure the full amount of data. The thing in my heart...I'm still like an engineer in the sense that in my...despite being concerned about the impacts of data and privacy, which is what I care about, I also think sometimes more data might be the answer. John: Yeah. I can understand that. At the end of the day, you're going to want the amount of time somebody spends on your site. I absolutely get what you mean. Julia: I'll say this as a slight plug for ProPublica. The reason I came here is that I wanted to go from environment of monetizing traffic to monetizing impact, so we literally sell impact to our donors. That's what we say, "We bring impact," and that's what they give us money for. That's a better incentive for me as a reporter. My point is, you can build the structures the way you want to build them. John: How have you found the change? How have you found the change from one to the other? Jarring or is it... Julia: It's great. Because ProPublica is a reporter's dream. Honestly I do pinch myself in the morning. I have worked in newspapers for so long the idea that no one is going to say to me, "Why didn't you have that? Can you do a follow?” is still kind of like magic and that I can pursue whatever projects I want. I will say this though that I'm really one of the people who writes the most here at the ProPublica because I get a little itchy. I've got to get stuff. John: You've got to get stuff out. Julia: I don't know if I'll ever get over that the newsroom thing. John: No, no. It absolutely is. Have you found that the relationships among the tech reporters themselves, in other words I don't want to say the pack but the pack covering tech, changed over time? Because remember at the beginning you said you were one of the few women out there. At The Chronicle you were alone, and now there's much more coverage out there. How would you describe that arc? Is it more competitive? Is it more collaborative? What's the culture like? Julia: Certainly from a diversity standpoint it's dramatically better, right? There are a lot of women, leading women, women running their own organizations. That's a great thing because really the pack was like me and a bunch of guys with beards when I was younger. That's great. The competition is really fierce and that is to the readers' benefit because there are so many of these tech publications. The fiercest competition is who has the first photo of the iPhone, which is of course a shiny object. It's going to get traffic, but there is also competition. Re/code is a very good example of a site that breaks every major personnel move in the Valley. That is something that they're known for and it's completely solid, important reporting. It's a pretty robust ecosystem. I'm concerned that there aren't enough players who are funded other ways, who aren't reliant on the same people they write about their funding. John: Re/code recalled it, and my talks with Walt and Kara talked about how they specifically looked at who they wanted to have fund them and who they didn't. Julia: Yes, and they were very picky about that, but not everybody has that choice. John: No, not everybody has that choice. Have you been surprised? You have parents who were both in the computer industry. You rant at technology industry. You ran away from that. Did it surprise you over the last 20 years the inability of the news business to innovate in a way? How do you think about that, the level of innovation in news? Julia: I would say that it is surprising, and it's been great, right? Another reason I came to ProPublica is I love working with technologists. We have a team of 10 data experts/programmers who I work with and I sit right next to. To me that's the dream, the collaboration, because I really believe that hacking is a journalistic skill. It's poking around in computer systems to find stories. In fact, that's a lot of what drove my privacy reporting was this, "Let's poke around and see, well, where is the data really going?" It was really an audit. We were auditing data... I was amazed at how receptive the Journal was to that, but it was hard. I had to convince them to pay for technical contractors, which is one reason I came here. They have that in- house. At the same time every news organization has committed to this idea and there's amazing work that's going on. Strangely at the mainstream institutional papers I would say are leading that in some ways. I don't see this as big a data team at the tech trade press... John: Not since before. When did you realize or do you think that technology is an existential threat to the news business? Do you think that? Julia: I don't think that, no. I would say there is an existential threat to the news business out there. I wouldn't call it "technology." John: What would you call it? Julia: I would say it's the inability to monetize their audience... John: Because their audience can be replicated. Julia: Correct, and I've been meaning to write this. I blame it in a large part on privacy issues because the ability to track users across the Web meant that The Wall Street Journal no longer had a monopoly on their audience. They couldn't sell it because you can find them on the cheapest website. Whatever the cheapest website of ads that that same person goes to you can find them there. That has limited the news business's ability to monetize their audience. That is such a crime. In fact I've really been thinking about it. Everyone says to me, "Julia, why do you care about privacy? What's the harm? Blah -blah-blah." I've started to say, "Well, it's killing journalism." "Is that enough for you?" John: No, exactly because as someone said...I was talking to the other day, he went into a good point about that the news business in the United States has really been an advertising business. Since we can no longer monetize that in an advertising way, it's an existential threat. Julia: Right, but I would say that's not a technology problem. That's a policy problem because the truth is that technology can let you do whatever you want. If we said, as a society, that "You know what? You shouldn't be able to follow people around and make weird dossiers about them and sell them over here." We could do that. We can stop that in two seconds. John: You could argue it's been stopped in parts of Europe or not as loose as here in parts of Europe, but they're still feeling pressure on their news business, too. Julia: Not as much. John: Not as much, but still they're worried there. Julia: Obviously, there's also the fact that the news business. It was like it was a good run. It was never going to be that good. It was a special time. It was really a monopoly. They had a monopoly on those audiences. We'll never get the monopoly back, but let's say could we erect a small fence? Maybe that would be enough. John: Maybe that would be enough. How do you think journalism has done covering the last 20/30 years? How do you think we've done as journalists? Julia: Covering technology? John: Covering technology. Julia: We've done OK. I wouldn't say it's an A. I would say maybe a B, maybe a C. The reason I say that is that there's a lot of shiny coverage and there's an occasional deep dive. As much as I thought that I was in this pack journalism that was terrible in Washington, we still don't even have that level of accountability. For instance, every single reporter in journalism in Washington goes and looks up the FEC filings. They write about the campaign contributions. It's part of the daily thing which is like, "Where's the money coming from?" and it holds people accountable on a regular basis. That is just not regularized in the tech coverage. Strangely even the core business isn't that well-covered, the actual money flows. There's a lot of, "Oh, Twitter's huge," but there's not a lot of really important writing about where's the money going or what I was talking about now, which is that privacy has impacted all of journalism. That core business accountability reporting of these companies as businesses I would say could be better. John: It could be better, and it's not yet on a par where it is in political journalism. Julia: I don't think it is, no, because a political journalist knows how to look up FEC filing, but not every tech reporter can read an annual report. John: Absolutely. Question. Are you optimistic about journalism going forward? Julia: I am. John: Why? Julia: I have a special problem, which I'm optimistic about everything. That's one thing to know. People accuse me of being irrationally optimistic about privacy and irrationally optimistic about journalism. But I will say that for everything that I've said about the way tech isn't fully covered as well it could be, it's better than it was. What it was was very few reporters, no accountability, and only gadget coverage, so we're moving in the right direction. The great thing about the flowering of the Internet is that news can come from anywhere. Somebody can write a personal account of something that happened and it can spark a whole news cycle. Sometimes those things are more important than what the journalists are writing about. John: No, that's true. Do you consider yourself lucky that you chose tech and not City-Hall reporting because as far as being optimistic it's a lot easier right now to be optimistic with your specialty... Julia: Yes. John: I cover City Hall. I cover cops. It's... Julia: ...by the way, that's the part of journalism I'm most worried about, right? City Hall accountability is at an all-time low and this is a civic crisis. That is terrible. You're right. I'm lucky. I do feel like I didn't quite choose tech journalism. It chose me. It grabbed me and pulled me back in, but either way, yes, I'm really lucky to have these skills. John: That about covers it. Julia: Great. John: Thank you very much for your time. This has been... ...

TRANSCRIPT: Paul: It's April 12th. It's Paul Sagan. I'm in New York City at the offices of AOL with Tim Armstrong. Thanks for having us in. Tim: Paul, good to see you. Paul: Pleasure. Everyone thinks of you as a new media guy or a digital guy. We're here at AOL where you're running it. Known for Google, but you were a newspaper guy. So tell me that story, because you saw something and headed west from there. So back up. Tim: After college, taught at Wellesley College for the summer. Then after that, thought I wanted to go into investment banking. I went to an investment bank for about six months. And that realized that that was not my true calling. Went out to talk to people and what I realized I think I was most passionate about I grew up reading a lot of business biographies was media. I decided to start a newspaper. I talked my best friend from high school into starting it with me. We started a publication called "Beginnings of Boston," which was targeted at 20 year olds in Boston. It was an alternative newspaper. I sold my car, sold my mountain bike, and bought a Quadra 650 Apple. I bought Page Maker Pro. We learned how to do everything from page design through editorial, through ad sales. That was my initial start in the newspaper business. It was probably the hardest thing I've ever done, also, maybe the most fulfilling overall, and a great introduction to media. Paul: You were going to be a newspaper guy, that was the model, business probably looked great, you find the right niche of young people to add dollars flow, but you didn't stick with that. Tim: In our travels, we ended up getting another newspaper called the "Square Deal," which was a publication in Cambridge Square that targeted Harvard students and tourist. Paul: What year was this? Tim: This was in 1993 1994. Paul: The world is online and the dial up? Tim: Yes. It's dial up, and most people had not seen the Internet yet. Browsers at that time were pretty simplistic. People didn't really know what browsers were. A couple of things happened during that time period. One, the biggest change for me personally was, I went to MIT one day with some friends, and we had lunch with some of the engineers from Mosaic. They turned on the Web and brought up Mosaic, and we looked at some of the rudimentary websites. The minute it came on, the minute we started going through it and really looking, and they showed some of the new browser types coming out, I walked back to my office and I told the person I owned the newspapers with, "I'm selling my share. I don't know what the Internet, how big it's going to be, but I think it's going to be huge." Within a couple of months, I sold our share of the newspaper and essentially went off to try to find Internet things to do, and the combination of media and Internet. Paul: You went west? Tim: I went west. I worked for Paul Allen's company, Starwave, which was really probably the first scaled content company that was purely digital only. We launched espn.com it was ESPNet.SportsZone.com actually nfl.com, nba.com, abcnews.com, Mr. Show Biz, which was an entertainment site, and essentially stayed there. Starwave was an interesting combination of technologists from Seattle, and a lot of content people from New York, the East Coast. Everyone came together at one time, and it was just an explosion of engineering and content creativity in one place. That experience for me was a game changer mentality wise from East Coast media with West Coast engineering mixing together. That company ended up getting bought by Disney. I ended up going back to New York to work for ESPN and ABC, but just a phenomenal experience in Seattle. Paul: We were in Harry Motro's garage earlier this week. Tim: Oh, were you? Paul: Because Harry, of course, started CNN and then went and ran Infoseek, which Bob Fonda merged in with Starwave and Disney. So these worlds all come together, but you really touched on two really important things that maybe we should poke on a little more. One was when you got out of it, you will, Tim Armstrong is the brand. Do you burn the boats? You got out of the newspaper business. You didn't try to transition online and do two things. Most of the media companies have tried to do two things. Now, you're obviously a small business man at the time. A little easier for you than a giant media company. Then you went to a place that you referred to as this combination of content people and engineers, but the engineers were in charge. Mike Slade ran it and he was from Microsoft. One of things that's come up over and over again is that the winners online didn't just have a lot of engineers. They had a lot of engineers and engineers ran it. The media companies, the traditional ones seem to have suffered, because they either didn't hire a lot of engineers or couldn't, and they never would have put engineers in charge. Do you think there's something to success came from having to become an engineering culture and run from the top in a different way? Tim: Yeah, the interesting thing is in the media business if you look historically back like if you read the Hearst biography and a lot of, actually CNN and those things technology played a huge role in the start of those businesses. They scaled tremendously, but over a long period of time, the engineering focus at those companies went down and the content focus went way up. I think what the Internet did was actually reintroduce the importance of engineering at the start of a new medium. Really the companies that focused on engineering have had a huge advantage. I think where we are in the cycle right now it's actually interesting is that I think the combination of engineering and content ability or media ability is what's going to define the future. I told people that I work with AOL, and even when I was back at Google, I think the single biggest opportunity is connecting the railroad tracks between Silicon Valley and New York media. Because if you look at where things are commoditizing right now, the non commoditization of the Internet's going to come from media and services and that real human touch side of things connecting with the technology. I think the companies probably way back when, even if you look at what Hearst did in the newspaper business, there was constant investments in new technology printing and colorization and distribution and those things. But over time, that probably became more of a stasis, commoditized part of the business. The Internet has reintroduced the ability for engineering to actually build significant moats around businesses. Now, what's happened is a lot of those moats have been built. I think the media side of that creativity's coming back in. Paul: So you went west. Then you came back here to ESPN, but then something pretty big happened. You wound up at Google. Talk about that. Tim: The way I ended up at Google actually was I had sat through the Disney integration with Infoseek and with Starwave. I got put on a team with, I think, McKinsey analysts to travel around to the different businesses to look at the businesses. In traveling around to the different businesses, Disney was interested in launching the Go Network, which was a multi billion dollar investment by Disney to go online. Paul: A URL, a domain that still exists. Tim: It still exists www.go.espn.com, I think, is still or espn.go.com... Paul: Is still the default. Tim: ...is still the default. Paul: Re direct. Tim: And that's the re direct. I had one meeting that changed the course of what got me to Google in that the combination of those businesses. At Infoseek, we interviewed the sales team at Infoseek. Two salespeople got into a physical yelling match and almost a physical fight over the value of keywords. This is in 1998. When we sat back to do the Go Project, we wrote in a room all the things that Disney could potentially invest in. There was a lot of investment in email and things like that. I had raised my hand, saying, "In all the travels we did, there was only one thing that actually had the biggest emotional connectivity on the revenue front. It was search and people fighting over the keywords. Essentially, search was not looked at as an important part of it, but that stuck in my brain. I had been using Google as a user and they didn't really have the advertising on it at the time period, so when Google called and I went to meet with them... Paul: Probably because you found it through AOL or Yahoo! Or direct? Tim: Yeah, I found it through AOL, actually. Just direct, actually, from the Internet, but I think I was using AOL at the time period. I had started to use Google. When they called, my first conversation with Google was really...I told them this story of hey, I'm interested in Google because I think from a revenue opportunity, advertising was the only thing in the entire Go Network research that we did that looked like there was a real significant revenue opportunity. Since Google was testing advertising and looking at it, I told them my interest level was really because early on, it looked like search was going to be a major opportunity for advertising revenue. Paul: When did you go and what did you do first? Tim: At Google? At Google, I started in 2000, in September of 2000. My job was essentially to run ad sales. There were about three or four people that they had in the advertising group at Google and my first job was to essentially ramp up ad sales, which was controversial at Google. Paul: Which was AdSense, eventually, and was text based search results, not display. Tim: It started with targeting text ads on search pages. After the first couple years, we went to Larry and Sergey and essentially said "Why don't we take the search ads off of the search page and put them on..." We actually marked up some PowerPoints with About.com. We just cut and pasted search ads and put them on the About.com page and said "Let's take our ad system out to the web." That was a project we tested and it looked like it was going to be successful. We bought Applied Semantics. They're a company that did relevancy targeting. Essentially, that turned into a massive business at Google. Not just doing search ads on our own properties, but putting ads on other publishers' sites. Paul: Martin even remembers...He thinks maybe your first meeting with publishers, or one of them, to talk about this roll out of AdSense to publishers, to other sites, and asking you if Google had designs on display ads, too. You said no. Tim: Yeah. Paul: Then three years later, you bought DoubleClick and the world changed again and in a really big way. Tim: Fundamentally, from our standpoint, AdSense and taking more revenue out to the web, was purely a function of us actually looking...We had an issue with customers, where customers had loaded in their full ad budgets to do search ad targeting and in many cases were only able to use 60 or 70 percent. We have, literally... Paul: They couldn't spend...? Tim: They couldn't spend the full amount of money they wanted to spend. That's what got us...It was that guy named John Firm, at Google, and I who went through and put together the About.com page with the things on purely to solve the customer need of how do they spend their full budget. That basically translated into us going out to talk to the people about putting the search ads on. People asked us how the gates..."Hey, is this just going to be search or are you guys going to get into display?" Our original intent was just to do search ads and then what happened was, two or three years later, we realized customers were coming to us saying, "Hey, it's so efficient to put all my budget into one system and have it run on search in other places. Can I put my display budget in and do that?" We tried to build our own display system, but we were in ongoing talks with David Rosenblatt from DoubleClick. Essentially, it made sense for us to, instead of build it ourselves, buy DoubleClick because DoubleClick had built all the piping. People don't realize what the ad business is. The ad businesses is about sales on top and selling advertising. What it's really about is putting piping into all the major customers, into their billing side and those areas and finance side. DoubleClick had done that. For Google to replicate that would have taken years, so we bought DoubleClick. We essentially came up with a new strategy chart, which showed on one side of it. We would basically have all the advertisers. In the middle, we'd have a Google system, and on the other side, we would actually be agnostic towards what type of ads and what type of revenue we took. Shooting to web...We launched the Google TV business, the radio business. We actually ran ads in print. We used the Google system to actually buy print ads and put them in magazines and we tested that. We really thought very big and broad about how do you have one system serve the whole ecosystem of advertising. I'm not as up to speed on what Google's doing today, but I think that's similar to what their current thoughts are. Paul: Certainly for the buyer, for the advertiser, they added an awful lot of efficiency and convenience. For the publisher, it was part of a double whammy, though. The other was the invention...First, Yahoo! News and then Google News. It became a giant sucking sound where half of the ad dollars or more on the Internet go to Google today between the combination of search and display. Because of effectively infinite banner inventory and targeting, for publishers it's been a mess. The transition of dollars to digital dimes or nickels or maybe pennies. What do you think the answer is? Does that sort itself out in some way for publishers going forward? Otherwise, many of them, except those that can find some subscription model, just aren't faring very well. Tim: You hit on a bunch of things there, but I think there's really three really big things underneath that that matter for publishing in the future. Number one is you can't apply your offline cost structure in the way you do business online. It's not fair to compare offline dollars to digital dimes. The reality is underneath the digital dimes in many cases, you can have a much lower cost structure. If you look at the difference between hosting on Amazon and running a content property versus having trucks and distribution and printing plants, there's also dime costs versus dollar costs on the digital side. That's one. Second thing is I think it's really important here and this point is important for our publishers. You have to be excellent at yield management and yield dynamics. A lot of the challenge I see on the traditional publishing side is a lot of people did not have multiple revenue streams. They had a sales force selling their properties. Whereas in the digital world, you actually can take multiple inputs of revenue stream and multiple customer segmentations and yield management's a really important concept. By the way, yield management comes with engineering, also. You actually have to engineer the yield management, so if you're... Paul: It's a math problem. Tim: It's a math problem and you need engineers to work on it. At AOL, we have a large yield management, which is run by PhDs in computer science. I don't know whether or not the larger publishing industry offline has thought in that adoption curve. The third thing, actually, is you have to essentially set your customer segmentation out, your revenue segmentation, your distribution segment out to maximize the current changes in the distribution, consumer, and revenue landscape online. What looks like a flat problem of I'm creating content and I need to monetize at a level is actually a cubed problem where you have to mix all of those things together and manage them together. It's looked as a huge problem in the industry. I think it's also the single biggest opportunity. Because if you get really good at doing that at scale, it's a massive strategic advantage. That's one of the things we're trying to build at AOL now. Paul: Let's move to that. You did the Google thing. Remind me, what year did you come to AOL and take on a whole new challenge? Then we'll talk about that, particularly on the content journalism side. Tim: Sure. In 2009, I decided to leave Google to come to AOL. AOL was inside of Time Warner. Job number one, for the first year, was to financially structure the company, to spin it out. At that time period, we decided, in that year of getting ready to spin out, what the strategy was going to be. AOL's strategy is clearly hooked around becoming the world's largest media technology company. Paul: That sounds like being two things. How is it one? Let's talk about it, particularly in the media or the content side. Because you made two big bets. One is national or even global, around "Huffington Post." The other is local, around "Patch." Tim: AOL is a media technology company. I think there's a false question in, "Which one are you?" By the way, going back 20 years to Starwave, people used to ask us that. "Are you a media or a technology company?" The issue is, in today's landscape, you have to be both. The media technology company, if you lose one side of it, we lose a competitive advantage. I'd say we're one. We have, essentially on the content side, decided to invest in what I'm going to call human brands. Technology changes all the time, but human needs don't. There are 10 or 15 things in people's lives they really care about. They care about family. They care about work. They care about where they live. The investments that we've made, overall, as a business, are directed at those really deep human need states. We bought The Huffington Post, because we felt like there was an open opportunity to build news at a cross country, global level that would mix in video, mobile and if you look at the distribution of news offline, it's tended to be in distribution systems in different countries, in different places. Whereas the Internet would give us the ability to build a global news brand that was cross country format, cross language format, cross topic format, across a number of verticals. We see the ability to build that platform for the next two decades, in a very large scale. This second one was on the local basis, which is local matters to people. They live in communities. The average person on Patch is an investment we have in almost 1000 towns in the US. The highest GDP towns. The consumers stay there for 16 to 18 years. Their kids grow up there. They spend 80 percent of their revenue within a 15 mile radius of those towns. The opportunity in each individual town, each town represents about $900 million of commerce. If you strip out houses and autos, there's about $300 350 million of just transactional things there. We believe that it's maybe one of the largest white spaces left online. Also that local information, for people, is a top five or seven thing in their lives. We want to be the company that fulfills that for them. As Huffington Post globally fulfills the news and information vacuum, Patch would do it at a localized level, at a very low cost structure, compared to what offline is. Paul: Let me ask you, just a little more on each one. Let's do Huffington Post first. They were an ultimate aggregator in the beginning, with almost no original content, just a little bit wrapped around. There's even been the debate about whether that was fair use or not, but most people who complain didn't push the point. Built a big audience and then started to create original content, even won a Pulitzer Prize. That ought to be the answer. That's the first answer to, "Are you doing something original?" There's certainly one positive answer that the newsroom can give, and a strong one. What's the business model? We talked to Arianna and she said, "It's got to be advertising. It's got to be a free business." Do you get to the point where it breaks even and it makes money and can sustain the investment, to keep growing, to build the two decade vision? Does that work as an ad only business? Tim: One is, The Huffington Post is a multi decade opportunity. It's a multi decade opportunity on the growth trajectory, with our current model, with advertising and scaling it up, including investing in content. "Huffington Post Live," which is the first cable channel for the web, live cable channel, also is another significant investment. People don't realize how strategic that is, over time. Looking at those two models, we can scale that property, globally, on a revenue basis off of advertising, which will be profitable and a good investment for our shareholders. The second piece I would say is, I would leave open whether or not that's the only business model, long term. We see the opportunity where consumers like paying for content, if you see what they're paying for. Whether it's Huffington Post or one of our other content properties, my guess is, in the future, we will test more and more business models around, "How do you make money doing content?" That piece of it is really strategic and important for us, overall. The investments we're making today, in free content, are having big impacts, in terms of the usage we're getting, those things. It's highly likely, over time, usage will grow. We're seeing it grow. On the advertising and revenue side, we're seeing that grow. That looks like a good pathway for the future. I would also say we'll be open to opening up multiple pathways. Both on the consumer distribution and on the revenue side. I could see Huffington Post Live going to TV or cable. Not just being on the web. We'll look at multiple, different ways to distribute and monetize content. Paul: Or maybe TV comes to the web and catches up. Tim: Right. Paul: That's another story, but it's ripe for change too. Maybe we end on the Patch question. We've talked to a lot of people. If you look over the landscape, the entities that have suffered the most have been local, primarily newspapers and primarily in the middle. The national brands arguably are doing OK. "New York Times," "Wall Street Journal." The hyper local, the "Where Warren Buffet's buying today," they are still by and large profitable and finding value. It's the mid level. Look at cities where the newspaper doesn't exist or there is no seven day a week. Look at New Orleans. Now a three day a week. And who knows if that lasts. One of the points that Julius Genachowski made today is, in many ways the market definition, the DMA for newspapers in the broadcast license requirement meant that traditional media underserved those communities because they had to do the whole metros. You've segmented down to towns, with a different model. But where arguably the base is going to be smaller and the cost basis has to be something completely different. How much original journalism can you do and do you think that fills that need for quality journalism or content? Does it become a business, too? When you look at the total commerce, the total amount of marketing dollars, reasonably what share you could get, because you can't get it all, no matter how good you are, how does that add up to be a business? Does that mean each town gets 10 reporters, one reporter or someone who shows up once a year? Tim: The model on Patch was really basic and really simple. We looked at the economics per town. We stack ranked about 18,000 towns in the US. We used 59 variables to do an algorithm to stack rank the most valuable town to least valuable town. We took the Wal Mart strategy. Essentially, Wal Mart's known for low prices. Originally, when Wal Mart started, it was started to bring big city goods and services to small town America. We wanted to bring big city Internet to small town America and digitize towns. That's the focus of Patch. The Patch business model relies on the Clay Christensen innovator's dilemma. Paul: Who was talking to us yesterday. Tim: Oh, was he? Paul: Yeah. He is the most mentioned person in this history. He does very little work in this area. Tim: We happen to be big fans of his. What we looked at was, could we do a multi 100 percent of the current content of the town at a fraction of the cost. The model we came up with was, run a town media property for under $150,000 a year on the cost side. Try to do 300 percent of the content. So increase the amount of content in the town by 300 percent. Paul: Against what existed offline? Tim: Against what was existing offline. Can we generate more and more content online? And open it up to the community. Our model mixes highly edited, highly trusted content in town, with community interactions, board postings and those things. What we've found is, the community really likes trusted information and trusted content and trusted journalism. It's a must have. The second piece is, they like the ability to upload content against those things, themselves because they're going to have more interactivity than one editor can do. The model that we've built is, $150,000 or lower per town cost in media markets that have $10 30 50 million media markets in those zip codes, overall. Our ability to get two, three, four percent of the media dollars on that platform in a town, Patch becomes profitable. When people look at the Patch investment overall, they say, "Whoa, you guys are investing a significant amount of money at an AOL level in local." That's not how we look at it. We look at it at a micro town basis. If you looked at investments from 1960 to 1995 in local community newspapers, it was one of the best investments. Great revenue, great margins. Even at a higher cost structure than what we're doing. If you look at what Warren Buffet's investing in, he's investing in the hyper local newspapers that have great revenue, profit margins and consumers that don't move. Paul: Arguably, they are metros, identify as a city, not as a suburb, but a town. Tim: But a town. We have the same model he does, which is, invest in towns. The regional newspapers, in general...The overall thing, across the entire Internet right now, regardless of what content space you're in is, don't get caught in the middle. If you go back to the Andy Warhol statement of people care about high end luxury and they care what happens on the street. Anything else in between comes across as mediocre to consumers. That's where the Internet is on local today. You either should be national, New York Times, Wall Street Journal, Huffington Post, or you should be hyper local and mean something to consumers. Our investment, we call it the bar bell investments, tend to be at both sides of those bar bells. Actually, I'm pushing the company right now to go as far in that direction as possible. The last place we want to be in, as a business, is in the middle. We're avoiding everything that puts us in the middle. Paul: Did I leave anything out you wanted to say? Tim: Maybe one thing about what I see happening on the network side of the future. Paul: Absolutely. Tim: One thing in the future that's happening today and you're seeing, I would point out the HTC handset that just came out that puts content on the front of the screen. You have billions of consumers... Paul: In this case, it's a Facebook home page. Tim: There's two different versions. The Facebook home page, there's also a version that has instant content updates on the front. If you look at, right now, in 2013 you have Amazon, Google, Microsoft with Xbox. All those companies, Apple, starting to invest more and more either in content distribution or content itself. I believe, over time, Silicon Valley is getting more commoditized on the device, network front. Those things. You're seeing, essentially, the same thing that's happened in media, over time. Distribution and technology of the content gets going first. Then people go back to content investing. AOL was highly criticized at the beginning of our investment cycle. But when you think about where we are today and you look at what the news is, coming out of all the big technology companies, content is becoming a bigger and bigger investment. You can almost look across any device, any network, any handset content is starting to get mentioned. I believe we're at the beginning of a content revolution in 2013, which will probably last, again, multi decade. The most important contents brands and content properties are going to be the most important things to consumers. Paul: Thank you. ...

TRANSCRIPT: Martin Nisenholtz: We are here with Marty Baron on April 4, 2013 at The Washington Post. Paul: Paul Sagan and Martin Nisenholtz off camera. Thank you for a few minutes. Marty: Sure. Martin: We are doing this look at when journalism and news met technology. It isn't just the period of the Web. It really does go back to video text, etc. You talked about, when we first walked in, covering some of those early systems. Maybe go back to those first experiences and what you covered and learned, and then fast forward through what the newsroom of today is going through. Marty: Well, I was at The Miami Herald when Knight Ridder introduced ViewTron, and people saw that as something that would lead to a very different future for us. The company invested a tremendous amount of money in it. I was a business reporter there at the time, and so I was covering it. It was interesting, but they kept investing a lot of money and a lot of money, and then nothing came of it. It's interesting, because we both saw the future and then I think people said, "Oh, well, maybe that's not the future." That was their reaction to it. It was interesting that years later, when I was at the L.A. Times and some of us were pressing some of our senior leadership to do more for the Internet, the managing editor at the time said, "Ah, yeah, Knight Ridder did that ViewTron thing. Nothing ever came of that." Some of us said, "You know, the Internet's very different than that." This was at a very late stage. It was interesting to see that Knight Ridder was pressing on that. Martin: That is interesting, because others have said that this video text experience essentially cooled the industry for a decade or more and caused the whole online services industry to evolve around the newspaper industry. Marty: Yeah, I think that's right. I'm not in a position to judge that. But having seen how people reacted to this huge investment that Knight Ridder in ViewTron video text and that it didn't work out. They had no way of making any money off of it. If I recall correctly, they were actually giving people machines. No, they were having to pay for machines that cost a fair amount of money at the time. It was pretty limited, obviously. It was just basic text. It was not fast. There was nothing great about it. It was interesting, but it's not as if the general population was eating it up, saying, "Oh, we've got to have this." It's some sort of replacement for their newspaper. They kept putting money into it. They kept not getting any money out of it. Paul: Do you remember, just as a ballpark, what a lot of money was? Marty: I'd have to go back and look at it. You'd have to ask Tony Ridder what he spent on it. I don't know why the number's sticking in my head, but I keep thinking $80 100 million. Somewhere around that. Paul: One of the points that's been made is... We've been playing with this metaphor of swimmers and the tide. The tide is so big it's taken the swimmers, meaning the news companies, just out to sea with it. Which is, even if it was $80 or $100 million, that's a lot to a company like that at the time. It's not really to the tech companies that created some of the tide that's just been too big to push back against. One of the other experiment they did was the tablet in the lab that they built, in Boulder, where the budget was only a million dollars a year. Which, when you try to think about, are you a tech company or aren't you? It's not table stakes in tech. You went through that and reported through that and then obviously rose up and became an editor of a number of big city papers and lived through the budget challenge. But also the changing audience. So maybe talk about how the audience's appreciation for news commodity versus brand and the value of the brand, the value of the package, has changed or not changed. Marty: There's so many trends that have affected us. My sense is that people are going to their passions. Their passions aren't always based on geography. Newspapers have traditionally been based on geography. We have a community here. We have a community in Miami, a community in Boston, a community in Los Angeles. The assumption was that people were members of that community actually would want to have a product that covered the full range of things in that community. What I observed over time was that, in fact, the sense of community wasn't nearly as strong as the other passions that people had. In fact, community wasn't necessarily such a strong passion. It was much more important to them that they were an aficionado of a particular type of music, or that they were a member of a particular religious denomination or that they were obsessed with a particular sports team, than the fact that they lived in Los Angeles. Or they lived in Boston or lived in Miami. That passion is really what drove their interests. There were all these sites that developed, that could appeal to them far more than a newspaper could. Because you could offer a site that offered every conceivable piece of information about your favorite pop musician, which no newspaper was going to offer. People started gravitating to particular sites. It becomes an a la carte environment. If they wanted to read about the Red Sox, they could go to a particular site. If they were just obsessed by sports, they could go to ESPN.com. If they were interested in movies, they would be going to some of the entertainment sites that existed. If they were interested in politics, obviously there were things like Politico that grew up to appeal to them. It was all eating at newspapers, at the edges, in terms of what readers' habits were. Paul: Let's come back to politics in a minute. Because it is a big vertical in this market, in Washington. But hasn't even the extension of what you've said been not even fragmentation by vertical, but almost by article. First search and then Twitter has turned it into, you're not even going to a site. You're going to a specific deep page or a story, which makes it even harder to figure out how to aggregate a business model. Marty: Yeah, I think that's true. Obviously, that's true. I was just talking with someone, earlier this morning. We were talking about section fronts online. Probably not that important anymore. People are either going to the home page or they're finding their way to the article. They're finding their way to the article through search. They stumble upon it. They see it on Google News or on Yahoo. They see it somewhere else. They go to that story. It just happened to be the story that they found first. It's not because they had any loyalty to our brand. It just happened to be the one that was most convenient. They may not even have noticed what site it was on. Now we're all struggling to keep them on the site once they're there. We recognize that articles are the entry point for a lot of people, as opposed to the home page or something like that. It is a struggle, because people aren't necessarily loyal to any particular brand. The distinctions between one brand and the next may be important to us. We may think they exist. We firmly believe they exist. We have reasons for that belief. On the other hand, there are a lot of consumers who couldn't care less. Martin: We're interviewing three different kinds of people, I would say: those who inhabit the traditional journalistic institutions; people on the opposite end of the spectrum, who have created some of these very large technology businesses like Twitter, Facebook and Google; so called new journalism folks, people who are inventing new models for journalism. Including local ones. The criticism that the tech and new journalism people bring is that the more traditional folks haven't yet recognized how radically different the costs structures are. And while someone like you may think, "I've taken a huge amount of cost out of The Boston Globe newsroom," from their context, it's still 10 times too large. Can you talk about the reality of that and what you think about that tension between, on the one hand, the entrepreneurs saying, "These people are still living fat and happy," and your perspective on creating quality journalism? Marty: Sure. I understand where they're coming from. Of course, lot of their models are built on aggregation. They're aggregating the work that we do. Of course they can maintain a lower cost structure. They're not doing the original work. They don't have to pay for it so they can keep their costs low. If we no longer existed, they wouldn't have very much to aggregate. That's one issue. I certainly believe that there's huge value in quality, original journalism that's done. It costs money for us to send people to Afghanistan to cover the war. It costs money for us to send people to Iraq to cover the war. It costs money for us to send people down the street to cover what's happening there, to actually talk to witnesses and to put together a coherent story about what happened. If we're covering social issues in our community, it costs money to investigate those things. It costs money to do investigative work. It doesn't cost any money to take our story and link to it and say, "Look, we've built a business model by selling ads around that." Of course they can have a much lower cost structure than we do. It doesn't mean that we don't recognize that they're operating on much lower cost structures. I think we fully recognize that they're operating on much lower cost structures. But it's kind of difficult for us to make that transition, to get to their point because if we cut our costs to their level, we won't be doing any original journalism. We actually won't. Martin: They would argue that that thinking lacks a kind of recognition that there are all of these other contributors out there. Let's talk more locally because Iraq and Afghanistan may be different examples, but they may not be. All of these folks are blogging and tweeting and creating whatever they're creating from these places. We're just awash in information. The new journalism is more about curation than it is about necessarily sending a reporter and then editing that reporter. Could you talk about that? Marty: There may be instances where that works. Even if you have a train wreck, you're going to get a lot of Tweets from people saying I was just on the train and it crashed. Who's going to explain to you why it crashed? What were the circumstances? Nobody's blogging on that. Nobody's blogging on whether the person who was the conductor of the train was on drugs, or drunk, or fell asleep at the wheel, or anything like that. They don't know. They have no information about any of that. They have no information about whether the tracks were in proper condition. They have no information about whether the train was properly maintained. They can't Tweet about that. There's nobody blogging about it. None of the engineers who worked for the Transportation Authority are blogging that "Hey, guess what? We haven't been maintaining those tracks." The notion that all information is known, but it's not necessarily available and it's not put together in any coherent way for anybody to possibly understand. We just did a story here about the governor of Virginia who has a highly unusual relationship with a very unusual company that's putting out a dietary supplement essentially. It's not clear that it has medical benefits, although some are being claimed. This company gave the governor, actually have paid for $15,000 of the wedding of his daughter. The governor's daughter isn't going to blog on that. The donor isn't going to blog on that. The governor himself doesn't plan to blog on that. The caterer didn't blog on that. Nobody blogged on that. Where did that information come from? Through the efforts of our own reporters. The Boston Globe just completed a series about the taxi business in Boston, and all the abuses that take place there, how the drivers are exploited essentially. Taxi drivers can't blog on that because they won't get another gig. The owners aren't going to blog on that because they won't get another gig. Nobody's sending out Tweets about any of that sort of stuff. The only thing that gets sent out on Twitter about that is if somebody had a bad cab ride. There's a limit to the kind of information that becomes available because of blogs and because of Tweets. We have to be realistic about that. Martin: Talk about that context of the priest scandal that you led at The Globe. Marty: Shortly after I got there, we embarked on a series investigating the Catholic Church. The issue there was not just whether a priest had abused children, which there had been cases of that before, but whether there had been a pattern of abuse and that the church knew about that abuse and then reassigned priests to other parishes where they then abused again, and whether that pattern had taken place over a long period of time. In fact, it had in the case of dozens and dozens of priests over decades. Now, that was not something that anybody was going to tweet about. The priest abusers weren't going to tweet about it. The victims weren't tweeting about the abuse that had taken place. The church wasn't tweeting about it. Nobody was tweeting about that. That kind of information would never have been known had it not been for The Boston Globe doing that expose. Paul: One of the other themes that has come up is this concept of original sin, which is if the newspapers and the magazine companies, too, had just waited and not gone, "Everything is free," and just said, "Our model is subscription. We just need to wait until that happens on the web," the world would be a better place for all these companies today. That, obviously, flies in the face of the other thesis which is just the tide was too strong. You could not resist. If Reuters and Yahoo! Are going to set news and headlines free, you had to play in the free space. Just wondering your thought about that as you went probably through those discussions in a bunch of newsrooms and today as paywalls have started to actually work. Have you thought about the decisions that were made then that maybe you were a part of, and would it have turned out differently if people had made different decisions, or has this just been the evolution, and we'll do the best we can now? Marty: I was never in a place where they actually considered charging from the beginning. I think everybody felt they needed to be in the game right away. Nobody knew exactly what the economic model would be. Initially, it was just we need to be there because everybody's there, and it's kind of this cool thing. Then people started to think about the economic model over time. I think once people started to think about the economic model, they were thinking much more in terms of share of market rather than total advertising or subscription models or how it would affect sales of the traditional print newspaper. They needed to be the biggest game in town and they wanted to make sure that there was no other player there who was a bigger game online than they were. So, that became very important, and it has been important for some decades now where everybody felt they needed to be bigger. We're still in that game where everybody's looking at each other's comp score number. We're looking at each others, in the extent they're available, Omniture numbers and things of that sort. Rankings are very important. I think people came to pay models very reluctantly and with some level of uncertainty because the economic model was based entirely on advertising revenue and in order to get more advertising revenue, you had to generate more page views. Then they discovered that there were no riches at the end of that... Martin: Because they put an infinite inventory... Marty: That's the problem. For those of us who have responsibility for generating those page views, you do feel like you're on a treadmill. That you have to speed up and speed up and speed up, and you're not actually making any real progress. You're not moving anywhere. If you slow down at all, you're just going to fall off. Yes, you're creating more and more inventory. Everybody is trying to generate page views so there's an unlimited amount of inventory. It's basic economics that the value of the advertising is going to start to drop, the rates will drop. And sure enough, they have dropped. They may well continue to drop. People are confronted with that and they say, "We've got to do something else, and by the way, look at the sales of our newspaper. They're dropping off because we're giving everything away for free." So they've implemented these pay models. A lot of people in newsrooms, journalists in particular, have said, "Oh, we should have charged all along." But I don't buy that. I don't think we could have. I think, in fact, we would have ceded the territory to other people, and I think this has been part of the natural evolution of the web is that it's just happened this way. I think it was important that news organizations be out front, innovate. Seize market. Boston.com in Boston became a very big factor. Had they been charging all along, someone else would have been the biggest factor online. There's just no question in my mind. So now, they have to figure out how to make more money. The pay model is one way that they think they might be able to make more money. That too has yet to be fully tested, in my view. It's something we have to try. I think we have to try a lot of things. It's one thing that people are trying. I don't think it's a panacea. It seems evident that it's not the panacea. Paul: What are some of the things that you think we need to try? Do you have thoughts about that, or is it just a general statement about innovation? Marty: In a way, it's a general statement about innovation. I don't know exactly everything that we need to do because there are new things that people are trying. For example, here at the Post, we announced three months ago that we were launching a politics video channel. I think video on the web offers us the opportunity to be a disrupter rather than the disruptee. I think the Post sees that opportunity. Politics is a sweet spot for the organization. We have an opportunity to do something interesting there. The advertising rates on video are much more attractive than they are particularly from ad networks that supply a lot of the advertising online. Video is one area that I think we can do things. Another area is so called verticals of specializing in certain areas where you're not trying to appeal to the mass audience, but you're trying to appeal to the niche audience. The advertisers who want to reach that niche are willing to pay a higher rate to reach them. For example, here at the Post, we have a lot of advertisers who are particularly interested in reaching people who have .gov and .mil addresses. Rates tend to be higher for that. We try to do a lot of things that might appeal to that audience. ...

TRANSCRIPT: Martin Nisenholtz: We are here on May 8 with John Huey and Martin Nisenholtz interviewing John Battelle through a Google Hangout. I'm going to ask the first question, John. Just so we're clear, I have to disappear at four, so John will continue, if you have any time after 4:00. If you can go for just a few minutes, that would be great. We really need to have a good understanding of coming out of the .com bust, the scene in San Francisco. You and O'Reilly start this thing called Web 2.0. A bunch of so called Web 2.0 companies were founded way before, in the late '90s and even into the early part of the decade. You don't have the conference until 2004. Is Web 2.0 a rallying cry? The first theme was "The Web as Platform," I think. Talk to us about Web 2.0, what that meant and what you were trying to achieve. John Battelle: I think there was a cultural moment, after the .com crash, where there was a lot of sentiment in the air that this Internet thing was certainly important, but it was overhyped, under delivered, probably over capitalized and a lot of people lost a lot of money. In New York in particular the financial markets I think had a very negative view of the web as did a lot of the large media companies who had invested heavily in it, not seen a return. They're quite honestly, I think, driven in part by a concern that their traditional models were going to be disrupted. So that there was some schadenfreude in. That didn't work out. Also a sense that a lot of the things that were done in the latter half of the '90s were ideas that didn't have a lot of carry. Web 2 really meant was if we take a platform that is open, that has a shared sense of values about how we connect to each other, how we share information, how we communicate, we can do some pretty remarkable things. A lot of forces had conspired over the course of two or three years from when the crash commenced to when that conference began. That taken together meant that all of the sudden, some of the promise that had been, perhaps over hyped in the '90s, it was possible to deliver on that promise now. There was a set of technologies that didn't exist before and standards. You remember AJAX, but that was a new stack of technologies then. The open source stack of technologies had become far more stable and probably most importantly, we had a broadband usage that had crossed 20 or 30 percent in developed markets. And was growing at a spike similar the spike we see now with mobile adoption. We had just generally, while all of us were wringing our hands in the industry, no one stopped using the Internet. As a matter of fact, a lot more people, we got to a critical mass of people using the Internet and depending on it for a lot of things. Probably the seminal Web 2 company, as you remarked, was one that started in 1998, and that was Google. Google was built from the ground up on this idea that the web is about connections between things. In the first instance those things were web pages, in the second instance they were people. Just like what we're doing now on a Google platform. I think that with Google came this realization that there was a new ecosystem that could be built on top of the value of the web as a platform. The sort of company that, to me, really was the namesake or the platform that allowed a lot of value was Google. Because it gave almost everyone an instant reason to derive value from the Internet, which was, I can instantly find what I need and go there. That started a very important shift. Google went public the year that we started web 2.0. Martin: Talk about the advertising markets at the same, kind of in the same era. The .com bust kills off the traditional display market, or brings it down very, very significantly. But within a couple of years, Google now has 9 billion of the 23 billion of advertising dollars spent on the web. I'm talking about 2005, now, 2004, 2005 time frame. Display has also come back, but there's this underlying ad network ad tech thing going on, too. Can you talk about that? John Battelle: Yeah, and I think that's taken a good decade to truly develop. But we saw...History somewhat repeats itself, so in the late '90s, we had lots and lots of ad networks, who strung together lots of different websites and made it possible to buy undifferentiated inventory at scale. Then there started to become the process of trying to differentiate that inventory that was deeply disrupted by the crash. But the people who started DoubleClick, the people who started a lot of the ad tech companies whose names we don't remember because they didn't make it through or they got folded into larger entities, those people didn't go away. We see them back today in a very robust, extremely competitive new form, what we call programmatic ad tech or machine driven to data driven inventory buying. At the same time, marketers demand value. I think, as an industry, we chose a set of advertising units for the Internet that became the standard, which, upon reflection, and John had mentioned earlier that you see things much more clearly when you can pull out of them and look back. We made a decision that the backbone of our advertising units that were not search related. Were relatively small and pretty easy to ignore from the point of view of a consumer, and not necessarily additive to the experience that people were having on the web. They were up at the top or over on the side and they weren't necessarily adding value in some way to the experience people had on the web. What happened with ad tech, I think, is that marketers started to see that inventory essentially as only as good as what it delivered in the direct response kind of way. That entire portion of the Internet, which was really driving a lot of the revenues for a lot of the companies, came into question in the last 10 years. Right now, we're in a very interesting transition period where, on the one hand, all of that sort of IAB standard units, all of that's becoming liquid and commoditized to the point where it's being valued pretty lowly, at a pretty low level. At the same time, publishers are realizing that they can create new kinds of ad units and defend the inventory by using their own data and saying, "No, this is worth something if we're going to make it worth something for you." There's just a continuum there between the ad network model we saw in the late '90s, which still exists today and is pretty big. The publishers who create premium inventory and who are working very hard to figure out how to deliver that to marketers in a way that adds value to the whole ecosystem to the publisher, to the reader, or consumer and to the marketer. John Huey: John, you wrote, really, a pretty prescient book about Google, the ultimate Web 2.0 company. You wrote it kind of before they reached critical mass in some ways. But if you look today at where they are and you see that... I was looking at one set of numbers earlier today just a prediction for 2014, where they would get 20 billion in digital advertising versus three each for Yahoo, Microsoft and Facebook. We saw Sir Martin Sorrell say the other day that he would now spend more money with Google than with News Corp and that Google would be his biggest advertising spend. What's next? Where do they go from here? In terms of share and dominance and if it's not just a continued straight line up, what's the disruptor around the corner? Is it social, is it Facebook, is it Twitter? What's going to happen next? John Battelle: I think the biggest war, if you just want to say in terms of dollars, has to be around how people consume and interact with video and entertainment. Because to me that's a form of content that has what marketers want. John Huey: Google has a pretty big piece of that today, too, right? John Battelle: Google has a very big piece of that. Obviously, we're streaming this to YouTube. John Huey: Yeah, streaming it to YouTube through Google Hangout. John Battelle: Google knows that. But what Google also knows is that the distribution mechanism for video is going to be any piece of glass that, you know, where video can be shown. Which means that you need access and distribution to whatever that form factor is where the video's being shown. Hence Android, and the desire to have a broad reach into tablet, smartphone. Quite honestly, if you look at Google Glasses, the new platform from Google, that's an attempt to define yet another piece of glass where there might be sight, sound and motion. Hopefully, not while you're driving. But, to me, the thing that can disrupt Google is someone who is a company who has the attention and the engagement of a consumer. That's where the money's going to go. And so, there are a lot of companies that have that beyond Google, but the truth is that Google's done an extraordinary job of staying ahead of where that attention's going to go. When they're not there, doing their level best to getting there. I think if you look at Google+ as a response to social, to me it's more than that. It's a conduit to what we're doing. Google's leveraging their extraordinary infrastructure to do something that's super hard for any other company to do, which is allow people to spontaneously connect over video. That is super hard. I've been thinking pretty hard about what Twitter's doing. I see that as a potential significant disruptor as well. In that if people can start to have behaviors where they see Twitter as their window into determining how they're going to spend their time. And inside of a Twitter card, you can just activate the video. If that video happens to be a competitive offering to Netflix, a competitive offering to Google or Apple TV, so be it. That's where that's going in terms of Twitter, is I watch my activity stream. I see what my friends and connections are paying attention to. I see what's trending and what's hot and I connect to it and now I'm engaged. I consume, not just the content, but the advertising content. I think Twitter is to me a significant potential disruptor in this space, if you look at just the biggest buckets of money. John Huey: You've already said video is where the money is going. Let's talk for a minute about mobile and of course, everyone's chasing the consumer where they meet video. But they're also chasing the consumer on mobile where video and everything else meets. What's at stake there and what are the choke points and just handicap that for me. John Battelle: To me, the strategy that makes sense in mobile from the point of view of chasing the consumer is content goes everywhere. Good content is consumed in a mobile environment. We're going to have, in the next three to five years, the infrastructure we discussed earlier, the programmatic sort of data driven infrastructure, feather into content in such a way that we'll understand who's consuming what in what context. Mobile gives you that context. Not just the context of what's being consumed but where. With more data in the context of what else has been consumed in that context. Someone's reading a review of a restaurant and we know that that person's in a location near a suite of restaurants. That context will inform the kind of marketing that goes into that particular impression. As will learnings from this kind of creative worked in the last hundred cases, but this kind of creative didn't. Even to the point of this kind of creative worked in this context with this kind of a person and this kind of content. Where we're getting to the point where a single impression can be valued on literally hundreds of data points. When you get to mobile, it gives you a critical data point that's almost as valuable. I've argued it's more valuable, than the data point you had in search, which kicked off the Web 2 movement. That data point was, "Hey, I know what someone's asking for." The data point in mobile is I know where somebody is. Then you add to that recipe all the other information you might know either about that person or about that location and what's happened in that location. That all becomes information that can be traded in milliseconds and the right messaging can be delivered to that person at the point of consumption of the content. That sounds pretty sci fi, but we've already built the infrastructure to execute on that and it's called programmatic ad tech. It's one of the reasons I think that business is the most important business we're building right now. John Huey: It all sounds pretty sci fi. If you go back to what you were writing about in "Wired Magazine" at the beginning, that all sounds pretty sci fi. By the way, you would be gratified to know how many people out of 60 interviews have taken it back to there. I would love to listen to you talk about this forever because it's actually fascinating. If I were a business reporter doing a business story, we would keep going and I could go on and on and I wish we could. But for the purposes of this hangout, this is an oral history of the news business and the epic collision between the news business and technology. Several things have become evident to us. One is the news business was always a bundle and actual news was always subsidized by support of other things that were around that news. Be it classified advertising, movie listings, whatever else people came to the newspaper for besides news about Iraq, Afghanistan, terrorism in Boston, politics. All of that has become pretty thoroughly unbundled in the main on the web at least and there's a decline in print readership and broadcast viewership of news. As one person put it, "The news business has always been the advertising business. They just don't like to talk about the advertising business." That's a very long preamble to a very short question which is you know as much about the state of the advertising business as anybody. Put that in context with the news business and how that's going to go forward and how they will or won't go forward together. John Battelle: I have a lot of thoughts on that. We break the news business separately from what you might call "information services." A lot of the, as you put it, bundling of the traditional news publication or news broadcast, there was a fair amount particularly in publications where the content that was created was created as attachment points for marketing. You'd have an automotive section in a newspaper where you'd have some editors write some interesting stories about new cars, or how to lease a car to gain financial advantage or whatever, but I'm going to inform a consumer about a broad advertising category. That would give the sales side of the business an opportunity to attach advertising to that. "We're going to cover entertainment more broadly so that we can get those movie listings and the big opening movie one page spreads," and so on. John Huey: It is the absence of advertising toward that kind of thing that has probably actually damaged the "news business" more than anything else. John Battelle: I think we're going to see digital publications where in fact brands are going to actually create the listing. Brands are going to actually create the service journalism and there will be deals struck where brands have the right to do that over a period of time. You see it happening in the magazine business. With some of the magazines you've been responsible for over the years, there are an awful lot of editorialists created by marketers. I would say the connection between value to the consumer and value back to the marketer in a print environment is harder to do than it is in a more real time digital environment. I could imagine a time, and it's already starting to happen, where brands essentially create that content as a service. You see brands who are already deep in the content creation business. There are obvious ones who come to mind like Red Bull where they say, "Why should we sponsor the X Games when we can just make them ourselves and we'll be the creators of that entertainment content?" John Huey: Or Coca Cola run their own Facebook program and it's quite popular. The big argument in terms of...Leaving aside the issue of whether it's a threat to democracy or whether there's news or not news, how will the real news survive and thrive in this environment? Obviously, part of the answer is consumers will have to pay for high end quality news and that we've already seen that begun. Here's the essential question. Is there a future for independent news and advertising to go forward together? That's probably the big question. John Battelle: I think it's an uncertain future. I think there certainly will be some of it. I think the model is going to have to change and our cultural behaviors and honestly, our societal morals are going to have to change. Brands are in the midst of a very significant shift where they're realizing that they can't just have a corporate social responsibility program on the side or they can't just buy a few ad placements in Sunday magazine news shows that no one watches because they're trying to influence The Beltway. John Huey: Those people watch each other to be fair. There are a few hundred people watching those things. John Battelle: Yes there are. [laughs] It's about that much. It's a hard play on a reach and frequency basis to sell that. What I'm saying is that I believe that some brands are going to come to a realization that their core values of what they mean as a brand equals the underlying creation and delivery of high quality news. That's what they mean as a brand. That's what "The New York Times" means as a brand. That's what "Time Magazine" means as a brand. I think we're going through a transition period and it's a very difficult one if you're in the business where brands on the other end of this transition are going to realize that's what they mean as a brand and therefore they want to be known a delivering that value. Does that mean that the masthead of the publication of the future that does actual hard, real, good news changes to the name of a brand? I would think maybe not, but I think it's going to be very evident that that masthead is underwritten and brought to you by a brand that has permission to do that. John Huey: It will become more like the Public Broadcasting model. I was going to use the word "underwritten" before you did. It's really more about underwriting and not about reach or target marketing. It's just that they decide to underwrite it because it has some brand value to them. Is that what you're saying? John Battelle: I think it will be even more tightly coupled than just underwriting. It becomes what the brand means. John Huey: Underwritten, and edited, and partially created and driven by. John Battelle: It literally is the role of that brand. Now I do not know that that is going to be the case with any number of the brands where there's going to be a very clear conflict of interest. But then again if you look at a Proctor & Gamble, if you look at a GM or any one of this large brands and American Express, for 95 percent of hard news coverage, it doesn't touch what they're about. They will be able to create, I think, a news coverage vehicle that is essentially theirs that they underwrite with very transparent rules about how things are done if it affects their particular sector. There are models for this right now. At Federated, we work with American Express to do a very scaled publication called "Open Forum" which is all about connecting value news as well as a lot of service for small business. Now that's not a hard news publication, but it's a model that I can see evolving towards supporting that. Brands need to get to the point where they are transparent and honest about who they are in the world and can live with wrapping themselves in the banner of what it means to create and distribute real news. You said, "Set aside the issue of what happens to democracy without this," I hope we never do set that aside. There probably is an important conversation to be had about how we bridge this transition using the public will which for me translates into the model you discussed. Public will is public funding for essential pillars of democracy and that includes the news. John Huey: We are having that discussion with a lot of people, but I just chose to focus this on advertising because you're so in the thick of it. Let me ask you one other question that's reverting a little bit more to your past life as a journalist and soothsayer. When you look at the super stacks and their roles in all of this...People talk about consolidations in various legacy industries and legacy industries no longer mean just print and journalism, there are a lot of tech legacy industries now. Do you have any thoughts about their role in the creation and distribution and curation of news? I'm talking about the Amazons, the Apples. Not so much Microsoft although they've moved as far away from this as they can, but they are a legacy. John Battelle: Not without spending a billion or so dollars in the process. [laughs] John Huey: Billions. John Battelle: I don't want to go too far out on a limb here, but if there was brand or a set of brands that could do what I just described and had permission to do it, I would certainly list Google, Amazon, Apple and others as players who have the permission and the ability to underwrite, support, execute and distribute real news. Obviously, as major players in the economy and in our culture, that news would have to incorporate their impact on the world. But if they wanted to declare that they are truly brands that are transparent, trustworthy and have earned the permission to be engaged in consumer's lives all day, every day, I can't imagine a better way to do that than to wrap your brand in the banner of supporting super high quality news. John Huey: It seems like from my point of view that Google would be the one intuitively the least likely, but actually maybe the most likely to be engaged in that for a lot of reasons. John Battelle: For a lot of reasons. They are legacy. But remember, they're legacies that are 15 years old. Apple's 25 plus years old. But as digital media companies, they're relatively new. As digital media companies Google really came out 10 years ago and 5 years ago got serious. Apple got serious about being a digital company really in 2007. And so, we're talking about companies that I think are going to evolve to a point of view where they realize that probably someone's going to have a brain storm and go, "My God, how do we maintain our credibility and trust and permission as a brand?" But we could run an extraordinarily high quality news room. You know, cordon it off and set up the business rules around it and we can do that for about the cost of three super bowl ads. That's a pretty damn good investment. We should do that. It might sound crazy right now if someone were pitching it to Larry Page or to Tim Cook or to Jeff Bezos. But the one thing about those three companies is they've done some crazy stuff and it's worked out. John Huey: You sound like a guy with a business plan in your pocket. John Battelle: [laughs] I'm just an advocate for ensuring that we have access to quality information that is without institutional bias. I think that there's going to be a very big issue of trust with companies that hold so much of our personal data and with companies that have so much economic interest in ensuring that the world sees them in a certain light. I have a deeply optimistic view that brands generally are going to have to exist in a culture of transparency and trust in the future. To me, there is no greater way to do that than to underwrite, support and distribute the kind of quality news that is currently suffering from a significant business model disruption. ...

TRANSCRIPT: John: That's interesting, I'm here in New York with Emily Bell, at the Tow Center for Journalism ar Colombia. Emily, why don't you tell me how you got here, what your career path was? Emily: I'll give you the short version, I won't tell you very much about where I absolutely started. I'll tell you a little bit, I started journalism is a graduate straight from college in '87, and I was really a business journalist. My first jobs were in agriculture, which was great, then with a magazine that was no longer around, Big Farm Weekly. Not pig farms, big farms. And then I moved to the Advertising Age equivalent in the UK, which is a magazine called Campaign. And then I moved to the Observer newspaper, where I was for 10 years, and after the Observer, which by that time had been bought by the Guardian, between 2000 and 2010, I worked for the Guardian. I worked entirely there in an online capacity even though my entire background is writing, reporting and editing. From a subject matter, I've been a business journalist almost by accident, rather than choice. But when I got to the Observer the things that I found myself covering were media, marketing and the business side in the 90s. And the interesting thing about that is, it was the point at which we have convergence. We started to see for the first time in the UK, these big American companies like Liberty Media or actually it's canadian company like Can West or some of the cable operators coming in, digging up roads and putting in fiber-optic cable. We had Rupert Murdoch and another consortium in the UK installin dish technology, so really through reporting on that, I was an expert on things like cable technologies and broadcast regulation. All I ever wanted to do was be a TV critic, and I couldn't be a TV critic. Then around the mid-90s, because I was on that beat, I started to go over to the West Coast of the states every so often. See, you find it quite unusual that companies like Cisco have to learn what routers were, how is this thing working. Through that, because I've had a long term interest in, really, the communications business, the natural place you then turn is into what was happening with that broadband fiber and the Internet. And if you're looking at anything from a policy and regulation angle, which I was, as well as a business angle. So, I'm not a traditional technology journalist. John: You covered the pipeline, if you will. Emily: I covered the pipeline, I covered to the convergence, and I covered to the regulatory issues from this European perspective. And all of that was remarkably under-covered and also quite unsophisticated. There were a few really great, focused trade papers, but a small handful. John: In the communications world, something like the equivalent of that. Emily: Exactly. Because a lot of that hasn't happened on the UK market, so any paper that was covering it for stock prices and things like that, there would have been no real reason to cover those companies. You suddenly had Liberty media in a scrap with News Corporation. You had cable versus satellite, you had the unbundling of the local loop with British Telecom being privatized. You had all that. Really, that was my routine term. Then, from 2000 until 2010 I was editor-in-chief of the Guardian's web presence. It must have been four years, between 2006 and 2010, on the board. I was Head of Digital Content, but I never lost that operational perspective. That was interesting because you were suddenly dealing, on a daily basis, with technologies and technology companies. I had to learn a lot more, a lot quicker than just being a reporter about how to make certain technology choices. Listen very carefully to what very smart people were saying about the progression and development of the application layer of the Internet, if you like. What we would have to do is to as a publisher with our data structures. I had a 10-year fairly hardcore tutorial in the platform technologies. I was helped by the fact that it had something of a reporting background in it, already. I did find it phenomenally interesting, from the very broad principles as well as to the individual movers and strategies that were in the market. Then, I ended up here because I'd done 10 years, I'd been 20 years in total in the Guardian Publications. I still sit on the board as I'm still very involved. I also joined the Scott Trust which is the ownership board. I write for them occasionally but at the end of that 10 years where we'd taken the Guardian from having a million users to having 50 million. We'd gone from being not at all known internationally to having two-thirds of all traffic outside of the UK. We'd gone from being, maybe potentially struggling, seventh in the market paper to being one of the most progressive. For publishing we were pretty innovative. We weren't innovative in terms of the web, but in terms of the Publishes we were very innovative. We weren't innovative in terms of the web, but in terms of the publishers we were very innovative. At the end of that you have to take stock inside, do i want to spend the next 10 years fighting some of the same battles. Coincidentally, just as I was deciding I didn't really want to do that, I loved the Guardian and I’d like to continue to be there, Sig Gissler who was the administrator for the Pulitzer Prizes, rang me up here and said, "We've got this startup thing that has to do with digital journalism. I don’t suppose you’re at all interested. Honestly, there were two factors that influenced it, first of all that you got so operationally bogged down. I wasn't doing either of the things I really enjoy doing, one of which was operational editing. I'm a writer and I say that I love doing that. I honestly didn't have time to do the thing that really caused me some anxiety, which is I knew that things were really progressing quickly outside the organization, and I never had time to find out what. This offered me an opportunity to do it. None of this was here four years ago. It was great to be involved in that sort of startup. i like the idea. I'm very committed to public service journalism. Columbia was a really important part of encouraging those skills and that culture. It was struggling with its digital mission, not struggling but they knew it needed one. That's it. That's how I ended up here. John: That's a fascinating path, especially because you, like many of us, got into business journalism almost opportunistically, you started covering the pipeline of tech and directing it. Were there any eureka moments you had? In the sense of journalism is going to change. Emily: Yes, lots. Let's think. This is a weird Eureka moment but it was a Eureka moment. I went to Seattle for the launch of Internet Explorer. I remember sitting in a room with a group of European journalists and Bill Gates. And the guy whose name I've forgotten now who was the product manager or the product director for the Internet Explorer. I still remember him saying, "I am the man who is leading the division that Bill Gates said we would never have because the Internet was not going to affect our businesses." That was a Eureka moment because it was the point at which you realized that, and this was, what, 1994? It's '94. That was when you could about, we have about three people thinking about the Internet at "The Guardian." I followed Netscape, I knew it was going to be a big thing. But that was a moment when you thought, "Right. Whatever it is that journalism is doing is not adequate." That was the first. The second Eureka moment was sitting at my desk, or standing, probably, at my desk. On the 12th of September, 2001, when we looked at the crazy preceding 24 hours and we looked at our traffic logs. I opened my email inbox. Nobody had much sleep. We were working through the night trying to keep the servers up. It was in those days where you literally came in, started the Internet at 9:00 in the morning. You finished at about 7:00 or 8:00, the night shift came in, uploaded the newspaper. You started to get... But I remember the incredible volume of traffic that we had from places where we did not, had not, planned to have readers. We had not planned to have American readers. We had not planned to have Middle Eastern readers. You thought, "This is it." We had literally seen the world change before our eyes. I do remember thinking, "This is the moment where everything changes." Then, 24 hours later, sifting through our traffic logs and looking at the emails, particularly the emails. And people saying, "I came across you guys yesterday. It's amazing. We can't get this coverage in the States. Nobody is talking about Middle Eastern politics." You realize that you're exposed now to a market who's finding you that you haven't planned for. That was the second one. Then the third and final one, which is an ugly moment, was in Oxford where we were having a closed meeting with some executives from Silicon Valley companies. They always wanted to talk to the media, the BBC or The Guardian or whatever. We had a meeting. There was Reid Hoffman, who's now come up with the grand, good LinkedIn. There was Matt Cohler, who was at Facebook. These were all people, way before the business kicked in. There was a guy who will remain nameless from Google. He's no longer at Google. The Google executive…everyone was very polite to us. But the people in the room, the news executives, kept saying, "What do you think about newspapers?" Finally, this guy from Google said, "Look. What's happened here is we have listened to what audiences want and what advertisers want and we've made them fit together." "You haven't been listening. We have completely taken your lunch and eaten it. Not just taken your lunch and eaten it, but we've destroyed the supply line. You're never going to be seeing lunch again." It really ran through a fairly chilling exposition about, "This is how Google technology and our thinking has ripped through the center of this business." That wasn't so much the Eureka moment, because I knew all of this. We got outside the room, and somebody I was with turned to me and said, "This is all very well, but they're not really in our business." I remember thinking, "They are in our business. They understand how to find and surface information, which is what journalism does and they're doing it better. Yes, we're writing the stories but they're aggregating them. We can't hold back. We cannot be King Canute… I used to have a slide with King Canute on it. But that's not an option. We have to understand how to cope with that." One final Eureka moment was Steven Dunn, who is... John: When was that? First, before you get to Steven, when was that? Emily: Meeting, again, it would be 2005 or '06. In some ways this was retrospective. This is when you're beginning to see the real growth in Web traffic coupled with the realization that it's not going to be accompanied by revenue. We consistently under-forecasted audiences and we over- forecasted revenue. We couldn't think beyond the old model. Then, as I say, an internal Eureka moment was Steven Dunn. He was the Chief Technical Strategist. A little bit before this, if you like, Eureka moment with Google, we used to spend a lot of time talking about things like the actual structure, the underlying platform structure, and the journalism that we sat on top of it and how we could make those two things work. Steven, who is an absolutely brilliant guy and should be widely credited with a lot of The Guardian's success on the Web because he was such a good thinker, said...He just had this throwaway line which, again, he says, 'That was not by me, it's..." Whoever it was, some other Web thinker. He said, "We don't want to be on the Web, we want to be of the Web." I wrote it down and put it, and that was a slide that I used to, whenever I was presenting, I'd say, "This is what we're going to be at the Guardian. We're not going to be on the Web, we're going to be of the Web." Not my idea. I wrote it on a slide, so I get to...But that's the moment where you think, if you follow that, it sounds, it's a trite slogan. To actually do it is really hard and challenging. It means rethinking your processes. It means rethinking your structures. It means thinking about that relationship with your audiences and the broader public as a "publish to" as well as a "publishing at." That really informed every single decision that we took. It's like, "This has to be aligned with best practices of the open Web not just what we think as being journalism that sits on the Web." That was it. John: That was a huge transition in your path, in your career, in these touchstones that you've noticed, that you've called out. That relationship with the audience has been transformative, because it started with when you were writing, when you were covering agriculture, I imagine that now and then you would get a letter through the mail. Emily: Yes, that was it. And that's what a lot of my career was about, really. I'm quite a talkative person, I like to interact with people. There are two types of journalists. There is a journalist who likes to be outward facing, hearing from people. And then there are journalists who love secrets, and like exclusivity, and that is important as well, because that's how investigations get done. I'm not sure whether it is anymore, but there's that journalist which is addicted to secrets, controls their information very carefully. Even among their colleagues is quite opaque, and I was the opposite. I was one of those journalists, because you are a media reporter, you're on the phone to dozens of people. To trade information among them, you hear back from them. So, I loved it, I used it. There was nothing that gave me more pleasure than one of my, perhaps not such a great piece of legacy was insisting that the Guardian, we were first to have comments on stories, and we did it through commentary first, which Georgina Henry launched. And I remember that, again, being the first week that we opened up unmoderated comments to people, being both terrifying and realizing that we'd done something we hadn't quite understood properly, but also exhilarating. Suddenly exhilarating, thinking this is how the future is going to be. This is how it's going to be. This is how journalism is going to look, really, really, really different. And that open access, again, if you are, you have to see journalism as being something which elevates those with no power against systems of power. And you can't do that from a position, you can have elitist arguments, but you have to have your ears and eyes open and you have to be considerate of what people are thinking beyond the walls of your own institution. John: Your own institution, but the interesting thing, too, isn't it? Here's the question. Journalists in your earlier role were definitely, if you go between the public at large and the companies who covered it. Now, to a certain extent, they've been bypassed. Emily: Yes and no. We went through a phase in the last, it's 2014 now. We went through a phase between about 2006 and 2010, where the real, if you'd like, technologists, the Silicon Valley culture said there will be all of this available data. And there will be a set of tools that will make it very, very easy for anybody to find anything. That's going to happen. When that happens, you don't need journalism. In fact, a very senior exec at a very large search company, every time I see him he says, and he's not being entirely disingenuous. He says "Just remind me again why we need journalists." That happened for five or six years, quite recently. The last two or three years we've seen a different story emerge, which is, even though companies, not just companies. But governments, sports stars, celebrities, all bypass the press with their own direct to market routes. Show me footballers who are not on Twitter, and those are footballers who have had their Twitter accounts taken away from them because they can't keep out of trouble. But all of those routes that cut out the press are, in a way, galvanizing and useful because one of the problems that we see in the technology press is being too close to your sources. I suffer from that. And probably myself as someone who covers the media, London is not a big city and you end up knowing everybody from the minister through to the director general of the BBC, through to the director of Ofcom. And whilst it shouldn't ever affect your coverage, inevitably in certain sectors it really does. Tech coverage is one of those where there has been a really robust debate about this. So, the fact that you are cut out of the loop, you are an outsider. You should always be prodding from the outside, and this is like if somebody is running to you with their story. Are you trading access for truth? When you talk to political journalists, who this maybe happens to more than any others. You talk to the people here, and you look at the studies on people who follow the campaigns around. The view is it's frustrating because Obama, for instance, controls press really tightly. He doesn't really like journalists and he doesn't interface with them or chat to them in the same way. He's way less friendly than George Bush. But at the same time, the pack following him and covering him, particularly during election coverage, are saying that it's very freeing because you don't suddenly have to worry about whether you get your 20 minutes with the president. You know that you're not going to get 20 minutes, so you're free to probe around the edges, write what you see and not fret about that window and that one sound byte that you are the only person. You have to dig deeper and differently for stories. John: Let's step back and ask that in a different light. How do you think technology journalists covered the last 20 years? Emily: First of all, I would not lump all technology journalists in together. So, I would say somebody like, let's say Kara Swisher and Walt Mossberg have managed to walk a line whereby they are both revered by the tech industry. But my God, they break story after story after story without fear or favor. So, I would say that there are not captured, but that there has been, it's almost like I didn't appreciate this until living in America, which I have done for the past four years, since 2010. But it's almost like there's a West Coast/East Coast culture, and when you go to the West Coast, the proximity of the tech companies to that, it's almost like a cultural view of what constitutes good business practice. There's been some Valleywag, TechCrunch, infinite numbers of smaller blogs. They've had a more close relationship with technology to the point where sometimes they’d hold their hands up and this and say it is true that they missed stories. And you have, I think, the more traditional publications which have maintained offices, have not taken technology seriously enough, quickly enough. So technology stories should be covered as a human rights story. They should be covered as a cultural story. They should be covered as a political story. And actually for a lot of publications, it was like well, it's really a business and gadget or tech story. We're looking at it still through that channel that we were looking through in the mid-90s. So I think, so the press has, in general, been slow to pick up on some of this. It's not been sufficiently knowledgeable to be able to be confidently critical. What I mean about that is, I think that there are a lack of journalists who really understand what companies are doing. And what the technologies are enabling them to do and what the broad implications of that might be. There are a handful of journalists to understand that very well,there’s Nick Bilton at the New York Times, Kara and Walt who are definitely in that category. But of the younger journalists, you look at Alexis Madrigal, who was at The Atlantic and is now at Fusion. Those are the people who have been bringing that broader but even they —Re/Code or AllThingsD-, were covering it from a very much business perspective. Alexis is just one person. Nick Bilton writes, but he writes for the New York Times. It felt to me as though, weirdly, technology was almost weirdly over-covered by all of those people lining up for an Apple iPhone6, but the implications of technology have been undercovered. And we are just seeing a few organizations that are waking up to that. People like Julie Angwin actually at the Journal, who perhaps wouldn't have come out of one regards as a traditional tech journo background. When the Journal produced "What do they know?" I don’t think it did win a Pulitzer, but it probably should have done, because people couldn’t quite see…. it was a like a bit of a "So what? We know they track us that way." But, for a business publication to begin to push back on those technologies and practices that was really good work And now, I honestly think one of the big five stories of the next decade or two, along with climate change, along with the decline of American power in the world, along with all of those other things, is really the resonance of technology through every part of society. And being able to challenge it and pick it apart with some detail and some expertise from the outside in. John: Are you optimistic about journalism rising to meet that, or do you think that the business challenges are going to hamper us? Are you optimistic about journalism? Emily: Yeah, I'm pretty optimistic about journalism right now. We are in the middle of a major transformation program here as every newsroom is. Our aim is to change the skills and outlook of students as they come through the door and equip them way better for the world of information and data as it comes to them without losing any of those vital skills of inquiry and narrative, and making people care, joining the dots. And you see, the falling away of this romance with institutional journalism, working for "The New York Times" or "The Guardian" or whoever it is -- big organizations looking after your career forever. We can see that in the mindset of the students who come in and do well now. The requirement on them to think quickly and critically and accurately about things that happen in real time...developing and giving them the skills and the tools to be able to really mine the available information and to make sense of it in a way that people would receive it well. And then to distribute it through these amazing both proprietary and one hopes, eventually, non-proprietary platforms. It's a really perilous time for journalism. It's not well-funded. But the opportunity is extraordinary. We've been through lots of periods in history where you can live in the truly creative part of the world and find yourself very short of money. We see over and over again all through the Enlightenment, all through Paris in the '20s, you see this burgeoning of ideas and opportunity and it's not comforting to people. It's awful for people my age, late 40s, that you have to acquire the new skills or you're done. If you're 22 or 23, you may look at it and say "This is not going to be a job forever for me. This is maybe three or four or five years." But boy, do they really want to do it. Do they really want to do something which is because it is the best job in the world and you can now do it with such freedom and creativity. We're seeing in America...one of the interesting things that's happened even in the time I've been here is a mindset that's gone from “journalism has to be profitable to be successful" to “good journalism is probably going to struggle to be profitable, so we have to find ways of supporting it." We're suddenly seeing external money coming in to journalism that wasn't available before -- ironically, much of it from Silicon Valley. Do I feel optimistic? I'm not sure that...you're not going to have a career in this in the way that you might have had in the '70s or '80s -- or '60s, '70s, and '80s, which were the real boom times for it — -but it's an incredible field to be going into right now. John: Excellent. Thank you very much. Emily: Thank you. I probably talked a bit too much. John: That's OK. We did a half-hour as I... ...

TRANSCRIPT: Paul: This is Paul Sagan, it is April 11th 2013. I'm at CSAIL at MIT with Martin Nisenholtz and John Huey. In the office of Tim Berners Lee. Thanks for having us. Tim: You're very welcome. Paul: We're here 2013 but we want to go back a bunch of years. You're in CERN and you invent something. We were just at Nick Negroponte's office. He said to tell you, you had no idea what you were doing, meaning where this would all go, and how big the impact would be. [laughter] Paul: What did you think you were doing, especially as it applied to the structure of the information, and the access to information broadly. Then we'll get to news and journalism later? Tim: From the point of view of motivation, I was relieving a frustration, like I suppose, a lot of things are created. I was frustrated by the fact the fact that the web didn't exist. I was frustrated by the hoops I had to jump through to get information across the 'net. Frustrated by the fact that pretty much every memo that you dealt with in your working life even though you were given it on paper it was actually sitting on a disk somewhere. If all these things were sitting on disks somewhere, and all those computers were connected together [indecipherable 01:28] computers, what was wrong with this picture? Why weren't they all part of an abstract hyperspace? It was, to a certain extent, solving a problem. Particularly, the people I worked with at CERN, the teams would be teams of volunteers from different existing collaborations would collaborate on a little bit of software, for example. Really what I was looking for was a space which was a very collaborative space very much of a read/write thing. The goal was to have something where, if you and I were working on a project we could develop the plans for it in the web. Every time you thought of something, then you'd put it in there, and I'd pretty much see it, so that you and I, our brains, would be in equilibrium, because we'd be in equilibrium with the web. The idea was that you would be able to therefore add things and make links very easily so that the web would become a really up to date expression of our common knowledge. Paul: Did you think about that in a consumer sense? Or a news sense? Or were you really thinking about it as an academic collaboration tool? Tim: Well, it was universal. One of the things I had noticed about all the systems which had been designed for scientists, or for people working on the mainframe, or for people using PCs in administration or something, is they made assumptions about which limited availability. It was clear that this thing had to be universal, so hence the "U" in what is now URL. That was in fact Universal Document Identifier. The system had to be universal. Every computer had to be able to understand HTML. Every computer had to be able to talk HTTP. You had to be able to make a link to anything. The moment you had a list a class of things these are the things which the web was designed for, and these are not. Then you end up with an oil/water boundary and the web itself would cease to be functional. If you can't link to anything, then what's the point? Paul: At that time, there's a walled garden, which is the opposite of that. It's a dialup...consumer services at least were all proprietary, and closed. Tim: At that time, yes. If you wanted to get information using a telephone you dial up and talk to something like Prodigy or AOL, and they would create for you an online world, which they try to make as nice as possible. That was, if you like, a classic walled garden model. Paul: Did that influence you at all? The let's not do that, or was that an orthogonal thing going on? Tim: I didn't use either of those. I didn't do dialup or anything. I was very lucky. I remember another of the good things is that up at CERN I had a workstation on my desk and I had a network coming into the office. That was relatively rare. If you're going to pick a Petri dish on which to spread the mold of the web, CERN is a pretty good one. Martin: I'm very interested in your notion of collaboration space, because at least initially, I think, a lot of the applications were more broadcast oriented. People were building... Tim: Yes, the thing took off as a broadcast medium. Why? Well, for one thing, I suppose the viral growth of that was what, as a broadcast medium that the way it spread, people looking at someone else's home page, I look at your home page. "Ah! That's really, really cool," then I would show source on the browser, see how you've done it, copied it onto my disk, change your photo for my photo, change your name to my name, and publish that, and call, "Hey, Mom! I got a Web page! You better check this out." It was spreading via people actually taking each other's pages rather than doing them by hand. I assume that that would be something people would not be prepared to do, because anybody in administration, anybody preparing the minutes, anybody writing documents, they all used word processors, which were WYSIWYG. Years before they used word processors, where you had to identify on a mainframe, and put doc bold to say when you wanted to go into bold. We got beyond that, so I was shocked that the thing took off, by people just copying each other's pages, and hacking them together. That is largely how it took off, people loved it. People who had enough technology to be dangerous, sort of thing, created lots, and lots of web page. Then the Web browsers became more powerful, and I think that is what happened is...Originally, the very first Web browser, I made was an editor, so you could edit with it, but then, we produced a line mode version, that was not an editor, it was just a way of getting the information out. Then, Viola Pei Wei's browser, that was a read only browser. It was put together very quickly by Pei? But, it was that, that Marc Andreessen saw. So, Marc cloned that to make Mosaic. Mosaic, Mark worked very hard to get that on everybody's desktop, to make that work for everybody, he worked long hours in the evening to get it out there, but it wasn't an editor. Most people saw the Web, as a read only medium. Paul: That's pretty interesting because I think a lot of media companies saw it, at that moment. They saw Mosaic, I remember that was my first exposure. I remember the meeting when the techie smart guy showed visiting a website on Mosaic. I think a lot of media companies saw that and thought of it as a broadcast tool to publish, create wants, and broadcast content out it. That was the business model that we adopted. For many then, it was also content will be free, we'll get advertising, that didn't actually turn out to be the model that turned into a great business, in a lot of cases. It wasn't exactly the model...I think a lot of people think that was the model you were trying to enable to was this broadcast model, but that's not right. Tim: No, it was supposed to be the universal head, in a way. If your goal is it to really have anything on it, anything really, that encompasses a lot, it's got to have, early on, I was giving talks on, it had to be universal. That meant, it had to have very, very highly polished beautiful artworks, movements which had been prepared very painstakingly, and it had to be able to have the scribbled idea. It had to be able to capture the back of the envelope. One thing which is important, that I had been pushing, when we use the web around WPC, you've got to be able to grab that half wind idea. You've got to be able to put it out there. You got to be able to make it accessible only to a few people, and then you've got to be able to grow that number of people, and modify the idea, and as you modify the idea, it may die or it may become something that is then submitted to a journal actually and become a very important part of scientific history. It's got to have that smoothest path, and no hiccups when you move from one machine into the other. URL, ideally doesn't change when you goes through that process. You can't encompass all the creative, and collaborative process, if you have only have things which are say, newspaper articles, or just op eds, or just things which are funded by advertising. You got to be able to have things which are funded by subscription. You've got to have things that are free and so on. You've got to have things that are just shared around a family. There's a lot of different sorts of information keeping the web universal, involved. That was one of the dimensions. There were also other dimensions as well. Paul: I think the media companies took one dimension and ran that way. Do you think that's a fair assumption or just, actually, applying an explanation to what we saw happen? I guess where I'm going is did they make a mistake and misunderstand the potential, or did they do the logical thing? Tim: No, I think the media companies are in that business. They have content, and they move it out. You'd be doing that with physical paper, or you'd be doing that with TV. Then you look at the web, and, obviously, it's reasonable to use the web for doing that. I don't think that was a mistake. I think that in the future we may see new genres. The broadcast only went on for ages, and then somebody invented the blog which was a easy way of making it so anybody could write an article. Wikis came out, and blogs came out. It was pretty easy to set up a wiki and pretty easy to set up a blog within particular areas, so you'd find all the bird watchers would get into the bird watching blog which would then become a wonderful resource. For them that was a collaborative resource. Wiki was one of the things that allowed collaboration. Blogs were another genre. We've seen those two genres become fairly well known, but I feel that those are just two ideas. John Huey: Some of that was a natural evolution given the growth of bandwidth capacity. Broadcasting seemed pretty sophisticated at a time when everything was really slow. Interactivity was harder to process anyway when you were in a dialup world wide web world. When things got faster, didn't that have a big effect on what got developed? Tim: No, the reverse, in fact. If you imagine that you're in something like an IRC channel, Internet radio chat channel which predates the web, that's very interactive. You can write as much as you read. That's very, very slow bandwidth. Text interaction, editing a document together, you can do that on a dialup line. You don't need high bandwidth to be able to interact. You need high bandwidth if you want to have an HD video conference, yeah. But, you don't need to have an HD video conference. In fact, when you interact with the web, you come to a project. You have an original idea. You see all the hypertext people have already done. You read these documents linked together. Maybe there will be some images in there, but, generally, you're not looking at videos. You're browsing data. All that can work at pretty slow bandwidth. I don't think you can blame the lack of bandwidth for the fact that it became... Martin Nisenholtz: I think you nailed it. It was the fact that we had all this content. I think the thing that was so intriguing about the web is that there was no intermediary. In other words, there was an instant First Amendment, righteousness, about it. There was no gatekeeper saying "Well, we like this from 'The New York Times,' but we don't like that." We could just put it up, and anybody with a modem and a web browser could get it. That was the huge "aha" at "The New York Times." It was like a printing press rather than an intermediary cable network. Is that something you thought about in building it on top of the Internet, rather than you could have just gone and built another proprietary online service for CERN? Tim: I know, but I've seen plenty of those. I looked at the way they died. I looked at the way people have sold me systems. "Come along and use our centralized documentation system." I knew, as I said earlier on, the thing had to be universal. An important thing, I had to be able to link to anything. That means people can put any form of information on. That means I can't discriminate as regards what sort of computer they're using, what sort of operating system that they're using, what sort of network they're on, are they on LAN, WiFi, or are they coming through Decknet, the old networks which ended up being superseded by the Internet. I shouldn't discriminate as regards what language they want to write in. An important thing is accessibility. We should try to make the web as much for people who may be listening to it as opposed to reading it, and so on. Certainly, it should work for any culture. It works in any language. There are all these different layers that had to be independent of so many different things. Previous systems people had built had ended up restricting their domain in one of these ways, and, therefore, ruling themselves out as being universal and, therefore, not being able to be [indecipherable 14:47] . The distributed idea, that was the way people designed things on the Internet. Nobody in '99, the people I knew would have... Martin: In a way it's counterintuitive. I understand where you're coming from, but, if you're looking at it before the web started, what AOL was doing was just mailing massive numbers of discs to people. Nobody was going to do that with the world wide web. It had to grow, to use an overused term, virally. It had to grow from the bottom up. Did you envision that it would, or did you think it would be fairly limited? Did you envision everyone involved...? Tim: Of course I wanted it to grow. From the early stages it was growing. It was growing exponentially year after year, but it wasn't small. The load on our original server grew by a factor of 10 every year in a very smooth exponential for three years. Martin: That was what, '92... Tim: '91 to '93. There's a graph that you can find in our history of the web, page history.html on the W3C website. It was clear that it was taking off. It was clear that it had to battle with other things. Gopher was another Internet system that was taking off virally and, at one point, was growing faster. But Gopher, the worry about it was not being royalty free. The web was declared royalty free by CERN after a while. That ensured its continued growth. John: The openness that you approached it with was the self fulfilling prophecy. Your insistence on it being universal is what ended up making it universal. Tim: It was designed to work on any computer. It's what I didn't put into the design. I didn't put any constraints that you had to use. You didn't have to use Microsoft Word. You didn't have to use a Mac. You didn't have to use a CDC mainframe. Everything had to have a URL, but the URL started with "http:"; because there could be all kinds of protocols out there and initially there were a whole lot of things which were out there, you could access using the file transfer protocol, so that the URL could be...You could put other things there. "Ftp:"; and there are now all kinds of other things that happen before the colon. Because there are other spaces of names of things. The URL was universal, but HTTP didn't have to be. You didn't have to use HTTP and you didn't have to use HTML. It turned out that everybody used HTTP and it turned out that, rather than put up HTML navigation leading you to other things, like PDFs, almost everything got converted into HTML. Paul: You were a disruptor and probably couldn't have done that in any business, in any company. Microsoft couldn't do that because they would want it to be closed. AOL didn't do it, even as an online service until they were forced to. This was an incredibly disruptive idea, probably enabled because you were in an academic setting? Tim: Because I'd seen how the Internet worked. I'd seen about the idea of TCP and IP were all distributed. Internet mail, as well, had been done. I was using that. For destructive things, network news is a very decentralized system. People don't use it much anymore because it has problems with scaling, but it was very nice in that you didn't even have to have a server. You could just send out your message to everywhere. The Internet was being built up, apart from domain names, the domain name system. This network's being built up with this decentralized idea. For a lot of people, you were interested in the First Amendment idea, that right to publish. In the early days of the Internet, people felt, "We have a distributed system. That means something which is not controlled by government or anybody else." That was driving a lot of people. That drove a lot of the excitement. Certainly, the early geeks were very excited to be able to work together without asking anybody's permission. Some of the initial publishers who realized, "Oh my goodness, I can start a business, newspaper just like that." As you were saying, the empowering nature to be an individual publisher, I think, that appealed a lot. Martin: What took a little while was for the entrepreneurial journalist to evolve. The blogging didn't happen in 1994. It happened a little bit beyond that. It happened in '96 or '97. I don't remember precisely when. Tim: Karl Malamud interviewed me for his FTP radio talk show. In the very early days to he web. There were people... Martin: Doing that. Tim: Yeah. Blogging software made it easy. But before that I had a series of design issues, notes, which were technical notes about how the web works. I just had a directory and dropped new things in it, every now and again. A lot of people did that. People would pick up an idea and just put out a web page about maple syrup. Somebody decide to just dump everything they've learned about something like that. A lot of people off load just making their site, just enjoying getting it out there, letting other people see what they know. Martin: How did you feel about all this stuff that was blossoming? Did you ever think about good stuff versus bad stuff? The beauty of the web is that the same people who publish great journalism can also publish the latest guide to blowing up buildings. That's all part of this freedom, in your view, right? Tim: Yeah. The first approximation of the web is just a piece of paper. It's just like a blank sheet of paper. It does not constrain whether you write on it vulgarisms or poetry or both. But when you look at the web you see humanity. It's not the job of a software engineer to try to constrain humanity or make a web which will only work for true pages or only work for good pages or some version of good. Some people have written to me and said, "Why didn't you do that? Why didn't you make a web where people could only put out good web pages?" Of course, the US government wanted to. There have been various attempts at censorship, to try to remove pictures of people without any clothes on, for example. We've ended up at a state where, "Yeah, there is a difficult boundary." But there are some things, like child pornography, where most countries of the world, that I know, it's just illegal. The governments of the world collaborate together to try and eradicate child pornography and people actually blowing up buildings and so on. But otherwise, free speech is fairly broad. Of course, we have a system where parents can go and buy software to put on their computer. They can buy blocking services which will to allow them to block access for minors to things that they wouldn't want their children to see. John: The web is ubiquitous and this whole new economy's been built on it for many years now. Billions and billions of dollars in corporate, in our business, in other businesses, retail media, just about anything you can think of. Government, espionage. Everything is different because of the web. When you look back on it, can you think of a few mileposts that happened along the way? You mentioned Mosaic. It sounds like that would be one. Mileposts that happened along the way? Then maybe extrapolate what you think might be next. Tim: As I said, the load on the first web servers went up...On a log paper, you could put a ruler through it. It wasn't that suddenly, one April... I've had a lot of questions saying, "When was it that it really took off?" People would say, "When did it really take off for you?" For me it took off on April 3rd, 19 whatever, when I saw this. When somebody brought me Mosaic. For that person, they were getting from sort of zero up to the curve, at that point. But the curve had been coming up very steadily. People had their individual conversions when they realized that this was going to be really...But there was no one particular thing. It was the fact that you could put a ruler through the load on the first web server, for example, to me suggested it's an exponential. Because there was some process going on there. For everybody who was introduced to the web, a certain proportion of them would go and look up world wide web, look at the original web server and learn about it. A certain proportion of them would go off and write some software or download the server software and put up a new server. That's how you get an exponential. The number of new people is proportionate to the number of people, so no one particular magic moment. John: As the line continues, where do we go? Tim: Right now, if you go to W3.org you'll see this consortium has now been running since 1994. It started off standardizing things like HTTP and HTML. Guess what? Now HTML is HTML5. It's a much thicker specification. HTML5, the idea is to make it really easy to put in embedded video. The idea is, on a website, make it really easy to create a video conferencing site, on any web page. Any web page, when you use it in the phone, the web page itself should be able to run as though it's running on the phone. It should be able to respond to the accelerometer. As somebody waves the thing around, it should know which way up it is. It should know where it is on the planet. It should be able to, with the user's permission, access things like the user's contacts and calendar and be able to contribute to a user's life. We're seeing this explosion in web applications, web apps. In particular, an explosion of web apps on mobile. So that's happening now. That's going to mean that a lot of the excitement people are seeing with apps on the phone, the power of a phone app is coming to every web page. If you think about it, that's a lot of web pages being looked at. If you imagine, each of these web pages is running a program now. Yeah, there will be lots of static web pages, which will look like articles, but also a lot of, "This thing's running a program. This is a computer." It's like we have lots of computers in the world, talking to each other. On top of that computing platform, people will be designing all kinds of really exciting things. To a certain extent, what's really important is that we gained...We call that the Open Web Platform, this computing platform. The Open Web Platform, like the Internet, is a blank sheet of paper. The Internet was designed without concern, without having built into it a particular set of applications. I could design the web without asking Vint Cerf and Bob Carlin for permission, without seeing if I could fit it in. I could just build straight on top of their platform. The web platform itself, and the Open Web Platform on top of that, they were all built in the same sort of way, just as white sheets of paper. What comes is going to be what the kids today will be thinking of when they see [indecipherable 28:30] . John: A phenomenon like Twitter or Facebook, both of which revolutionized the subject that we're looking at, which is the distribution of news and content. Those things are able to explode as fast and as large as they do, because of where they are on that exponential curve. Is that right? It's already so big. If you have a phenomenon that hits, the next thing could be even bigger. Tim: When the Internet spread, it spread relatively painfully, from university to university, through people calling each other and having meetings. Once the Internet had spread across America...When I launched the web in 1990, the Internet had spread across most universities, so immediately the web, by the speed of email, the web could pick up, across American universities. Now that the web has spread, globally, it's even broader. Something like 30 percent of the people in the world use the web. It's a larger population. The web's faster. Tweets go out really rapidly. Yes, a new idea can spread bigger. It can spread faster. Each revolution, if you like, is happening faster than the previous one. John: Do any of these things really surprise you? Or amaze you? Or amuse you? Or are you pretty much inured to the whole...just there they are? Or do you see them coming before they get there? You're in a unique position. Tim: I love the diversity of what's out there. I love the creativity that you see people have lavished on the web. From people having brilliant ideas, to people painstakingly developing little things, or putting up painstakingly developed pictures or something, to crazy ideas, and so on. I love the diversity of that. Early on there were some things, which I think people noticed. There were some firsts from my point of view. When I followed a link at Franz Herzl's "Vatican," he had an online hypertext exhibit of Vatican renaissance artwork that had been scanned by Library of Congress. He found the stuff on the FTP server and had made web pages out of it. I went through his museum and clicked on a little thumbnail and I found this beautiful I've got it on my computer still beautiful illuminated manuscript. I had a nice color screen. That was just great, because this was showing how you could really see great art on it. Then Steve Putz was the first person to make a map server. You could click and you would move to a slightly different part of the world, and it would draw you a map every time. I think it was done with the US census data, the TIGER data. That was another trigger. The moment Steve puts up that very crude map server, everybody realized, "Oh my goodness! Every web page is just a virtual idea. I have to write a program, which will draw, or paint the right version of that idea when somebody clicks on the link, and I can make links to other ones," so they realize with just a few lines of code, Steve had produced this world of maps of the US at any scale. There were a few places, but now the rate of innovation is massive. Things are invented in multiple places at once. They are probably being invented, certainly, in different languages. If somebody invents something in Chinese, another person in Arabic, it may be a long time before they see it. John: Here's a meta question. How does Tim Berners Lee consume news? Tim: That's not a question about questions. That just a question, that's not a meta question. [laughter] John: It depends on whether you're Tim Berners Lee or not. If you're not Tim Berners Lee... Tim: How do I consume news? I listen to NPR if I'm driving. That's pretty much the only safe way for consuming news when you're driving. I follow Twitter every now and again. I love [indecipherable 33:30] a lot of the time, just following the people I follow on Twitter, and follow and look at a few links from them and finding out what's going on. Sometimes I will follow a particular hashtag, when something's happening and focus on that. I also have people who are sending me things. Obviously the world is this massive network of people tweeting. Before tweeting people would drop things into IRC channels. I sit in a few Internet Relay Chat forums for, like, the semantic web, one which has been going on for ages, lots of consortium ones. If somebody's in that chat room, and they see something turns up they'll drop the URL and everybody in the chat room clicks on it, so we're all in sync about what's going on. There's lots of different ways in which people feed things. I don't watch any television. I use the large screen for watching movies. I do watch videos and movies online. Martin: You started a stream of thought on HTML5. There are a bunch of native OSs that have come out, and a lot of news organizations have used Apple's OS, is a big example of that. Now there's tension again between having an intermediary in the case of the iPhone or the iPad, it's Apple's OS, in terms of the app world, of course you can always publish to the browser on the iPad and publishing directly to the Web. Do you see a time soon when the capabilities of the HTML5 world begin to outrun the native OSs, or do you think these things will always exist in combination, and news organizations, like "The Times" and others, will be developing in parallel? Tim: The outrunning is happening as we speak. If you look at the web consortium working groups, they are working and they're producing things like the system API, the application interface you need to access the system, which is the core of things that a native app would use. Basically, the power of web apps is increasing all the time. Yes, it is basically outrunning. At the same time, of course, you've got operating systems that are becoming more and more web like. You've got new operating systems like the Firefox OS, where actually it's really a browser that's been extended to actually have an operating system, rather than being an operating system extended to be a browser. All the desktop, all the conventional I/O actually you can do using the Web. HTML5's a pretty nifty way of doing it, because with the CSS, the style sheets, you can do all kinds of very nice effects that would be nice to have on the desktop too. There's a convergence to some extent, but also Web apps are growing and outpacing the native apps. Of course, the lure for the developer of Web apps is if you can develop for a Web app on one machine, then you've done it. Hopefully they're all compatible, because if everybody's got a browser and the browsers are all compatible, then it will work on multiple paths. It's much quicker to get the web app out in the first place, much quicker to test it, make sure it works on all systems. Martin: Just to quickly get your perspective, you may have one, you may not, but when Netscape put its browser out, it invented these little things called "cookies." They've run wild, in a sense. Everybody uses them to target now, and in particular, the advertising industry, particularly the ad tech industry, uses them to target across the web by tracking behavior. Mozilla, I think for the first time, has implemented a "do not track" execution in the browser itself for third party cookies. I think the first party's are still preserved. Do you have an opinion about that, or don't you think about the whole cookie/privacy issue very much? Tim: It's a massive issue. I think about it a lot, and the people I work with think about it a lot. The "do not track" functionality, that's the standard coming to W3C, is a "do not track" header, which the browser turns on, which says to the site, "Please don't track me." The idea is you have two levels, one in which the user's happy that the site's building up profiles of them, and the other, in which the user says, "Actually, this part, what I'm going to do now, I don't want to be remembered for." That hopefully will relieve some of the tension. If everybody can agree, which is going to be really hard, I think really hard work for the people in the working group, but if that comes out so that it works and the sites respect it, then I think that users will tend to give away more. When I'm buying shoes, I don't want to have to remember what my shoe size is. I want my shoe shop to remember what my shoe size is, that sort of thing. That sort of relationship is fine. Martin: That's a first party relationship. Tim: Right, and to a certain extent, it's reasonable for them to have got that information from somebody already, to have a profile of me which allows them to guess which shoes I'd want to buy. Maybe I'd trade more of that in return for if I wanted to go and look up a particular disease and I just don't want the world out there to think that I'm suffering from the disease, for example. Then I might want to turn it off. The "do not track" currently being defined, being hashed out, it's been implemented by a number of browsers, and hopefully it will be part of the answer to the problem. I think there will be others, by the way, other parts of the solution to the privacy problem, as well. It's a big and complex issue. We've got a lot of research that's been going on for several years here about privacy accountability, making companies accountable for having use of [indecipherable 40:50] , which is, in fact, a large piece of the puzzle which is sometimes forgotten. Paul: I wanted to ask one, maybe last, question, going back to something you said early on, describing the original structure of what got created. You could almost think of it as the universal fragment locator. You were really talking about, that resources could be really small pieces that get assembled into some experience. Whether that's a video, or a phone call, or a web page. That turned out to be a tremendously valuable tool to let the web do so many things. For media companies it wound up being, in many ways, an Achilles' heel because people don't search for sites, they search for stories. Tweets aren't even full sentences. People are almost creating and locating fragments of sentences today. These business models in the pre Internet world, pre web world was about packaging and control, and a bundle, and almost a subsidy. It seems to me that part of the structure of what got created for a really good reason, undid the business model for a lot of these media companies, and they still today don't have a good answer for it. Investigative journalism, to some extent, is subsidized because you got it with classifieds. When these things got disaggregated, by the power of digital in the online world, it has created a problem that, at least for existing businesses, they have not figured out how to reinvent. I wondered if you view it that way, or you think that... Tim: It depends on the business, because a lot of business out there which are all kinds of different shapes and sizes, and different kinds of business models. I think a critical thing that we need to do is to find ways of paying the people who are creative and paying the people who do the journalism. Since the web started, journalists have become sometimes very concerned about their jobs? How will I be about to put bread on the table? At the same time people come to me, since the beginning of the web, very concerned saying, "There is so much junk out there, how am I ever going to sort through it and determine what's true?" These guys need journalism. There's a need for journalism. People are desperate for it. People are fed up with spam. They're fed up with just searching, using a web search tool to find a medical article, then realizing only after they have gone to the bottom of the article and followed the advice, and bought the drugs that the whole thing was produced by the same pharmaceutical company, with an extremely slanted view. People are getting so good at presenting stuff which is biased as though it is not. People are fed up with that and journalists have got the skills and the motivation. It's their job to solve that problem. With all these new genres, don't expect everything to look like something on the printed page just translated. Yes, you can think of a blog as an op ed, but there's a lot more blogs than there are, were ever, op ed columns. The world's changing shape. Some of those things are fragmented into small pieces. Maybe that will equalize and maybe we'll get a pushback. I think people will use tweets to find things which are larger. There will be a balance. I think serious pieces of work will be important. There will be a range of all those things. It may involve new protocols. We are looking at new payment protocols. One of the solutions may be to get payment protocols on the Web, new payment protocols, so it's easy for me, as I read your blog, or as I read your journal, the output of your journalism, I might be able to tell my browser, "You know what? Whenever I really enjoy an article, I'm going to hit this button, and I want to pay the guy who wrote it, and I want to pay the guy who pointed me at it," because I really appreciate that. That pointing to good articles is so important for me. "Every time I don't like it, I want you to remember that," and "I want you to just show me the rest of his tweets." It's building new systems. There will be new genres, both of works and of journalism. They won't all be paid for by payrolls. They won't all be paid for by advertising. We'll have new types of products, ways of paying for them. We just have to be creative. You think about how the user, what user interface would you like to have that makes it easy to pay for something, to give credit where credit is due? Let's see how we can implement it. Without the middleman, without having to cut down the trees and make wood and the paper and so on, then I think maybe we'll be able to solve both of these problems. ...

TRANSCRIPT: Martin Nisenholtz: We're here on April 1st, 2013 at Google with Krishna Bharat. Krishna, let's just simply start with a very brief history because you don't come to this through journalism, I don't think. You're a technologist. Krishna Bharat: Exactly. But even though I'm a technologist, before I became a technologist I was reading news. I grew up in India. In India in the '80s, late '70s, there weren't that many sources of journalism but we had enough. We had our local sources. We had television. And then we had the BBC, Voice of America, and we had all these magazines. I was fortunate enough to have not only a collection of these. My father was in the government so he used to get every single publication. But also, I had a grandfather who was obsessed with radio. Every four or five hours he would actually listen to the world news. He was a wonderful person to be with, so I would end up consuming a lot of the same. First, reluctantly then afterwards, actually, I loved it. Every time there was a big event in India, I would sense that there was all this national pride and politically correct reporting that's happening in the country, but when I was at the BBC and Time Magazine, I had more license to comment on those things. For me, it was actually important to read these multiple sources. I want to mention that because going in, coming to the US eventually to grad school, even though there were so many sources here, I felt there was a sameness here that annoyed me. I tried to buy a shortwave radio so I would listen to the BBC because it was different. That was in the back of my mind. I started out thinking I was going to do computer graphics, and then afterward, I got interested in other things, ATI and so forth. But one of the projects I did when I was in grad school was on actually creating a personalized, interactive newspaper. So even though I was a technologist, my research said go off and build a newspaper. And this was 1993. There were almost no sources online, right? There were very few. The News and Observer had the AP feed online, and I think Palo Alto Online was online. And I picked the News and Observer as the source from which I would get content to do my graduate student... Martin: You were at Stanford? Krishna: No. I was in Georgia Tech in Atlanta. And so we had a... John Huey: The Raleigh...which News and Observer? Martin: Raleigh News and Observer. John: Raleigh News and Observer? Martin: Yeah, it's called Nando now. Krishna: It was called Nando Times. John: A Knight Ridder paper...well, not at that time. It later became a Knight Ridder paper. Krishna: They didn't have any images. They just had text. But it was formatted in the most boring way possible. Like, there'd be a sequence of links. You'd click on them, go get a page. And I wanted something that was two dimensional, that actually had allocated more space for the bigger stories and was attractive. John: So you were at Georgia Tech in 1993, and your news source primarily is the News and Observer. Krishna: Not really. Obviously, we had a lot of print sources. But for the purposes of my project, I needed to find an online source, and I picked this one because it had news. And I wanted this newspaper firstly to look like a real newspaper, and I wanted it to work for me and work differently for somebody else, because they had different interests. So I would fetch content. Every couple of hours I would then index the content, and then I would lay it out using Java, which had just been invented. And there was only one browser that had Java. And I would lay it out in Times New Roman, justified font, bigger stories had bigger font. And you had some controls that would tell you whether you wanted to see more of the more important stories or you wanted to get a larger selection of stories. And you could also give feedback on stories. And you gave feedback implicitly by reading a story. Every time you clicked on a story, and it became bigger [indecipherable 04:13] in place. The system learned a little bit about your preferences, whether you liked baseball or you liked golf. And the next days, or next rev, would be more to your liking. This was 1993. There weren't any two dimensional newspapers anywhere, and there certainly weren't any personalized newspapers anywhere. And it had a maximum readership of six because it was my lab and the people who knew me. But I cut my teeth in journalism by understanding ranking from the ground up and thinking OK, what is their ranking, what should my ranking be, because I kind of want to respect their ranking, but I also have certain preferences. And where does the editor have latitude and how should they exercise that latitude in sort of helping me without pandering to me, you see? So I learned a bunch of things, kind of with firsthand experience. But I didn't have a lot of users, and you learn a lot more from having a lot of users. Then I went on to do web search. I was at Tech System Research Center doing web search, and I became interested in link based ranking. I met Larry and Sergey, and they persuaded me to come to Google. And I started in 1999. And I helped start the research group here. I worked on web search for a few years. But then in 2001, I sort of got interested in news again, as did a lot of people, because of 9/11. I could talk about that, if you want. John: Yes, because it's a recurring theme in our interviews. It's one of the there are several things that everybody agrees on, and everybody agrees that 9/11 was a seminal moment in the history of news and digital news. Krishna: Right. John: So do talk about that. Krishna: Yes, I will. And so a little bit of personal background here. I was at a text retrieval conference and indexing conferencing in New Orleans along with lots of other researchers, and we were stuck there after 9/11 happened because the skies were closed. So I spent all my time trying to either find a flight back or follow the news and brainstorm about finding news with a lot of people. So I was stewing in it, in some sense. I came back here, and I found out what happened in that period. A lot of online news sites had kind of melted down, so Google had to host some of that content. They built a resource page. It was abundantly clear that, although we were a premier information company, people came to us and said give us information about what just happened now, and we didn't have a good answer, right? We didn't have a way of telling them... You can always direct them to news sources and sort of hand off completely, but there's also an obligation, I think, to help people understand the biggest story of the day and all the reporting that was happening on it. Because to me, I think that when I try to find the news subsequently, I found that in order to follow a human story, what had happened to the anthrax mailing stuff that was happening then, or what was happening in Afghanistan or what was the Arab reaction, I needed to go to many sources which I wasn't personally familiar with, and I had to find the same story. And it was frankly too exhausting to do. It was too exhausting to work the web, going to multiple sources and finding information if that's what you sought. So I felt that there's got to be better way, a story first way, where you can actually find the story you care about and then very efficiently read the reporting, not just from the stories you trust and are familiar with, but also sources potentially you don't trust or potentially sources that have the opposing view, or are closer to the story or are experts in the topic, right? So I felt that that was kind of important. The other thing that had happened in the months leading up to that was a realization that our news search wasn't working. So you would come to Google, and you would search for Bush, let's say, and you would get a bunch of stories. And what Google knew was how to find trustworthy sources, which we were already good at. So we looked at Page Rank, and we looked at the anchors coming in, and we would find you either a dated story, which had lots of links coming into it, or we'd find you a story that mentioned Bush a lot from a good source. And finding a story that has Bush a lot is not a guarantee of importance. It just means it's a long page, whereas the most important story that all editors would agree is important is not even being featured because we really aren't tapping into the intelligence of editors. We're not consulting editors in real time and saying what do you think is the most important story on Bush, right? So I had two different problems, but they both had the same solution. The first problem said if a user wants to read multiple articles on the same story, there is no way. We should find a way. The second problem was we need to consult editors globally to find out what's the most important to story to show about a topic like Bush. It turns out that in order to poll the editors, you actually have to find, at least online, if you want to do it automatically, you need to find all of the publishing on the same story. You need to align it. If there was a controversy about X, and "the New York Times" has two articles about it, and CNN has three articles about it, and "The Journal" has two articles about it, you need to assemble that collection. Then you need to look at how that collection of articles on that particular story is growing, and that gives you two things. One is it allows you to present that collection to users, and say if you really care about gay marriage, here's a collection of 500 articles. Some of them from the best sources, some of them from sources you haven't heard of that are very passionate it, that you should be reading. Also allows you to understand how excited editors are about gay marriage right now. Whether they're more excited about gay marriage right now than some other story. Since we can't actually pick up the phone every few minutes and call all the editors in the world, the best proxy to that is just look at their publishing actions. If you're an editor who cares about gay marriage and you've allocated resources to actually cover it, and run a news story that's not wire copy, then clearly it matters to you right now. Also where you position it on your front page matters too. Understanding who's published what, is it a duplicate or is it fresh, where is it positioned on the website, gives you a ton of information. When I say you, I mean computers. A ton of information in real time about what I call aggregate editorial interest. Google News was born out of this insight. September 11th happened, a month and a half later I had my first prototype. 150 sources. Either top international sources or top national sources crawled every 15 minutes or so and indexed, and presented in the form of pretty ugly UI. Here's the top story and here are the articles with the top story, here's the second story and so forth. We were a pretty small company at that time. I sent the demo out, I would say everybody in the company looked at it and played with it, and some people got very excited about it. Because news was on everybody's minds and they went to a couple of sources habitually, and now they were able to expand the range of sources and they were able to look at sources that had interesting viewpoints that they hadn't encountered before. It was super efficient. John: This is how far after 9/11, this is... Krishna: This was early November, mid November. We moved really fast. John: It was pretty fast. Krishna: It was really fast. But it was a prototype. Good enough that people got a sense of what could happen. A lot of people got involved. Eric came to my office at some point and said, "This is very exciting, because this is a new way of looking at the news. This allows us to do something that I've always been wondering about how we would do globally." We have to serve consumers globally, and building newspapers everywhere does not seem like the right strategy. Staying true to our mission of making news accessible in this way, adding value to the industry. He was excited about it, Marissa was excited about it, because she'd been talking to Larry about creating a new experience around news and now here was an opportunity. By mid November we had an internal prototype, we decided to do two things. One is we wanted to make that prototype the basis for news search going forward, as I was saying earlier. Search for "Bush", you got the article that mentioned Bush the most number of times. Now I had a new way of figuring out what was the most important article about Bush [indecipherable 13:23] . By January of 2002, we had news search upgraded to using my crawl and my clustering and so forth. This was because of Jeff Dean, who's sort of the most remarkable engineer at Google, frankly. He'd been working on this real time indexing system and it needed a test case. What a wonderful test case to try it on news, because news by definition is real time. He applied it to news and we found that we needed a ranking function, we wrote a new ranking function that was based on our understanding of how hot the story was. Just like Page Rank was about how many pages linked to it, Story Rank was about how excited editors are about the story. John: I'm going to do something we don't normally do here. I'm going to ask Martin, who at this time is at the New York Times, what your reaction to Google News was when this... Martin: At that time I was very excited about it, because it seemed to me that it was a way for a lot more people to experience the news and therefore to link to us. I had a very expansive view of how the Times should be treating the Internet. I was never one of these people that felt that we should lock down our links and not be open to the web, so I thought this was an opportunity to get more traffic. I know the other side of it, which is that it tends to fragment the news environment and therefore for big news sources like the New York Times, it has a commodifying effect and sort of sits on top of all of these fragments. I understand that, I get it, but I don't think that's a legitimate criticism. Mainly because technology is not something you just put your hands on top of. Now, other people have said you should lock down your links, you should not be open to Google News, and we can talk about that now. Krishna: Let's talk about that. Martin: Yeah. Krishna: Actually, I haven't told you when we launched it that we could...When we finish this and then we'll get into the ecosystem. John: Oh, this was still in prototype. Krishna: Yeah, no we're still in prototype when we launched news search. News search allowed you to go and search for news and get not a single article, but a cluster of articles, and ranked based on aggregate editorial opinion at the moment. We launched an in house internal version of Google News which had 150 sources and a very simple UI. But it wasn't until September of next year that we launched with 4,500 sources and we had to get images in. We had to understand a lot of things. We had to understand firstly how to work with publishers, because until now the initial version was all search. In search, publishers understood what we were doing, we were in response to a query we were returning a link and that link was driving traffic to them. It was the same thing that had happened since the days of Lycos and Infoseek and Altavista, and all of the others. Nothing had changed. Google News, when we launched as a tab on our front page in September, broke with that paradigm. For the first time without a query, Google was providing a collection of results. It's true that we weren't showing more content than web search was doing. But we were doing it in a query free way. One way to think about it is we were returning results with the query, "news." What's new? Come to Google and say, "What's new?" That's my question. Google comes back and says, "Biggest story of the day is a Texas DA was assassinated." Here is from Dallas Morning News or whatever. Here's one from The Wall Street Journal. Instead of saying, "Sorry we don't know." Or returning to you an old article. We were transforming ourselves from just answering queries on specific topics to much more general topics. This was a new paradigm and it caused us to have to talk to all the top sources, initially, to explain what we were doing, under wraps. There would be interstitials coming up and we had to come to an understanding that the first click from Google would not create an interstitial because that would ruin the experience. Once the top newspapers got it, everybody else wanted in. Most of the 4,500 sources that came in, came in because they wanted in, once they understood what was going to happen. After that, we've grown from 4,500 to 50,000 sources. We've moved from one language and one global edition to 72 editions in about 50 languages or something. That paradigm has actually proved to be quite versatile. John: So how many employees would be dedicated to Google News? Krishna: If you ask how many employees are dedicated to Google News full time, it is a small number. But if you ask how many employees are working on stuff that makes Google news possible, it's a much larger number. Because we build on top of very powerful machinery. The machinery that allows us to crawl the web in real time is not something that Google News, per se, maintains. The ranking and serving machinery is not maintained by us. If we were to build the service afresh, we would employ thousands of people. But we don't. We're building on top of the massive machinery that Google has put together. John: You have hundreds? Krishna: We don't disclose numbers. The quid pro quo that mattered to content providers still is maintained here, in the sense that you participate in Google News voluntarily. You provide a small amount of content, the title and the snippet. Which could be topical, depending on what section it is. You get, in return for that, traffic. If that traffic isn't acceptable, as quid pro quo, you can opt out. Every master in the world knows that it takes one line change on their robots.txt to step out of Google News. That's the way it works. The fact is, for most of the links we show, we don't even show the snippet. Because our design is such that we show a primary article and then a lot of other links. Some of them, we show a title. Some of them, we show just the name of the source. It's really compact. John: In fact, everyone wants to be that primary article. Krishna: They do. We often had a situation where one part of the company was arguing that they should be the top link and the other part of the company was arguing that they shouldn't be part of this at all. I wish they would resolve that conflict. John: I was going to say, this brings us to News Corp. Martin: No, but before we get there, my only issue with Google News was one that had to do, sometimes, with the quality of the computer science underneath it. What I found, at least at the outset, was that there would be a story about New York, for which we would be clearly the definitive source, or maybe even The Daily News would be the definitive source. And yet the top link would be a paper in Hawaii or in California. I never quite understood why that happened. It might have had to do with recency or the way the AP was publishing or some of the wires. Can you explain? You may have already corrected that many years ago. But could you explain why that was happening, at least at the outset? Krishna: When we started we... Martin: The wires were probably a problem. Krishna: ...were learning on the job, in many respects. Firstly, we didn't realize the importance of the source. The New Orleans story the New York Times published is not as good as The Times Picayune having local coverage. So over time, we got better at that. Secondly, the kinds of biases that you needed to create for the US audience, versus the UK audience, versus the Indian audience, even though they were all consuming English news, had to do with local preferences. So it took us many years to learn all of those things. Even today, our situation is where the ranking needs to get better. I completely agree. This is a discussion we absolutely must have with publishers, if we can settle the other discussions and talk about, how can we bring the source that best merits traffic for this particular query or story to the top? It's in everybody's interest to do that. Part of it is, we haven't come up with a good technique to communicate the fact that that source has the best article on the subject. Some of it has to do with recency, as you said. Often, the source that has the canonical article is one of the first to publish. And it's been 18 hours since then. Maybe they are reusing the same URL to update it and it's not obvious to us that that actually has become fresher. Although we try to guess that. We look at a source that's published five minutes ago, which is also potentially a good source. We say, why don't we show this instead? That's clearly a mistake. Over the years, we've come up with many solutions to fix that. But none of them is perfect. We look at how many people cite that source, the first signal that humans use. We look at proximity from the event, but you can't base it solely on that. We look at how many people cite the source, which provides a weak signal. We look at how many people link to it, but that doesn't help very fresh content. Because that doesn't happen very much. The best approach is the most direct approach. The source that raises its hand and says, "I have the canonical coverage of this thing. Please make sure I get tons of traffic." We have a meta tag that does that. Unfortunately, it doesn't get used nearly enough. We've pushed this thing back to publishers, saying, "Use the stand out content tag and we will respect it." John: The problem with recency, obviously, is that it can reward freshness but it can also reward lateness. Krishna: It rewards copying, at some level. Once we can understand that this is what we all want, there can be a solution that's not based on guesswork, that's based on asserting rights based on privileged access to content. There are very few stories where a source can say, unilaterally, "I have the best coverage." There are many stories that derive from press releases and public interviews that people have given. You can't raise your hand and say, "I am the source that should be at number one." But still, there's a lot Google can do, in terms of eliminating the sources that clearly don't qualify as being representative. Martin: I want to go back, six or seven years, to some of our discussions. There was probably a moment when I certainly felt that we could find a scalable solution to some human curation. We had these conversations. I always got the sense from you, Krishna, that you felt there was no way you could scale humans in the mix. In the hindsight of six or seven years, I think it's been about that long, do you think you were right about that? Krishna: I wouldn't put it that way. Maybe we should begin with what it is I appear to have said. There are many ways in which humans now access news content. One is when they seek out a ranking that is trying to be comprehensive, but different from the others in some ways, that addresses either top stories or a section that they care about. That could come from a source like the New York Times or the Wall Street Journal. Or it could come from a curated source. Or it could come from an aggregator. An aggregator like Google News or Bing News, is actually a meta ranking from multiple editors, just adding up the rankings. All of these have the nice property that they are trying to be comprehensive at some level. If you don't see a story there, probably that editor or union of editors didn't think it was important enough to make it. There are many people who actually don't seek out these options. They just wait for the news to come to them, to social networks or whatever. Or they completely ignore it until it's big enough that it finds them. One of the tragedies is that that's creating a filter bubble in itself. By opting out of an editorial rank or a meta editorial ranking, you are hoping that the news will find you. That's an illusion. There are stories that matter enough that they should be found by you on a daily basis. But you don't find them. John: Are you saying that they're just opting out and opting for a social default, like their Twitter or their Facebook? Krishna: Yeah. John: That somehow, if it becomes big enough, it will find them? But it might not be the same level of quality? Krishna: The [indecipherable 27:40] is too high, usually, for it to raise consciousness. Part of what news is trying to do is to raise awareness and open minds. Every time you raise awareness, open a mind, it's not an "Aha!" moment, it's a gradual build up. You get sensitive to the issue of immigration. You get sensitive to the issue of health care, by reading a sequence of articles. Unless somebody feeds you that diet, you are not going to be ready to make that decision on polling day. John: So Google is now in the position of defending hierarchical ranking of a mix of traditional and other news? Krishna: Google has always been for comprehensive coverage and good ranking. That's what we stand for. John: Right. But the difference is, now there's this new wave of competition that is just the default of the Twitter feed. Krishna: Right. I wouldn't point specifically at Twitter. Any social network says your friends and famous people will keep you fed with content. I don't see that as a replacement for a comprehensive ranking, whoever it comes from. Getting back to the question that Martin raised, I don't have a problem with humans doing that. I do think there's always a place for an aggregator that combines multiple humans. You could have a primary ranking by a source, like The Times or San Jose Mercury, that says, "We will select from our content and wire feeds and produce a ranking." Then there are aggregators that are robotic, like Google News. Or you could have something like TechMeme, which is human drive, which is curation, again, from this collection. And you could have something that combines TechMeme and Google News and does one more thing. There's going to be an ecosystem where rankings are combined to produce new rankings. They get filtered and so forth. I don't have a strong viewpoint on that. There is always going to be a role, a place, where you can go and find every single article ever published on the net, if you wanted. That's where we see our role. We want to get every article into the index, and we want to do some math on top of that, and we want specific queries on top of that. We want to track your personal preferences, and if you have a preference for a very eclectic thing, we want to make sure that that one article that got published on that eclectic thing shows up. John: Where does Google News meet Google+? How does that work? Krishna: Google News allows you to connect with journalists who have Google+ profiles, so if there's an article from, say, TechCrunch, and there's a journalist there, or the Wall Street Journal, you can actually click on the journalist and see what else they've done, learn more about them, and become a fan of them, and so forth. That's one way in which we actually have [indecipherable 30:41] to that. Also, in the context of a story, you can find Google+ posts on the story. So those are the two things that have happened. More things will likely happen in the future, because I think there's a big opportunity here to get the audience involved and also connect users with sources and journalists. Martin: I think one of the questions that people have, and I don't think we ought to go down the road of business models too much here, but one question that people have is, not just particular to Google News, but particular to the entire, what you're calling "ecosystem," is that as business models in news get weaker and weaker over time, the sources could become fewer and fewer. The question I think some people ask is what role should/can/must folks like Google who depend on this content play in helping that ecosystem survive? Your response typically has been, "We send traffic to websites, and that's our role." Krishna: And we help monetize them. Martin: And you help monetize them. Precisely. The problem with that, increasingly, has been that the traffic itself is losing velocity, in terms of value. You can see that in the numbers. This is not something I'm making up. The data supports this pretty compellingly over the last several years. I'm not asking you to solve the problem, Krishna, so don't take this the wrong way. I just want to get your perspective on the history, how this evolved, and what we ought to be doing about it from the computer science perspective, and obviously, without going deeply into News Corp., it's all in the public record that Rupert was very adamant about the notion of open links and the idea of fair use in this context. The question at some level is was he right, and were guys like me, who naively opened ourselves up, wrong? I know there's a lot there, sorry. Krishna: No, this is very important. There's a graph I sometimes show on how print circulation dwindled over time. '93, I think, was the year when the first five or six sources came online, and then by '95 or '96, every single major publisher was online. At this point Google didn't exist, just for the record. You were probably in the thick of this thing. You understand the logic behind this thing. People saw the inevitability of it, and they also saw an opportunity. They didn't want to be the last ones to animate in this space. They put their content out online, ad monetized. So the economics were set in stone at that point. They looked upon search engines as a source of traffic, which they continue to be. They looked upon ads as a way of monetizing said traffic. They assumed that print would continue forever. The print circulation started going down at that point. If you look at the graph, if you look at when Google started, there was no change in the trajectory. When Google News started, no change in the trajectory. The first real dip, that was the slope became even more steep, was when BlackBerry launched. People started saying, "Wait a minute. Coming back from work I don't have to buy a paper. I can read my mail." They're not necessarily reading news. They can read something else. I don't have to buy that paper. As smart phones became much smarter, the reasons to buy this piece of paper were dwindling. If you look at it, why would I want to take the news of the moment and put it on dead wood? Clearly that didn't make a lot of sense anyway. Finally it comes down to how else could you pay for this kind of journalism? People naively put all kinds of journalism into one pot and said it needs to be monetized the same way. Really, there are at least three types. There's a kind of journalism where all that matters is the facts, and frankly, you cannot corral the facts. They get out. Facts are now a commodity, especially for the big stories. Hugo Chavez died, he died of cancer, whatever. You can't be the only source that holds that view, of course. What people actually go to the source for is analysis, opinion, and trustworthiness, and all other stuff. Where does that matter? Where does the quality of the prose matter, and where does the editorial's judgment of what to cover and how to cover it matter? It's in the other two tranches. Commodity news, the kind of news you can get from anywhere, is cheap to produce. Everybody will produce it. It will be ad monetized and probably ad sustained, because there will be enough people willing to do it at that price. The kind of journalism that we're thinking of is either deeper analysis, where the quality and the effort and the amount of restraint really matters. That will probably draw a select audience that cares about that quality and what it does for them, and they will want to pay it different. That's where we're headed with the portal paywall or subscriptions on iPads and what not. Then there's a third category, which I think many people miss. The third category is news that I want everybody to read because I think it's important for democracy or important for the things I care about. You, as the reader, may not perceive the benefit, but I perceive the benefit from you reading it for the society I want to create. This is where I think some form of funding, either it's public funding, government funding, is going to have to pay for that, because this is journalism that is subsidized by people who care about how society evolves. It doesn't have to be meritocratic. People should vie for those dollars, and they should compete on the basis of quality. But that kind of journalism is not going to be journalism where the people who are consuming it are going to pay for it themselves. It's going to have to be funded by somebody else who believes that the America of tomorrow, the world of tomorrow, needs to be a certain way, because a certain kind of journalism needs to exist in that world. Martin: Would that be like local journalism? I'm having trouble parsing the second type from the third, because the second type is the type the New York Times creates. Krishna: Let me give you an example. I get The Economist in print. Martin: The Economist is a good example too. Krishna: The Economist is not something that you, Martin, would want me to read, necessarily, because it makes America better. It's something I'd buy because it guides my investments, let's say, or whatever, or it makes me a more intellectual person. That's the reason I buy The Economist. I recognize its value. I'm willing to pay the money upfront. There's a notion that the country is losing because the average person does not get quality journalism. They don't get good analysis, and they draw random conclusions. They go to the polling booth and they do random things. Making sure that the opinions that I consider to be high quality and based on good analysis get read by a large group of people is in my interest, because I want to see democracy thrive in this country. If I am a donor who wants to support that kind of journalism, where do I go? How do I pay for it? How do I fund it? Martin: The Lehrer News Hour would be one model for that. John: You have progressive issues, like the New Republic, Michael Bloomberg. Krishna: I don't claim I have figured it out. Martin: NPR. Krishna: Maybe funding NPR would be a solution, but you may find fault with the way NPR operates. NPR is just an example. The notion that I want people to hear about these pressing matters of the day and hear a good analysis by somebody I trust, we need a model for that. Right now we have a model that doesn't involve money. It's called social networks, which is basically, I find an article I find to be thought provoking, I share it, I plus one it. I make sure that my friends see it, so I'm helping that journalism get eyeballs, because I respect the content and the authors that produced it, and I want to make sure that they get traffic and stay in business. Can we take that to the next level, where it's not just a plus one, it's not just a share, it's some kind of actual funding that comes from me based on the fact that I respect this person? If that model can be either supported directly by me giving to them or me paying to some pot and that pot funds them, I think we can have that category of journalism thrive. There the consumer is not the person you should be expecting to pay for this, because they don't even know how valuable it is for them. It's a very different use case from me subscribing to The Economist, where I know what I'm getting and I'm paying for it. In my opinion there are these three models, at least these three models, that will happen. John: Of course the truth is if you look at the price/value thing, equation, The Economist, you're paying a hundred and something dollars a year for it because you consider it to be high value. Krishna: I actually subscribe to the New York Times on the weekend. John: The larger group of people is the people who tend to pay 25 cents for the New York Post. They gravitate toward what their tastes... Krishna: I don't have a problem with that. Just like I find The Economist intellectually stimulating, they may find some other magazine to their taste, and so be it. John: And we do have examples. Chris Hughes buys the New Republic, Michael Bloomberg buys Business Week. These are money losing businesses that they bought... Martin: David Bradley and the Atlantic. John: David Bradley and the Atlantic, that they bought for some reason other than profitability. Krishna: Getting back to Google, you said Google depends on its ecosystem, and its ecosystem is struggling and it needs to turn the corner and survive. Obviously, Google cares about all kinds of domains. News is just one of them. If the information about medical stuff vanished overnight, or legal stuff, or something else stuff vanished, there would be a problem for our consumers. It's not as if Google needs to focus exclusively on news. We want an entire ecosystem, but we do believe that when there is open access and the ability for people to try any kind of business model, they could direct at payroll, they could ad monetize, they could give it away in some other fashion, I think people have the ability to innovate and create new business models that will actually work. I think Google sees its role here as providing open access and the opportunities to monetize. I don't think we are in the business of saving one particular kind of operation, because we don't necessarily know what's going to be the viable operation of tomorrow. Sometimes it is from having one business model prove itself to be incapable of sustaining itself that a new one is actually born. It may be the same players, even. Martin: I just want to read...We interviewed Arthur Sulzberger, "and I say the assumption over time," speaking about his assumption, "is that people are going to continue to appreciate quality journalism," and by that he really meant, in some way, pay for it. He says, "If that goes away, then you're right, our mission is gone, because that is our mission." I think he and you are in a funny way saying the same thing, which is that with the, I don't want to say disappearance, but the decline of Internet advertising as the sole viable source of income for quality journalism, you need to have the consumer stepping up and paying. Krishna: You need either to have every consumer or some consumers stepping up and saying, "Information is important. It's important that I get this information. It's important that other people get this information. I'll fund it." Journalism falls into this unique category where it empowers democracy, and democracy is good, not only for the people who are making the decisions, but also the other people in the country. I want to make sure every person who walks up to the polling booth actually knows what happened in the last couple of years, and accurately so, so that they can make a proper choice. John: Other than occasional movements like Common Cause, John Gardner's inform the public, lobby for the public, there aren't many examples of people funding information for selfless...They may be funding it because they want people to know what they think is the right thing for them. There's not much precedent for funding factual...For that matter, you could argue that there's not much example of for profit journalism providing information that doesn't have some agenda. Krishna: I'm not going to predict that public funding is going to be agenda free journalism. I think it will end up falling into certain categories where people have a certain point of view that they want to espouse. I also believe that the sum of many, I shouldn't say "agenda" journalism, but certainly opinionated journalism, can be something that's very wholesome. If you have a strong advocate from the left and a strong advocate from the right and somebody else who believes in a different model, and they're able to produce the best argument their community can articulate, I think it's worth hearing. I think it's worth hearing the union of that. I think it's worth having a public debate based on that. I think that's what we need. We need respectable sources who have a reputation they want to maintain. They don't want to get it wrong, because history will condemn them and they have a brand they want to protect. That doesn't mean they are not opinionated. They may have an opinion that their editorial staff strongly believes in, and that's fine. Martin: Where does Google News go from here? John: That was my question. Krishna: I think Google News has the original mission, actually, to help people make sense of the news of the day, the news that matters, and get it from the most competent sources. That mission actually is only becoming bigger as the number of sources increases. Also, in some sense, as you articulated earlier, the computational challenges here remain, which is that sometimes you're finding the needle in the haystack to find the best story to read on the subject, because they're very close to it, or they have unusual expertise, or they managed to tap a source that other people did not find. As the number of sources increases, finding that article remains an open problem, and I think we will continue to push ahead in that space. I think the big opportunity is how do we work with Google+? Google+ has taken off and is continuing to do well. Richard Gingras is much more in that world and understands that better. I think there's an opportunity to think about the technologies there and how can we make Google News better. Hangouts is a very powerful concept, the notion that you can actually tie together people in different parts of the world who actually care about the subject and you've got on air. It will change the way people report on the news. John: You'll be pleased to see, if you see this finished product, that Hangout has been a key enabler for us. And at the same time, if you'd like to interview us after `this is over about some of our issues with Hangout, we'd be happy to share them. [laughter] John: It is a good enabling technology. Martin: It's very typical of Google. They just launch it into the wild and iterate from there. The old style guys just try to perfect everything, and it never happens. [laughs] John: But we have some important interviews that wouldn't have taken place if we didn't have Google Hangout, because we didn't have the time or resources to go to St. Louis or wherever. Martin: Do you have a view of... Krishna: Let me finish one more thing. I think the other thing that Google News really needs to do is to embrace the world that is trying to elevate news by bringing in information, infographics, and a more interactive consumption. We don't quite have that yet. All our articles that we show just tend to be standard articles. There are really powerful infographics out there that need to come in. How do we firstly encourage that world to grow and thrive? Because, as I said earlier, everybody has the basic facts. It's really how do you build insight and analysis, and insight and analysis can also be brought in through infographics and visualizations. So what does it mean to bring that together to a place where you can consume it? How do we standardize access to that? I think there are a lot of challenges in that space. John: What about from the point of view of Google? You have all this product aggregated. You have all this data. Is there any reason why Google wouldn't invest in that infographic representation of what's...? Krishna: No, I think every top publishing house has got developers and designers thinking about this thing. I just think that it has not evolved sufficiently that there are any standards on how do you build these things, how do you encourage usage of that, how do you use data. John: I guess what I'm asking is has it gotten to the point where it's time for Google to get into the creation of the product, because the raw material is all data, and that's what you do. Krishna: We do some of that. We allow you to put content into Fusion Tables, and then you can mash them up with Maps and tell stories, but I think ultimately there are...The creativity comes from people whose job it is to tell the news, right? It's not what we do. We build the tools that enable them to do that. It's a back and forth dialog when they say, "We need this additional thing," and we think enough people need that additional thing, we build that additional thing. Yes, and in a sense I'm agreeing with you, but I don't think our job is to specifically focus in news, but to say how can you make data more easy to process. John: Do you ever discuss radical departures from your traditional map, traditional role, like charging for high value content? Or creating high value content, or is that someone else's job? Krishna: I think Google's position in the Internet would become very conflicted if we were creating content and putting the content up besides the people that we are trying to drive traffic to. I think that we can add more value and our expertise is more aligned with us providing access rather than creating the content in the first place. I would not pick Google to bring anything together. Martin: Krishna, as a way to end, you've spawned many, many, many others out there. Is there anyone out there right now who you think is particularly...Taking your Google hat off for a moment, leading the way do you like Flipboard, which is another kind of aggregator? Do you like Prismatic, which is a learning system? Krishna: I like Flipboard for...although I don't use it a lot, but I like their UI and I know a lot of people use Flipboard. I think this brings to mind another point that I've been wanting to see happen, which is that trying to drive traffic to your website is a very old fashioned way of looking at it. Sometimes it makes a lot of sense to do that. But there's also an equally attractive model, which is to say that I will make my content free and it will land wherever it wants to land and people will...But I will insist that I get paid for it. I get paid for it based on the monetization units that accompany it. I think aggregators like Flipboard will allow us to make that happen because in order for that Flipboard experience to succeed, they need to have license to take your content and display it in other ways and connect it with other kinds of content. We really want to tap into the ingenuity of the designers of Flipboard to make your content reach the eyeballs who will appreciate it. And so, if you want to make them part of the equation, maybe give them some freedom. But in exchange for that, you need to monetize that. We need to come up with standards that allow a content publisher to say, "This is the content I require people to come to my website or my app to consume. But for all of this other content, I'm fine having it float free and land where it wants to land, using a different syndication model, where I don't need to know who's syndicating, as long as I get paid for it." I really want to see that new ecosystem evolve at some point. Aggregators like Flipboard are going to be part of that. John: One of our other interviewees said that the essential difference between Google and everyone else in this business was, everyone else was trying to, what you just said, draw them to their website. Whereas Google was just monetizing them on their journey to wherever they're going. Krishna: But again, the notion of the website as where you consume content is old fashioned. It's irrelevant. We send people to websites because website owners want that. But they could equally well say, "I don't mind popping up as a full page as part of the Google search results page and get consumed there. If people have more interest, then they can transition to my website." If the economics works out in their favor, then they should do that. Sure, Google does not see itself as a rival experience to the publisher. But couldn't the publisher open a shop here? It's a bit like a mall, versus your dedicated store. Couldn't you open a mall store here, where you have the New York Times experience inside of the Google results page? John: But the essential question, which you raise, is if they get monetized at a rate that they consider... Martin: That's essentially what The Times has done in Flipboard. Flipboard enables a subscription relationship. There is a Times experience inside of Flipboard. Krishna: Yeah, I know. But you had to make that one deal with Flipboard. It probably took a bit of time. Another idea is that The Times can manifest itself wherever it wants to, as long as it can monetize that content and has some control of how it gets presented. You don't have to get lawyers involved in every single person you have to deal with. That makes it much more scalable. Martin: Kind of the RSS of monetization. Krishna: The problem with RSS is it didn't think about monetization. But think of RSS Plus Plus as something that has monetization as a fundamental component. There are situations where you say, "I know what's the best ad to show because I have a ad network that will actually do it." Or I can say, "You can do it because you know that audience better, and you have access to local ad providers." There's the movement in that direction. ...

TRANSCRIPT: Martin Nisenholtz: Henry Blodget, New York City, March 14, 2013. Let's start with when you first...I'll give you a choice. You can start in one of two places. You can start with when you first met the Internet, or you can start with when you first realized that the Web was going to have a very profound impact on publishing. It may be the same moment, it may not, but let me start there. Henry Blodget: Just give you a brief background on me. When I graduated from school or shortly thereafter, figured I was going to go into journalism. At that point, journalism was print, TV... John Huey: What year was that? Henry: That was 1988 when I left school. Spent a year teaching and writing a book and then was figuring out what I was going to do. I figured I would be an editor at a magazine. I'm not sure why. That was just the thing to do. Freelanced in New York for a while, a bunch of magazines. Actually, I ended up freelancing at CNN, too, so got a picture of TV, and then ultimately went to Wall Street for 10 years, but had a good basis of freelance in the media at the time, which was basically print and TV. On Wall Street, relatively quickly, that was when Netscape came along, the IPO. Everyone got incredibly excited about the Internet. Huge action. I was one of the first people on my office floor to get a browser. The second thing I got was PointCast. Suddenly, everything is changing right away in front of your eyes. You didn't know where it was going to go, but it was going to be a big change. That was the year when Bezos jumped in his Honda and drove across the country, figuring that e-commerce is growing at 1,000 percent a month or whatever it was, going to be a big opportunity. It was clear in those days that the Internet was going to revolutionize industries. People had very little idea about exactly what it was going to do. Most of the companies that came out in the 1990s were companies that really took advantage of what was different about the Internet. You also had a lot of traditional media executives looking at it and saying it's going to be just like TV or it's going to be just like print. They would transplant the TV or the print product. Didn't work. Then we saw the same thing that has happened in other media as they've came along. Basically, there's the jamming the square peg in the round hole for a while. Then the journalism perspective. I think people really started to figure it out about 5 to 10 years in. It was really 2000 to 2005 that you saw really new models of journalism start to emerge. Now, I feel like they're hitting their stride. Martin: What were those new models? Henry: If you look at the range of different kinds of companies that have been successful, you can look at Matt Drudge, who started in the middle of 1990s. He is still doing something that takes full advantage of the new medium and does not replicate any of the old media. Internet is a medium that knocked down all geographical barriers. There's no longer a way to put a case around content and control it the way you can in TV or in print. You're not limited in terms of time. You're not limited in terms of the number of sources of information that you can reach. What Matt Drudge did was say, "I'm just going to see the whole world through one page. People are going to come to that page. They're going to get what they got in all other media, which was a particular perspective on the world." That's the one end. The other end was Gawker Media, which was producing its own original content, but it was a very different type of content than what was being produced in print or in TV. In the middle was Huffington Post, which was doing a little bit of both. There was lot of aggregation, there was original content and so forth. What we're doing at Business Insider is a blend of those. We're using all of those different techniques, but what every single one of those does that's been successful is, it takes full advantage of the Internet. It's not bringing a print model or a TV model to the Web. It's actually saying, "What can we do with a fully interactive medium?" Martin: Let's stay on your bar. You spent 10 years on Wall Street. You then decide to start Business Insider? What made you decide to...? Henry: A little bit of time between. I was in the Internet and was covering the industry. The most successful companies in the 1990s like Yahoo and eBay and Amazon were taking advantage of megatrends in commerce and so forth. Ultimately, some of those companies have died. Some of the new models have been reinvented. If you look at the most successful media company in history, it's Google. What does Google produce? What is the media? It's search results. That's what they produce. It turns out a lot of the conceptions that media had before that, which was what you want to do is capture a reader or viewer and hold them on your property. That's the way to make money over time. Google exploded all of that. Basically, what Google showed us was what you want to do is actually find them on their way somewhere and help them get there. That is the single most valuable media opportunity there is on the Web. Google did that. It's why it's so incredibly valuable and successful. It's swallowing up all advertising dollars from everywhere. Now, we're getting into the next level of media like news and the news industry is reinventing itself. The opportunity that I saw looking at Huffington Post, TechCrunch, and many of these other early next generation publications was there's something new here. It is like coming into television journalism in the beginning, when people effectively read newspaper stories. Then they figured out, wait, pictures are so much better at telling stories. Let's use those and let's have the host concept completely different than a newspaper. We figured that the digital opportunity would be radically different as well and it's turned out to be. In fact having a new model... [crosstalk] John: What year did you actually start Insider? Henry: 2007. John: It's in its sixth year. Can you tell us how and exactly what you did and what you were thinking? Henry: When we started, it was three of us and a loading dock. We were focused on technology. The original conception was we'll focus on New York Technology. Martin: I think it was called Silicon Alley. Henry: That's right, Silicon Alley Insider. We were going to focus on New York technology. What happened was the first day half the traffic came from California. We immediately noticed that the Apple story was much better read than the story about the local New York start up. We said, "Why are we focusing just on New York? Let's focus on technology." I had a background in that. Obviously, it was easy for me to do. We did that. We broadened. Then within sixth months, we realized there ought to be other publications like this that are serving other industries. The natural one for me was Wall Street, because I knew that well. We originally thought that we were going to build a network of sites, the way Gawker has with each site focused on a different industry. We launched the Wall Street one. That began to work very well, but it didn't make sense to have a separate brand. Ultimately, we realized that in fact you could have a single brand that all of these are encapsulated under. After a year, we decided to start Business Insider. We basically just folded them all into that and we've been building that since. Martin: But you think of it as a brand, not a network? Henry: Ultimately, if you look at what the Internet does, and this was true in commerce as well, the big insight that Jeff Bezos had at Amazon was every other kind of retailer, physical world, any physical world retailer, even a catalog retailer, is very much limited in terms of its floor space or warehouse space. They either have to be a specialist. They go very deep into a category or they have to be super broad and an inch deep like Walmart. There are two models. The insight with Amazon is you could be both. You could be both infinitely deep in a particular category and then you could go infinitely broad. It's exactly the same in news. The New York Times, for example, has chosen to pretty much stick to its knitting, in terms of what it has done in the paper, when it looks at the breadth of what it is doing in terms of producing news. There is no reason that over time the New York Times can't quadruple the size of its newsroom and become a completely global organization. With one central entrance point, which is the New York Times, you can have an infinite amount of content produced behind that. What we're seeing right now, what I'm seeing right now in the news business is actually there's tremendous overcapacity and a cacophony of different brands and organizations trying to adjust to it. I think over the next 10 to 20 years, you'll see a lot of consolidation. Ultimately, you'll have a few big, global, news providers, where you can be both incredibly deep and incredibly broad. John: Just a side question on that is something that obviously you've thought a lot about. Do you think you could be local in that context, too? Henry: I think so. I think the key question on local is what brand a local community is going to rally around. I think there is tremendous affinity for the brand that's been in the community for a long time. People are used to going to that. The idea of starting a single brand and saying we're going to go into every local community and become the brand that everyone rallies around, that is a tremendously tough challenge. John: Yeah, so that is what Tim [Armstrong at AOL] is trying to do with that? Henry: That's right. It's a new brand. John: It's a spin on what you're saying about broad deep. He's trying to do essentially what you just said, but it isn't quite [inaudible]. Henry: That's right. Part of the challenge there is he's trying to build it by building a macro first, then parachuting one or two people into a particular community. Then replicating that 40 times or in his case, 800 times across the country. That is very difficult. I think the way that the local news organizations of the future will be built is they may well be built from the existing newspapers that are there. They will have to be much more lean than the current ones, because they just simply will not have as much revenue to play with. As we found, you can be vastly more efficient if you start to tell stories in a native digital format. It's very hard to come in and say we're just going to produce a newspaper and put it online. That's very hard. Just as TV is not producing a newspaper, if you think about it digitally you can be vastly more efficient. Martin: Let's talk about that for a second. You had a little interchange on Twitter, maybe 10 days ago with Jeff Jarvis, where you were talking about eating spinach. I think your view is you've got to be fairly entertaining to be...That's at least the view I took. From an editorial perspective, what does that suggest? Does it suggest that institutions like the Times and others are not that the Times isn't entertaining just writing for a different medium and need to be changing? What's the takeaway from that in your view? Henry: I think there's a big argument right now about what's going on in the news business. There are two big differences of opinion. One is that news is dying. The world is going to go to Hell in a hand basket. Who is going to do the hard reporting? Newspapers are caving in. How is the world going to police itself? That's one. The other is what's actually happening is that the amount of news that's being created has been increased by a hundredfold over the last five years. People are absolutely drowning in it. That's the one I subscribe to. You've got anybody with an opinion can Tweet, they can blog, or they could go online. Any media organization says anything that somebody disagrees with, they immediately publish right to the Web. They're as much in the conversation as the newspaper. Effectively, what we've gone to is the old world through 1995, media organizations were the equivalent of a hydrant in the desert. They controlled the vital information flow. They had tremendous power because they were the gateway. Now, we are a hydrant in an ocean. Media organizations are often still coming at it from the point of view is, "Wait, we get to choose what's important." People should consume it because we say it's important. The point that I'm making is there is so much out there to consume right now that you actually have to build something that people like. People do not want to have to eat spinach because it's good for them. They simply won't. There are too many options. You got to make the spinach taste good, so that was the discussion I was having with Jeff Jarvis. I do feel in a lot of traditional media organizations now there still is a sense of entitlement, which is, "I thought a story was important. I worked on it for a long time. People should read it." Maybe they should in some perfect universe, but the fact is we all have jobs, we're busy. Maybe we didn't get time to read it. Maybe it was too long. Maybe it wasn't as important as the reporter or the publication cited. I think the reader has a vote in that. You got to make readers want to read it. Martin: You think BuzzFeed is out...It's a race to the [laughs] candy. It's bad metaphor, but you know what I'm saying. Henry: I think there are different things that are going on. I think that from the beginning media organizations have sold different audiences. The audience that likes to look at cute puppy pictures, which is incredibly huge, is a different audience than the Economist audience. BuzzFeeds insight. It was a very important insight that there is a lot of crossover there. In fact, you don't need a separate Economist and Cosmo magazine anymore. It can be under one brand. People could say, "This is the site whose tone and voice I relate to. I'm happy to look at puppy pictures next to the analysis of foreign policy," or what have you. You can hang them all under the same structure. That was their insight and worked incredibly well. There's a big difference between that and having a newsroom like the New York Times newsroom, which is just 100 years of history, expertise, and incredible experts in a particular industry. When I look at the New York Times, I think that the organization is going to have to continue to change radically. The idea that nobody cares about serious journalism anymore is crazy. They absolutely care. It's just you've got news organizations coming at it and figuring out a model that supports that with other things. By the way, you've got a television, the big hit show "Walking Dead" pays for everything else that AMC does. That model in the media industry of having a popular thing pay for the love projects or the important stuff has been traditionally true forever. John: Would you mind just walking us through your business model? What it was when you started? Where it's come in six years? How you think it can grow and what it could become? Henry: Sure. When we started, we where three people in a loading dock. We started publishing. We said, "What do our readers like?" We published more of what they like. We published less of what they didn't like. We knew relatively early that we were going to have to be supported by advertising. That was the goal, so we continued to build with that. We initially partnered with a third party reseller of advertising. We were part of their network, which is a model that works very effectively online. That helped us grow for the first three years at a very nice rate. About three years in, we realized to get to the scale we wanted to get to, we had to build our own sales force. John: What was the percentage of...It was mostly original, right? Henry: Almost everything that we produce, up until relatively recently, has been original. John: Great news. You have your own stories. Henry: Great news. We build on other people's stories all the time. When the New York Times reports an excellent story, we will go through it often and pull out a detail or two. John: Your theory was that you were going to...Your stories were going to be a little smarter, a little more knowing, a little more point of view, and always fresh. Henry: The theory was there are now a million points of news creation, effectively. Having somebody watching that world go by for you and pulling it into one place is valuable as long as you do it in an intelligent way. You don't waste people's time. Our hope was we can pull it together and then we can add some value to it. The moment it happens and is reported it's no longer news. The next question is what does it mean? John: Now you have a mix of what, commentary, reporting? Henry: Features, lots of visuals. This is one of the things... [crosstalk] John: Yeah, I read it so I know what... [crosstalk] Martin: You brought some of the analyst perspective as well. Some of your best stuff is... John: I was going to say, you asked about entertaining. Henry was entertaining when he was on Wall Street... [laughter] Henry: To my detriment. John: ...which isn't always that easy. Henry: No, it's interesting. When we started it was very much...It was almost like Wall Street research, a lot of analysis. What we realized is there is a small, influential, and very passionate group of people who love that, but not enough to make a media business. To make a media business, you've got to have that plus the personalities and the fun stuff. It's the same thing as the New York Times. John: Then you get your own sales force. Henry: We get our own sales force, so that has helped us really grow. John: What year are we in now? Henry: '04 and '05. The last couple of years we have our own sales force. John: How many employees in '04 and '05? Henry: Now we're 100, so we've grown from 3 to 100 over five and a half years. Martin: How many employees... Henry: I'm sorry. Martin: ...for sales? Henry: Employees. Sales force is about 20. John: Mostly in New York or all over? Henry: Most of our employees are in New York. We have a couple of sales offices and newsrooms. Martin: I'm asking everybody this question, but programmatic. This is an advertiser supported business for the most part. You do some conferences, which we should talk about, but tough now, less tough? What's the affect of programmatic on your business? What do you think is going to happen over the long term? Henry: For us, right now, it's an opportunity, because we have basically two different types of advertising that we're selling now. One is the big custom campaigns that we sell to the big 100 200 clients, global advertisers. Those are premium campaigns. They often have a custom part of them. That is what the sales force is selling. Then there are the commodity [banner] ads that most sites use to fill out the advertising units. What programmatic has allowed us to do is now raise the value of those a lot, so it's helping us. Industry wide, what you're going to see is the programmatics or the automated buying and more efficient buying is going to drive down pricing for advertising. That is OK for us, because we have built the model to be able to do fine on ad rates that are considerably below the current average across the industry. It's going to continue to put a lot of pressure on traditional media organizations that are still trying to sustain a print cross structure or a TV cross structure and translate that online. It will not sustain that. The good news is it will sustain a native digital newsroom. What it should do is allow us to just get much more efficient in using the ad space. Martin: You don't have any plans to charge for the service. You think that would be a mistake, I take it. Henry: Like a pay wall? Martin: Well, a pay wall, a metered model. Something. Henry: I should think we will. What we've done now is we've launched a research product that builds on our tech expertise and that is designed to be sold to industry executives in recovering the mobile industry. We will continue to expand that well. That is what I would describe almost as like a high end journalism product, very focused on a particular industry. That's doing well. That will definitely help us. Martin: That one was going to teach with like a Forrester Research or GigaOm or something like that. Henry: It's much more akin to Om at GigaOM than it is to Forrester. Forrester is a multi thousand dollar subscription consulting and so forth. There is no question. You see this from Bloomberg to Politico to other high end news and information services. People in business will pay for insight and information. John: Let's continue with that. Go through that list. Give us the complete list with Politico. Henry: Reuters, Bloomberg, Politico, and all manner of data providers to Wall Street or different industries. You see again and again GigaOM is doing it in technology. Most industries will have different service providers that sell a high end subscription service that helps people do their jobs better. That's our goal in that business and that is going to continue forever. John: You'll go into dual and stream income pretty soon? Henry: Yes. It's becoming meaningful now, which is great. I do think, to your question to the main site, because we serve a business category. If you look across the spectrum from Financial Times, they have a whole bunch of different subscriptions to the Wall Street Journal, which I think has a $400 million digital business of which $200 million is subscriptions. There's no question that people will pay for a good business oriented product. The question is, what does it look like? Is it just you get bonus material? Is it a meter? Is it a wall? We don't know, but we definitely do have a very passionate group of people who are on the site all the time. If we can figure out a good way to give them more of what they want and charge a very small reasonable price for it, I think that model works and it will be important. [interruption] John: I was just going to ask, what is at the end of the first year the size of the audience and today the size of the audience? Henry: I don't remember exactly. John: Roughly. Henry: I would say the first day it was 2,000 people, which was like, "Yeah, 2,000 people!" Then it went down for two weeks, so we were like, "1,000 people. Not so good." Then it bottomed and then it started going up. After the first year, we were at about one million a month. It has grown very steadily over the past five years to about 25 million a month now. That's on our internal. Those are Google Analytics. What does that translate into in terms of people? It's 10 million people on desktops in the US. There is another bunch on mobile and then there's a big population outside of the US. John: There are a lot of people at work, probably? Henry: There's no question that our main audience for the life of the company has been at work. You see the primetime during the day peeks at about 12:00 to 1:00 East Coast time. That's when the West Coast comes on. People like to check it early in the morning. We're designing the product to be accessible from work. You can read an article, you go back to work, and so forth. That's one of the advantages that we've had. Interestingly, in the last couple of years with the rise of mobile, the day is getting extended. It's now really 18 hours, where we see heavy mobile during the commute in the morning, heavy mobile during the commute at night, and then at night during bedtime, people in bed with tablets. The day is definitely getting extended. John: That's sad, isn't it? Henry: No, it's happy. We're thrilled about it. As soon as we can figure out a way to get you while you're dreaming, we're golden. Martin: You describe this world expanding and contracting with some big players. What do they look like and what do economics look like in those? Would you call them news organizations or would you call them media? Henry: I would absolutely call them news organizations. They may well be bolted onto other big organizations like a Google, for example, or Bloomberg where $6 billion of cash flow is coming every year from Wall Street. Why not bolt on a $500 million news organization as a rounding error? They may be married to those, but I do think that they will work economically. I think that over the next 20 years, 10 to 20 years, there will be some big digital news brands that are built, that have certainly hundreds of millions of dollars of revenue, and probably billions of dollars of revenue. What do I think they'll look like? I think they will look like we look. To put it in context, we have about 50 people in the newsroom. Our site is about half the size of the Wall Street Journal. The Wall Street Journal has about 1,700 people in their newsroom. The reason we're efficient relative to them in terms of people, is that we focus just on this medium and we're creating content just for the medium. I think that what you're going to see is over the next 10 to 20 years, organizations like ours will continue to grow. I don't whether it will be us. I don't know whether we'll be part of somebody else or we will decide to bring in others or what have you. I think our newsroom could grow to 200, 300, 400 people around the world and ultimately be vastly larger than the digital organizations of sites out there now. John: Business Insider could end up being a buyer or a seller? Henry: Yes. If you look at what I would describe from a business perspective as leverage points in the business, sales is a huge leverage point. It is very expensive and time consuming to build a sales force. Once you are calling on a big client or clients, that sales person can sell a small deal or they could sell a $20 million global deal. It's the same cost to do it. What we want in that is scale. It's the same thing with technology. We have a tech team that's working very hard to build from the ground up a great contact management system and site, and so forth. Lots of features associated with that. It's different than we had five years ago and that's a real competitive advantage for us. That content management system could easily be spread over 10 times as many newsroom folks and the cost of running the site. Both technology and sales, there's a big leverage point. Then just in terms of digital journalism. The consumption of news, the gathering of news, and the packaging of news, there's a lot of leverage there. Unlike television and print, both of those are limited by either space or time. TV, there are only 24 hours in a day. That's all you can pack into a network no matter what. New York Times can only be so thick, even if you got the ads because you can't go in there digitally, either of those barriers. What that says to me is that the news organizations of the future are going to be much larger in terms of global audience than any of the existing ones now, because there are none of those barriers. In terms of timeframe, what was surprising to me, a couple of years ago, I went back and looked at CNN, which revolutionized cable news. I found that in the very early '80s, it was 10 years before anybody had even heard of them, they were basically broadcasting in a closet until the first Gulf War. Then people suddenly became aware of them. Then they became a household name. Now we're 33 years into CNN or 30 years into CNN. That's how long it takes to build a global news organization. I think the same thing is going to happen digitally. I don't know whether it will be BuzzFeed or Huffington Post. I don't know whether it will be a retooled New York Times or Wall Street Journal, where you really embrace digital, or whether it will be somebody new. I think you will, in 10 to 20 years, have big digital news brands that are fundamentally different than the brands we have now. Martin: The chest beating of all on how do we support serious stuff [inaudible] it was. Does that scale support a Baghdad bureau? Does that support the things that people worry are going to get lost in this transition? Henry: Without question or it supports what the Baghdad bureau is turning up. Twitter, Facebook, and blogs, just an incredible new mechanism for unlocking information. We see that all the time. You can do things. You do not have to have a reporter on the ground, necessarily, to learn a huge amount about what's going on. Citizens are contributing to global knowledge. I don't know whether it's going to make sense for the New York Times to have a Baghdad bureau. What I'm very confident about is that the world will continue to be vastly better informed than it ever has been before. I think even with the pressure on newspapers, the world is vastly better informed than it ever has been. We're going to digital. What we found is, when we started with the three of us, we had to come in early in the morning. Write frantically all day just to survive. Go home, eat dinner, and get online because something might happen. Plug in again and go. Now that we have 50 people in the newsroom, we actually have the ability to do a lot more projects that look like much more traditional print or TV journalism. Where we can send a reporter to Canada to look at the tar sands, take a lot of pictures, and come back. There are things that we can actually do with that that you can't do in either print or TV, such as create wonderful photojournalism essays that really describe what's going on. Couldn't do that before. I think there's a native form of journalism that is developing digitally that is every bit as powerful as print or TV. It doesn't look like them. If you're looking at from their perspective, you would say, "That's not quite what we do," but tremendously powerful. Readers love it. It communicates a huge amount of information. Point being that the bigger we get, the more we have resources to do things like that. I think what people forget when they look at the New York Times is, the New York Times has been at it for 100 years, They had a lot of profit to work with. Maybe they're less profitable going forward, but they still have this wonderful newsroom with 1,000 people in it. Even if the paper died tomorrow, they would still have $200 million to play with in the newsroom, or at least $100 million. I don't know what the numbers are, but it would be very big and powerful and could do a lot. I think the hand wringing is completely misplaced. John: To that point, is Business Insider profitable? Henry: Shockingly, this quarter, surprisingly, we are. We didn't expect to be. Basically, the way we've run the business every year has been...We have raised a little bit of money. We've invested, so we're losing money with the idea that that would enable us to get bigger faster. In 2010, for the first time, we turned profitable. Very, very tiny profit. Then we immediately raised some more money and lost money in 2011 and 2012 again. This quarter we're back to profitability, so what do we do? We immediately decide to spend more money. I think what we've done is that we've gotten comfortable if the model works. At any point, we could say, "Now, we're going to simply throttle back on the growth." John: Make money. Henry: I personally am not running the organization to make money. There are other businesses that I think you could go into if the goal was the bottom line. I want to produce a product that our readers love that is self sustaining. The goal was not to have to bolt it onto an entertainment business or a soda business or anything else, but actually make it... John: Or buy Time Warner. Henry: Exactly. It was to produce it and make it self sustaining. I think we're there, and I think we're going to continue to invest. John: To your point about the hand wringing is over exaggerated. One thing I've been telling people when they talk about that. It's never been harder to get away with something than it is right now. Whatever it is you're doing, you're not likely to get away with it. But then I try to put this...You seem to be in this frame of mind. Let's take something like the civil rights movement and say that you didn't have strong television networks and newspapers committed to a long haul and physical courage and endangerment and all that. Say you didn't have that, but everybody back then had smartphones and Twitter. Would we still have gotten through that with positive results? I don't know. Henry: The idea that you're not going to have any organizations that have the wherewithal to put people in harm's way if they want to be there or to invest a lot in it I think it's just crazy. You look at it now. Let's just take Bloomberg. There's money everywhere! Just oceans of money! John: They put people everywhere. Henry: They're everywhere. John: What they don't have is an audience. They have a brand. They have revenue. Henry: That's right. If they discover something important, it's going to get out there in the world. There's no question about that. Then you've got the TV organizations. You know when I realized that TV was not in fact in trouble, which I had been thinking it might be? When I went on the "Today Show" and I realized that they had full time employees, one of whom does nothing but steam the lint off your suit before you run on. I said, "TV's in fine shape!" [laughs] John: They have a half billion dollar revenue for the Today Show. Henry: Fox News is making $750 million a year. There's so much news gathering... John: CNN makes 600 [million]. Henry: Exactly. Everyone's telling you about how terrible. CNN's going down the tubes! John: Still making $600 million. Henry: We are awash in news gathering capacity. What the Internet's going to do, it's going to make it more efficient. The digital model's going to be different. But TV's not going away, print is not going away. And now you have the ability for anybody anywhere in the world to publish information instantly that will be immediately seized upon by, in almost every case that I can imagine, an interest group that is very passionate about that thing. It will get brought to other people's attention. I think we're in great shape in terms of that. Martin: I want to actually go from the large to the fairly small and mundane here for just a second. We had a chat with Nick Denton. He showed us it's public, so you can see it yourself if you go to [inaudible 35:04] a new kind of comment. Not just comment, but really bridging. On the Times but I'd say even more so on Business Insider, the comments are just...it is a problem area. There are all sorts of... Do you think about that at all? Do you think what he's doing makes sense? Do you think you're going to adopt something like that? Henry: I think about it a lot. Early on, when we were really focused on technology and technology analysis of businesses and so forth, we did have lots of very intelligent commenters coming in. We still do, but now they're often drowned in people fighting back and forth and so forth. The issue for us has been how much effort are you going to put into moderating it. Is there a way to automate that? The answer is that the folks where it's working...There are technology interfaces that you can get. There are reward systems. You have ways of banishing people who are being rude. That's an area that we definitely want to focus on. What I didn't fully appreciate when we first started the site is that the vast majority of the readers are just reading. They're not commenting. There's a group that wants to comment. It's wonderful to be able to cultivate them, especially when they have something intelligent to say or they're funny or what have you. That's what we want to focus on doing that. Even just with the production of the news and storage, you're reaching the vast majority of your audience, who is not paying any attention to the comments. In general, people pay too much attention to the comments, but it's definitely an area where we can improve a lot. John: I really enjoyed the evangelical quality of this interview. Henry: Digital works! News is alive and well! [laughs] John: I'm feeling much better. Henry: You'll feel great! ...

TRANSCRIPT: John Huey: It is April the 3rd, 2013. We are in the iconic Watergate Tower in Washington DC with David Bradley and Justin Smith of Atlantic Media. David, if you wouldn't mind kicking this off just by giving us a brief history of how you decided to get into the media business to begin with and when it was, after arriving in the media business, that you realized that digital technology was a profound influence on what you were going to have to do to make this work. David Bradley: I'm happy to do that. Welcome, both of you. I ended up in this place by failing to get to the place that I intended to get to. I was raised in Washington. I wanted to be, by age 30, the young Republican senator from the state of Maryland. To do that, I decided I should become prosperous before I was powerful. Neither thing happened. I started a business. It took me a long time to succeed in the business. A long, long time. Decades. 22 years. Finally, I found myself prosperous but no longer in the District of Columbia, no longer Republican, and surely not a U.S. senator. On my 40th birthday, in that haunting hour where men shouldn't be allowed to give serious thought, I realized I was never going to become the thing I wanted to be. I came up with the thought that if I can't be in politics, I can be near politics. If you can't take the course, you can audit it. Media was as close as I could get to. I took my earlier companies, Corporate Executive Board and Advisory Board, sold them, and then bought my way into media. I bought the National Journal in the late 1990s. I found it a wonderful product and a really easy business to manage. On the strength of that I thought, "How hard could journalism be, media be?" So I bought The Atlantic from Mort Zuckerman and got to the full answer, "This is exactly how hard media can be." Mid 19th century long form fiction and nonfiction journalism was so not even then, late 1990s in fashion. I think it was probably Mr. Zuckerman's favorite business transaction, selling me The Atlantic. John: Fast Company was a pretty close second. David: Yeah, he'd like that one too. Justin Smith: That was probably his favorite. John: That was a pretty good one. Justin: 300 million. David: The profound problem on the other side of having bought is, I loved it. Terrible business, but I loved it. And I really worked on The Atlantic. trying to turn it around. Mr. Zuckerman had not spent any time at all on the properties. He had subsidized The Atlantic. but he hadn't been part of managing it. He had a real estate empire to build. I went into the business and met with advertisers, hired editorial staff, oversaw the redesign of the magazine, and bought better quality paper for the magazine 100 levers, and didn't succeed. John: It sounds like, in addition to wanting to be close to politics, power and all of that, you also were not interested in the subsidy model. You were trying to make this into a sustainable business. David: Yes. I've seen other wealthy people act the same way. Chris Hughes is talking the same right now as I was talking then. It's just not satisfying to just subsidize. There is a challenge to creating something that people want to have. The commercial standard forces you to perform to standard. John: You were an entrepreneur, and you brought your entrepreneurial mindset into this. You found that frustrating. David: Yes. That's a very fair characterization. John: Then what did you do? David: I did something that I'm good at. What I'm good at, my gift, is seeing gifts in other people and finding extreme talent. I had been tracking Justin Smith, who was at the time with The Week magazine, but had done International Herald Tribune and The Economist and then had gone with a British publisher and created The Week here in the United States. I'd been tracking his incursion into my space, stealing market share from National Journal and from The Atlantic with a publication, The Week, that I had never heard of. I, in an act of self sacrifice, went to the Carlyle Hotel in New York for a three hour dinner at the fireplace and spoke to Justin about coming and leading The Atlantic. Justin was thoughtful about it but had little interest because he had another offer that he was in the final stages of negotiating, so I stayed up late that night and I wrote him a memo. Martin Nisenholtz: What year was this? I'm sorry. Just so we're grounded. Justin: In the summer of 2007. The other offer you can say, because it's actually relevant to the story, was to be publisher of Business Week, which was one of the great business print brands. But go ahead. David: I did something that's thoroughly unkind, especially to do to an ambitious person. I complimented him on how well he had done with his career to that point, but then said, "I don't understand how your next chapters are worthy of your early chapters. What's happened to the ambition?" Of course that threw him into days of self doubt, and he ended up joining us. Justin: Now he finally told me what he did to me. [laughter] David: Don't act so naive. You now use the exact same question. It's such a derailing question. Justin: Because you've taught me so well. David: He's a force of nature. The financial turn took place at the Carlyle Hotel beside the fireplace, when an old man, an old world person... John: A manipulative old man. David: ...manipulated...Yes. That's exactly right. I'm only going to be with you for a few more minutes and then Justin's going to take the reins here, so why don't I answer the other part of the question, which was, when did I discover that the Internet was in a collision course with the properties that I owned? John: Then there's a third question we want to ask you before you leave, but go ahead and do that because it comes from that, which is about the future of the industry and where all this is headed. Martin: I'll actually have one, too. John: We'll move along as quickly as we can. David: I don't remember the reason, but I found myself at the USA Today headquarters for a conference that was being sponsored in their legacy funded global tower there, on the Internet and what it could mean for journalism. It was a three yellow pad kind of conference for me. It was 300 ideas and new frames that I had not thought about, almost all of them threatening. They were great if you were on the non legacy side, but if you were sitting there with a 19th century, long form magazine, none of this is comforting. I came back and I was really sobered by it. I had seen this once before, when an earlier company of mine used to work for hospitals. The Advisory Board Company worked for 2,500 hospitals. Suddenly, managed care and capitation and the Clinton health care plan all arrived. I understood none of it and had to go learn it and remake my business. This felt like an "oh my gosh, you have to remake your business" moment. This is 2006. There were roughly a dozen, two dozen, entrants into digital media. Some of them legacy enterprises trying to drive over the bridge, and some were just startups. I decided to go on a Hillary Clinton listening tour. I went to 16 different offices. I went to them and met with editors and publishers for lunch or for dinner and said, "I'm a neophyte. I know nothing about it. Tell me what you know now that you didn't know before." I don't remember all of them, but I was writing down notes before we met just now to give you some of the places. In the legacy category, I met with the editor of the New York Times website, the USA Today website, Bloomberg, Forbes Inc., Fast Company, Slate, Time, NBC. Went out to dinner with Arianna out in LA. And just took notes, and came back and wrote up the notes. I've got them here. I didn't realize this was a video interview. I don't whether these will be useful or not, but I'll give them to you. John: Oh yeah. We're posting all manner of memos, memorabilia, speeches. All that sort of thing are attached to this. We're very grateful for that kind of thing. That will be attached to this. We're looking for just that sort of resource. David: This is circa 2006, but what it is is 46 lessons that I heard when I was out on the road. I'll give them to you. So I don't take up too much time on the merits here, why don't I not go through them. There were 8 or 10 that were both significant and turned out to be right. One of the measures I took before I met Justin but just before I began that courtship was to say, "Let's jumpstart the website with some great talent." I had been recruiting Andrew Sullivan from The New Republic ever since I had entered media. Maybe a little bit after I entered media. For six years, I had been writing him every third month and fourth month, just saying, "And now how happy are you?" Once a year, I'd invite him for scones and cream over at my office with a view of the Watergate and the Potomac river and the suggestion that, "Someday all this could be yours." He'd regularly turn me down. Finally, I found a moment when he was at Time and he was ready to move. He had something like 500,000 unique visitors at the time. All of Atlantic, everything we had, had in a good month 500,000 unique visitors. He decided to join us. He and I sat in a conference room here, looking at the screen, the Atlantic website, waiting for the moment when Time switched whatever switch Time would know how to flip which would yield the traffic that recircuited from them to us. John: Which Andrew had cleverly put into his contract, wherever he worked, that he had the URL switch. David: It switched again when he left us. John: He figured that out early. He knew that he had a brand. We interviewed him recently in his world headquarters. David: He's been talking that way. John: He speaks well of you guys. David: I loved him before he switched his traffic to us, and then I'm really grateful since. They flipped the switch, and suddenly our traffic doubled. Overnight, it doubled. It was the first moment I could see that you could win this, not as a legacy competitor but on its own merits, in units of business that we never could have achieved in the legacy era. You can't grow by 500,000 subscribers [snaps fingers] like that. Right now, the last month, we had 19,900,000 unique visitors. Bitterly, 100,000 short. We should have all sat at our desks the last month, clicking onto our website to get us up to the 20 million. John: There are people who do that. David: Really? [laughs] There's no old world scheme by which a 156 year old legacy property can grow itself in readership about 18 fold in just a handful of years. That's my set of stories. Do you have another question you wanted to ask me? Martin: I just have one. I want to go back to this notion of "deeply unsatisfying" in terms of the subsidy model. One of the things that continues to come up over and over again in these interviews is that one of the models going forward is to have wealthy individuals essentially adopt journalistic institutions and finance them in some way or another. There are all different flavors of that model, from the Bloomberg flavor to Russian oligarchs. The notion is I think Michael Kinsley described it again this morning that it's actually, in the context of Chris Hughes, a pretty satisfying thing to do with your money and your time. But you don't seem to think it is. Is it personally unsatisfying, or do you just think it's not a viable way for journalism to move forward in the United States? John: Another point of view was Eric Schmidt, who said it's not a viable model because ultimately rich people either die and leave their money to someone who doesn't share their interests, or they grow bored with that particular cause and move to another. David: I think you could make an argument that rich people are a real danger to journalism, maybe not in the moment but over the longer term. To answer your question directly, Martin, I meant to say both things. Deeply unsatisfying, to me, to keep putting out something that was failing against any commercial standard. But I also don't think it's a healthy thing for the enterprise. You end up with two bad things going on. One bad thing is that it can never grow. No matter how wealthy the fund is or the person is that's going to subsidize it, there's going to be a finite amount of money in the trust. It's going to produce a finite amount of income. You end up creating an enterprise that operates at that level, and then the next year, when things cost more, it will operate at that level but a little more tightly squeezed and the next year a little more tightly squeezed. We saw that with The Atlantic. with Mr. Zuckerman. He was genuinely generous with the enterprise, but he had a limit of how much he was going to spend on it, which was about $4 million dollars in a bad year. The Christmas party had become a pot luck supper, where everybody brings his own. They had not been able to afford the high end writers. They had lost people like...Nick Lehman had moved on when the contract wasn't competitive enough. They were increasingly publishing the works of academics who didn't charge for the pieces or charged at a lower per word rate. One thing you end up with is a ceiling on the growth and a meaner and meaner culture. "Meaner" in the sense of tighter, financially. The other thing that happens is, they get whimsical and quirky. Since there's no external standard to which you have to perform, you can publish whatever you want. You can report whatever you want. You can do the indulgences of the aggregate of your talent base. There's something really good about The New York Times waking up in the morning, going, "We're not breaking the news we used to break. We're being scooped by these people. Furthermore, we're losing this talent. Everybody meet in the conference room at 8:15 because we have to figure out what we're going to do." Those kind of crisis moments which the for profit sector forces on you relentlessly. John: Well, it's not capricious. David: No. John: Can we segue from that to my final question? One of the reasons we are here to talk to you is...We look over the broad landscape. There are all kinds of definitions of journalism and news. The current dominance of social media, particularly Twitter, in terms of [inaudible 17:47] coverage of campaigns and this sort of thing. We're covering all that. We're looking at it. But the biggest question mark hangs over the category of serious journalism reported, deeply analytical, deeply thoughtful, responsible to the masses, some would say boring. Some would say it's always been that way. It was able to survive because it was part of another package that had a sports section and stock quotes and all those things. Martin: Classified advertising the most important... John: Classified advertising, all those things that work in the old, aggregated model. Now it's all fragmented. Now we find people who are in the serious news business. You're in it. When you look at it obviously, it matters to you where do you think the future lies for that category? What are the sustainable economic models? How is this going to play out? Will there be many smaller purveyors of this kind of information? Are the mass purveyors doomed? Will they survive? Look in your crystal ball. David: Abraham Lincoln, before he did the Emancipation Proclamation but after the war had started, was asked, "Are you going to free the slaves?" He said. "I'm not given to know that. I'm like the canoeist who's on a river who paddles to the next bend in the river." I have no view beyond the next bend. I'll tell you what I see between here and the next bend. Roll it out 10 years, 20 years. I don't have a theory of that case. John: Just the next bend. David: When we invaded Iraq in 2003, we had about 2,000 Western reporters who went in on that embedded with the military. The Atlantic has, if you take our website and our magazine, the ability to... You'll be able to fact check me on this, Justin. I'd bet we have the ability to publish long form, well reported pieces. I'd bet the economics support us doing somewhere between 50 and 100 of those articles a year. That's it. John: That's a lot, though. Justin: It is a new model, I would say, a new digital model of the traditional report long form that we could talk about. That's sort of the two day immersion on a story that's deeply reported but written in 48 hours. A lot of our journalists, we're playing around with that model as opposed to that journalist being responsible for four or five posts in one day. They'll take two days off, three days off, and go deep on something. It's not the trip to Iraq. It's not the two month investigation. It's an attempt to take those values and those ideas and reinvent them in the digital realm. John: The Economist proved a long time ago that one substitute for deeply reported is deeply educated and highly informed. If something happens, if you're really smart and you really know what you're talking about, you can make five phone calls and write a story that comes across as deeply reported because you didn't have to start from the beginning. You didn't just graduate from high school and have to learn about the Middle East. You know it. You went to Oxford University. You studied it. You know the 200 year history of it. You know all the treaties. You write a piece and you go. "Oh my god! The Economist does such deeply reported work." Not really. They hire really educated people who know what they're talking about. By the way, so do you. David: My reference to the Iraq War was...That's never happening again. We're never sending 2,000 people to effectively write the same story. I would think The Atlantic can chip in its 50 to 100 stories a year, even as small as we are. The New York Times can chip in its 2,000 stories a year, and so forth. I would think we will aggregate our way to enough excellence. What we're not going to have is a hundredfold the work force that you need doing the same thing. That's what's happening to regional papers. John: As much as we lose something in the translation, would you make the argument that we also gain something? Is there a new focus, a new emphasis on a certain kind of quality? David: To what you were saying, John. There's one thing that we find we have to do when we're not on one of our 50 to 100 stories where we are originating the deeply reported story. That is, we have to find some way to advance it. Either it's got to be smarter by a moment's thought, or it's got to be breaking the second day story 20 minutes earlier than the next person doing it, 1 minute before the next person does it, some kind of value added. What you see in The Atlantic website is 50 people really distraught by, "What can I do to add value to this thing. I can't just put it up. What's my contribution?" I think that is relentlessly happening all over the website, where everybody's trying to improve. I think what we're going to see is things move forward faster intellectually and in terms of unfolding narrative than they ever did under the old model. It's just unfortunate we can't own it in the same monopoly sense the good old days when Time owned news magazines and The Washington Post owned Washington. Martin: David just talked about a world where things may get a little bit leaner and a little bit faster. What I want to know from you, Justin, is...That world is also a little bit meaner in the sense that the consumer, while there is some evidence that they're willing to pay something, is a little bit less certain. The advertising, in particular, has become very problematic over the last couple of years with the advent of programmatic buying. What I'd like to know from you is what is the essential business model that you're trying to build here as you try and build a more profitable Atlantic? Justin Smith: [clears throat] Sorry, I'm losing my voice a little bit with a cold. I think the first rule that we subscribe to running this business is not to lock into a permanent view of anything. We don't have a religion around business model. We don't have ideology around business model. We obviously have adopted a business model the last couple of years, which I'll describe, which is working well for us in the moment, but we are very, very, very aware and constantly discussing the highly likely possibility this business model that's been working for us the last three years may evaporate or may not actually work going forward. In a sense, our business model is to never fall too in love with a business model and to try everything. That's at the highest level. I think our business model, as you said at the outset, John, is really around this notion that the web is fragmenting audiences and narrowcasting content to more specific niches. I think you'd think of the Atlantic audience as not a tiny niche, not a small niche, a medium sized niche. Our sense, our strategy is to focus very, very, in a very disciplined way, around that niche audience. We call them opinion leaders or influentials by producing really high quality journalism that engages them. Producing that journalism in many different forms, different platforms, and, where possible, getting them to pay for it. But where impossible or where we find the consumer payment proposition difficult, we've had a lot of success in actually monetizing it through advertising. We don't necessarily feel like the industry wide pessimism around the ad model is not felt as strongly, I think, here. Because, I would argue, because of the niche approach of our strategy. What I mean by that is, people talk about CPM depreciation in advertising and how it's this one way trip down to commodity status and programmatic buying and so on. I think our CPMs digitally have been relatively stable the last...We just did analysis this week and actually they've maybe single digit, one, two, three percent declines across three or four years. Now we've had to...That's off of a very high CPM, relative to what broader publishers get. Because we deliver a niche audience that is very valuable to a very specific type of advertiser, we are able to charge a premium. Because of the services which we package in with the advertising proposition, namely events and other marketing services that are highly customized... Martin: You've shown a willingness to go a few places that some others haven't been willing to go, in terms of sponsored content, and created a little bit of controversy for yourself. Justin: Yeah, that was not intentional, the controversy. But the Scientology thing, yes. Martin: We'll talk about that, but... [crosstalk] Justin: We can absolutely talk about that. But just to finish what I was saying, I always say that all inventory is not created equal. That there are B2B sites that deliver some very, very specialist communities that are seeing no CPM depreciation on $80, $90, $100 CPMs, digitally. And they're largely entirely digital businesses. Martin: I guess the counter argument to that, just to make it because I'd like to hear your reaction, is that, as the science gets better and better, the traditional intermediary position, the notion of an audience proxy, just dissipates because those business to business sites' audiences can be identified pretty accurately at about a tenth of the cost by Google or whomever and simply targeted across the web. Unless you think context has such high value, not twice the value but literally 10X the value, and a lot of advertisers just don't buy that, I'm not sure there isn't an inexorable improvement in the science. I'd just love to hear your reaction to that because it's not a question of value, it's really a question of how much value? Justin: My response to that is not to, on a straight banner contextual impression, sure, that's probably the case and I would concede the argument to you. But when you're talking about going to an advertiser with an idea that is customized to that advertiser, that comes from an organization that understands its brand and its audience extremely well, that idea is actually expressed across a series of live events, a series of video products, a series of print products... John: You talked about marketing services. What does that mean? Justin: That's the idea. In a sense, that's the creation of the idea. I think it's the media company as agency, which is effectively what has happened to us. Atlantic Media is an ideas based marketing agency, digital marketing agency, is another way of describing our company. That multi touch, multi platform, multifaceted, customized bespoke, ideas driven initiative that in the past would have come from Ogilvy or Mather or from an ad agency is, in fact, coming from us directly, cutting out the advertiser, going directly to the client. That's not replicable by programmatic. Martin: Cutting out the agency. Justin: Yeah. But that's not replicable by programmatic. Martin: No it's not. John: There's a customer focus that you're describing. You know your customer. You work with the customer. Martin: The argument is it's expensive and not scalable. John: When you get into this discussion, you have to... Justin: Yeah, but what is scalable in a niche business? We're not... We're looking to grow, certainly. But the scale of a niche business is "niching" the niche. It's not getting bigger. We're burrowing deeper into different micro segments of influentials to get more data and more information and more content for them. Martin: Give them an example, Justin, might be helpful for them... Justin: A great example that is working really, really well is, we discovered this common ground between this editorial tradition, journalistic heritage we had with The Atlantic about a lot of great journalism around urban matters, urban development, urban design, the future of cities. Going back 100 years, it's been a thread that, at various points, we've had some consequential journalism on that subject. It crossed maybe five years, there was this big boom in advertisers, particularly a lot of our corporate image advertisers that are the central advertising base for an influentials audience. A lot of these are big infrastructure companies, financial services companies, began getting very excited around contextual advertising environments tied to cities and to urbanization, the global trend of urbanization, which is this cross section of politics and economics and money and finance and infrastructure and environmentalism and energy. We actually created something called the Atlantic Cities, which is not the perfectly named thing given the confusion with the town in New Jersey, but in effect, it's the first digital media brand dedicated to creating journalism around this megatrend of urbanization globally done on a B2B basis, i.e. information and journalism that will help urban and designers and architects and financiers that understand... Martin: Do you have conferences about that? Justin: We do. Martin: I get that. That's the niche within the niche. John: I've got to say, just for the benefit of the audience,whoever it may be, I really love that debate. I just want to point out to Justin and the audience that that was not Martin Nisenholtz of The New York Times arguing that side. That was Martin Nisenholtz who started out at Ogilvy and Mather and arguably created the first digital agency, so that was seriously good round. Martin: It was really Martin Nisenholtz playing devil's advocate. John: With some background. Justin: But no, he's right. But another way and a flippant and maybe humorous way of looking at it is, we look at programmatic and, just entrepreneurially, we say "What can we do that programmatic can't do that adds value?" It's like your back's against the wall. They're coming at you and you're like, "OK, I've got to reinvent myself to do something that those machines, those algorithms can't do that delivers value to the advertiser." There's a lot of things, if you put your thinking cap on, your innovation cap on. John: Another way of putting it, and I've always believed this, that ultimately, the legacy media business, as long as it existed, always depended upon a certain amount of magic. There was also a certain amount of magic with a client, with a brand, for the reader. And ultimately... Now there's a different kind of magic involved with programmatic and algorithmic. Justin: Black box magic. John: That's a different kind of magic. Martin: Mel Karmazin famously said, I think, to someone at Google, "You're fucking with the magic." John: Ultimately, I believe that once you get all the magic out of it, then there's a niche for the magic to come back. Magic will always...People like magic. Justin: The other way of thinking about it is, how many CMOs are going to say, "OK, great, my whole marketing budget's just going to go toward this complex algorithm." I think it's the argument of media platforms taking over new media platforms and not actually ever taking them over. I think there's always going to be at some level a portion...The budgets going to get smaller, but you're seeing the bifurcation of budgets into programmatic, at scale, loads and loads of eyeballs and you're seeing the other budgets the more bespoke customized market. Now, it's hard to get really good numbers on these things. I saw today in Digiday that RTB is only 10 to 12 percent, 10 to 20 percent this year of total display advertising. The growth rate of RTB display advertising is 94 percent in 2013, but it's projected to drop to 33 percent in 2014. There are issues there, as well. There's a lot of unknowns, but we have our back against the wall and we're creating new ways of creating value, adding value. Martin: Can I ask you a journalism question? Justin: Sure. Martin: From the point of view of the person who runs the business and clearly has a sharp bead on what you think your current strategy is and, as you said, aren't wed to any particularly future strategy, whatever works, describe the place of the journalism in your current business model? You've got a magazine. You've got a website that is somewhat different from others in the space and has done pretty well. Explain how you view all that, and also where you think it's going? Justin: I would say that the way we view it is, because we are a media company that's targeting this niche customer that's the most educated, the most discerning, the most skeptical, the core of everything we do is the quality of the journalism that actually can get this target audience to pay attention and to engage. It really is the life blood of everything we do. It starts with... It has to be if you're going to set out to try to engage this type of consumer. I think what we pride ourselves on a little bit is that the journalism five years ago used to be really kind of a single mode, in a sense. It was the magazine monthly, The Atlantic Monthly magazine. Arguably, that journalistic model had not changed or evolved that much in the previous maybe 50 maybe 100 years. There was the front of the book and the well and the back of the book and different sections and so on. Certainly there some mini innovations on the edges, but it was largely about, really, largely about the well, the deeply reported, long from kind of journalism that The Atlantic is very famous for. I think what's exciting is the challenge we put to ourselves, which is how do you take the values of that journalism, how do you take core mission that has existed for a long period of time and then reinvent it for all these other platforms and all these new environments. You have a person like...Jim Fallow's a great example who came out of that tradition of The Atlantic. He's been here for 30, 40 years. Jim started blogging. Jim started doing web video for us. Jim started developing... And this is what a lot of...It's not unique to The Atlantic. Started doing a lot of shorter form stuff as part of his reporting for longer form things and began this relationship with the long form and the short form, the digital and the print. It was this new creation. Then you saw the journalism actually becoming dynamic between the individual voices online of the actual... One of the great initial paths that we took... [bell] Yeah? Martin: Be careful. It was shaking. Justin: One of the great initial paths we took was this "Voices" paths anchored by Andrew Sullivan and Ross Douthat and Ta-Nehisi Coates and so on, where we were literally dynamically creating this debate among these different journalists and different voices. The model where they're working online for us now, it's very similar in a way to what Andrew does. It's the journalist/DJ/curator who's doing a number of different things. He's doing the deeply reported piece, taking two or three days at doing the quick aggregation piece, doing an analysis piece and kind of mixing it up back and forth. But then also writing for the magazine. I think it's the versatility... It's transporting those values and those quality standards to all these different models. Martin: Can you talk about where your traffic comes from? What percentage now comes from social media versus search versus direct, and what's the implications of that are over time? In other words, what's growing fast and what's shrinking? Justin: Can I give you directional numbers because I don't have them off the top of my head. I think the big headline for us, obviously, is we have a pretty solid direct number maybe in the high 30s, low 40s. Even larger than that, I think, is the social number. There's the "pure social" and then, I don't know if you use this term, "dark social," which is the sending content via email or text or other forms. If you add that in with the traditional social, just the social networks, becomes the overwhelmingly largest segment of our traffic. I think the big story here is the story we've seen everywhere, which is social pole vaulting search very aggressively over the last 18 months, 24 months. We've never been very strong at search. It's always hovered between maybe 10, 15, 18 percent, but social obviously went from 0 to, without dark social, probably somewhere in the 30, 40, 50 percent, and with dark social maybe up to 60, 70, or something. Martin: Do you design for that? In other words, talk about the tactics around that and how it touches the journalism. Justin: David comes from a research background so one of the things he did, we assigned one of these PhD researchers from his past to literally document and analyze the best practices of our best social journalists. We have this deck. We probably don't want to share it publicly but we have this deck of best practices on how to create social journalism. John: They're sources of best practice? Justin: Similar idea. What's funny is we have this expression where your best journalistic decision is made when you made the job offer because in the web environment we're not able, at the speed that things are moving, to actually review someone's work as closely, to review the headline, to review the subject matter, to edit it. In a sense, the strategy of the Atlantic.com these last couple of years, first we had the voices, the bloggers, led by Andrew. The second strategy was actually to have these individual journalists who manage sections of the site who themselves are what we call native digital journalists who have such intuitive sense of the web and of how to create sharable content. They have the metabolism. They have the social network themselves which they're constantly seeding and a part of on Twitter and so on. Martin: Have you learned anything from Buzzfeed from Jonah Peretti's work? What have you taken from that? Justin: I think, for us, we've been more interested in the business learnings of Jonah Piretti's stuff than the editorial. Martin: You mean the advertising side? Justin: Yeah. How they're creating sponsored content. I think they're doing some really novel, different things. I think we are obviously looking at them, as well. One of the best practices, I think there's 30 or 40 of the high/low, the ways of treating low brow content with a high treatment and a high brow content with a low treatment is something we've perfected because it fits The Atlantic brand quite well. One of the most popular pieces on the site recently was this incredibly high brow cultural analysis of "Gangnam Style" that was all about what this actually meant, what the Korean language words meant and what the neighborhood it came from and the socioeconomics of that community. That was a classic example of us looking at a quasi low brow subject and applying an Atlantic lens to it. Photographs. Huge lessons and learnings about visual storytelling. We've got this blog called In Focus which is just so powerful and a huge driver of social traffic, which is a big, big, big, big part of our growth story the last couple of years. Alan Taylor, again, is an engineer. Not a journalist by training, an engineer that lives in Boston and, again, very much in that DJ mode. John: Wasn't there an Alan Taylor involved with Fast Company? Justin: That's a different one. Martin: What have you learned from Quartz? Justin: From Quartz? Martin: Talk a little bit about what it is and why you started it and how it's going and what you've learned from it. Justin: You want me to tell you about Quartz? Martin: Yeah. Justin: Quartz is our newest brand. The broader thought, strategically, is that we'd been very successful at transforming our traditional brands into digital brands and so the second phase of our strategy was to create pure digital brands that didn't have any traditional components and attack different traditional markets. We're very, very interested in the global business and financial market, occupied now really by the FT and The Economist. We see that as another little micro market. We don't put the FT and The Economist marketplace in the broader business marketplace. We don't put it with Forbes and Business Week. We don't even put it with Wall Street Journal and Bloomberg. It's this global English language influential niche community, again, that are spread around the world. These brands are explaining the global economy and how to navigate the global economy to this tribe of niche, high level players. The FT and The Economist are both very defensive vis a vis the web, big paywall strategies and so on. As this community traveling the world is extremely mobile and extremely digital, we saw a great opportunity to build a mobile brand around really, really high quality, free but sharable journalism, utility journalism, for this community. The novelty, of course, for us is it's the first brand we really built with a mobile first mindset. If you see the experience, we don't really have a home page because it was really designed much more like a news feed or like a Twitter feed on the smartphone. That's obviously not to this notion that people are predominantly reading units of content that are being spread independent of one another. It's the unbundled approach. Our bet is that The Economist is still saying, "Every Friday and Saturday read the bundle of content, either in print or read the bundle on the iPad," and we're saying, "Let's just blow up that bundle and put out 40 to 50 Economist quality global deciphering stories a day, 24 hours a day." By the time Friday comes around, most of that stuff in the Friday bundle that The Economist is holding onto so preciously, a lot of it will have been consumed in the grazing and the multitasking consumption and night and morning consumption that happens all week long in the unbundled Quartz version of it. John: Is this a significant investment for you? Justin: Yeah. It's our biggest new venture. We have about 20 to 25 journalists. We hired the editor of the wallstreetjournal.com, Kevin Delaney, who's a real innovator. It's ad supported but, again, because it's a very niche audience we're able to charge really, really high CPMs for it and we've also created, obviously, completely non standard ad units. No banners, no buttons. It's all large, beautiful ads that are integrated into the content flow. We have a sponsored content module which is different and new. Again, the one thing I didn't mention in all of this is the key to ad models, other than, of course, the fear of programmatic, is ad models work when cost structures are transformed. I try to think, I wrack my brain about how many new startups are launching with paywalls. It's very, very few. Then I don't wrack my brain when I think of the dozens and dozens of profitable businesses with ad models. I own a company called Breaking Media which I started on the side which publishes abovethelaw.com and fashionista.com. Above The Law is the largest site for lawyers in America. It's got two or three journalists. It's got a million or 1.2 million lawyers glued to it every day, all the top firms in America. In fact, when I go to a cocktail party and meet a partner at a law firm, if I say, "I'm founder of Above the Law," they're much more impressed than I'm president of The Atlantic. It's got 40, 45 percent margins because it's created content at a much, much lower cost. Martin: This is very important. This comes up over and over again in the context of legacy media, this notion that you've got a legacy brand here, but you're trying to transform a cost structure. Justin: You can't have a successful ad model on an old media cost structure. That's right. I quip. It's just a quip. The only people you really hear talking about paywalls are people with legacy cost structures. Martin: I was going to ask you about what lesson you brought here from the week and I was suspecting that the answer would have to do with the cost model. Justin: You're actually right. Felix Dennis has this great story. I don't know if you know Felix. He's a wonderful publisher. One of his stories, he was smoking a pack of cigarettes, he pulled me aside and he said, "Justin, one of the truths about publishing, this is an unchanging, untransformable truth. It takes five Americans for every English person to make a magazine." He pulled the British weekly celebrity magazine out at the time, this is 2004, whatever it was, Hello in England. He took the masthead. He put it next to People, he put it next to whatever the new ones that were started, I can't even remember the names. Martin: Us magazine. Justin: Us magazine and the German one. Literally, you could just go down to each department, times five, times five, times five, times five. John: We had a British subsidiary that had three magazines on the same floor. IPC. Justin: IPC, of course. John: On the other hand, in defense of legacy media I'll say People magazine earns more than five times as much as of all of IPC. Martin: Anyway, back to... Justin: You're right. That was a huge lesson from Felix was that there's just a different way of doing it and it's what entrepreneurs do. Martin: If I could, just for a moment, I'd love to hear your perspective on this. I know it was probably a mistake, but I think there was a recent controversy around a person who blogged you were trying to get them to write for nothing. Cost structures are fine but zero payment is simply not sustainable. Maybe it is. Why bias the answer. Maybe it is. Is your model to get people to write for free? Is that really the...? Justin: No, I mean absolutely not. I think that was a really frustrating experience for us. I think now that we've talked about our success so much we're getting a little bit more of the target of the media writers and so on are looking for us to misstep a bit. But in that instance, actually, we were looking to excerpt, I think, a couple of hundred words of a much, much longer piece, which we actually, in theory, based on fair use, digital aggregation standards, probably didn't even have to ask him to do it. John: The HuffPo might have just... Justin: We could have just put it on there... John: There you go. Justin: The truth is is that, and it was, the writer posted this email exchange with a young junior editor who had actually just started at our company. I think it was her third day or something. The truth is, yeah, we have tons of different models for paying for content. We have our own journalists, and by the way, the Atlantic has twice as many journalists today, paid journalists, full time, as they did five years ago. Twice as many. It's something like 35 to 70 journalists. Are a lot of those journalists younger and more digital? Of course, but that's our story, when most of the industry is going the other way. But that doesn't mean we have to be ashamed of the fact that we have paid journalists that are on staff; that we have journalists that we hire on a freelance basis, that we pay for, pay by the word or pay by the piece; and that we also have free contributors. I think it would be insane for any publisher not to experiment with free content, free contributor content. That would just be shooting yourself in the foot. There are tons of people who are great writers, who are citizen journalists, who love The Atlantic brand, who want the platform, want to get their ideas out there. We think it's a great... [crosstalk] John: I live in a fairly small town. Someone recently scored a big piece on Atlantic.com. I'm relatively certain you didn't pay her for it. It was a huge event in the city. There were parties around her being published in The Atlantic. Justin: To the critics who say, "God, The Atlantic is ruining journalism by not paying." It's really the inverse. I think we we're trying to save journalism here by experimenting with lots of different models. Trying like hell to throw as much spaghetti against the wall to figure out what sticks and what works. It's working for us. We're hiring more journalists in the process and producing more journalism than we ever had in our 155 year old history. David likes to say if Emerson and Wendell Holmes were sitting around the table, they'd be pretty happy about what's going on here these days. They'd say, "Damn, God, we're producing 175 stories a day." The quality is in a certain very high bandwidth. It's experimental. I think they'd be proud. ...

TRANSCRIPT: Deborah: I was always a voracious reader and I loved in particular the in particular magazines. When I was in college I was buddies with one of the librarians. Like me, she was from a working-class family. I think that's how we became friends. I was working at the library and got to know her and really liked her. I was at her apartment whining about my future and she said "You can do something to get a job at a magazine or you can just talk about it and then end up working at the Postal Service like my sister does." Deborah: I was an avid reader of "Mother Jones Magazine" and they alluded to having an intern. I applied for an internship it was for the summer before my senior year. Actually, I did graduate a little bit early January the following year. It would have been the summer of 1978. I became an intern at Mother Jones magazine and they offered me in the following October, they offered me the job of fact checker which started in January because I was graduating early. That's how I got into journalism. Actually, I got into journalism from a perspective that made me utterly cynical and suspicious of writers and writing. I did things like, this was pre-personal computer error. I would do things like I have to cut out chunks of charts that a writer have submitted and reorder it. I was so bitter because some writer won an award for some article where the whole factual boxing was completely wrong. I have to reorder it. I was always like… writers. I didn't come from a reporting background. I have like a single summer class in journalism. I was dealing with people who did not had a rigorous education and what it meant to be a solid reporter. I do think it really served me well in the sense of, I'm still fairly gullible. I can give you examples of that later. I got into that way. I decided very wrongly to become a freelancer. For me, my freelance after three and a half years at Mother Jones and helping actually organize a union to represent the workers there. I was making so much money there. They were paying me a thousand dollars a month. It's the more money that I could've ever imagined. It was all hippie, right? It was like, there was three levels of payment and no one made more than three times of what I made. It was like boom times. I was super excited living alone for my first time. Anyway, I decided to become a freelancer because after three and a half years, I was bored. As being a fact checker, I've been told that because the previous fact checker has been promoted to managing editor. It didn't work out. Fact checkers would never ever get promoted, which I thought that was just wonderful. Anyway, my career as a freelancer lasted about a year. It consisted of me spending money I didn’t have to to go to North Beach, drink lattes, buy a fresh copy of the new "New York Times" and read it. That was pretty much it. I wrote maybe four stories the whole year. My husband came to join me because he was Swedish and we're apart for a while. He joined me and we got a house mate. She was a former intern for Mother Jones, whom I adored. She was working at InfoWorld. She said, "They need a copy editor." I'm like, I've taken a copy editing class. I was like how did you know? And she said Stewart Alsop — who you know went on to become a well-known venture capitalist — said “I wasn’t very good so I’m pretty sure they’d be happy to have you.” I went there and took a test. They hired me. InfoWorld was great, because after I've been at this non- profit place, where I really supported the journalism that was being done, but the internal politics were weird. I was working my ass, but I would never get promoted. In InfoWorld, I went from being on the copy desk to being a Chief Copy Editor really quickly, to being a News Editor, to being Assistant Managing Editor, to whatever the hell I was when I left. They rewarded you, if you did well. I really didn't care thatthey were money-grabbing-what-have-you, because if I worked well, they'd give me a promotion and give me more responsibility. I remember saying...At first, I was fighting (against) becoming) the Copy Desk Chief. I was like, "I can't spell." They're like, "It doesn't matter. Here, here's a dictionary. You have to understand mostly it's about making a decision and sticking to it. You'll be fine." It was exciting. Did John (Markoff) tell you about the day he resigned from InfoWorld? John: No, he did not. Can you tell us? Deborah: OK. This is a highly entertaining story given that John Markoff and Stewart Alsop both went on in different ways to become Silicon Valley famous people. I knew John almost not at all because I had fact checked an article he had written from other jobs. I started and said hi to him. I hadn't even been there a month. We were at this big staff meeting. Stewart was also leading it, of course, because he was the editor. In a long conference table, all the reporters and everybody were around it. John Markoff and Michael Swaine, who went on to be at Doctor Dobbs, and is a wonderful person, they walked in and they slide their letters of resignation all the way down the conference table towards Stewart, the two of them, and announced that they're leaving. Deborah: Yeah, yeah, yeah. That was festive. Really, I didn't get to know John until much later, when he was based up with The New York Times. I don't know him well, but I worked with Steven Levy as his editor at Macworld. I sort of knew John through Steven. I was at InfoWorld probably for another three and a half years. This was this short-lived weekly called, badly, Macintosh Today, which abruptly got the plug pulled on it. John: Who owned that at that time? Deborah: It was an IDG publication. It was in the same building as Macworld. David Bunnell had started PC World at his kitchen table with his wife. David's a delightful person, but there's a way in which lucky amateurs think that they're professionals, only they're not. Our wonderful editor-in-chief, Maggie Cannon said, "I am going on my long-awaited trip to France. I'm not going if anything's going to happen." They're like, "No, no, nothing's going..." She left, and then the word came down they were closing the magazine. I was the managing editor so I had to tell everybody. David chose not to do that. He chose to give that job to me. I was unemployed for all of three weeks and I became the head of departments. I edited columns and had a couple of people who reported to me. Then worked with Jerry Burrell, who was editor-in-chief, and then worked with Adrian Mello and had columnists like Steven who was absolutely our best columnist. He wrote the first thing ever about the World Wide Web, back when it was only Mozilla. Steven is so professional and just was a delight to work with as an editor in every way. I did that, and then, after a while I really wanted to become a freelancer, so I did after I'd been there for six and a half years. I had a column while I was at Macworld. It was called "Conspicuous Consumer," where I shamed Apple because they had a crappy warranty. It was like 90 days or something. Eventually, they changed it. I worked for various publications, and then Steven said, "Hey, do you want to help me at Newsweek a little bit?" I was like, "Yeah, totally." I started doing some reporting and actually writing for Newsweek. I had a brief gig with Fortune.com writing a "Valley Talk" column, which was the best gig ever because I could write about anything I wanted to, as long as it had something to do with Silicon Valley. It was super fun. I did some stuff for Circuits for The New York Times. The best part about that was the one about telephone etiquette because I did that thing about voicemail versus blah, blah, blah, and I got to call up Miss Manners and beg her for an interview, and talk to her about that. That was the highlight of my New York Times experience because I was such a big Judith Martin fan. I wrote a feature for "Reader's Digest" and a few other things. Basically, it's mostly been tech stuff. John: It was opportunistic. As you describe it, it wasn't some innate fascination. You didn't code. You didn't do anything like that. It was opportunistic. There were jobs there. Deborah: I was totally opportunistic because we're on the West Cost. There is nothing being published here. Papers? Newspapers, and tech, that was it. When Steven wisely left "Macworld" for Newsweek, and I had an opportunity to follow him, I was very clear. It as super clear to me that here's a window of opportunity. Pretty soon technology is going to be every other thing covered in the newspaper. It's not going to take special expertise to cover technology because technology is going to be baked into everything." Right now, for this split second, I have expertise that people think is worth something. Shortly after this it's going to be automatically assumed that everyone who does any sort of writing knows about this stuff already. That's how I saw it. I saw, "OK, here's this opportunity. Walk through this door now because it's going to slam shut pretty quickly." John: That's fascinating because if you think back, the place you started at Macworld and the others, there was a small cadre of journalists covering it. Now it's like an army of people covering it. That's stunning. Did you ever expect that sort of army? It's getting to be more people covering tech in some newspapers than covering sports. Deborah: I don't think I foresaw that. I am not good at the crystal ball business, but I did understand that tech was going to be baked into everything. I would say that there are more people covering tech than ever but, also, they're freaking interchangeable. It's not like you have to search high and low for someone who can cover this esoteric area, unless you're talking about esoteric things, and those exist. In general, the Internet, when I was still working at Macworld, it wasn't really a thing yet. It was just starting to be a thing. When I started working at "Macintosh Today" I remember going home to my husband one day and saying, "Honey, if we just buy a Mac SE I promise I will never want another computer the rest of my life," and I've had about 47 since then. I was so naïve. I was really naïve. I think one of the things that I did not understand actually until I started working at Newsweek, because I was doing trade press. One of the things about the trade press, the trade press often has its guts knocked for there's no separation of church and state. That's probably true now given that Time agazine just announced that there's no longer any separation of church and state. No longer any separation between business and editorial because it's all in service of blah, blah, bullshit. At MacWorld because it was owned by Pat McGovern and he was a quirky guy who had made money in the tech industry and who was quite ethical. I wrote this monthly column and regularly pissed off people in addition to doing my editorial stuff. He had this thing where every 10 years he would take people out to a swanky dinner, a variety of employees. I showed up there early which was a nightmare because I did not know how to talk to him at all. Our small talk was about the trip he'd recently taken to Antarctica with his wife. Not a great meeting of the minds. Nevertheless, he was a sweet guy. While I'm waiting he says, "You know, Steve Case, who was then the founder and head of America Online AOL, called to complain about your column one time." And I'm like, "He did?" And he's like, "Yes." I said, "Why and what did you tell him?" He said, "He was unhappy with the way that you were characterizing AOL." I told him that we did not interfere with our editorial staff. That doesn't happen nearly often enough but it happened there. That made me really happy to work there. I was protected because I was trade press. Vendors were coming in, Apple was coming in and they were always showing their products all the time. It was really clear what our job was. Our job was to review products and help people use them. I go to Newsweek, Newsweek is great. Newsweek treats me as a professional and I'm not actually obligated to be objective. In this way. It wasn't a political thing. I wrote a piece about software for babies. That's a stupid idea. Babies have not evolved to use software. It's a dumb idea on the face of it. I set out to cover this for a special family tech issue because they did special tech issues. Totally pissed off the company because I talked to their hired psychologist for two hours and chose to use the quote in which she conceded that in an ideal world babies would probably not use software. This is not verbatim. The company called and they complained and she was upset and I stand by the story. Newsweek was totally great about that. One of the things that I loved about Newsweek and about other places, you're old enough, you remember the PBS News Hour when it used to be McNeil/Lehrer report? John: Yes, it was. Deborah: OK. One of the things that I've always hated about the mainstream media is this wrongheaded insistence that pretending to be, because I don't think anyone actually is, pretending to be objective is a service to the readers. If they had had the McNeil-Lehrer Report during World War II, you just know that Jim and whatever-his-name-is, they'd be like, "So, Herr Hitler, you hear the Jews are claiming that blah, blah, blah. What's your response?" Now, how is that helpful? Anyway. I think I've been less horrified by the demise of the mainstream media due to Internet influence than a lot of journalists have been, because I bumped up with a lot of journalists who were just as arrogant and just as much of a pain in the ass and just as much thinking that they were masters of the universe as all the annoying entrepreneurs I used to have to deal with when I was working at Newsweek. John: Was that true back then? Because some people say to me, "In the '80s, covering tech was more camaraderie than competition." Deborah: I think that there was. It's not that I felt competitive toward other journalists. Remember, I wasn't working where...I'm so lucky. I was never in a working environment where I was working for scoops. I was never, ever, ever in that position. There were fewer journalists. I think there was more camaraderie. I know much later I helped out a British Financial Times reporter by giving her a tape of an interview that she didn't have and then she stiffed me. She refused to return it. She just didn't return it when I was totally saving her ass. Normally I didn't have that happen to me. Normally it wasn't an issue. John: Good. Deborah: That was later. That was when Gil (Amelio) was at Apple, just before Steve came back. John: Yeah, after. It's fascinating, because if you ask the journalists themselves, they don't feel too arrogant. If you ask anyone on any copy desk anywhere dealing with reporters, there's a hierarchy. Deborah: Oh, yeah. There's totally a hierarchy. There's a hierarchy everywhere. Ultimately, sorry to break the news to you, it's high school. It's high school, sadly. I think that there are a lot of really smart, really good reporters out there. The whole tragedy about...First off, I should say I love the Internet. I love the development of all of this information that's now available to us. I was one of the earliest mainstream journalists to have a blog. It was a PR and media criticism blog called "Buzz" that was hosted by Dave Winer. I don't know if you know Dave Winer. John: I've read of him. I do not know him. Deborah: Dave Winer is this guy who, he's a famous software developer in the Valley who purports to be the very first blogger. There is some disagreement about this. I do not have a position. But Dave was very generous. I was reading his blog. I was reading a blog by a guy named Doc Searls, because he and several co-authors had written this wonderful book called "Cluetrain, Beyond Business as Usual," which I thought was wonderful. I was working for a magazine called Upside which David Bunnell happened to be running at that time, which no longer exists. It was in the days where people had money for ads. It was fat and happy with tech ads. I went to Adrian, with whom I'd worked in Macworld, and said, "Let's start doing book excerpts, because it's a cheap way of filling pages." He's like, "Sure." That's how I got to know Doc. Anyway. Their blogs were great. I was so excited about blogs, so I started one. The freedom as a writer to basically write what you want, and then to get the immediate feedback from people, the comments and stuff, was incredible. It felt like this little community. That really felt like a community. I wrote the first article in Newsweek about blogging. John: Yeah, you did. Deborah: There was some criticism about it in the community, in that blogging community. Somebody wrote, "When Newsweek covers your trend, your trend is dead." I wrote the guy, saying, "I'm sorry that I didn't cover every blah, blah, blah." He was so super embarrassed, because you know how people will say anything if they don't actually think they're going to be called on it? I didn't mind about the criticism that wasn't a problem. But there were, even at that time, people, journalists and editors, who were getting all miffy, like, "This is our territory." They could sense a pissing contest coming on and they really wanted to win it. John: Right. Because, let's remember, you grew up, I grew up, in an era that, you write something, and once in a while a snail mail will get through the mail room and land on your desk. Deborah: Right. John: Going from that position of quote-unquote "authority" into feeling that there's a scrum was jarring at best. Deborah: It was, because we were all protected and fortified. We were just as institutional as, like, the industries we were covering or the government or whomever. We had this comfy little spot and all was right with the world because we knew our place in it. Suddenly, there are these upstarts who are calling us out, who can write their own stuff instead, who can complain instantly and publicly when we get it wrong. Yeah, early on it was really clear when I had my blog that the establishment, as it were, was getting all antsy about this. I had no idea that Craigslist was going to destroy advertising for newspapers. I had no idea...Dave Winer told me this thing. I refused to believe it. I refused to believe it because I could not imagine the world. This is how bad I am. We were at some event, and he said,"Deborah, some day you're going to do a search in 'The New York Times,' and you're going to get blog results as well as results from The New York Times itself." One day, several years later, I'm not making this up, one of Dave Winer's blog postings came up as part of the Google search. But it was on TheNewYorkTimes.com. He totally won that one. But I didn't foresee it, and I didn't foresee it because to me, The New York Times, the paper of record, although I still think "The Wall Street Journal" is better, but that's beside, meant that it was always going to be doing its job mediating my experience as a reader, and the thing is, vetting it, if you will. You don't necessarily agree with the vetting process, but it's been vetted. If Dave Winer's blog posting or anybody else's blog posting comes up on nytimes.com, that has not been vetted. That has not gotten The New York Times stamp of approval editorially, and yet it's on that page. To me, that was inconceivable, that would never happen, because that was the whole point. The whole point of The New York Times was that, hate them or love them, the editors were there doing their job. John: What else took you by surprise? You were not naive. You were covering this industry. Did you see anything? Deborah: It took me by surprise that people were so insular. It shouldn't be, but I went to things like...I remember this tedious dinner party I had to go to for some event. The guy sitting next to me was some successful serial entrepreneur who was telling me in all seriousness about how Silicon Valley at this time, and this time must have been, it was before the tech bust. It must have been in 2000 or late '90s. In all seriousness, he explained to me how Silicon Valley was like the modern equivalent of Florence. He believed that. I do not believe that, but he believed that. Although, apart from the Computer Science Museum, I do not see a lot of art and culture resulting from the riches and whatever. I have to say that I think I was naive. I had this idea that people would be a little more self aware. Because I was always being pitched by people who were completely convinced that their latest widget deserved the front page of Newsweek, which is common. In fact, I even had this exchange. The only time I met Steve Jobs, I was doing reporting. Steven was doing the story about the introduction of the iMac. That was the very first one, the old CRTs with all the bright colors. I was there talking to some product manager, and Steve shows up. I'd never met him before, and it's exactly like all the stories about him. He had this total bubble, this bubble of charisma. I'd never been with anyone before who could take any argument and turn it around. He was like, "This should be on the cover." I was like, "I'm really sorry, but it appears that there may be," and I'm not making this up, "...a potential cure for cancer which appears to be going on the cover instead of this." He was like, "I can see that." I didn't understand, actually, that the very things that I embraced, blogging and online communication and stuff, was basically going to destroy the industry that employed me, and that pretty soon I was going to feel like a mid-level manager at the buggy whip factory several years into the introduction of cars. I just didn't know that there wasn't going to be anybody who would value my services anymore. John: You're not alone among those who didn't see it coming. Were we covering too close? Not far enough away? We didn't see the whole picture? Is it one of perspective? We've all lived through this, and yet there has to be...Why didn't we see it? Deborah: I have several theories about this. One is, humans have a built-in status quo bias. It's one of the reasons why people tend to vote against their own interests when it comes to things like health care, if it's change, because what they know... John: Is what they have. Deborah: Is what they have now, and so a change...That's part of it. We had a status quo bias, so we believed...There's science about this. But I also think we were too close. There's a way in which once you're in a role and you know the role...Because there are many, many examples in many different industries where exactly the same thing happened. This has not only happened to journalism. It's going on right now in the new company I'm in. It's gone on in lots of areas over all of history. But if you're right in the middle of it...It's the people on the outside who can see it. John: But yet, journalism tries to predict, tries to offer, tries to listen to us because we can predict what's coming. We can forecast. We will let you know. We can see around, or pretend you can see around that. Deborah: It does? John: Some parts of it do. You disagree with that. Deborah: I disagree with that and I will tell you that one of the most troubling things for me. Now we have click-bait. We have all these websites with click-bait. I'll tell you that the people who started...the late lamented Al, whatever his name was, and whoever started "People." I do not believe in hell, those people are going to hell. Here's why they're going to hell, because we've had a race to the bottom because journalism needs money and because tech people need, you know the myth, "Information wants to be free." My time isn't free. My apartment isn't free. I have to pay for everything, so if I'm going to be a reporter or an editor, I actually need a sustainable way of doing that. There's this Silicon Valley ideal of somehow information wants to be free and we'll all use bloggers and whomever. Meanwhile, there's this problem that people have to make money. Human beings are wired to create novelty and all sorts of fake, salacious stuff, so the things in an ideal world that I think people need to know, they're things that we want to know. No problem finding out that stuff. But the things that we need to know in order to function well both as human beings and as a society, those are actually things that journalism and publishing can provide, but they can't provide it for free. Right now, nobody wants to pay for it. In the old days, that was OK, because we had advertisers and they covered the costs of both the stuff people wanted to read and the stuff people should read, so you got your vitamin pill. Sometimes that made a difference. There's been tons of investigative journalism and other forms of...like Jane Brody for example, excellent service journalism, but we got to the point where we don't want to pay for it. We got used to things being for free, and we end up in a click- baity world where now even what used to be good websites have devolved into collections of click-baity, short, sweet, listen stuff. What I'm saying is nothing new. I'm using the longest possible way to say I'm not convinced that...I haven't gone back to Ben Franklin, I'm not a historian when it comes to journalism, but I've never liked talking heads and pundits. One of the things that has so distressed me about what has happened is that people do not understand the difference between actual journalism and punditry. They haven't understood it for years. The confusion has only gotten worse, so when you talk about journalism can predict the future,mmmm maybe. There were certainly people, journalists, who predicted the housing bust, for example, long before it happened. I knew it was coming. I sold my house here because I was listening to the journalists and a bunch of other people weren't, so journalism can provide services. It can be good for society. I have great faith that it will continue to provide that service, but the shape it's going to take, and how it's going to happen, and how we can do it in a sustainable way, I have no idea. I didn't see the bus coming and I don't know what the salvation will be, but people have been doing this stuff for a really long time. It's not going to stop. John: Do you think readers will become more discerning or smarter? Deborah: I think readers are discerning and smart. I actually think the people who aren't discerning and aren't smart are the outliers. John: Who are the outliers? Who do you mean by that? Deborah: I mean hurried, uneducated people. It's like the people who are busy buying the 58 ounce Big Gulp and the candy bar for lunch. There are people who do that. There aren't as many of them as we like to think. I think there's a way in which journalists, like politicians, have often operated in a bubble. My disappointments about journalism is that, like many places, there aren't a lot of people. It hasn't been as diverse as it should, not as many people of color, not as many people who grew up working-class or poor, so I think it's been a fairly elitist institution in some ways. In that way, it hasn't always served its readers and has tended to look at them as other, like not discerning and not whatever. I'm not so sure that's true. It could be true. John: Do you think that bubble you describe came to exist around Silicon Valley and tech as well, just the accumulation of wealth from there, the accumulation of influence? Deborah: In terms of reporting, no. I don't think so. I was able to do the work I did because I was out here, because when I went to "Newsweek," virtually everybody there was from an Ivy League university. I'm not from an Ivy League university. I could get in this way, through tech. I doubt very much I would have been able at that time to come in through the front door. No, I think in terms of tech coverage, it was very egalitarian for the most part. John: Were there any inflection points that you saw in the past 25 years, where things changed, whether you're talking about the Mac, whether you're talking about AOL buying Time-Warner, whether you're talking about the Internet. Someone even mentioned 9/11 as being a inflection point, because suddenly everyone started looking at their desktop for news. Deborah: I'm like this small-scale thinker and not a big-scale thinker. The inflection point, I think about the development of publications like "Fast Company" and "The Industry Standard." The reason why I think of those as inflection points is because that's when we stopped being journalists and started being cheerleaders. I had this conversation once. Katie Hafner... John: Yes, I know Katie. Deborah: Katie was teaching a graduate journalism class at Cal and she had...my gosh, I can't remember him by his name. John... John: Koten? Deborah: No, different John. He was one of the founders of The Industry Standard and The Industry Standard had just folded or something. I didn't realize who he was. {John Battelle} I didn't know who he was and I had written a piece for The Industry Standard. I made some smart-ass crack about The Industry Standard and all the graduate students were like, "Ooh," and then I realized who it is. Katie's like, "If you only had a single piece of advice for journalism students, what would it be?" I said, "It would be people lie to you and you need to remember that." John was all, "But I don't think that's true." I'm, "John, I wrote a feature for your publication and it was about the development of smart chips on cards and the Visa person I quoted claimed that they did X for Y reason." I was on deadline. I didn't find out until later that Visa had actually testified before Congress that in fact, they had done it due to competitive pressures and it was actually blah, blah, blah. The inflection point, technology companies and corporations were filling those pages with ads. Those magazines became cheerleaders. "InfoWorld," a dull, boring trade magazine, it wasn't a cheerleader, though, for any of the companies. What was The Industry Standard, what is Fast Company? They're not like "Business Week," although Business Week may have become more of a cheerleading publication, but they're all about the cult of entrepreneurial energy, Silicon Valley, the value of you as a human being, being based on your contributions in terms of your groovy, fabulous, trendy startup whatever. It's bullshit mostly. There's no place in there where you find real reporting about the fact that technology isn't clean, it's polluting Silicon Valley. About the workers and how they suffer, about the fact that video game people had to file a lawsuit, because they're basically being forced to work 70 hours a week or something. For me, the inflection point was when the purported journalists stopped being journalists and started being cheerleaders. It may have happened earlier, but every time I read Fast Company, I needed to go take a shower afterward. Deborah: I have to say, does that mean I was too good to write for them. I know I'm sure I would have written for them if they had called me and given me a gig. I just want to say when I was still in college and I had an internship with the "Lodi Life and Times," a weekly newspaper, and got sent off by the managing editor to cover spring fashion and wrote copy about the local department store skirting the issue with frilly spring dresses, et cetera, it's not that different, If Fast Company had called me up and said, "Do an article for us," I probably would have said yes. It's not that I'm so much better, but I do feel like there were lots of things we didn't see, partly because we'd stopped being reporters and really had become cheerleaders, not in all cases, but in many cases. John: Someone said to me they think it was the attractions of wealth. Deborah: Oh, my God, yes! I remember, all of us were so jealous. A bunch of us at "Macworld" were totally jealous because we discovered that somebody who'd been a copy editor for Google or for some different company had become a millionaire, and it was like, "How do reporters become millionaires?" They don't. "How do copy editors become millionaires?" They don't. The wealth is very seductive, although nobody was being paid off as far as I know, but Mike Wallace played tennis with the White House people, right? John: Others have said, they think that technology reporting has become in a way like political reporting in that both are suffering from being seen as "access central." You're covering people of influence, so I want to rub up against them and you lost that distance. Deborah: I think that's absolutely true. Stone...what was his name? John: I.F.? Deborah: I.F. Stone, right. It's absolutely about access, Steven had access to Steve Jobs, Bill Gates, and all these people. One of the difficulties for journalists, including in tech, is a lot of times we feel forced to take someone's word for something. That's not actually good enough, but we do it. Because we want to get the word first, we cozy up with people, often the heads of the company if we possibly can and that's how they court favor with us. The fact is, they don't need to do that any more. Now it's super easy for all these companies to speak directly to their customers and potential customers and they don't need to be nice to journalists any more. I'm now a marketing director busy trying to route around journalists, because a lot of times they're inconvenient. John: That's one of the realities of social networking. I can disintermediate journalists. I can bypass them. So that's that. Deborah: Inflection points. Obviously the development of the Macintosh was a big deal. Obviously, the development of the Internet was a big deal. Craigslist, in retrospect, was a huge deal. We just didn't know it yet. In fact, Craig Newmark went to one of my conferences. I caught him before he was really way famous, and that was 2001 or something. I just didn't see it coming, but again, the cheerleading instead of journalism, which I think continues to this day, and always there's been some of that. I think in terms of the business press, there was this mania going on. John: It was always thus, but it wasn't everything and it became much more than it ever was. Deborah: Absolutely, at least that's what I think. I understand that people want to follow the trends, but seriously, Fast Company and The Industry Standard, it was cheering you on, worshipping all things tech, and Silicon Valley related. John: Do you think we ever covered the anthropology of this? I mean anthropology, in a way, how it all...what it was going to do to us. Deborah: I don't think I'm in a position to do that. I think that's an outside job. I think we were too close and I personally feel like I am still too close. I did get an inkling. I think I mentioned to you that in 2000, I was interviewing for Newsweek. I was interviewing somebody for a research firm, a first story, I don't remember the story, but the guy let me know very nicely that Newsweek would be dead by 2002. I was like, "OK," and he explained to me how the advertising was going to drop. He was off by about 10 years, but he very clearly, outsider, talked about the shift in terms of advertising revenues. It's interesting "US News and World Report" survived because they have their specialty on their Top 10 List and this other stuff, and Newsweek did die. I reported back to the editors and we all had a merry laugh about that. We could laugh, because it didn't die in 2002 or in 2003 or in 2004, but it died. There were people who saw it coming, but not the people in the industry because you don't want to believe. We're wired to not want to believe bad news. Good luck, there may well have been people who saw it coming, but I wasn't one of them. John: What about journalism? Are you optimistic about its future? Are you jaded? Deborah: I'm jaded and optimistic. I'm jaded because as previously expressed people lie and people lie all the time and they lie in all different industries, in all different areas, because it serves them. They do that if you are trying to do your job as a journalist because they're trying to spin you, or as this happened to me, basically lie outright. That's one of the reasons why it was so easy to become cheerleaders, because if you're a cheerleader, you don't piss off anyone. You can pat them on the back, you can encourage them. You don't have to ask any hard questions. In fact, for Newsweek, I was at the press conference when Gil Emilio, his first press conference, and the economy columnist, I can't remember his name, sent me there, so I asked him one question. The one question was "How do you justify given Apple's current stock price the enormous salary that you're commanding?" The PR person, the head of communications who was standing next to him, turned all kinds of purple and attempted to go, "No!" He's like, "It's OK. I can take this." Then he talked about how it was like the market blah, blah, blah. I wasn't there to be mean to him but I had a job to do. I didn't care. As far as I was concerned, he didn't need to justify his salary. Apple wanted to pay it, fine, but it was a hard journalistic question. The tech press, we don't like to ask hard questions and they don't want us to ask hard questions, so usually we don't. I was an exception with some consumer columns I did, but usually, that's how it went, so I'm cynical. John: Yet, you're optimistic. Deborah: I'm cynical because of the lying problem. I'm optimistic because I think there are an incredible number of stories well worth telling and investigative journalism or communication or whatever we want to call it that can find an audience. But I do believe that there's no longer...The days of Life magazine have been over for a really long time. Broadcast journalism is more or less dead. We are being sliced and diced, that's good in some ways and it's bad in some ways. But, for me, what it means is, if I decide that I want to be some sort of writer or some sort of journalist, I have every confidence that I will find an audience and that I do not have to own a printing press, in order to find that audience. I don't have to be Ben Franklin with my little printing press. I am optimistic, because there is all kinds of journalism going on now, but, it's like small J journalism, and also, local news sites that are becoming more important to people, because, people are local and want to know what's happening right here. I don't know what's going to happen but I think there is this incredible mechanism for reaching out to human beings in the Internet. I have never known, because I have never been on the official journalist credential train. I didn't go to J-school, I didn't go to graduate school, I am just toiling away, down here in the trenches. What has always been most important to me is being very accurate and objective. To be fair and accurate. I think, people can do that, and many more people can do that now. And, you don't have to fight your way through, you can do that if you are a person of color, you can do that if you are working class or poor, you can do that if you are in a different country? You have potentially access to an enormous audience, so, am I optimistic about corporate journalism? I hope, Time dies, it ought to die. If it has a publisher now, that's saying, "There is no longer a law between editorial and advertising." He doesn't know what journalism is, so, what they are doing now, isn't journalism anymore. That's fine. You can make that decision, but don't call it journalism, it's not. Anyway, not optimistic about Time, optimistic about journalism. John: Thank you very much. Deborah: Thank you. Deborah: We forgot to ask about who is going to pay for it. Deborah: I don't know. John: Who's going to pay for it? Deborah: Yeah. Well, I mean I think it's a question worth asking. Who's going to pay for it? I do think that people have got to learn to pay. I think the future of journalism is once again subscription -based journalism. People pay for it up front. John: Thus far, that hasn't had great legs in this country. Deborah: It hasn't had great legs in this country but Sweden still has that driving newspaper industry, tons and tons and tons. I think people are paying 100 fucking dollars a month for cable plus this plus that plus that. I think at some point they're going to go, you know, 25 bucks a month for really decent news that serves me in this area, yeah, I'll pay that. Maybe not a lot of people but enough people. John: All right. Knock on wood. Deborah: Yeah. John: Thank you Deb. Thank you, good chat. ...

TRANSCRIPT: John: Here in Boston, with Hiawatha Bray of the Boston Globe and he stopped here at JFK School. Hiawatha, why don't you talk to me about the arc of your career? Hiawatha: It was a strange stagger through all kinds of weird life experiences -- growing up on the Southside of Chicago, going to college at Knox College, in Galesburg, Illinois, where I majored in economics. Not knowing what I wanted to do and actually working for years at the post office, just trying to find myself, which is a pretty weird place to do it. But then I went back to school, went to a christian college in Wheaton, Illinois, called Wheaton College. Got a degree in communication. By this time I think, "I ought to become a journalist." I got a job at the Wheaton, Illinois Daily Journal and I actually won some Associated Press awards and some other stuff like that. I was doing pretty well. Then, I got hired by the Lexington, Kentucky Herald-Leader. As I told you.... No, I didn't tell you before. Lexington, Kentucky is a really nice town which I've always really liked. Then, for some strange reason, I gave it up to go to the Detroit Free Press, where I spent about three years. Detroit, what can I say? It's actually a fascinating place to work. A rather depressing place to live. Then, there was the newspaper strike and I wasn't going to cross the picket line. Luckily, I was able to get a job at the Boston Globe. I've been there ever since. I'm going on 20 years at The Boston Globe. I started writing about technology in Detroit, because of the times. It was the moment when everything started to change. John: What was it? About '91, '92? What was that year? Hiawatha: What really happens is '94. John: '94, all right. Hiawatha: A couple of things happen in 1994. First, you have the government deciding, basically, to privatize the Internet. They say, "We're going to allow private companies to take over the operation of the nascent Internet backbone." It starts to spread and expand from, one of the key centers of it, the University of Michigan. You have the part of the backbone was run by the University of Michigan. They started opening up to the public and people started sampling it and experimenting with it using all of these strange pieces of software with names like Gopher and Archie and Jughead and all of that stuff. But around the same time, of course, back in my native state of Illinois and in Champaign-Urbana, you have a bunch of guys -- most famous of them of course being Marc Andreessen -- who come up with Mosaic. That's the moment everything goes absolutely nuts. Now, you've already got people online at this time. Everybody sort of forgets. I was already using a service called CompuServe. A lot of other people were using America Online. Remember when you would get all of those discs in the mail? It was crazy. We've almost forgotten about them, because what they did was they ran private computer networks that you reach by dialing in on a telephone line. But they already had several million people each using them, so this was already starting to catch on. But then comes the public Internet and that just obviously, if I can use the old cliché, it changes everything, of course. CompuServe is long dead. AOL is a shadow of its former self, in a completely different mode of operation. But I was already online. I had actually been online since really the 1980s, using the dial-up bulletin board services, which were just absolutely fascinating things. You could get a feel for the way things were heading when you started messing around with those. But when the Internet comes along, and when Mosaic comes along, and that really becomes exciting because Mosaic is a technology that begins to make the Internet more accessible and more attractive to ordinary people. It looks ridiculous now. If you can remember what a web page used to look like. Of course, we skipped that which was happening off in Switzerland, when Tim Berners-Lee was inventing the World Wide Web. If you remember what the early web pages looked like they were just ridiculous. They were totally a joke. But this did allow you to do things like post pictures and eventually you could start putting up audio files, and little by little it starts becoming more and more capable. The minute I saw this, I said, "We have to start writing about this. This is going to be exciting." It turned out I was right. The whole world is just absolutely going crazy here. You have a lot of stuff that, for example, explains the subsequent, not fall, but decline of Microsoft really begins at this moment. Because this is where Microsoft is completely wrong-footed, as the British like to say, by what happens here. I was at Microsoft headquarters back in the '90s, and Bill Gates was talking to a bunch of us about this, that and the other thing. We were in a conference room. I just looked around and noticed something that struck me, even then. There were no Ethernet ports. This is well before WiFi, even, but there were no Ethernet ports at any of the seats in the conference room. I realized, and then I thought, You know what? The whole reason, for example, that a company like Novell for a time became a huge company in computing was because they made networking software that let you network Microsoft PCs, because they didn't have networking software built into the operating system for DOS or for Windows. The whole Microsoft worldview at that time had no real connection with the essential importance of networking computers together. They simply had failed utterly to realize that. I feel stupid because I didn't fully realize. I should have been a billionaire, because I should have seen this coming. The first time I dialed onto a bulletin board, what went through my head was...all of these people were talking about you should buy a personal computer so you can use it as, you can do typing on it or you can store your home recipes on it. The minute I logged onto a bulletin board, a thought went into my head. This is why people are going to buy computers. Sooner or later, people are going to realize that you can use them to communicate with each other all over the world, and this is why people are ultimately all going to want computers. I should have started a business, but I didn't think of it. But Microsoft apparently didn't fully understand that, either. It isn't until, not really until Windows 95 or 98 where they finally put software. It was 95, because they had earlier versions of Windows like Windows 3.1 and all of that, and there was nothing in there for enabling you to connect. Remember you had to download that program called, what was it, Winsock? John: Winsock, yes. Hiawatha: It was called something Winsock. You had to spend hours figuring out how to configure it and put it on your computer just so you could dial on to an Internet connection and get an IP connection. Because, of course, what Winsock was doing was adding the IP protocol to, basically, Microsoft's DOS-based operating system. It just didn't have that in there, and even well into the '90s, Bill Gates and company failed to understand how important this was. Of course, when they did understand, they went on this absolute crusade which included, "We're going to crush Netscape." They were kind of right, but they were early. They got in huge trouble with the government, but they were foreseeing what eventually happened to the cloud. Now, of course Microsoft has embraced the cloud, but back then the idea terrified them, with good reason. They were looking at the idea that someday...in fact, remember there's this great line that Mark Andreessen had? Where he was saying, "Ultimately, we're going to be able to do this stuff online through a browser, instead of having to have everything on your desktop." He said that, "By the time we're finished, Microsoft Windows is going to basically become a badly debugged set of device drivers. That's all it's going to be good for." That was like waving a red flag in front of a bull. They paid a terrible price for that but so did Microsoft, due to the antitrust case. Microsoft hasn't been the same since. John: Really, for you personally, the Eureka moment was the net and the connectivity. Hiawatha: Connectivity and the ability to communicate the digital information almost virtually instantly all over the world. John: Now, one of the things that's changed is your relationship with your audience as a journalist. Hiawatha: Oh yeah. Absolutely. John: Now, when you started you used to get maybe a letter in the mail maybe once every few weeks. Now, your audience is right there all the time. Hiawatha: Yeah. John: How do you feel about that? Talk to me about that shift. Hiawatha: I like it. Although, I've been vaguely disappointed. I don't get as much mail from readers as I would've assumed you would get. I don't get tons of email. By the way, other people you've talked to, have they said they get tons of email from readers? John: No, they haven't said they get tons of email but they said, whenever they get anything wrong, they're quick to hear. Hiawatha: Yes. Absolutely true. One of my colleagues at the Detroit Free Press has this wonderful line, or one of my former colleagues, Dan Gillmor. You know Dan Gillmor. John: Yep. I know Dan. Hiawatha: There you go. Dan Gillmor has this wonderful line that I always try to remember. "Your readers know more than you do." In the world of the Internet, they will tell you and that's fine. I always try to remember that my readers know more than I do and, when you get something wrong, yes, you hear about it. Bang. Right away. It can be very embarrassing, but that's life. I think that's all part of it. It's weird because there's no question that what has happened has had, in some respects, devastating impacts on traditional journalism. I can't bring myself to think it's a bad thing. I'm sorry. It's a threat to my livelihood but is it overall a good thing for society? I would say yeah. Yeah, pretty much for the most part. Yeah. John: You've been covering this for over... Hiawatha: Yeah. Over 20 years now really. John: ...over 20 years. How has your relationship with the technology companies you've covered changed? You're covering a sector that went where, back in the day, there were a handful of people covering it to, now, there's a hoard of people covering it. Hiawatha: Right. John: How has your relationship with your sources in the companies you've covered changed? Has it changed? Are they bypassing you at all? Hiawatha: In some cases...yeah. Oh, in some cases yes absolutely. Well, some of them the most blatant I think is Apple. That's not surprising. Apple just...their strategy is very obvious. They basically talk to the biggest media companies in the country and they ignore everybody else. The Globe has seen its circulation decline dramatically. We were easily, when I started, one of the top 20 papers in the country. We're not even in the top 20 anymore and that's part of the problem that I've had. In addition, we're in Boston. Boston is simply not a hotbed for the highest profile technology companies. The biggest technology company in the state of Massachusetts is a company most people have never even heard of called EMC. It's one of the most important technology companies in the world. Most people have never heard of them. If you've got all this junk sitting out there on the cloud, there's a decent chance that at least some of it is sitting on machine made by EMC. Although, even there, that's not nearly as true in some cases as it once was, precisely because of the way cloud systems work. Data storage is becoming so generic. A company like Google, they don't go buying stuff from people like EMC. They just build their own servers. They buy a bunch of hard drives and assemble them into servers. They don't even need that anymore, which is why EMC is doing reasonably well but the entire big-time storage market is actually quite weak these days. It's really interesting. Meanwhile, of course, we're famous here in Massachusetts. Harvard is known as the school that let Mark Zuckerberg get away. You said, why isn't Facebook based out here? Of course, they make logical sense out there. The failure of this entire region to attract the kind of consumer technology companies or companies that mass produce the critical hardware that is vital to computing, with the exception of EMC, but it of course is an enterprise company. We don't have the Intels of the world or the AMDs. We don't have the Googles. We don't have the Hewlett-Packards or the Dells or the Apples. The whole center of gravity, in terms of manufacturing and the production of a lot of these new products, is on the West Coast. The center of gravity of a lot of the innovation is here. It's kind of annoying. John: Someone in Washington said, "Well, it helps me keep my distance. Not being near the center of gravity of tech helps me keep my reportorial distance from them." How do you... Hiawatha: I think that's true. I think that's true. I don't have any trouble keeping my distance because I tell you I mainly focus on the technology and not on the personalities anyway. I get to try a lot of this stuff and write about it and write about the trends that I see going on out there and I talk to a lot of smart people. I don't have to get caught up in other people's reality distortion fields. I get caught up in my own. I'm the guy who predicted that, when Steve Jobs comes back and he brings out the iMac, I said, "This is going to flop. This is going to be a complete failure." Beep. Wrong. Did fine. Did just fine. Yeah, I don't claim to have this great crystal ball, but I don't worry about it. What I try to do is look at what's out there and consider its value to readers and its implications for how we do stuff. There are just countless things going on out there that are just completely changing everything that we're dealing with for better and, in some cases for worse, but I think mostly for better. I don't have to be sitting on the laps of the companies that make them in order to write about that. John: Has the relationship changed? Do you feel a different relationship among the tech reporters now than then, or is it the same combination of competition and camaraderie that has always... Hiawatha: I don't think that's changed. John: You don't think that's changed? Hiawatha: I don't think that's changed. Bray: Competition plus camaraderie is pretty much it. We talk to each other when we encounter each other. We're not at each other's throats that I've noticed. There's plenty of stuff going on out there. In addition, so much of this stuff comes out from these companies themselves, going straight to the public and sharing it on blogs and on Facebook pages and on blogs and stuff like that. There aren't a lot of secrets. You're better off trying to write about the new and impending stuff that's in the pipeline, rather than new product stuff. Besides that, things like looking for new product leaks is never particularly interesting. I've never understood all this stuff about, "Here's the latest leak on what Apple's new phone's going to look like." I don't care. When it comes out, we'll know. When it happens, it happens. Unless there's something that's going to emerge that's just going to be completely transformative. I've got a story coming out about something in cable television that's been talked about for a while. We may finally be starting to see it. They call it the virtual-MSO. But it's one of those fascinating things that you wonder why we hadn't seen it up to now. For example, we're in the Boston area. Verizon has FIOS, but they've never run their cables in the Boston area, so we can't use Verizon for cable TV. You have to use mainly Comcast, or get a dish or something like that. But Verizon's planning to launch a virtual cable service. What it does is, they get access to the standard cable channels and they pump them over the Internet. You buy a broadband connection from whoever you want, like Comcast. But instead of getting your TV from Comcast, you subscribe to the Verizon TV service. It comes in over your broadband. If that kind of thing takes off...Let's see, Verizon's going to do one, Sony has said they're going to do one and Dish Network has said they're going to do one. Now, if that happens, it transforms the cable TV industry in some rather significant ways. Now, they don't have to run a cable through a neighborhood to deliver cable TV service in that neighborhood. They bring it in over somebody else's broadband. Comcast may not like it, but they can't do anything about it. But if they attempted to stop it...We don't have net neutrality laws, but any attempt to stop it and you would see a net neutrality law get passed pretty darn quick. It's your broadband connection. If you want to use it to bring in Verizon cable TV, if anything, Comcast might... In fact, there are good reasons to think that Comcast wouldn't object. Because if you do this, you're going to have to buy more broadband. You're going to have to use more broadband and you're probably going to have to get a bigger pipe to do both all your other stuff plus the TV. Meanwhile, the number of people getting cable TV has leveled off. It's not growing anymore. It's actually ever-so- slightly declining. Broadband demand is soaring. In the long run, they might be better off letting it happen. But that's just one of the examples of something that's coming up that I think is much more interesting than writing about what the new phone is going to be. I don't know. We're going to see this happen. When Verizon offers this service -- and they say they're going to start offering it, at least in some test markets, in 2015 -- will it make sense for me, at home, to say, "All right, Comcast, turn off my cable TV. I don't want TV from you anymore. Just give me a bigger Internet pipe. Give me a bigger Internet pipe, take away my TV and I'm going to buy my TV from Verizon." Or maybe I'll buy it from Sony. Or maybe I'll buy it from Dish Network. In fact, I could buy it from all three, because it would be virtual. I could say, "These guys have this channel, these guys have this, these guys have this." I wouldn't want to, though. That's the big advantage the cable company has. Everybody's talking about, "You can go over the top and buy different channels." Who wants to go through all that? Every time you want to switch to a different provider, you have to re-log on to a different network. With cable, you just turn it on. Here's all the stuff you want to look at. Somebody's going to have to aggregate that. This is the kind of thing I like to write about that I just think is absolutely fascinating stuff. The other things that I think are going to come out...We're still just getting to the beginning of what a lot of people call the sensor revolution. The fact that now you can put sensors of just about every description into just about everything, and use it to track and monitor and record just about everything that's happening in the world around you. How is that going to change the world? Well, for better, again, and for worse. We're able to collect data about everything. But who gets to keep that data and what in the world do they do with it? This is the kind of stuff that we now are coming to grips with. That is, to me, much more interesting than writing about the latest gadgets. John: Latest gadgets, right. Would you agree that some people have said, "The scoop culture has gone from many outlets, in tech journalism, especially..." Hiawatha: I hope so. I don't really see the point. There aren't that many scoops in the sense of some breakthrough news story that matters that much. It's just, "Oh, I got this before you did." Yeah, but so what? It's not that big a deal. It was going to come out anyway. It's not exactly earth-shattering. OK. Like the person who gets the first photo of the next iPhone. You go, "Oh, congratulations." I just don't care that much. I think it's more important to write interesting and fulfilling and meaningful stories than to constantly worry about beating somebody to something. Although I haven't seen any big stories about this. Oh, this isn't going to be out in the public anytime soon, is it? John: No. Hiawatha: Good. Because I've got to start working on this for next week. It's just a fascinating story that I'm dying to get my hands on. Did you know that virtually every smartphone on earth has a FM radio in it? John: I thought I did. I didn't not know. Hiawatha: I mean, an FM radio in it. Now. Today, so that you could plug in a set of headphones and listen to FM radio on your phone. John: No, I did not. Hiawatha: Yeah, I didn't either. I knew my own phone has it. I have an HTC One Android phone. It has it. But virtually all of them have it, including the iPhone. But carriers don't want you to use it. Because if you listen to radio, you're not streaming data and making money for them. They don't let it work. In the rest of the world, millions of people listen to FM radio on their smartphones, but not here in the US. Now, the National Association of Broadcasters is trying to launch this big push to pressure the phone companies into letting you use the radio that's built into your phone. I think this is a fun story. John: That is a fun story. Hiawatha: A few years ago, they actually were lobbying for a law that would make it mandatory to put FM radio chips in phones. This is back when we were using the old flip phones, and they didn't have that. It was the dumbest thing I'd ever heard. You're going to force people to put FM radios into their phones? "But it's good for the public!" Get out of here, that's garbage. But then it turned out, because there was so much demand in the rest of the world, they started building FM radio capability right onto the chips that are built into the phones. Now, certainly most smartphones have an FM radio in it. Then, the carriers turned around and said, "We don't want our customers listening to the radio, turn that off!" It's fascinating to me. Stuff like that that I just think is so fascinating. John: How do you think journalism, writ large, as a whole, has done, covering the last 20 or 30 years? Hiawatha: Not too badly. Except we do get caught up in a lot of fanboy-ism and we root for some of this stuff a little too much. John: Would you say...Sometimes, it seems that...Others have said it's become a combination of celebrity journalism and political journalism. The flaws in some of those come up in tech. Hiawatha: Yeah, I guess. I don't know. You hear people say that, but I don't think I've seen anything that's too terrible. You see more and more skepticism aimed at companies like Apple. I will grant you that there's this whole big Apple cheering section that you sometimes get it from. But nowadays I think you see a fair amount of skepticism about Apple, as you do about Microsoft, as you do about a lot of companies. I don't think you get that same quite worshipful attitude that people sometimes bring to bear. There are so many different kinds of technology around journalism too. I find myself dabbling in all of them. I do product reviews. I try to take the long view of the state of the various industries, although I don't get to do that as much as I would like. I'm trying to do a story about what's going on in storage and my editors just aren't as excited about that. Even though it's one of the most absolutely fundamental things happening in the world. I would love to write about that. We need to write more about bandwidth, about the efforts to make sure that there's going to be enough bandwidth in the world. You can write about stuff like this if you've got a sexy, juicy angle. Like I just got through writing about the company in Waltham that's trying to... Actually they're in a head-to-head competition against Google and Facebook, of all things. They are building a drone that is designed to stay in orbit, in the air, at 60,000 feet for up to two years at a time and just act as a radio transmitter, beaming broadband cellular data from the air. Of course, Google and Facebook are both working on the same thing. These guys are working on a shoestring. They're a bunch of aeronautical engineers and they're saying, "This is something where having the extra money does not necessarily give you an advantage." They are, by the way, in talks with Google. Google may buy them. They think that, by some time next year, they'll have one of their prototypes up there, 60,000 feet. The longest they kept a plane up is 37 hours. But that's the kind of thing I think is...It's sexy. Solar- powered airplanes with 150 foot wingspan just hovering over... John: Geostationary. Hiawatha: Yeah, it's not in space, of course. But it's basically geostationary. Not completely stationary, because it flies in a big circle at about 50 miles an hour. It has to be about 60,000 feet, because it has to be that high to avoid getting torn apart by the wind. This is an incredibly fragile aircraft. But at that altitude there's almost no wind. You just sit there and just fly. It's supposed to last for two years. If they can make it work, and there's no theoretical reason why they couldn't, then this is what you use in developing countries all over the world to provide communications. John: Has it surprised you, covering all of this innovation, that the news business hasn't innovated more? Hiawatha: I don't know how you do. The problem isn't that there was nobody thinking about this. Does anybody remember Pathfinder, was it? That Time...They were trying to figure this out from the beginning. Claims that they were sitting on their hands, not trying to figure out how to deal with the Internet, are nonsense. The problem is they haven't found any good answers. Because you have to figure out a revenue model. That's the real issue. Getting people to read news online, that's the least of your problems. The problem is how do you make money doing it. They've tried a variety of business models. The online advertising simply doesn't begin to bring in the kind of money that print advertising brought in. People say, "They should have figured out some solution!" There is no solution. There is simply no solution to that problem. There is nothing that we are doing online that will bring in that kind of money anymore. I used to work in a building where there was a whole, huge central section full of people taking classified ads. You almost have explain classified ads to people. Those tiny little ads used to bring in roughly a third of the revenue and that entire one third of the revenue is gone. It will never come back. There was nothing we could have done to prevent that. The minute you saw...First it was eBay. That was the one that got my attention. But probably the real killer was Craigslist. You see those two things. Frankly, the moment I saw eBay, years ago, I said, "We are so screwed." The problem isn't our circulation. The problem is advertising. This is where a lot of people who used to place classified ads are going to start selling their stuff. Of course, that was nothing compared to what happens when Craigslist comes along. That's it. There is no longer a reason for classified ads to exist. It's like the buggy whip problem. You can't find a way of making gold plated buggy whips. There's no way people are going to keep buying buggy whips. You simply don't need buggy whips. Period. That's that. John: So the web, Craigslist. Other eureka moments? Other things that suddenly struck you as, "This is going to be an existential threat to the news business, to journalism." Hiawatha: No, I think that was it. People are whooping and hollering about blogging, but I loved blogging the moment I saw it. I never thought that was any threat to journalism. I thought blogging was great. I thought a lot of bloggers were talking nonsense, but that's not the point. Heck, most of what you see on blogs of any value is stuff they got from newspapers or other legitimate news sources. There were actually people talking about blogging replacing traditional journalism. It was laughable. Traditional journalism takes time and effort and a certain amount of knowledge. Any of these bloggers could learn to be a journalist, that's true. But it still requires a support structure that blogging just doesn't provide, unless you're one of those rare bloggers who can make so much money blogging that you can hire a staff or something. No, that wasn't going to happen. But what really has been the problem is the destruction of our advertising revenue base. That's the issue. I just don't know of anything that is going to ever replace that kind of revenue. It's really interesting. I was just reading something in a...I can't remember where. It was some conservative website and it was making a really good...No, it wasn't. It wasn't a conservative website. It was something called Inside Higher Education or something. I can't remember what it was. Hiawatha: No, I don't think it was that. It was philanthropy. It was a philanthropy publication. They were making a fascinating point. Right now, an increasing amount of journalism is being subsidized by non-profit foundations, some of which have an ideological agenda. Readers often may not know that. They were complaining about some left-wing organization that was co-sponsoring an investigative news report. But the same thing could arise -- I don't know if it's happening, but you could easily imagine a right-wing foundation subsidizing...Because there are these foundations now. In fact, I saw one come over my desk in my own case that really raised eyebrows. I didn't hear anybody talking about this. SABEW, the Society of American Business Editors and Writers. They are doing the seminars teaching reporters how to report on the Affordable Care Act. It is funded by an organization called The Commonwealth Fund that is an active supporter of the Affordable Care Act. I'm reading this. I'm going, "It's nice that they want to support journalism, but do you really want to get to the point where foundations with a clear, political agenda are the ones paying the bills to cover particular stories?" Given the current financial weakness, much of it Internet-induced, that our industry faces, you might see more and more of that. Is that a good thing? I think the answer is no. It makes me very nervous. This is one of the things that has happened as our revenue model has been ravaged. Don't misunderstand me. This whole concept of "objective" journalism is just a tradition. There is nothing in principle wrong with newspapers having a slant, as long as you know what it is. But you want to be careful when people are presenting as objective journalism stuff that may have been subsidized by people with a dog in the fight. I remember seeing that, last year or the year before, and going, "Why is nobody in business journalism saying, 'Hey, wait a minute.'" If I was told or suggested, "Hey, we want you to cover this and all your expenses will be paid by Microsoft," I'd be like, "No." John: There was a story this morning online about Verizon starting up a tech blog to cover tech, but they're saying to their hires, "You can't cover anything about security on it." This is Verizon. Hiawatha: Yeah, if it's their blog, I don't have a problem with that. You know they're an interested party. I don't have a problem with it. It seems kind of dumb. Much better example! The one which you surely remember and that is making everybody's hair stand on end. Oh my God, I've forgotten all the details. The one, a couple of years ago, at CNet, where CNet gave an award, at the Consumer Electronics Show, to a company... For some reason, I can't remember the name of the company. They said they had the best thing at the whole show. They were currently embroiled in a legal dispute with CBS, which is the owner of CNet. The CNet editors were ordered not to give an award to that company. Several CNetters quit, but it permanently tarnished CNet's image for trustworthy and objective coverage. They were ordered not to give the opinion that they genuinely held. John: We're back. We had to switch venues because of a fire drill. So be it. One thing that's interesting to me, when you and I started this business it was sure there were stars in journalism, but the institution always was bigger. Now are we getting to a point where you writing a column, are you more aware of your brand, that you have to manage yourself? Hiawatha: In my case, absolutely, and it's been sort of weird. It's come home to me for a couple of reasons. One, I have done a fair amount of local television so I've done that. Two, I've done a little NPR. Three, I've written a book called "You Are Here" about the history of modern navigation. It turns out that one of the reasons that Basic Books was willing to publish a book by me was because I already had a sort of a brand. That's exactly right. If I were just some guy - Joe Schmo - I don't think I'd have gotten this book published, and it's been a big help to me. I try to treat myself as a brand and, to some extent, market myself as a brand. It's a good thing, and it helps. However, I don't want to be a star and that makes me very nervous. I do occasionally get recognized when I'm walking down the street and it creeps me out because I don't think journalists should be the story. It does help you to market yourself and make yourself marketable and help you make a living. I like that part of it but I don't particularly have any desire to be famous so it's a little nervous. Believe me, in any meaningful sense I am not, and it's great. I can just walk down the street and most people will go, "Oh, look." I'm walking through a store and it's like, "Oh, it's a shoplifter." That's fine with me. It really is. John: Are you optimistic about journalism going forward? We both know the news business, which we've discussed, is under incredible strain, and it will continue. We don't know. How about journalism, though? Hiawatha: I just can't be pessimistic about journalism because the demand for journalism is as great as it's ever been. The problem is paying for it. That's the problem. I don't know what the model is going to be, but eventually we're going to come up with something. How it's going to look, I don't know. I can't tell you what it's going to look like because nobody else has been able to figure it out either, but you're going to have large, national media organizations that are going to do fine. I keep hoping that there's going to be a way to do highly localized journalism that will also be reasonably profitable, but it's not going to have the kind of depth and sophistication that we were used to because without the original, traditional revenue stream newspapers just cannot be as deep and complex as they used to be. It's a shame. I used to be able to say, "Hey, I want to go cover something in California," and they'd send me to California. Nobody's got the money to do that anymore. Unless it's a crucial kind of thing, they just can't do that. Heck, I got sent to Africa one time and wrote about the Internet in Africa. I asked, "Can I go back? There's this big conference in Cape Town." They looked at me like, "Are you nuts? Get out of here." I would love to do it. That's one reason I want to write books, because it gives me an opportunity to do stuff that isn't going to be supported by daily newspaper journalism anymore. If I do this book that I'm now trying to do about the rise of video gaming as a competitive sport I'm going to have to...I'm hoping I can get to South Korea, which is like the official headquarters of it. You've heard about this thing, right, the international? The international they gave out $5 million in prizes to these guys - they were either Chinese or Koreans - playing this game. That's what's starting to happen, and somebody needs to write a book about that. Actually, somebody has, but it was six years ago. Since then, it's just grown tremendously. I want to write a book about it with a skeptical eye because I still can't help thinking this is poker. I think this is poker. After a few years it's just going to go woo, woo, woo, woo. John: These are the hands we're dealt. Hiawatha: Absolutely. It gives me an opportunity to play around with sports in general like the news...I don't know if you saw it. It was in the New York Times. It was a fascinating story about how few people have been watching the World Series. They said more people watch "The Walking Dead." More people were watching "The Walking Dead" than were watching game one of the World Series. John: No team from Boston is in this year. Hiawatha: That's part of it. That's right. Boston is one of those teams where even though it's a relatively small market people all over the country would look because the Boston Red Sox, a story legacy. The Kansas City Royals just doesn't have that impact on people. Not even the San Francisco Giants. If the Chicago Cubs ever make it, that's it. Even I would watch baseball if the Chicago Cubs made it. The Yankees, the Red Sox, maybe the Dodgers. I don't know. Something like that. John: It depends on the brand. That's it. Hiawatha: It depends on the brand. The NFL is rolling. They're just ecstatic because of the resurgence of the Dallas Cowboys. Whenever the Dallas Cowboys are playing well and the Green Bay Packers are playing well - and they both are - and the New England Patriots are playing well people turn on their TVs to watch football when those guys are playing. What's going to happen with video gaming as a competitive sport? There is a surprisingly large audience for it, but after a certain number are you going to sit for hours in a stretch watching somebody else playing a video game? I just can't talk myself into believing that that's going to remain a durable, long-term sports franchise, but the very fact that they're trying to turn it into one is worth writing about. That could be a really fun book, and I'm going to be pitching that to my agent and saying, "Please give me another book." As for what's going on covering my beat, there are times when I feel like the innovation just isn't coming as fast as it used to be. This is a really important problem right now. It's not a problem. In the long run you know people are going to make these amazing breakthroughs. Right now, writing about smartphones. I can barely stir myself to pick one of them up because they're all the same. This is not an evil thing. The point is that every technology starts to hit this plateau where it achieves its general form and function, and it is not going to change tremendously beyond that. We are at that point now with the phone. We've been at that point for the last decade in the PC. There is nothing new happening of any significance in terms of personal computing. Hasn't been for years. It's the same thing over and over and over. Phones, that's happened now. Tablets, that's happened now. What the next great...they're trying to do wearables but nobody is buying into that because they don't do anything that you really need. Don't get me wrong, I've said it in my columns, you come up with one that's under $100 and just does a few simple things like buzz you when you get an email or buzz you when you've got an appointment, yeah, I might buy that,. These multi-hundred dollar things that are trying to do everything in their phone and you talk to them? No. That's just silly. I don't need that. A little personal notifier thing...and, of course, I wrote about Pavlok. I don't know if you saw that. John: I did. Hiawatha: I'm sorry, I need me one of those now. That is cool because I'm the kind of person who forgets stuff. I've got to tell you, when that goes on the market I may very well buy myself one. That is the kind of thing that just made you go, "Oh, yeah." John: It's good to see you can still get excited about that. Hiawatha: I get excited whenever there's some new, innovative thing coming along. One of the things I've got to write about is stuff for seniors because I just got a tablet. The first tablet officially marketed by AARP. Whoops, I was going to hit the table. AARP is going into the tablet business, and that's very important because they're right. Tablets have a great potential to be a very useful tool for seniors, and AARP is now marketing one. I don't want to write about the tablet because it's basically just a tablet. I want to write about what do you need to do to a tablet to make it more accessible to older users. In fact, I should take it to church and let some of the people at my church play around with it for a while. The whole thing about accessibility, which I like to write about on a fairly regular basis because technology is a great way of building devices that older people can use, that people with disabilities can use, the blind can use, and so forth and so on. John: People who used to read newspapers. Hiawatha: Yes, people who used to read newspapers. Look, I prefer to read things online anyway. I'm sorry. The reason is all my life I've had lousy eyesight. I just find it easier to put something on a video screen and blow up the type. I like reading things on electronic screens. Some people say, "I could never." I read books on my phone. I have a Kindle app on my phone. I read whole books on my phone, and some people say they can't stand it. I love it because I can make it any size I want, change the background color so it's easy on the eyes. Why wouldn't you want to do that? I was in Congo last year. I read a whole book just sitting around on the phone. It's great. I love it. Are we...? John: We're about set. Hiawatha: What else do you need? John: That's it. ...

TRANSCRIPT: Merrill Brown: So this is audio? Paul Sagan: Yeah, that's how we get our transcripts done. You can sit there, that's fine. Yeah, that's even better right here. That way I'll get less side show. Merrill: Now, you prepped me not at all for this. Paul: That's the way it is. Martin Nisenholtz: That's the way it is. It's an oral history. Paul: When you start to cry, I zoom in 60 Minute style. We've got this down, and you confess. Merrill: There is one topic we could talk about that would lead me to tears. Paul: What's that? Merrill: Mark Harrington, the late Mark Harrington who founded the cable network and who I worked very closely with. You must have known Mark from CBS, right? Paul: Yeah, yeah. When did he pass away? Merrill: He died in office like in '98, '99. He was just an extraordinary guy. We worked very intensely together. So there is one sad piece to the story, great guy. Paul: Three, two, one. Martin: We are here with Merrill Brown at [inaudible 01:30] Center on April 15th, Patriots Day, 2013 with Paul Sagan, Martin Nisenholtz, Merrill. Let's start, Merrill, just with kind of a five minute, quick take on how you met digital journalism. What was the catalyst that got you into the business? Merrill: In 1994 I became a consultant with a goal of trying to figure out what this Internet thing was all about. I thought it was going to be a big deal. I had written about technology, been involved in various text like ideas floating around, but in '94 I actually put out a shingle and I got a bunch of consulting clients. A couple of start ups and Time Incorporated, which is where I probably met Mr. Sagan initially. I helped get Time on line, helped found "Time Daily" back in the Pathfinder, at least a slice of the Pathfinder era. And put "Money" magazine online. That was one of my client relationships. The other large company client relationship was with NBC, who I helped develop a variety of video strategies in the '95 ish time period. Martin: And prior to that you were a broadcast journalist, just as a way of background? Merrill: No. Well, prior to that I had been a print journalist for newspapers and the "Washington Post," The head of corporate development at the Washington Post Company, the editor in chief and vice president of a magazine company owned by Norman Lear, and I was the editor in chief of "Channels" magazine, a media industry magazine in the mid to late '80s. In '90, I went to work for Bob Pittmanand Steve Brill to start Court TV, that's actually where I met Paul Sagan. Martin: Yeah, OK. Paul: That's right. That was in my New York One at Time Warner Cable, before New Media. And John Huey's walked in right on cue. Merrill: Mr. Huey, good morning. John Huey: Good morning. Merrill: So back to '95 now. I fall in love with the Internet in '94. Start consulting, trying to figure out some businesses to get involved in. Get involved with NBC. Microsoft comes along as an NBC partner. NBC asks me to get involved in that deal. As a consultant in early 1996, I sign on to the new joint venture to help them develop both, at the time, its video and Internet projects. I helped them get it launched in July, 1996. July 15th, 1996 it launches, and several weeks later, I guess just before that, they ask me if I want from suburban New York to Seattle to run MSNBC.com. In August '96, I do. Martin: So, talk about that. Talk about the founding of MSNBC.com in Seattle. It must have been an interesting thing to do. It's one of the more interesting ventures because it combines a significant journalistic institution, NBC News, with a huge technology company. Merrill: There were technology challenges around that. There were cultural challenges around that. There were journalistic challenges around that. It was a very intense period of time. Doing anything in real time news in the Web in that time period was challenging. The mere act of publishing was tricky. Paul: And that you mean from a technical point of view. Merrill: From a technical point of view, the content management systems were in their infancy. Trying to deliver, for NBC, real time news on this very, very fragile web platform caused a lot of friction, because they didn't quite understand that when a plane went down or something happened, the turnaround time on that wasn't the same as breaking in to a cable network or broadcast network. It, at the time, involved a variety of steps that we today take for granted in the content management world, but then it was rocky. As we all know, there's, to a certain extent, a lot of this still isn't figured out. Nobody's mastered content management systems, but imagine it in '95, '96, it was even trickier. Paul: Now I was going to say, one of themes that has come up talking to news organizations at the time was the inside versus outside question. Most opted at least to try to set up their digital news organizations a little outside of the news room, maybe across the river, but not across the country. How much of that was politics, economics or deliberate in terms of trying to make it work and take advantage of going to a tech center? Merrill: Well, we thought about that a lot. I was part of the decision to do it, or at least I had a vote in the decision to do it. The feeling was that we would never get Microsoft to embrace any part of this unless we had a presence there. In a number of ways, that proved to be a good decision. It was a good decision, probably, looking back on it, to set up a newsroom there. We had lots of technology advantages. As everybody recognized quickly, we had a huge traffic advantage, because we had great distribution throughout their portal and other web properties, which was critically important to our early traffic success. Martin: I'm sorry, Merrill, but one of the themes along those lines that really has come up repeatedly is that journalistic organizations really didn't embrace technology very quickly. It took years for them to do that. The thing that's so interesting about this operation, it's almost unique, it is unique, is that it was born in a technology company surrounded by thousands of engineers. Talk about that a little bit. Was that a huge advantage? Couldn't you almost immediately do things with the content that were being done in the pure plays, like Yahoo, that were not being done at more traditional journalistic institutions, because they had no engineers? Merrill: That is correct. Being in the hub of thousands of engineers was a terrific advantage. We did figure out content management. We did figure out multimedia distribution. We were great, very quickly, at photos, which is and was a hugely valuable technology on the Web. Taken for granted today, but developing easy to distribute and easy to publish photo technology, which we spent a lot of time and effort on was very, very important and very valuable. The challenge was, however, to make sure we had the editorial balance right as we sat alone, 200 journalists and web producers in a technology company which did not respect anything, or even understand anything, about journalism ethos and so on and so forth. We had a lot of educating to do of the technology group out there, so they understood what a deadline meant and what breaking news was all about. Martin: And you were isolated from the centers of power. You weren't in Washington. You weren't in New York. You were in Seattle. There isn't a lot that happens, with all due respect to Seattle, it's not, you know... John: Hey, come on. Starbucks, Jimi Hendrix. Paul: Besides those, it's not a news hub. Martin: It's not a news hub, no. Merrill: But it was an interesting time to be there because Starwave was doing very important work then. ABC News was sort of in Seattle as well. Starwave was. Kinsley and I went to Seattle simultaneously, so all that was going on. John: Yeah, we talked to him about this, and he had some of the same observations about every culture. [coughs] Excuse me. Everything from contracts with journalists to just the whole employee/employer relationship, very different. Merrill: And kind of who was in charge, because they had, maybe Mike talked about this, this program management mindset where the program manager really was the guy in charge holding all the levers. We had to build a level of rapprochement with them so that they understood that editors had to be empowered to make decisions, that all couldn't flow through a program management Microsoft culture. John: But you mean program management in the software delivery sense, not television programming at all. Merrill: No. No. No. Totally in the Microsoft software delivery sense. Yeah. Absolutely. Paul: Talk about where content is coming from. So 200 people spread across 7 x 24 is not really a lot of people, and that's all in one place. That's not bureaus. That's not reporters. We spent some time talking about what's going to set news free both in terms of dollars, but just in bulk. A lot of that was the wires between Reuters, what Yahoo did around the same time. NBC was a pretty big organization, NBC News, but not as large as major newspapers probably, at the time, or the wires, where did you get the news from? How did you think about appending, amending that in a ways that made it Web friendly? Merrill: Multiple ways. First of all, we had probably at the time, 30 people in New York, under Lynn Povich, who was a key hire of ours, who was charged with integrating with NBC News. We had people in DC. The principle functions of those people in New York and DC was to attempt to extract words from television people, which was no small challenge, in part because they didn't have, when we got there, desktop computers. They had only television news computing systems, which you're quite familiar with Paul, and you all probably have never worked on. Paul: They were closed systems. Merrill: Dumb, closed systems. Yes. We had to figure out how to just give them even machines, and Microsoft could not understand it. There actually was an information company that didn't operate on some Windows, or Windows like system from which we could actually get words. It was a very tricky thing at first. There was actually enormous resentment about the fact that they weren't all racing toward Windows. We're talking about 1996, '97 here, when a lot of people in financial services and other industries were quite computerized. The newspaper business, I guess, was as well, but they didn't have the need for it out at NBC. We had to literally go and sit down with them, interview Andrea Mitchell, and Pete Williams, and other NBC correspondents, take down their stuff, sometimes transcribed on the phone, sometimes, on notepads or on laptops, and literally pull content from them, so we could rationalize the expenditure of effort and money on NBC in the short run, where they had very, very few natural assets. Interviewer: But this theme of separate, I want to continue to walk down this road a little now, because what I'd like to get from you is what you did as a result of that, that may not have been done in Legacy news operations. Merrill: He was asking though about where we got content from, so I was explaining how we attempted to maximize NBC. What we did was create a newsroom that had its own rhythm, that was adjacent to, but not a part of, NBC News at first. We had to do that because we had to create native Web content. There was no alternative to it because video was so hard to produce and publish at the time. Almost all of it pre the cable network was minute 20 packages for the 6:30 broadcast. There really was very, very little to mind at the beginning, as they tried to figure out what the cable network would be. Even when the cable network got off the ground, it was mainly chatter, as it is today, but really chatter. There was a bunch of people sitting around a table that Andy Lack had figured out would be the launch format for NBC. It was literally a bunch of young interesting new faces. People like Laura Ingram, and Ann Coulter, and others. John: Rick Stingle. Merrill: Rick Stingle was a friend. John: Gary Ginsburg. Merrill: Gary Ginsburg was a friend. Excellent memory Mr. Huey. Paul: It was talk TV. Merrill: It was talk TV, so there was nothing to do there. I wanted them to get to the content part of it but, we had to have an independent newsroom and independent journalists. A lot of people didn't understand that at the time, because per your question, you're part of this great big global news organization, broadcast news was still pretty preeminent at the time. NBC was a dominant brand. Brokaw was still there, etc., etc. But we realized very quickly we needed to create assets in order to create eyeballs and ad inventory. Martin: You weren't looking at CNN? Because they had launched a year earlier. Merrill: We were looking at CNN. We were looking at "USA Today." We were looking at the "Times." That was the competitive set at the time, and we had them on our big wall, and watched them all the time. But every print company had way better assets than we did, because they had words. We had no words. Paul: They had no TV promotion. Merrill: They had no on air promotion, and they had no portal access as we did. Martin: We had words but it was a 24 cycle. I mean, what we didn't have... Paul: We, the "Times." John: I'm sorry. Yes, we the "Times" had words but we had them at that time on a 24 hour cycle. The only people that I remember who were doing a great job of really being on top of breaking news were the folks at Yahoo News, for the reason that Paul outlined, they have access to the Reuters wire. And CNN, who somehow mastered this, despite the fact that they had a television operation very, very quickly. Merrill: It was a television operation that had 20 years or 15 years, whatever it was, of breaking news experience. They knew how to go after a cover story in real time, which NBC didn't know how to do. NBC didn't have any years of doing that. John: [inaudible 15:02] 24 7 cycle for 20 years. Merrill: Right. So it was in the culture, at least. It wasn't in the NBC culture, because they didn't have a cable network until 1996. The only solution to the problem was to build significant, original, journalist capability, largely in Seattle, where people could produce stories, cover stories, do reporting. I sent them on the road. I sent people to the war in Bosnia. I sent people to the Middle East. In some cases, to facilitate NBC News producing content for the Web, but in some cases just to get us stuff. John: But what that really means, "to facilitate NBC," is to make sure you got something out of there because they weren't giving it to you. Merrill: Precisely. John: Because you were a .com and they were a network system. Merrill: Yeah. Nobody's reading, "People are going to get news on the Web? What? We're NBC News. What are you talking about"? John: Just to remind everyone, there was no broadband, so there was no chance for them to have their talking head on, so what interest was there? Merrill: Yeah. Dial up video is oxymoronic practically. You lived through, obviously, on many levels. We had to figure out ways to create content and change the cycle. That was very challenging. We spent a lot of money doing it, and hired lots of good writer producer types to do it, because NBC didn't have any. Paul: Was there a business model besides the fact that there were two rich parents at the time? Or what was the business model that was being pursued? Merrill: Nothing but weak efforts that ad dollars, which Microsoft was terrible at for years, really, really terrible at it. We had lots of conflict about the fact that we couldn't get their attention. In part because our inventory was worth 50 cents on a dollar to them, and Expedia's was worth a dollar on the dollar. We had lots of tension around that issue. That was sort of the first generation tense issue in the joint venture, that the revenue model couldn't get implemented in ways that were in our interest. We spent a lot of money as a result. Martin: In "our" being? Merrill: The JVs. The joint venture was a separate company. I was not a Microsoft employee. My people were not Microsoft employees. We didn't have Microsoft benefits. We sat very much alone, in a lot of ways. Paul: What happened, from a seminal point of view? Were there specific stories that changed the perception of the parents or made the JV stand on its own? Were their business moments or did it just never quite come together? Merrill: No, it did come together. The late '90's were very good to MSNBC.com. Despite MSNBC cable's absolute floundering performance, for many years. Until they figured out that going left was an answer, which wasn't that long ago, as we site here in 2013. Paul: So the cable network, from an audience point of view, and probably a revenue point of view, was an asterisk? Merrill: Inconsequential. Paul: But the online was not? Merrill: The broadcast network was not. Among the really important things we did was aggressively and quickly integrate with Dateline, Today and Nightly News. We did this incredible thing of getting our URL on their screen. In 1996, '97, the act of creating a lower third that had an Internet address on it and actually might have a reason to send people to the Internet, was adventuresome and revolutionary, in many ways. We were the most aggressive people to do that. In fact, in prime time broadcast television, we were the first people to do that. In doing some very clever things with Dateline. Paul: So effectively, your promotion, or at least your impressions, were far greater than what CNN could drive to their own site, just by sheer numbers. Merrill: We had two brand and audience strategic advantages that nobody had. A broadcast network that was willing to integrate with us and a portal that was fully integrated with us. Big, important advantages. Paul: That drove you to be number one, two in audience pretty quickly? Merrill: Right. And stayed that way until the mid 2000's or early 2000's. I don't know quite when that changed. Paul: But after you were gone? Merrill: Right. But those distribution advantages were significant. I used to tell NBC, "We are playing the same game the cable network is. Although the distribution outlets aren't John Malone's." In this case, not the equivalent of cable distribution. "We still needed to get on as many outlets as possible. If we didn't have third part distribution, working with this obscure brand, we weren't CNN from a brand point of view, we would be hopelessly in second place." We succeeded at the distribution part of that. Martin: Things got very good in the late '90's, as the .com boom. Your usage is great. MSN is supplying a lot of distribution. The network is advertising the URL. What happened during the .com bust? I guess you were in a good place. Because there wasn't a whole lot of pressure to downsize at MSNBC. It might have been one of the only places that didn't significantly downsize during that point. Merrill: The operative word is "significantly." We probably had to lose 15 percent of our cost side when all that happened. NBC was very freaked out about it, because they had a lot of challenges at NBC, in the Internet era. Welch got a little aggressive and went into Snap, and into a publicly traded portal play. Martin: That was called Snap? Merrill: Snap and NBC.com. That was a huge bust. They read a lot of their struggles. To this day, they haven't maximized CNBC as an Internet propriety. They read their struggles as an indictment of the Internet. As opposed to raising questions about their own strategy. That put a lot of pressure on us. I remember Black coming to Seattle. Probably in early '01 or around that time period, and saying to me, "At NBC, we're thinking this Internet thing might be over." Almost a direct quote. That freaked us all out. Because living on the west coast, in the Microsoft world, we knew this was 1.0, and 2.0 or 3.0 was ahead of us. This was just the beginning. We got through that. But that period was another chapter in the tensions in the JV. NBC was very discouraged about the prospects for the Internet. John: Although, to be fair, the Internet still hasn't exactly been Valhalla for the broadcast networks. It's not a great part of their business. Merrill: Well, Hulu's pretty important. John: No, it's obvious the Internet didn't go away. But it's also obvious that, for network television, the Internet still looms over their business. But they haven't made a lot of money on it. Merrill: The disruption we've been predicting for broadcast television hasn't exactly happened the way we might have predicted it 10 years ago. Absolute truth. John: They are disrupted. But they're disrupted more by cable television. Merrill: Right. Although we'd all love to be at Disney, owning ESPN, both .com and on air, which is now a dominant property in sports. You competed mightily with them. John: ESPN is the greatest business in all media. Merrill: Could well be. Paul: A few observations, having worked in a bunch of places, lived through a true start up in online news. No matter how robust or not you think the future's going to be for TV, online and the disruption to come, a lot of media companies have gone away, are severely diminished. Or, their digital businesses, even if they're a few a few hundred million, are nothing compared to what they used to have. We all know the analog dollars to digital nickels comparisons. Merrill: Dimes became nickels already? Paul: Some people say pennies. How much do you think that was ringing the inefficiency out of the old, into the new? How much was the traditional players not understanding where engineering was going to play or how fundamentally different the world was? Or just the power of the disruptors who had the innovator's dilemma on their side and they just have been running the table in some places? Merrill: I'd say it's a little of all of that. I've spent a lot of time railing against how slow old media moved and how little innovation came from them. Especially in the '95 to '05 period. What are the great inventions that came out of that world? Why was a guy in town house in San Francisco able to blow up the classified model? There are a lot of things that better leadership in the media business might have averted. But that's ancient history now. So there's that problem. But you can also look across industry, in general, and ask the same questions about Brentano's, Barnes & Noble and lots of people who've been disrupted. Old businesses don't move well into new eras. It's kind of a business fact. Paul: Or new businesses look totally different and the old business wouldn't want to own them. I don't think any of the old media companies would want to own Craigslist today. It is, compared to their businesses, a tiny business. They would have hoped it would never happen. Or even those who predicted it would. Arguably, Knight Ridder, we went to see Tony Ridder, were farther ahead than anybody, did some of the most interesting early work, during that period. Their business was simply destroyed. There wasn't something to own on the other side. They were left outside when it was over. Merrill: But they had opportunities to do things, like buy Yahoo, when it might have been very interesting to figure that integration process out. There were plenty of things to buy along the way, plenty of opportunities to invest in Facebook and Amazon and other things, at prices that, today, would make one chuckle. Paul: Then you can only blame them for not being slightly smarter, because they were spending more time looking at it. But that wouldn't be their business today. It might be their portfolio today, had they made the investment. It wouldn't really be their business. Merrill: I don't know what would have happened if a media company had bought Yahoo in 1998. Martin: I can pretty much guarantee it would have failed. Yahoo would have gone down the tubes. They didn't have the culture to run Yahoo. You've just criticized Jack Welch for investing in Snap and taking it public, which was, in essence, the same thing. Merrill: The only thing I'd be critical of was impatience. Martin: That's an important clarification. You feel that, instead of shutting it down, during that period, they should have stuck with it and I agree with that. Merrill: Very little happens quickly in the worlds we're talking about. John: But before we drift off too far into the world of hypothetical, the biggest failure that everybody made in this business was failing to invent paid search. That's what they failed to invent. Merrill: Or acquire. John: Yeah. Martin: Yahoo tried. They acquired Overture, which was the original paid search company. Merrill: Fair enough. John: But you could turn that around and say, "Before that their biggest failure was to fail to invent the browser for the Internet, or failure to be Tim Berners Lee." It wasn't an engineering culture. They had huge profits, legacy profits that continued for a long time. Around 2001, all the bottom fell out of online business, in terms of being able to make money. Some companies had hundreds of millions of dollars in revenues and no profits. They looked at it and said, "This isn't a very good business." As you said, I think you said it well, they blamed the Internet, rather than their strategy. They pulled in their wings. That's about the time paid search showed up and changed the world. Paul: And swallowed the ad business. John: Yeah. And as Paul has said, the news business is really the ad business. They don't like to talk about it that way. That's what happened to the news business. Martin: Merrill, when did you leave MSNBC? Let's get back to the oral history. Merrill: 2002. Martin: You leave MSNBC. You're leaving just around the time things begin to start to improve, as all down cycles end. You then were pursuing local projects. Weren't you interested in local journalism for a very long time? Merrill: Was and still am. Immediately, though, I went to work at Real Networks, in Seattle, where I ran all of their consumer businesses. Worked a lot on pay models, as a matter of fact, there, which was very instructive. Did that for about a year and a half before returning to New York in '05, to start a new life around local, among other things. I can walk through that, in some detail if you... Paul: That would be important. And also define what local means. Because the size of the market matters a lot, in the definition to the business model. Merrill: In 2005, came back to New York, in part to run News21, a piece of the Carnegie Knight initiative on the future of journalism, in which I founded a graduate student fellowship program that operated here at Harvard, at Northwestern, Columbia, USC and Berkley. Did that for two and a half years, with about a third of my time. That was a very important thing in my life at the time and hopefully a contribution of some note. It's now at Arizona State where it has a permanent home and a permanent staff, and 14 universities and is thought to be, in that world, a successful thing. So that was one thing I did. Then I joined boards and did a variety of consulting things. A number of them with newspapers. A number of those things led to my efforts to try to raise money to start small, local news sites in metropolitan areas. Something that, to this day, nobody's really quite figured out and which Patch and others are trying to figure out. I attempted, got very close to, raising money. Is everything on the record here? Paul: All on the record. Merrill: What should I say? This will be public at some point? Paul: It will. So you should be truthful, exhaustive and name names. John: Because it's for history. Merrill: The closest we came to getting our local business financed, I had three partners in this business, was during a period of time in which we were incubated at Gannett. We spent an enormous amount of time in Virginia with them, with the theory being that we were going to create in partnership with Gannett and "USA Today" local news sites that would live on a URL like "usatoday.com/philadelphia." We would have this joint venture company that would be venture backed and backed by them. We spent five months at this. We had a complete sales plan involving their local sales organizations. We had target markets all lined up. We had a letter of understanding. We had a finished MOU done and lawyered, which me and my colleagues financed at some expense, because it was complicated. In December of whatever year this was, I want to say 2006, but we may need a fact check on this, the principle champion of this, the then publisher and president of "USA Today," Craig Moon, took it to the CEO of the Gannett Company for final approval. He said to Craig Moon as it was recounted to me, "I don't think this is a good idea. First of all, why do we need Brown and his group if you guys are so smart over at 'USA Today?' Secondly, how am I going to sit on the Boards of companies like Career Builder, with McClatchey, if we're going after them in their own markets? I don't want to do this." That ended the most serious foray into actually raising money and getting us financed. We continued to try to get Venture money behind it, but as everybody in this room knows, getting Venture to back something like this, which is human heavy, is challenging. Martin: Try to connect the dots looking backwards Merrill. Do you think it would have succeeded? There are a lot of folks that tried. BackFence, others... Merrill: I was on the Board of Back Fence, by the way. Martin: We might want to talk about that a little bit. that's an important effort, but they failed. Merrill: I'd like to correct you, because I really don't think this has been tried, maybe for good reason, but nobody has gone out and tried to own metropolitan areas in a web savvy, low cost way. They tried to own suburbs. They tried to own pieces of it, Patch, BackFence, others, but nobody has actually tried to go into Baltimore with 12 journalists and figure out how to do something that would be competitive to the local newspaper and local television. I believe to this day, and until I'm proven otherwise, that that's a viable model that somebody's going to do, and in fact I'm on the Board of a company in Providence, Rhode Island now. I'm so committed to this, called GoLocal, which seems to be pulling this off in Providence and Wooster. Maybe those are the right size markets to get this figured out in. It maybe has not been funded for good reasons, and I remain a Pollyanna about all this, but I do believe that if we gave Sagan, or Huey, or you or me, 15 people in Baltimore, we could figure out something with meaning and value. Once you get past the daily newspaper and local web traffic, the whole thing diffuses and there is room for a number two or a number three, or whatever, as long as the cost basis of it is managed well. Paul: Does that always work, because 15 people isn't going to... Merrill: We don't know that it's going to work. Paul: It won't build the platform. Is your assumption that there has to be a national platform and you plug into it? Merrill: The assumption behind the business I tried to raise money for was there was scale economies around, building the infrastructure for it, selling ads against it, having a centralized staff that did some of the work, but that from a hub you could build four, six, eight, ten of these that would make some sense. Martin: It sounds a little like Patch though. Right? Merrill: Except Patch is about coddling together, little town after little town, after little town. When a plane goes down in Baltimore, you have Towson, and you have Catonsville, and you have Pikesville, but you don't have Baltimore. It seems to me that that's missing a huge audience opportunity by simply redlining American cities. You're not getting metropolitan area news and you're not getting access to all those eyeballs that live in Baltimore or Philadelphia or Cincinnati. Paul: In that example, would you stop coverage at the city line? We talked to Julius Janikowski last week. The FCC has obviously intersected some of these issues and he made the reverse point, not argument but point, which is some of the rules of either newspaper distribution of the DMA or broadcast license rules made people spread too thin in their coverage and, therefore, not cover enough in any one community that was relevant anymore. If you were in Baltimore, do you think the model is you cover the city but not the suburbs? Merril: No, I think you cover the whole thing. To reinforce the fact that I'm still involved in this thing, I run a center called the Center for Cooperative Media in New Jersey, which has two components. One, the aggregation of New Jersey media, traditional media, including the "Bergen Record," "Star Ledger," and so forth. Secondly, a thing called the New Jersey Commons run by Debbie Gallant, who some of you know or know of. She founded BaristaNet. We have put together 60 hyperlocal blogs throughout the site, all of which are interesting at some level. We're going to give them tools, we're going to give them training about both journalism and data mining and revenue and all of it, and we're going to do everything we can to build an infrastructure around New Jersey media as an alternative scenario to the ones we've been talking about. There's all this out there and it exists in Baltimore and it exists in Philadelphia and it exists in metropolitan New York. Somebody putting that together in smart ways, perhaps the only way to do this in the world we live in is through foundation money, which is what we're reliant on now, but also maybe from an investment point of view, would have some scale. John: This is all free content paid for by advertising? Merrill: Yes. John: The trend is not headed your way on that. Merrill: Our traditional media partners like the "Bergen Record" and the New Houses in Newark and so forth are working aggressively on that. Newark has a paywall. John: I don't want to turn this into a business model debate but you've mentioned two experiences you've had and they were both joint ventures. Now you're talking about a matrixed joint venture. You obviously are a glutton for punishment. That's all I have to say. Merrill: Fair enough, John. This center thing is really interesting in the context of this conversation. We have Patch in the center, we have the "Bergen Record" in the center, we have the "Star Ledger" in the center, we have Channel 13 in the center through their NJTV arm which produces a half an hour of news for New Jersey and is on channel 13 every night called NJTV. We have Laura Walker and WNYC in the joint venture with Jim Shackter running a thing called NJPR. We have all these interesting assets in one place. Paul: It runs as a not for profit? Merrill: For now, yeah, funded by Dodge and Knight. Paul: You have both commercial and not for profit content? Merrill: Yup. Paul: I don't think anyone else is doing it on that model at that scale. Merrill: I don't think so. To the point, I'm still trying to figure this out now with a different model, with a different set of assets, and maybe we can get it figured out. It's very interesting. Paul: Do you know what victory looks like? Merrill: Another round of foundation funding and teaching these hyperlocals about revenue, which we're doing. We have an ad platform for them. There's an ad company in New Jersey that's trying to service all this in an interesting way. We'll see if we can get that figured out. Martin: In some ways, although he's doing it a little more commercial basis, it sounds, to some extent, like what Tim Landon is trying to do in Chicago. He's very focused on bringing up a local business. I think his economics are skinnier than yours. I don't think he feels that he can support 15, but maybe that's because he's doing it from a narrower perspective geographically. I don't know. You should talk to him. Merrill: It's been a year or so since we've talked. We should. Thank you. Good point. Paul: What haven't we asked you about? Merrill: Obviously we compressed six years of MSNBC into 20 minutes so there's a lot that went on there. I don't know how instructive, at this point in time, much of it is. John: It's a part of the early story which is very important. Merrill: It's a very important part of the story, and the part of it that I'm proudest of is that we actually did journalism. We hired a lot of really good journalists who did amazing things. Like go to Bosnia, and we broke stories, and we did investigative reporting, and we got known for some of that then. There is some disappointment, that those of us who were involved in that field of Internet Journalism has been bumpy. We still, to a certain extent, rely on the good graces of Reuters and AP to publish content. John: How do you, if you look at the trends today, there's this incredible increase in the number of people who get their news from Twitter and Facebook, but especially Twitter, how do you get your news? Merrill: I'm on Twitter just about every day, using it as a marketing vehicle. In other words, that's how I find out what Krugman's writing today, or what various people who I follow are doing. I get my news from an array of daily visits to relatively dimensional places. There's no magic in it, other than the first thing I look at is Twitter in the morning. John: I believe that recently, NBC took back MSNBC from Microsoft. I don't know precisely what the... Merrill: NBC paid $300 million, it was disclosed, to get all of it back, So Microsoft is out of the business now. Martin: What do you think happens from here? Do you have any thoughts about what happens now that... Merrill: With that undertaking? Martin: Mm hmm. It's your baby. You must have thought about it. Merrill: Vivian is starting it all over again as an NBC News wholly owned property, and as a separate left leaning website called MSNBC. What it was is kind of over. What was built in Seattle is being changed, and in some ways blown up, which is sad in many ways because of the point we made earlier about the nexus of technology and media. That interesting experiment that still has so much, at least theoretical, promise in terms of mobile and video, and so on and so forth is gone, and NBC News has no technology resources to speak of. I think that's a lost for them, not that Microsoft has actually figured everything out here in bold fashion. It's still a technology company of 20,000 people with enormous engineering resources that could be better used. Microsoft is now hiring news producers because they want to have their own news content. They're getting back, and they're getting into the stand alone news game in some fashion that's unclear externally. Everybody knows they need to be in the content production game in some fashion, including Microsoft. They'll just be doing it on their own and largely with third party content. All that is disappointing, because I think ABC News Yahoo, again, demonstrates that putting some technology and some media thinking together is an opportunity for at least traffic and revenue, and hopefully for quality content. They're doing very well. It's this model, in part, that they're following. Good for them. We'll see how it plays out. ...

TRANSCRIPT: John: Let’s start off by talking a bit about your career path -- how you got into journalism, how you began, what you're doing now, what you did. Tell me your career. Denise: All journalism? OK. Well, that's a funny story anyhow. I was the switchboard operator at the San Luis Obispo County Telegram Tribune. I had dropped out of college and I was working at the newspaper at the switchboard. The woman who was the Sunday editor for the Sunday magazine walked in one day with this load of books up to her chin. I said, "What are you doing with that stuff?" She said, "I have to review these books." I said, "Oh well, I was an English major. I'll review one." That was it. John: Where did you go from there, once you started? Denise: I had to badger my way into the newsroom, for starters. I left when we tried to start a union and they tried to fire me. I thought, "You know what? I don't need this anymore." I moved to the Bay Area and my friend who I had met up there...I'd lived up there after I dropped out of college. She was the new editor of the Osborne computer user magazine called The Portable Companion. She said, "Why don't you come work for me?" I had been working temp at the phone company during divestiture, which is actually kind of interesting, doing data entry. I went to work at Osborne. About 15 minutes after I got there, they filed for Chapter 11. I called a trade magazine, InfoWorld, and Stewart Alsop was the editor at the time. I said, "I just got laid-off from Osborne. You want a story?" They took a couple of stories from me on the Osborne thing. I can't believe you don't know this story. Apparently, John Markoff, Paul Freiberger and Michael Swaine all had walked off the job at InfoWorld because they really hated Stewart. I was the next hire and I got John Markoff's desk.. The beginning of a long and wonderful relationship. I worked in the trade press for a while, and then I got a column in the San Francisco Examiner. A Sunday business column called "Inside Silicon Valley." I did that for, oh, it seems like forever. Probably about five years. I started while I was doing that column I got to go down to Cupertino and...no, it wasn't in Cupertino. It was in San Francisco. They had this top-secret lab, the Multimedia Lab. It was in this old mechanics garage that they'd converted. John: Who had the multi-secret lab? Denise: This was the Apple site. John: Apple. OK. Denise: Who else? Denise: I saw this thing and my mind was completely blown. They were doing just this unbelievable stuff, stuff you could never possibly have imagined. Interactive multimedia, as we used to call it, for education. There was this great language learning program. Unbelievable. There was a way for kids to make these interactive reports about things. Of course, there was nowhere near the amount of material there is nowadays. It was amazing. John: This was in 1990 or when was...? Denise: Oh, God no. It was before that. John: Before that? Denise: I think it would've been '80... John: '88? '80? Denise: Well, maybe you're right, around '89. I started writing about this stuff and it didn't take me very long before I just thought, "You know, this is really good." That was the game changer for me, was seeing that. I wrote about it in the "Examiner," and then I decided that...I had been ghostwriting Stewart Alsop's Prodigy column. I had been working in his office down at PC Letter. I said, “you know, I should just start a newsletter." So I started Media Letter which it was not quite the first one but it was the first one that really caught on. John Doerr wrote me...he was the first subscriber. He wrote me a check on the spot. He's not so fond of me now. I did that for a few months, and then Jonathan Seybold came to me and asked me if I would start a newsletter for him to go along with their Digital World conference. I think that, by then, it was '91, '92 maybe. I did that for a few years. I went to this place called Friday Holdings. John: Sounds familiar. Denise: That's sort of the trajectory. I mean, it was kind of crazy. I just took to it. It was one of those funny things. I remember somewhere in there the American Film Institute asked me to come run a workshop for them on Women in Multimedia. It was a job thing, how do you do this? The only thing I could think of to do was I just invited all the really great women I knew who were working in it. There was 12 or 15 of them all lined up on the stage. They also said exactly the same thing which is also my story. It was the perfect time to want to get into something if you were a woman, because nobody knew what it was. The guys just thought, "Yeah, go ahead." They kicked butt. I had all these women tell their stories, basically, of starting out in something completely different. They were the secretaries or whatever. They all just dove into this and they made it happen. The women made it happen, really. As soon as it got good, the guys took over. John: OK. Friday Holdings then, when Friday Holdings as we both know folded, you went...what's the rest of your track, before I go and dig into it? Denise: After Friday Holdings, I was invited to write a column for the "New York Times" by someone. John: Who will remain nameless. Denise: Yep. John: You did that until when? Denise: 2000. Denise: 1995 until 2000. John: Then, "Hybrid Vigor" was... Denise: Then, I started Hybrid Vigor in 2000 and... John: Explain what Hybrid Vigor was, for those... Denise: Hybrid Vigor was -- still is, I'm just paying the money to get the tax return I’m paying the money now to get the tax return done, it's a research institute. A nonprofit research institute that was designed to study interdisciplinary research and to apply it. To improve the methods which people were...I mean, people were talking about interdisciplinary research but they weren't talking about how do you do it. What is it? How do you do it kind of stuff. Denise: New room, yes. Sorry. That's a real snafu. John: That's OK. You just said that the visit to the Apple lab was what I'm calling one of those Eureka moments for you. Were there others? Denise: Yes, in not such a positive way though. John: OK. What? Denise: In probably 1987, '88, I was writing my Examiner column, and a guy named Bob Jacobson, who was working for Gwen Moore, in the State Senate in Sacramento, California... ...was trying to pass a bill, the first computer security privacy bill. I didn't know anything about any of that stuff. That was the beginning of, for me, of realized that this could get ugly. Probably if you had to tote up all the individual articles I've written on various topics over the last gazillion years, that would be security and privacy and copyright would probably be the top ones. Beating them, beating them, beating them. It was one of those things, when I very first started, nobody knew what personal computers where. Nobody really had one. They didn't really understand the ramifications of it. How I understood the ramifications of it, I have absolutely no idea but I knew it was like, "Uh-oh." It was one of the hardest things for me, I think, over the years of writing about this is that nobody listened until it was too late. Then, they're still not listening. Dave Farber, he was one of the original internet gods. We were around the EFF or together on the Electronic Frontier Foundation. I sent him an email about a year ago saying, "It all happened." He said, "I know it sucks. It's really bad." John: Yeah. You said...It's interesting, how much did you expect that all this digital stuff, not just the privacy, did you ever expect it to hit journalism what you were doing at the time? Denise: I wrote about it almost immediately. I, also, in one of the many little things that I did, I had a forum on what was Quantum. Then it changed to America Online, so I had a forum on there, and they had a news page. I looked at this, and I thought, "Oh my, god." It's different. Obviously, much different today. The technology's much different and you can brand things. Then it was this screen, and there was a headline, no identifying characteristics. Was it Reuters? Was it some podunk who decided to post something in the news section? There was no way to know. I thought, "We are in huge trouble." I started stomping around at all the journalism conferences saying, "You have got to pay attention to this" and nobody wanted to listen. In fact, at one conference, I shouldn't name who it is. He would be so embarrassed. Someone, a very august person, at a very well-known publication, stood up and put his fingers in his ears and said, "La, la, la, I can't hear you. I don't want to hear this. I don't want to hear it." It's like, "OK. Well, that's good. That's helpful." . The credibility issue has always been big for me, and that was a lot of what I talked about. At some point, I was on a panel at Cal, some journalism panel at Cal-Berkeley. I heard tell that somebody from Pew was going to start a center, a thing, about this credibility thing. I said, "Hi. Actually, that was my idea, so maybe you would like me to help." I did this thing with Matthew Hawn, who I'd worked with at MSNBC, at the site. We did this thing called credible.org. We wrote standards and practices for publishing online whether you were journalist or not. It was pretty clear to me that that horse had left the barn. If we really wanted people to be responsible about what they posted then there were things that they could do to make sure that people understood,that they were transparent, basically. It was a case for transparency. John: Transparency. OK. But as a columnist, one of those transitions we've seen over the years, which goes ahead with the point you were wrestling with just now is the question of...When we all started working in journalism...Journalism always had starts, but the institutions were always bigger than the stars. Now the stars... And you were a columnist. You're a star. Now the stars almost transition into brands that are separate from the institutions. Does that surprise you? Is that also in the arc that you knew was coming? Denise: Yeah. We didn't call it that. But it was pretty clear, when the commercial Internet started to ramp up, that there was going to be so much stuff. And there already was, stuff got online so fast. You were going to need someone to guide you through it. At the time it was not journalism stars, but it was celebrity stars. Like David Letterman, whatever, the stuff that he thinks is funny. People really do do that. In a way, that's what Twitter has become. But it was clear, there was going to have to be something that helped people make a cut through...I always felt really sad about that. Because like or hate broadcast TV what you lose by having these really narrow channels is all the serendipity. At the time I was writing for Digital Media and I made some snarky comment like, "If you're a Neo -Nazi, you'll just look for the Neo-Nazi news." You're not going to hear anything that's ever going to challenge your worldview. I think that has really happened. And in a really bad way. So I don't know. John: Things happen. Let's talk about, things change. You mentioned the forum you held at the American Film Institute, with the women who were in it early on. What have you noticed that's changed in that technology coverage? Not coverage. The technology sector. You were back there, in the early days. How has it changed? Money for sure. But what other ways has the culture changed? Denise: Empty money, really. It started at the last big dot-com boom. I remember talking to Ann Winblad. She said, "I'm afraid to do anything. All these wannabe...If I make a bad decision they're going to chase me right down the rat hole." And they did. The thing that I've seen primarily...It had already happened by the time I left The Times, which was one of the reasons I left the Times. There was no substance anymore. It was huge amounts of money that these big companies like AOL would pay for these little, teeny applications like a calendar thing or something. And it just was dumb. It was shallow. It was lowest common denominator in the worst possible way. It wasn't interesting anymore. There wasn't anything interesting about it. The people who were doing interesting things could not get any traction. There are a few people who have continued to be inventors. Steve Perlman is one of them. They keep inventing technologies. But it's not about the technology anymore. The technology piece of it has gone. I think Steve Jobs is looking up or down, or whatever... ...from wherever he is, and laughing his ass off. Because he ruined everything. People are face-first in their screens all the time playing Angry Birds. We have just become so ridiculous. It's ridiculous. Denise: I walk my dog in the park pretty much every day, and it's really beautiful here right now. It's fall, the leaves are down. There are people walking through the park with headphones on. Why would you do that? There's birds. John: It's changed. Look, tech will change the world was always seen as sort of an empty boast and then it happened. Denise: I never thought it was an empty boast. No, but I knew there's always two sides to everything. I gave a talk one time called "10 Reasons Why I'm Always So Cranky." That's one of my favorite talks, actually. It was partly because there's always a way to exploit in the negative sense. I remember a column. They say the long-term memory is the last to go. I remember a column at the San Francisco Examiner that it was like the annual federal productivity report or something and it was down. All of these computers that were supposed to increase everybody's productivity not only did they not do that, but they made it worse. That's something that I think people didn't see coming. They didn't see that computers were going to actually replace them. John: Right. That's perfect. Denise: I don't know that I saw it coming way before it happened, but I remember writing and saying the same kind of stuff that people are saying today. How do you expect people to buy your stuff if you pay them no money or you lay them off because you have a machine that can do it instead? I feel like such an old fogey saying that, but the fact of the matter is it's true. You can be the frog in the water if you want. I think that people who started in this when it was the '90s or something, they don't see it. They don't see what's happened so they all think we're going to do a start-up and we're going to be gazillionaires. Maybe, maybe not. Then look at the detritus that they left after the Dot Com boom at the end of the '90s. San Francisco is ruined. It's ruined. Too expensive. Filled with hipsters that actually think they're worth that much money. John: What was the relationship...you've seen covering technology go from a handful of people at one point. I can remember when the Times had one person in San Francisco covering technology. Denise: Me, too. John: To now where everybody's covering technology. Denise: I wouldn't say that they're covering technology. This is the blenderizing of it that really makes it hard for people like me to even want to read a newspaper anymore. Because I actually had to learn the technology when I was writing about it. I had to be sure that I wasn't getting the wool pulled over my eyes by somebody because I was a journalist who didn't have any technical background. I really learned to ask more questions, to check around, to make sure that it was right. I don't see much more than press release rewriting in most places. Even in really well-known places a lot of the coverage is still in the business section and it's very much inside the tent. John: You're not seeing at all, in your estimation as a reader now, a lift in the quality of the coverage over the years? Denise: No. There are a few people who stand out. Matt Richtel is just amazing. I just read his book. I was awe-struck. That's the kind of stuff, not these little one-off pieces where somebody decides that they talked to two or three industry people and maybe somebody at a consulting firm and then they think they have a story and they have nothing, really. John: How about the idea that everybody says, "Everyone's a journalist." There's thousands of journalists. Do you put any stock in that? Denise: Everyone's a publisher. I think the only way you could make the statement that everyone's a journalist is if you really followed the credibility guidelines. That was the thing I was really trying to pitch back in the '80s. I said, "We need a milk advisory board for journalism. We really need somebody to go out and start stomping and saying, 'This is what a journalist does. We check our sources," blah, blah, blah. I don't know why - arrogance, denial, for whatever reason. Maybe it was becoming clear the quality was going to go down and you couldn't really say those things about yourself anymore because you didn't double check your sources, but it never happened. There was a golden moment when it could have happened. I think the news business, in particular, could really have turned it around. John: What was that moment, do you think? You mean the news business could have turned itself around, turned the quality of online around? What do you mean by that? Denise: Prodigy had a news service and America Online had a news service. CompuServe had a news service. All of these places that were sort of online database-y things had news, for the first time, somewhere else. Some of them got their stuff from the wires, and you might see a wire tag at the end or something, but there were no rules. No one was branding. The web hadn't been invented yet. It wasn't like you had links or anything. You just had these blocks of text that called themselves news. So the moment was early on. John: And the moment was short. You're saying about a two-year window. Denise: Yeah. All this stuff ramped up real fast. Especially anything that was text because that was easy and certainly much cheaper than trying to do anything with images. John: Were you surprised that the new business didn't reach the level of innovation that seemed to be necessary to survive? Denise: No. John: Why? Is there something in the news business that makes it unable to... Denise: The news business was just as old and entrenched as any of the other old industries. I wasn't surprised. The whole computer thing was still even new in the newspaper business when all this stuff started. I wish I could still find the photo when I was working in St. Louis. We had just gotten Atexes. I didn't know there was a photographer there. I was slumped in front of the...Like, "Oh my God." I was in my early 20s then. The people who had to learn how to use that, who were older than that…it was like an alien planet. I remember, for a long time, well into the '80s, computers weren't really entrenched yet. Because the big guys didn't know how to type. It's really prosaic stuff like that that you don't realize has such a big impact. But that was a big thing. People who didn't type didn't use computers. Period. John: What was it like among the journalists covering tech in the '80s and '90s. Was it more competition or more camaraderie? Denise: Both. It was kind of old school. It was the way people who were on the same beat always covered things. You know each other, maybe you hate each other for personality reasons. But nobody really...It wasn't like, "Oh, Evelyn is covering this." I was never a reporter at a newspaper at that time. I didn't have to worry about that kind of competition. People weren't like that. They didn't share stories or anything, but they hung out together. I just have the vision of all the legal reporters hanging out in the courtroom, jawboning. People who cover the White House, stuff like that. We really were a breed apart. In the '80s, if you were at a party and you told people that you wrote about technology for a living, it was like you dropped a stink bomb in the room. They cleared out. Nobody knew what you were talking about. They didn't want to know what you were talking about. Like, "Oh, look at the time!" So we talked to each other. I think it's the same thing as any reporters who had a specialty or a beat that they really knew a lot about, that was intricate. Like the law, stuff like that. But that's so diffuse now. John: It's interesting. By the '90s though, that had changed. You were no longer a stink bomb in the room. The companies always wanted access to you in the '80s and '90s. Right or wrong? Denise: They wanted access to me because I wrote for the trade press and I wrote a newsletter. When I started writing for The Times, nobody would return my call. John: Really? Why? What's your analysis. Denise: One person, who shall remain nameless, said, "Why should I talk to you, you're just going to tank my stock price." Like, "Really?" It was probably true, but still. John: If I bring up the Justice League of America, does that ring any bell with you? Denise: The comics? John: No, if it's just the comic than never mind. Because Markoff tells a story and he couldn't remember quite when and where, about being together with a bunch of reporters, and them all deciding to set up their own independent shop. It lasted for about 24 hours. There was even an episode where the venture capitalists wrote them a $10 million check. They all flipped out so it never happened. Do you... Denise: No, I think that was...That was probably after I left The Times. I can't even imagine the number of incredible job offers that John Markoff has gotten over the years. Denise: Intriguing for a minute, but then...No. John: What do you think about journalism these days? Are you optimistic about it? Are you not? You're not practicing it in the new role. Denise: I practice it more than most journalists do, right now, even though I'm not publishing. But the way I do research, the way I write about things. I take nothing for granted. I learned at the feet of the master. Jim Hayes was incredible. He was my mentor who was a teacher at CalPoly. He was also one of the editors at the TT. (Telegram-Tribune) He was no-nonsense about all of this stuff. John: It's the same thing that Esther said. Esther said she started life as a fact-checker. That's sustaining, that mindset. Denise: You come to realize that if you don't ask those questions, in a world that's as complex as this one, if you don't push the question, you almost certainly are going to get it wrong. John: It's true. Why do you think nobody listened to you? It's true of all the journalists. I was talking to one of the colleagues the other day. He said, "I had a great relationship with my boss, but he never asked me. Who's going to listen to a tech journalist?" Did you find that so? Denise: I didn't find that to be true at the Times. Arthur did more outreach than anybody else. When I wrote for The Examiner, Will Hearst was the editor. He was invested in a ton of technology companies. So he knew what we were talking about, but we couldn't talk to him very much. Conflicts of interest all over the place. In terms of anybody else listening, I feel like it's...I don't know how to describe it exactly. You know when you have people do surveys and they say, "How would you feel about having your own personal spaceship?" I would love that. But when push comes to shove, nobody is going to have their personal... What I'm trying to say is that it's very difficult to imagine something that doesn't exist. Some of us who covered the industry from the beginning, we saw the underpinnings. We saw the chips and the video cards. We saw all of this stuff developing. We could extrapolate. Whereas people who didn't have that technical understanding, it just sounded like you were flapping your lips to them. It was like, "That's crazy. That's never going to happen." La, la, la. I couldn't believe it. He actually stood up, put his fingers in his ears and said, "La, la, la. I can't hear you." John: You sure you don't want to say who that was? Denise: I don't want to embarrass him. It was ridiculous. It was just ridiculous. John: One other thing I want to chat about. You had the forum, you had others. That transition in a journalists’ relationship with the audience is huge. Once upon a time, when we all began, you used to get a snail mail would come in once in a while. Now it's...Is that good? Is that bad? What do you think about that, that relationship with the audience that journalists have now? Denise: If I started a blog again, I would not post comments. John: OK. Why? Denise: Because unless you vet people the vast majority of people are going to be like, "Haha, she said 'fart.'" The level of thought and consideration for other people... It's gone. I just don't respect that. There are things for which I'm sure it's great. But I don't think it's useful in journalism, unless you can vet the people. And then it's not free speech. So I get why people don't do that. But I don't want to have those conversations. I don't want to have a conversation with someone who is too ignorant to read to the bottom of the story. I don't want to have a conversation with somebody about the public policies of genetically modified organisms who hasn't read the book. I wrote a book about it. I did four years worth of research. Did you do four years worth of research? "No." Well then, shut up. It's very frustrating to me. It's very frustrating. Part of what's happened I think, also, at least in the United States, is that people are really polarized, about commerce in particular. So if there's anything that looks like you might be able to make money doing it, it's good. Doesn't matter what it is really and if somebody wants to take issue with that or say that maybe there are other aspects, which is what I've made my whole career doing. They're like, "You're a Luddite, shut-up, you're stupid. Your mamma wears Army boots." It's not fruitful. John: No. But you were one of those who always saw how things...Because of you inquiries you saw the underpinnings. You looked closer rather than at the top. That unfolding inquiry that you use is unique. That's not how most people go about their lives at all. Denise: I know. I understand that and I wouldn't expect most people to do it. But what I would like is some respect for doing it. I think people who do those kinds of unfolding inquiries, they could be the people who help keep all of this together by making sense of it. You can't continue to bifurcate arguments until the end of time. You can't get anything done that way. What you get done has to be undone later. Because some ideologue decided not to fund the NSF (National Science Foundation)anymore or something. John: Yeah. All right. Not optimistic about journalism. Denise: But what I am optimistic about is that if you know how to look for it, the people who are doing really good work are there. They're out there. However they're getting it out there, they're doing it. They don't get the same kind of buzz that Perez Hilton gets. There's really good stuff out there. It's harder to find a really good general journalism. But the people who do specific stuff...whether you call it journalism or whatever you call it. There are lots of places where you can find excellent information that's vetted properly. John: So as someone said to me, "I'm optimistic about journalism with a small 'j.'" Denise: Exactly right. Because I think people...Once they start looking at what's around, writers who care about what's going on in the world have this deep, innate sense of, "Oh, that's not right." So if they decide to jump in then they want to do it right. I really am grateful for that. John: As am I. Alright, thank you very much. Denise: You are welcome. ...
VIDEO: YES

Steve Case
BIO: YES: Stephen McConnell "Steve" Case (born August 21, 19...
TRANSCRIPT: Walter Isaacson: It's April 10th, 2013. I'm Walter Isaacson and I'm speaking with Steve Case in the Washington DC offices of the Aspen Institute for the Harvard Oral History Project. Steve, why don't you start by telling us how you got involved in online and with AOL? Steve Case: I started AOL, co founded it in 1985. But my interest in the space really started a few years before, when I was still in college. I think it was 1979. I read a book by Alvin Toffler, called "The Third Wave." He was talking about a number of things that were going to happen in the future. But one of them was the idea of an electronic cottage. Someday, people would be living in this more interactive world, getting information in new ways, communicating with people in new ways. It struck me as an obvious thing that eventually would happen. So when I graduated college, there were no companies to go to do this. So I worked for some larger companies, Proctor and Gamble and Pepsi Co for a while. I moved to Washington DC, in 1983, to join a company that was doing an early version of this, but more focused on Atari game machines. That was not successful. But I did end up with two of the other people, Jim Kinsey and Mark Seriph, leaving that company and co founding what became AOL, in 1985. It was a five, six year effort to try to figure out some way to get on the playing field with a company that could begin fulfilling this mission of trying to get America online. Walter: What exactly was the mission, in terms of forming community, helping with email, delivering content and news? How did you see AOL, originally? Steve: When we started AOL, in 1985, only about three percent of people were online. The people who were online were online only about an hour a week. It really was a pretty small niche, almost hobbyist kind of market. Our goal always was to expand it and make it much more of a mass market, mainstream phenomenon. Everything we did was geared towards that, trying to make it accessible, easy to use, and more affordable, more useful, more fun, things like that. Our big bet, even back in 1985 was what we called community. Now people refer to it as social media or other kinds of things, but we thought it was the killer app of the Internet was going to be people. People interacting with people they already knew in new ways that were more convenient, but also people interacting with people they didn't yet now, but should know because they had some kind of shared interest. Even in 1985, we launched things like People Connection or chat rooms, things like instant messaging, buddy lists, and text messaging, and things like came out of that. We really always focused on that. It always accounted for the majority of our use. We had a lot of different things as part of AOL, but those community features were the main event in terms of use. We thought really the soul of the medium. It was what was really going to resonate with more people. We had a number of things, we used to call them the Cs. Things like content, and context, and commerce, but the biggest one, the fourth C, was community. Walter: Why then did AOL not, over the years, evolve into a social network and became more of publishing medium? Steve: It did evolve, always. Even when I left it, 12, 13 years ago, the social functions, the community functions were the majority of the use. We also believed, in order to get America online and then expand it globally, to get everybody online, you had to have a full array of services. Some of it was the connectivity in the early days, before people had access to broadband or WiFi, the dial up connectivity was bundled into the package. Software that made it easy to use was bundled into the package. We created a content offering that really was compelling, with brands that people could trust, as well as launching a variety of different things. A lot of people wanted to be their own publishers. Things that have now evolved with blogs and twitter and things like that, we were trying to do some of that 20, 20 plus years ago. We also thought it was important to organize it in a smart way, that's why context mattered as well. It wasn't just about content or commerce or community, it was how it was all linked together, how it was organized in a way that made it more accessible. We believed, in order to get people to buy into the idea of getting online, it needed to be a complete package. That really led us to try to create compelling offerings once you were there, but also made it easy to actually get you there by creating the on ramp. Both in terms of the communications connectivity as well as the software, and be fighting to get PC manufacturers, for example, to bundle modems into PCs. When we got started they were viewed as a peripheral device. They were not an essential part of the computer because only a few people were using that feature, but eventually we got the PC manufacturers to bundle modems in. We bundled our software in and made it easier to get online, and then we started expanding the array of offerings. Walter: You were up against Prodigy and CompuServe, who both had big corporations backing them, as well as a few other services. What caused AOL to win? Steve: I think a lot of different things. I'd say the core was that the team we assembled was really passionate about the idea of building this medium. Some of our competitors, CompuServe was a division of H&R Block, a relatively traditional financial services oriented company. They did some interesting, innovative things, but they were not quite as consumer oriented, not quite as mainstream oriented, as what we were trying to do. Prodigy was a joint venture of, at one point, IBM, Sears and CBS. They committed a billion dollars to invest in that. They really tried to own this market, but the people they were able to attract were more people from those companies that brought the perspectives of those companies, and I think they were too focused on the past and not enough focused on the future. I think we had the right balance, in terms of trying to make this ready for prime time, reach a mainstream audience, figure out ways to make it affordable, be much more aggressive in pushing things like community functions. That was a little scary to these other companies, the idea that people were just talking to each other. It was not something they thought was going to be a core part of the service, and we always believed it was going to be the core of the service. I think it was a lot of different things. Some of it was also related to partnerships we formed, especially with PC manufacturers. We did deals with Commodore and Apple and IBM and Tandy and others, to create different kinds of services. We partnered with media companies to bring their brands in. One of our earliest partnerships was you with "Time Magazine," probably 20 years ago, when larger media companies were beginning to look at this space. There were a variety of different things that we were able to assemble to make this something that really was ready for prime time and could reach a mainstream market. That said, it really took us a decade before we hit our stride. It was a lot of hard work, a lot of foundational work to get things going. It was really the second decade when things took off. We started the company in 1985. We went public in 1992. It was seven years later, and we only had 200,000 customers after seven years. Seven years after that, when we were looking at, and did merge, with "Time Warner," I think the number had gone from 200,000 to 20 million, and we had gone from 200 employees to I think it was almost 10,000 employees. So this first phase was a pioneering phase of trying to figure out how to create something that would attract a broader audience, that was easy to use, was useful, was fun, was affordable, was compelling, and was convenient. But it was only the second decade when it really took off and everybody woke up to the idea of the Internet. Thankfully at our peak, a majority of Internet usage in the United States flowed through the AOL systems. Walter: You mentioned the content deals you did around 1992. I think the one you did with "Time Magazine," it was when you were just 200,000 users. How did the content and the marketing work together to get people online with AOL? Steve: It was a mix of things. We always believed, and it turns out to be right, because still to this day the majority of Internet usage is related to community, social kinds of functions. We always believed that would be the core. We also knew until people experienced that, they didn't really get it. People weren't going to adopt AOL and embrace the idea of the Internet just based on the community features. We needed to have broader mainstream appeal. As a result, we tried to assemble a package of services, including branded content, that was from brands that people knew and trusted. So we wanted to get "Time Magazine" on. We wanted to get "New York Times" on. We were really trying to get some of the leading brands that were already trusted, because if they were part of AOL, that would attract more people, be a magnet for more people. Once they experienced this, this service, they would broaden their use to other things, including the community functions. It was important as a way to create that momentum and anchor to reach a more mainstream mass market than we would have likely been able to reach if we just focused on the community functions. They were a very important part of the service, in creating credibility and momentum, a sense that this new medium was arriving, that the major media companies were now starting to pay attention to it and embrace the idea, or at least try different things in that space. That's why it was important to not only have content, but have trusted, branded content. Walter: But let me plug the theory which is also, like Steve Jobs, you believed it had to be really simple, and you had to get people online in an unintimidating way. Those disks and the marketing that would come with the "Time Magazine," you'd say, "Oh, this can't be that hard. I can put it in and it says, 'You've got mail.'" Which made it, to me, more distinctive than The Well, Prodigy, CompuServe, which always seemed a bit more intimidating to the average user. Steve: They were more intimidating. We spent a lot of time designing our software and our services to make them as simple as possible. The mantra at the time was, "We want to make this easy enough for my mom to be able to use." My mom always resented that, I guess. She said, "Why don't you pick on your dad?" Walter: [laughs] Pick on your dad, yeah. Steve: Which was probably correct. But the idea was we didn't just want to appeal to technologically sophisticated people. We really wanted everyone to get online. We really wanted to get America online. In order to do that, it was going to have to be simple. Some of that was the software. Some of it was things like getting PC manufacturers to bundle the modems in and bundle our software in, so it really was, they've got their computer at home, turned it on and clicked on this icon, and basically you were up and running. It would give you a free trial, a free month or two to get that experience. Then we supplemented that with bundling our software with magazines and a variety of other products so that no matter where you turned, you would see AOL, and it would be coming to you from a trusted, credible endorser, if you will. It might have been IBM bundling us on the computer. It might have been "Time Magazine" bundling our software with their magazine. It was a way to make it easier, but also a way to basically say, "It's safe to get in the water. It's time to get online." Walter: When did you first start thinking about the Internet at large as something that AOL would provide a gateway to, as opposed to a carefully curated online service and community? Steve: What's interesting to me is that when we started in 1985, it was illegal to connect a commercial online service to the Internet. The Internet until, I believe it was 1991, was only for government use and university non commercial use. Businesses could not operate on the Internet. A company like AOL could not connect to the Internet. Walter: I think it's September 1991 when they opened it up so that you don't have to be an academic institute to connect. You can connect through dial up. Steve: The first five or six years we, in a sense, were having to do everything on our own, build our own email system, our own paid subscription language, our own tools. Everything we had to build ourselves, because we were essentially excluded from being part of the Internet. When the decision was made to make it commercial, it still was not ready for prime time. It had the basic capabilities there, but it was not very accessible. So our focus was how do you embrace that, give people access to the Internet in a simple, convenient, affordable way, but also give people access to whole set of services we had at AOL that were not yet on the Internet. Our positioning in that early to mid 1990s was AOL certainly got you access to the Internet and a whole lot more that was exclusive to AOL. That drove a lot of the growth in that 1990s period, when people were beginning to learn about the Internet. The World Wide Web was just beginning to emerge and come of age, and the way you could access that through AOL gave you a better Internet experience, plus some things that were only available if you were an AOL subscriber. Walter: Do you think the nature of your service changed in the early '90s from being an online community service to being an "Access to the Internet and dial up connectivity" service? Steve: It certainly changed several times in the '90s. The first phase, the late '80s, it really was a bundled online service offering. It was the software and the connectivity and a whole slew of services, some that we were providing and some that other people were providing. Initially, because the cost of communications was pretty high when we first launched, people were spending five, six dollars an hour to be connected, which was part of the reason why they didn't use it very much. We had to build networks to drive down the communications cost to get to the point where it's pennies an hour, as opposed to pennies a minute. That also helped drive the adoption. That's when, eventually, in the mid '90s, we were able to move to unlimited pricing. We started with a subscription fee, but you only got two, three, four hours of use per month, and you had to pay extra. The meter was always running. We were able to migrate to a model which was an unlimited use of all these different services. That's part of when the Internet was becoming more of a mainstream phenomenon. We had to pivot and reinvent the business model every two or three years, based on what we were seeing and what we thought was going to happen next. Walter: But when you were charging per 15 minutes or per hour, that formed a business model, in a way, to get content like "Time Magazine." When you pivoted to unlimited service, did that change your view of the need to put "The New York Times" into your service? Steve: A little bit, but they were still important. What it really changed was the business model we had with each of these content partners. In the early days, we were licensing their content and basically paying them a percentage of the revenue we generated based on those numbers of hours of use that their services generated. When we decided to move to unlimited pricing, and the usage obviously skyrocketed at that point, we had to modify our agreements and it was less about a percentage of the dollar per hour revenue and more about a percentage of advertising revenue. We had to basically move off a communications per hour model to more of an advertising supported model, which is the way most media, television and so forth, magazines and other things, they've always had more of a blended model, where advertising was a key revenue stream. We didn't have any advertising on AOL until we moved to unlimited pricing. It was a completely consumer focused service with a set of services that consumers paid for by the hour. It was when we said, "Now it's time to move to unlimited pricing," because that was going to be critical to unlock a mass market and remain competitive, and it was becoming a more competitive market. That's when we had to pivot the model and shift towards advertising and commerce as the primary source of revenue. Walter: You just talked about the blended model of advertising revenue combined with subscriber/consumer paid revenue, and yet that then shifted so that the Internet becomes almost totally advertising supported. Do you think that that had some real downsides to it? Steve: There were always multiple revenue streams. What happened was the unbundling, in a sense, of these services. With AOL, or our competitors at the time, Prodigy and Microsoft's MSN and others, they tended to have integrated offerings which included communications access. What happened as it shifted from narrowband to broadband is instead of paying a service like AOL the communications, when we essentially were wholesaling it from the communications network, then we're essentially already online through your cable network or your phone company on some broadband network and you're already paying them for the communications. Then you were just focusing on the services you were using as opposed to this bundled offering. It did have to migrate and be one of the strategic reasons we decided to merge AOL and Time Warner. It wasn't clear what our path to broadband would be. We were the leader of the pack in the narrow band dial up world, but we knew it was moving to broadband and we didn't own any broadband systems. Time Warner had the largest cable system with Time Warner Cable as well as a treasure trove of branded content that we thought would work well in a multimedia broadband world. That was one of the strategic drivers of the merger, recognizing that that was where the market was going and the core revenue stream we counted on, which included this communications connectivity, was going to move away from AOL to these communications networks. Walter: The advent of broadband and cable access and stuff pretty much ends the traditional business model you had for AOL? Steve: Yeah. It ended up doing that, in part because we, at the time, in the late 1990's, were arguing for what we called open access. These broadband networks should be opened up, much like the narrow band telephone networks where when AT&T was broken up into seven Bell Operating companies in the 1980 ish time frame. It created enormous competition because, in a sense, they were selling their wholesaling services to many, many other companies. Walter: In other words, make the cable companies sort of like a phone company where everybody had open access to it? Steve: Everybody had access and you had the ability to wholesale that access as opposed to the only way to get it was through the consumer. We were hoping that would be what the policy was. That didn't end up happening. Walter: What would have happened if the policy makers had gone that route? Steve: It's harder to say, but we would have had a clearer path to broadband and the need to consider a merger with Time Warner would have been diminished. That path to broadband, we knew, was where the market was going. There was pretty clear evidence of that and we knew we had to migrate our business model to do that. Because we were essentially locked out of doing, in the broadband world, the same thing we'd been able to do for more than a decade in the narrow band world, that forced us to rethink our business models and consider other strategic transactions. Walter: The other thing that happens in the mid to late 1990's is that advent of the world wide web as the protocol one uses to be on the Internet. How did that undermine, to some extent, AOL's strategy and what it was doing? Steve: The evolution of how these systems were working moved away from a narrow band system to a broadband system and we had to evolve our business model to reflect that and unbundle the communications aspect of our service from AOL and recognize that most people would be coming from broadband providers. Walter: You were saying that the web helped you at first because it allows you to, with your own service, make it faster in the cache. I don't know how you do it. Steve: The first wave of AOL was really trying to get everybody online through our own technologies. This was the mid to late '80s, early '90s. When the Internet became commercialized in 1991, that extended our opportunity and we suddenly wanted to embrace the Internet and provide better access to Internet than anybody else could provide, along with some other services that were exclusive to AOL. When the world wide web emerged a couple years later, that created a broader platform opportunity. People were really quite engaged because it shifted from a text oriented design to more of a graphical kind of design, video and audio and other kinds of things. Our advantage then was we architected AOL to deliver those world wide web pages faster than most of our competitors. If you were going to a page that had a photo on it, for example, it would be delivered more quickly on AOL than on an independent provider. That actually fueled the growth of AOL. When the world wide web emerged, AOL became the way that people who were curious about the Internet now and wanted to get on the web. It was the best on ramp to that content. Walter: You just said something interesting which is it helped deliver pages. That seems, to me, a fundamental shift from what the Internet was all about 10 years earlier which was about creating community. The web, does it change the nature of the Internet just by the virtue of its technology to be more of a publishing and delivery of content service, where community is relegated to comments at the bottom of pages and undermine the notion of the whole Internet being more community than just content delivery? Steve: Not really. Even when the world wide web came of age, the dominant use of these service was community functions. It enabled a whole, essentially, publishing platform that didn't exist before, which the large media companies embraced, but also thousands of independent entrepreneurs and editors and journalists and creators also embraced. Suddenly there was an outpouring of content that was available that previously hadn't been available. Even when that was happening, the core of what was driving these services and the core of what was driving their usage was the community related function. Walter: What services? You mean AOL? Steve: AOL and other services as well. Things like email and chat rooms and message boards and instant messaging, things like that, continued to be very, very popular and obviously today remain popular. Facebook and Twitter are basically the next generation of those kind of community based services. Walter: Do you think, I'll leave aside you personally, but had AOL's original people kept with their vision, which was community, gathering people, it would have evolved into a Facebook, MySpace, Twitter like service? Steve: It's hard to say, but I do think at AOL's peak, the majority of the use was social functions and that was always, from the day we started the company, the focus. When new emerging technologies and services that were community based came onto the scene and started getting traction, ICQ, for example, became a global instant messaging platform, AOL acquired it because we wanted to make sure we were at the lead of this next generation of community based offering. It's always hard to predict things, but the focus of AOL was always around these community social functions. I imagine it would have evolved to create the kind of environment that now Facebook and others have. Walter: You think that, had AOL stayed a small or nimble or separate company it might have seen a MySpace, seen a Twitter, either acquired it or created something and be in that space now? Steve: Yeah. Again, it's hard to say. I would say as companies get larger, and AOL, even before the Time Warner merger, went from dozens of people when it started to a couple hundred when we went public to many thousands by the end of the 1990s. It was losing some of that nimble kind of attacker mindset. Walter: Why? What could have been done to prevent that? Steve: We tried. Some of it was through reorganizing the company periodically and acquiring new companies that had interesting technologies, interesting products, but there is something around scale that makes it harder to innovate. The other piece of it, though, was this migration of our model from communications services to advertising support also resulted in a shift of the mindset and the community functions were actually harder to monetize. Things like instant messaging were harder to monetize. It's easier to monetize a page of content from "Time Magazine." There are a lot of people that want to put ads on that. People were more skeptical and reluctant to advertise on community functions where, essentially, people controlled the content as opposed to branded providers controlling the content. That puts some pressure on the model, as well. Walter: Before you did the AOL merger with Time Warner, which I think is 2000, beginning of 2000. Steve: Yeah, announced in 2000. Walter: Was there anything, in retrospect, you wish you had done to take it in a different direction? Maybe not get distracted by the advertising/monetizing pages and take it in a different direction? Steve: I would say, in retrospect, we had to make the transition, the pivot, towards advertising because, clearly, we were making money when it was by the hour essentially selling communications access. We were losing money when we offered unlimited use and we had to essentially make up for that loss by moving into things like advertising, commerce. That was an inevitable trend. Walter: Was there any possible way to keep it a blended model where you weren't totally dependent on advertising? Steve: It was a blended model. Even at the time of the merger, a significant portion of revenue, we're getting $20 a month... Walter: I assume you saw that being a declining model? Steve: No, it was pretty steady. We were still generating $20 a month from the customers at that time. In the early 2000, that's when that started diminishing as people were adopting broadband. Walter: I imagine you saw ahead that in the end people weren't going to pay for dial up access. Steve: Right. Walter: Why did the merger fail? Why did this notion of combining AOL with the broadband access with the greatest content brands fail? Steve: I think it's a lot of things, but the core of it is around execution. I think the idea of that merger, from AOL's perspective and from Time Warner's perspective in terms of the strategic drivers of what's happening with these markets, what's happening with technology, I think it made sense for both companies. For AOL and its shareholders, it certainly made sense because when we went public in 1992 the market value of AOL was $70 million. By 2000, the time of the merger, it was $150 billion. It was the best performing stock of the entire decade. More than Microsoft or Cisco or many other companies. The ability to essentially take that and merge it with Time Warner, which was a large, diversified company, our shareholders ended up with 55 percent of a company that had $40 billion of revenue and $10 billion of profit versus if it had stayed as AOL they had 100 percent of a company with $5 billion in revenue and $1 billion in profits. There was some strategic benefits on that side, as well. The core reason it didn't work was not, in my opinion, the idea but the execution of the idea. Walter: How would the execution have been different? Steve: I think it's all about people. Thomas Edison famously said a century ago, "Vision without execution is hallucination." I think that was part of the problem. In retrospect, because Time Warner itself was a company that was essentially built through a variety of different acquisitions and mergers and AOL came into that world, we saw the world converging. We saw operating this as one company to try to be the leader in this new and digital world. It really operated as independent companies and we were never able to get the kind of synergies that I was certainly hoping for. That's why, as part of the merger, I agreed to step aside as CEO. I said I'll basically hand the baton to the Time Warner side because I believed in the idea of the merger enough to step aside personally. It disappointed everybody to see that that didn't really work. I think it ultimately came down to people and cultures. In retrospect, if it worked like the White House when a new president's elected, essentially everybody leaves and they bring in new people to basically move that agenda forward. If the top 50 executives of the combined AOL and Time Warner companies had all been fired and you conned a central casting to replace them and 50 new people that were not focused on the past but rather on the future were in charge I think it would have worked out better. Walter: They would have integrated better. In other words, integrated content delivery. That's the main thing that failed. Steve: Yeah. I think what's happened over the last decade, and Apple is a great example, as you know, the resurgence of Apple was essentially a belief in convergence. Whether it be the iPod or the iPhone or, more recently, the iPad. It was integrated devices with hardware, software, and services coming together in a simple kind of fashion. That is convergence. That was the idea that was underpinning bringing AOL and Time Warner together, but required really operating them in a more integrated kind of way. If you had a holding company structure essentially and let everybody do their own thing and didn't drive that synergy, then you weren't going to capitalize on the possibility of digital convergence and weren't going to capitalize on the vision of that merger. Indeed, that's why, a couple of years after the merger, I stepped aside as chairman and, not long after, I left the board, because I really believe that we were not on the path that I thought we'd all agreed to, to run this in a more integrated way. Walter: One of the ways Steve Jobs felt to integrate a product, you had to integrate the company and have no divisions in the company. He said even the word was bad. Time Warner, after the merger, and even before the merger, seemed very much division oriented, where each division had its own power. Steve: I think there are pluses minus to both arguments. I think you can argue, and I did, for an integrated view of this. You can argue for a liberated view of this. What you can't really argue for is, basically, to be in the middle. Walter: The worst of both worlds. Steve: I was saying, "Run them..." If Steve Jobs had been the CEO of that combined company, because he did bring a sensibility, understood technology and where is was going. The Silicon Valley mindset and a creative Hollywood mindset. If Steve Jobs had been running that company and able to assemble a team, I think it would be in a very different place. But, ultimately, the decision was, not just the management, but the board, to not push towards convergence, not force this integration. That's why, over the past decade, essentially, they've broken up the company, spinning off these different businesses and then letting them operate separately. That is a better strategy than what they were doing when I left, which is, basically, neither fish nor fowl, not getting the benefit of synergy, but also not getting the benefit of being nimble and more independent. Walter: One of the things AOL did not do was search. Why is that? Did we all just not realize that search engines would be valuable or we thought they'd be commoditized? Steve: We actually did do search. Obviously, we didn't do it well, but we did. In fact, we acquired the first search engine in the mid '90s, it was called "Webcrawler," and integrated that with the service. But we did not focus as many resources on search as we should have, because we really did believe in the model of channels and content, and tried to, in terms of getting people comfortable with this medium, organize it for them into different topical areas. As the Internet became more mature, and people got more comfortable on it, they naturally evolved from more of an organized channel model to much more of a search driven model. Now it's evolved again to more of an apps model. But in that first phase we did think it was important. I think, in retrospect, we were right that organizing it in the way we did to get the mass market was important, but then we needed to migrate them as they got more sophisticated to search and then later, in the last few years in particular, to more of an apps model. Walter: But is it also perhaps because both on the East Coast, and amongst all of us, the engineering driven culture wasn't quite as strong as the more, say, content or marketing's culture? Steve: Not really, in part because AOL's engineering was fairly dispersed. We acquired dozens of companies, including Netscape at one point, which was considered one of the most innovative Silicon Valley Internet companies. We certainly had smart people that were focused on different opportunities. Ultimately, it was how things got prioritized, which things got more attention, as opposed to less attention. But even when we did the merger and I stepped aside, I think Google at that time had 10 or 15 employees. It was still pretty early in terms of what was happening with search. That didn't become a real phenomenon in particular till probably 2003, 2004, or something like that. Walter: Why did you acquire Netscape? Steve: Probably to expand our capabilities with Internet technology. We both, in terms of the enterprise space, and as part of that deal we also partnered with Sun Microsystems to have them take the lead on the enterprise side. We felt owning that browser technology and some of the services they were able to generate off that would be an important way to have a more diversified model. Even though AOL was always the core business, the core brand, as we expanded and grew, we did acquire dozens of other companies. Not just Netscape, but things like MapQuest, Moviefone, ICQ, many different companies, focused on different niches. Some were communication niches, some were technology areas, and some were related to content. We also launched, around the same time, AOL Studios and, basically, incubated dozens of companies, many of which have gone on to be quite successful. There are a variety of different things that we were doing outside of building the AOL brand, even though the AOL brand was always the core of what we were doing. Walter: Where do you think, if any place, the Innovator's Dilemma would have been, as relevant to looking at things that got missed, either during the AOL days or the Time Warner days? Steve: I do think that the Innovator's Dilemma, the way I frame it, is the world of business is divided into two camps, the attackers and the defenders. The attackers are the disruptive innovative entrepreneurs that really are trying to change the model and change the world. The defenders are the larger companies, the Fortune 500 companies. They really want to grow, they want to innovate, but they're primarily focused on protecting the downslide, they want to make sure they don't lose what they have. Have it optimized, but not lose it. It's a different mindset. I think, as AOL grew, particularly as it got to the point where it was approaching 10,000 employees and 5 billion or so of revenue, which is about what happened when we did the merger, it was already starting shift to be a little bit less of the attacker and a little bit more of a defender. Then, with the merger with Time Warner, given the complexity of that business, and some of the trying to protect different parts of the business, it made it much more difficult. I remember, for example, that AOL was launching, probably within the first year of the merger, a very robust communication service that was leveraging the instant messaging technology, which, at the time, AOL really had a monopoly on. There were people trying to force us to open up the APIs, because we had such a great monopoly on it, and a broad suite of offerings. It essentially was what Skype now is today. Walter: Should AOL have opened up the APIs faster? Steve: We did. We actually did start licensing it to Apple and other people. iChat was based on the AOL APIs. We did start opening up the APIs, but the initial thrust was how do you leverage that market position to enter other businesses. One was essentially a forerunner, probably four or five years before Skype, of what Skype became. The problem with this combined company is, basically, the people running the Time Warner cable division were also developing communication services. They were, "We don't want AOL to do that. We're trying to do that," and, basically, the AOL service was shut down. Instead of AOL developing something that could have been Skype, based on that AIM technology, the AIM platform, that was lost to another company. That's pretty common when companies get large and you've got tens of thousands of employees each focused on managing and often protecting their particular businesses. You lose that edge and that ability to be nimble and swing for the fences. Walter: In retrospect, would you think it would have been better or not having done the merger to have had that nimbleness? Steve: It's hard to say. I think AOL would have been able to innovate more aggressively and be a stronger brand today if we hadn't done the merger. At the same time, I think, as I said before, the idea of the merger made sense to me. Certainly, from an AOL shareholder's perspective, even this day, it made sense. The combined value to AOL shareholders of that merger to this day is probably 60 or 70 billion dollars. Whether AOL, on its own, could have continued to maintain momentum in the market, it's hard to say. I like to believe it would have been able to, but you never know. I don't look back and say, "I wish we hadn't done it. I wish we had figured out a way to execute against the vision of the merger more effectively." That really comes down to people and culture. Walter: One of your earliest deals was with Time, I think '92, or so. Then you have a newsroom, you have digital cities. You were always interested in news content. Why is that and how do you think about that in retrospect? Steve: Two reasons. One is we recognized the news content, and journalism more broadly, was a core part of what people were spending time with every day, whether be reading newspapers or magazines or watching news on television. As we were trying to bring this news medium to life and have people move away from the traditional ways they were consuming content, this new medium embracing news and journalism as part of that was very important. We also thought the brands that would come with that and the credibility of those brands would be important. But we also believed it was a leveler of the playing field. One of the things I always loved about the idea of the Internet, and it's now obviously true today, is that everybody could be a publisher. When we got started, unless you were Time Inc. and owned a bunch of printing presses and distribution capabilities, you really couldn't easily start a magazine. Unless you owned cable systems or broadcast television, you really couldn't launch a television program. There were barriers to entry and gatekeepers that, essentially, were controlling what you saw and what you read. We wanted to blow that up. We wanted to disrupt that. The Internet was leveling that playing field and giving people the tools so anybody could be a writer. Anybody could be an editor. Anybody could be a publisher. That's now created, 25 plus years later, a whole phenomenon around blogs, Twitter, and a variety of different publishing platforms. That was always part of our goal, how do you take this medium and build on what's happened in the past but reach new audiences and, basically, make sure the Internet was as ubiquitous as things like the television or the telephone, but more valuable in terms of people everyday life. Walter: How would you regard now the perfect news service? Is it a mixture of user generated blogger content, the branded content like Time? How did you try to do that and how, in retrospect, do you think it would be perfectly done journalism as a web service? Steve: It continued to evolve, but what's happening now with these blended models, I think it makes a lot of sense. Part of popularity of Twitter, for example, it's not the way originally it was envisioned, of people updating their status to tell you what they're doing. There's some of that. The majority of that use now is people sharing with other people ideas that they think matter, by linking to articles or videos on topics they find interesting and think other people would find interesting. Essentially, it's allowing everybody to be a curator, an editor, a packager of content. That's evolved. You can decide who you want to follow and, essentially, who you want to help edit your perspective on the world. I think the fact that now there are many different sources of content, many people that had thought they had to work for "Time Magazine," the "Washington Post," or CBS in order to have a voice, now believe and realize they can have a voice on their own or relying with more of a small entrepreneurial operation. There's a lot of content now being creative, far more than was there in the past. These curators are now emerging. Some of them are big companies, but a lot of them are individual people, as people using Twitter, a blog, Facebook, or some other way to share ideas that they think others are going to be interested in. Walter: As I've mentioned earlier, before this, I follow you on Twitter, and I don't follow that many people. It's mainly, not just for your insights every now and then, but you're almost a newsfeed to me. I figure you've seen so many things, and you're always retweeting, pointing to things, or whatever. How does that stem from your earliest days of understanding the online as the communication and community medium? Steve: I think it's a little bit the model. I think it was the "New York Times" that said, "News you can use." How did they, as a traditional newspaper, sort through all the different things that are happening in the world and try to create some simple package? Henry Luce, with "Time Magazine," as you know, that was the original idea, put some context around a world that's moving more rapidly. When I look at Twitter, as I use Twitter, it brings that same sensibility, "How do I sort through everything I'm seeing, hearing, and reading, and pick that handful of things each day that I think do matter that other people are going to be interested in." I think it does go back to the earliest days of AOL, when we were trying to create a medium that really leveled the playing field and let anybody do this. But we had a bias towards simplicity, packaging, how do you make it useful and accessible to a wide audience, recognizing not everybody in those early days wanted to learn how modems worked, or how communication software worked. They just wanted to turn their computer on, click on their icon, and have everything work for them. Similarly, not everybody wants to spend a lot of time each day sorting through hundreds of different websites, reading lots of different magazines, newspapers, or blogs. We had to figure out some way to get other people to curate that, distill that, synthesize that for them. Walter: We'll end with this if you would. "Time Magazine," just personal, the relationship, you started in '91, '92, it was your very first thing. Throughout the history, all the way through to the Time Warner, what was your relationship like at the beginning? Why was it there? Should we have merged more quickly, just "Time Magazine" and AOL? Your thoughts on journalism with "Time Magazine" as a surrogate for journalism and packaging. Steve: Time was one of the first, basically, bet on the medium. You, who were running the new media operation at the time, realize what was happening and embraced that idea over 20 years ago. For us, it was a source of valuable content, but also of valuable brand that, essentially, was a signal to a mainstream audience that the Internet, AOL, was coming of age. It was now more accessible and more mainstream. It wasn't just for techies. It was for everybody. I think it was an important transition. I remember, not long after we did the initial deal with "Time Magazine", talking to you about potentially having Time Inc. or Time Warner make an investment in AOL and buy five percent of the company at a relatively modest value. At the time, there was not a lot of belief within Time Warner that this would ever be a big business, so it passed. A few years later, AOL grew quite rapidly and ended up having a market value greater than Time Warner. That really led to the merger. It was interesting what happened in less than a decade, as, basically, it started with, at the beginning of the decade, a medium that nobody really understood. The Internet still was not even commercialized. AOL, as a brand, was only beginning to emerge. It was almost like a hobbyist phenomenon. By the end of the decade, the Internet had become a critical part of our everyday life, a critical driver of innovation in our economy. AOL had gone from this little thing nobody ever heard of to this relatively large and valuable company that was driving a significant amount of traffic. That shows you how quickly innovation can happen. Particularly in this digital world, there's an acceleration of the pace of innovation, which is why it's exciting to be looking at new industries education, healthcare, other things that need to be disrupted, need to be transformed, and haven't really been impacted in the way they should. I think in the next decade there's going to be enormous innovation, so that the lesson learned in building the Internet can now be applied to changing these other industries. The last 25 years, for me, was the first Internet revolution, just getting everybody to take it seriously, get online, in a more habitual way across more devices, across more networks. The next 25 years are the second Internet revolution. It's not just be building more Internet companies, but now using the Internet to change other aspects of our lives, such as how we deal with education, healthcare, energy, transportation, government services. There's a lot of things that are going to be reinvented, reimagined, over the next 25 years. Walter: It's interesting to me that, in the first 25 years, it was journalism and media that got disrupted the most by the advent of the Internet. But surprisingly, education and healthcare, the two industries most ripe for it, still have barely been touched by it. Steve: I think this first Internet revolution, it was media, communications, financial services. There are a lot of things that get disrupted. Healthcare and education didn't. Partly, it's because they're complicated issues, where, actually, the consumer has less control than they do over the consumption of media. Things like healthcare, you can actually only have limited decisions that you can make. Ultimately, the government is the payer or your employer is the payer. It drives a lot of those decisions. Education, similarly, whether it be a school you happen to have in your neighborhood, or other schools, where the subsidies are largely coming from government and other supporters, it's less consumer driven than some of the industries that have been disrupted in the last 25 years. It's harder and more complicated, but they will change, because there is a recognition that there are significant, important parts of our lives, they're significant industries. Healthcare alone is one sixth of our economy, and needs to be delivered in a more personalized, convenient, affordable way. Education needs to be delivered in a more personalized, active, engaging, and more affordable way. There's going to be enormous pressure on those industries to reinvent themselves. Some of the lessons we've learned in this first Internet revolution, I think, will apply naturally to the second Internet revolution. Walter: The essential quality of digital technology seems to be that it empowers the individual and almost forces the ability to have choice. That's the two things we don't have, or many people don't have, when it comes to schools or medicine. Do you think, inevitably, there will be more choice, more openness? Steve: I think there will definitely be more choice, in that people have more options. There will be some more choice among the current options, the way things are currently being delivered, but the real innovation is happening around the periphery, creating new kinds of options. Not just about what you learn when you're in the classroom, when you're 17 years old, but what you can learn through the rest of your life, more of a lifelong learning effort. Even on campuses, we're seeing a lot of innovation with universities embracing these digital technologies. Not just how do you deliver distance experience, things like these massively online classes where people are in other countries or are not on campus, but even people on campus, how do create a more engaging educational experience. It is more personalized, but before doing an after class and recognize that the generation that's now on campus grew up with these digital tools, and expects a more interactive relationship with the content, with their professors, with their fellow students. I think there will be a lot of innovation there. On the healthcare side, there's different sectors to healthcare. Some of it is how you stay well, some of it is how you deal with chronic disease, diabetes, heart disease. Also, how you deal with more life threatening disease, cancer, things like that. Technology can improve all three of them, and get people tools to better manage their health, stay healthier, monitor what they're doing. I think we're in the early stages of a revolution in healthcare, education, and other parts of our lives, of other parts of our economy. Walter: You've proven yourself the Henry Luce of the digital age. Thanks. Is there any final thing you want to say, especially about information and journalism in the digital age going forward? Steve: I think the key thing is that the Internet has leveled the playing field. It has given everybody the ability to have their voice heard. You no longer need to own a printing press. You no longer need to have access to things like a broadcast network, to be able to have your voice heard. That's the good news. The bad news is just because everybody has their voice heard doesn't mean every voice needs to be heard or should be heard or is accurate. That's why the role of curation becomes so important. Some of those are going to be brands that people grew up with. "Time Magazine" or "New York Times" or others. Those are important brands. But also, we're seeing the evolution of a whole new generation of brands that aren't just picking content, they're also helping, like Henry Luce did, in the early days of "Time Magazine," point you in the direction of things that matter. The most exciting thing to me, which goes back to the earliest days, at AOL, when we were focused on community and giving people the tools to have their voices be heard. The fact that things like Twitter and Facebook and other social media now gives everybody the ability to be their own Henry Luce, for their family, their friends, their colleagues, whoever wants to follow them because they're interested in that space. They can now play that important curation role. Having these voices all out there now is terrific. The effort now needs to be focused on curation and letting everybody have the opportunity to be a curator. ...
VIDEO: YES

Clay Christensen
BIO: YES: Clayton M. Christensen (born April 6, 1952) is the...
TRANSCRIPT: Alex Jones: Well, it is my great pleasure to have as our guest for breakfast this morning Clay Christensen, who is known to everyone of course in this room very well. He is a distinguished professor at the Harvard Business School, but probably more importantly he is the author of a very, very influential book, "The Innovator's Dilemma," which is both given credit and blame for all kinds of terrible and wonderful things that have happened in the last decade. Clay, I'm not even going to bother to introduce you beyond that. I would just invite you to speak, and then we will have a conversation with everyone in the room. Clay: Super. Well, I thought I'd talk in kind of a general way about the impact that the types of innovation that people can invest in is having on the national economy. Then we could through your questions apply it to a lot of different industries. Just one other thing you need to know, I had a stroke about two years ago. A clot came from somewhere and lodged itself right here, and it killed about a quarter of the left side of my brain. Unfortunately, the part of the brain that died is where you formulate speech. I was giving a talk in a church meeting, and all of a sudden I just couldn't speak. Nor could I write, so I have been over the last two years trying to learn how to speak again. I got Rosetta Stone for English, started with Level 1, Lesson 1. You can sense how well I can speak, which is not as well as I used to. I'm speaking to the table, not to you. [laughs] The reason is, if I look at you, sometimes you distract me. If I look at the table, I can think about what's the next word. I apologize for that. It's not that I've become shy. It's the way I deal with the problem. I've been thinking a lot about disruption in two contexts. The first one is that it's very clear that disruption is the fundamental microeconomic reason for nations' microeconomic prosperity. If you have thought much about economic history, you realized that through the 1950s and early '60s, Japan was just an impoverished nation. Because of their poverty and the low cost that accompanied that, Japan's economy disrupted the West. Those included Honda, which attacked America with rusty little bikes that were motorized, that they called a cub. Toyota came into America not with Lexuses, but a rusty little sub compact that we called a Corona. They made it so affordable and accessible that the rebar of humanity, the college students, could own a car, thanks to Toyota. Canon disrupted Xerox by making just little simple boxes that couldn't compete with Xerox, which is a very high speed copy machine. We could go on and on. Japan, through the 1960s, '70s and '80s was growing like a juggernaut at rates that were unprecedented. Then in 1990, Japan's economy just died. For 20 years they've been in a stagnant swamp. Korea, Taiwan and Singapore came in underneath Japan and disrupted them, just like Japan disrupted America. They have their Kias and their Hyundais and Samsung that have taken the wind out of the economic sails of Japan. Now Korea, Taiwan and Singapore, themselves, are perilously at the top of the market, and here comes China. China is just in the middle of this revolution that's transforming not just the products that they target, but the whole nation. And then Viet Nam is next. You can already see them at the bottom of the market. The big question in my mind is why these disruptions from Asia transformed the economic fabric of Asia, but why hasn't Mexico disrupted America, or Latin America, in general? Because they're in the same position that the Asians have had, but there's been no disruption, either within Latin America or into North America. Nor have any African or Middle Eastern nations disrupted anybody. They are stuck in poverty because they haven't, for reasons that I'm just thinking about, they haven't disrupted anybody. That's one piece I'm thinking about. Another one, which I think I would like to go through in more detail, is in the American economy there have been nine recessions since World War II. In the first six of the nine recessions, from the time that disruption hit bottom to the time it then took to rebound past the previous peak was six months. But in the seventh recession, which occurred in the early 1990s, it took the economy 15 months to reach the prior economic peak. In 2001 2, it took us 39 months to get to the prior peak. And now it's been 65 months, and we're still way below the prior peak. There clearly is something going on that is fundamentally disarming our economy, and why this is is the question that I've been thinking about. I have a hypothesis that needs a lot more work, and solutions need to be much better than what we can understand right now, but this is my model. There are three types of disruption, or three types of innovation. The reason why innovation is, in my mind, the focus of macroeconomic growth, is that, in fact, these are the things in which investment occurs. There are disruptive innovations. Just in your mind, think about, in your mind, a set of concentric circles. The centermost circle represents people who have the most money and the most skill. And then, as you come to the larger circles, they represent larger populations of people who have less money and less skill. Historically, almost always the technology that was the initiation of a new market always starts in the middle, because the first products are so expensive and complicated that only the richest people can own them and use them, and people with a lot of skill can use them. In computing, for example, the mainframe computer put computing on the map. They cost about $2 million, and so only the largest corporations and the largest universities could have one, and it took years of training to operate those things. Then the personal computer emerged, and it made it so affordable and accessible that plain ordinary people like Clay Christensen can actually own a computer and use it. At the beginning, the personal computers we could use just for simple things. But as the computer got better and better and better, we didn't have to take the complicated problems to the mainframe center where the experts solved it for us because we could solve these problems ourselves. Now you have the smartphones that are disrupting the personal computers, and a much larger population of people now have access to computing in a convenient way. That's what disruption is, is it transforms complicated expensive products into things that are so affordable and accessible that many more people can own them and use them. Historically, by my calculations, these kinds of disruptive innovations accounted for nearly 100 percent of all of the jobs that have been created in America in the last 100 years. The Model T was a disruptive innovation. It enabled a larger population of people to own it and use it, and so on. They require capital, because they need to expand their growth. When you make something affordable and accessible, so many more people are buying the product that you have to hire people to make it and sell it and distribute it and service it. It creates engineering in software, around the hardware and so on. That's the first one. Disruptive innovation creates jobs, use capital and so on. Then the second type of innovation in our research we call sustaining innovations. Sustaining innovations make good products better. They're very important in the economy. Sustaining innovations account for the lion's share of investment in the economy, and they're important. They keep the markets fresh and exciting, but they don't create jobs. The reason why is by their very nature, these are your innovations that make better products that you could sell for better profits to your best customers. Whenever you succeed in selling the new product, you don't sell the old product. Toyota has a marvelous innovation on the market. It's called the Prius, which is a hybrid car. A wonderful innovation, but every time Toyota succeeds in selling a Prius, they don't sell a Camry. By their very nature, these kind of sustaining innovations are important but they don't create growth. They don't create jobs. They don't need more capital, because it's replacetive in character. Then the third type of innovations we call efficiency innovations. They're primarily process based innovations that allow companies to deliver the same products, but at a better price. Walmart is an efficiency innovation. They can get market to the product, products that are 20 percent cheaper. When Walmart puts a store in a community, they hire a lot of people. But the people who get driven out of business are the small mom and pop folks, and so they take jobs out of the economy on aggregate. They've got to do it, because if they don't make the economy more efficient, then we lose even faster. Another important element of efficiency innovations is they emancipate capital, or free capital from prison. What I mean by that is, before Toyota came to America, it took General Motors and Ford about 60 days to assemble a car through the assembly line. Because it took that long, there was all kinds of work in process inventory on their balance sheets. Therefore they had to have capital to support all of that work in process inventory. The Toyota production system, they figured out how to make cars in 2 days rather than 60 days, and so they didn't need to have capital to support all that work in process inventory. The capital previously had been imprisoned on the balance sheet. Now the Toyota production system, which is an efficiency innovation, emancipates the capital so it can come off the balance sheet and is available to do other things. Those are the three types of innovations. Disruptive innovation creates jobs, use capital. Sustaining innovations are very important, but they have a neutral impact on the economy. Efficiency innovations reduces employment, but emancipates or frees capital. As long as the economy is creating more jobs through disruptive innovation than efficiency innovations take out, the economy grows almost like a perpetual motion machine. That was the case for the last 100 years, but things started to change at a very low level in the 1960s, and then it has come to a crescendo. There has emerged in our economy a new church, and I call it the Church of New Finance. I call this movement a church because the people who belong to the church, finance folks, believe as deeply in their religion of finance as the Mormons believe in their religion. What is their religion? Well, there's a guy named George Gilder, who's kind of a guru in a lot of things that he shouldn't be a guru about. He's a very smart guy. He gave us a paradigm which asserts that, if there is an input into production that is scarce and costly, then you don't want to just use that anywhere. You want to deploy that costly, scarce input only to applications where it can be leveraged maximally. You want to husband its use. If there's something that is abundant and cheap, you can waste it. Like sand. When new finance and this new church was emerging, through the 40s, 50s and 60s, in our economy, capital was scarce. Because it was scarce, capital was costly. You needed a rate of return on that capital of 20 to 30 to 50 percent, because in fact, it was scarce and costly. To help managers decide how to carefully deploy this scarce capital, the finance community gave us new measures of how to finance or how to measure how efficiently you're using your capital. Prior to this, the way managers measured profitability was with crude measures, like tons of cash. Now the finance people give us more sophisticated ways to measure profitability. One of them is return on capital employed. This is a ratio. In fact, every one of these metrics to measure how efficient you're using capital is a ratio. How do I get that ratio up? I could invest in disruptive innovations and create markets that generate lots of profit and put that in the numerator of this ratio. But what the heck, I could also outsource everything to get assets off the denominator of the ratio. Either one makes the return on capital employed go up. It turns out to be a lot easier to get the denominator down then to get the numerator up. There's another important measure called internal rate of return. It's a ratio where the denominator, essentially, is time. How much time does it take to get the returns? Sure, I could create new, growing industries, create profitability and put it in the numerator of that ratio. But what the heck, if I only invest in things that pay off very quickly, then time in the denominator goes down. They gave these measures of profitability to managers. These measures of profitability began to be taught with the same fervor in finance, as Billy Graham teaches his religion in churches. Truly. The MBAs get baptized into this way of thinking. Then they join hedge funds, private equity funds, venture capital funds. Or they get positions in operating companies in finance. Whenever they have an opportunity to invest capital, they look at these measures of profitability against the business plan. They say, "This is a disruptive innovation. It only pays off in five to ten years. If we invest in there, our internal rate of return will tank." "If they start to grow, we have to invest capital to expand their capacity. That puts assets on the denominator of return on capital employed. On the other hand, lades and gentlemen, if we take that money, cycle it around and invest it again in efficiency innovations, it pays off in a year. Most importantly, we can take out more capital than we put in, because efficiency innovations free capital." So they get more capital. Then they look at the next thing comes in and say, "Damn, this is a disruptive innovation. It pays off in five to ten years. It uses capital. Return on capital employed tanks. Internal rate of return tanks. On the other hand, maybe we could put our money in another company and it pays off in a year. We can squeeze out even more capital." So they do that. Then another opportunity to invest shows up and they say, "Jeez." Have I said this story before? Because, in finance, we teach people to measure profitability in the ways that we do it, it becomes illogical to invest in disruptive innovations. Over the last 20 years, our economy has generated about 20 percent of the number of disruptive innovations than were created in the fifties, sixties, seventies and eighties. The reason why our economy, from a financial point of view, seems to be robust, but the real economy is not creating jobs, is that the finance economy can't invest in those things that create jobs. They just have to cycle it around again and again. Now we find ourselves in a strange position, where George Gilder said that if something is scarce and costly, you need to husband its use. But if something is abundant and cheap, you can waste it. Now, capital is like sand. The cost of capital is essentially zero. In America, the private equity funds in aggregate have about a trillion dollars of capital. Not a billion. A trillion dollars of capital. There is no place to put their capital. Every time they have an opportunity to invest in disruption, it makes no sense. They reinvest it in ringing out the last possible piece of efficiency. When Silverlake tries to take over Dell, what are these guys going to try to do? It's not to invest in growth. It's to get even more out of that company. People who are trying to start disruptive companies just bewail the fact that there's no money. They can't raise money. The people in the private equity shops bewail, "We have so much money going after too few deals." Coleridge wrote a piece called "The Rhyme of The Ancient Mariner." This poor guy was afloat in the ocean. He says, "There is water, water everywhere. But not a drop to drink." That's where we are. What's the future of America? All you've got to do is look at Japan. Because all investment in Japan was going into disruptive companies. That includes Sony, Honda, Toyota, Canon, Mitsui. Their economy was growing like gangbusters. But in about 1990, the using of these metrics of profitability that people learned from coming to America to get MBAs started to be used pervasively in Japan. Since 1990, Japan's economy has produced only one disruptive innovation. That was the Nintendo Wii. That's the only one. There is capital everywhere in Japan. They can't invest. They keep reducing the cost of capital to zero. They can't invest. They're paralyzed. Instead of these three types of innovation being in a circular way, where you use your capital to invest here, Japan decoupled it and it's in a straight line. They started with an investment in disruption, then focused most of it in sustaining. Now they focus in efficiency and it ends. If you put it out in a line, there's a beginning of an economy and an end of an economy. That's what I worry about for America. In the end, in most problems in business, the root core of the problem is the professors, the management. [laughter] Clay: Anyway, that's what I'm thinking about. Questions, comments, criticisms, cannonballs? Not just mine, but any other topic. Alex: Let me ask you the question that is begged. What do you think could be done about this? Clay: Go to Vietnam. Because that's the next one. What do you do in America? There are some simple, obvious things. Right now, if you keep your money in an investment for 366 days, the tax rate jumps from 35 down to the Romney rate of 15 percent. The problem is that 366 days isn't long term capital. So they need to get rid of that and migrate it down to the point where, if your money is at work in a company for five years, the tax is zero. Maybe negative even. But you've got all this capital. It may be possible that the tax system could repurpose some of this capital so that it wants to go in disruption. That's one possibility. Another possibility is to convince the high priests in the new church of finance to recognize that it's an apostate church. A good theory always is a circumstance contingent problem. In other words, if somebody gives you a theory, like the finance people gave us, and asserts that this is the way you should approach any problem you know they're always wrong, that it has to be circumstance contingent. If you find yourself in this situation, do it this way, but if you're in this situation don't do it this way. These are the rules. If they taught their theories in this way they would assert the way we measured our success through the '50s, '60s, and '70s was we were very careful and efficiently deployed our capital and that was the right thing to do in that circumstance when capital was scarce. Now, ladies and gentlemen, we're in this other situation. All of the measures of return on capital are irrelevant. Truly irrelevant. What meaning does return on capital mean when capital cost is zero? It is actually nonsensical. Is that a word? Alex: Yeah. Clay: Calculating net present value where future cash flows you divide by one plus the cost of capital and, therefore, it causes you to invest only in short term things. Now you do the math. One plus zero means that net present value has no meaning. What George Gilder would say is because capital is abundant and cheap we can waste it. What's scarce and costly, I think, are the people that we employ and we've been wasting people and education. Now that's what's scarce. I bet you that in 10 years there will emerge another way of measuring profitability which is investments in making our people to become more capable people. I'm not a left wing whatever out there. I was raised in a home that was so capitalistic that I didn't know the word dumb Democrat was two words until I was in my teens. Given that, I really do think that there will emerge other ways of measuring profitability that have nothing to do with capital because it's people. Those investments will get the most leverage. Alex: You're probably one of the most influential thinkers in the world about these kinds of things. Are you putting these thoughts into a new book? Clay: Yes. I'm calling it "The Capitalist Dilemma." There's a problem with the business model that we're all engaged in, though, which I don't mean to say that I'm in despair. When we write a book we think that we're writing to the world. The problem is on the other side the idea is consumed individually and so somebody will read "The Innovator's Dilemma," for example, and they'll just get so psyched up that, holy cow, we're one of these. If we just change our strategy we can do this. You go to work on Monday morning and you pull your team together and you explain, "You guys, this is going to solve this," and everybody else in the room didn't consume the idea with the leader and their response is this makes no sense at all. Within two weeks, her excitement for the idea just gets dissipated and nothing happens because the idea is consumed individually, even though I write it for the world. There are ways to get large groups of people to consume the idea, but that's actually really hard if it entails changing what you do on Capital Hill. They can't consume the idea in unison. Alex: What's your view of David Stockman's book? Clay: I'm ashamed to say I haven't read it. I should. Can you tell me about it? John: It's about this thick. Alex: It's very thick. He uses the word despair, too. Basically, he says there's no hope. America's going down the tubes. That's it. It's over. Forget about it. John: If you remember in the 1990's when James Fallows told us that we'd all be working for the Japanese and the Japanese economy was the way to go, centralized thinking. Then this little thing called a personal computer took off and venture capital took a different approach to financing, innovation, than normal equity market financing, et cetera. You know all this. Now we have private equity, which was putting all this debt on companies and shrinking them down for efficiency. You still have companies like we were just at Facebook last week. It's seven years old and it has 25 buildings on its campus. Somebody was financing innovation there and apparently getting a return. My question is, there's some kind of balance between equity financing, private equity, venture capital. What should the next one be to finance innovation? Also, to do that doesn't it kind of require a new thing like the personal computer? Clay: Yeah. Those are the things that create growth and there are a lot of them out there that the money can't get to them. I'll tell you a story that occurred when I was at Intel that really helped me. Helped me frame the problem of these. "The Innovator's Dilemma" had just been published and I was just working in my office minding my own business and Andy Grove, who's the chairman of Intel, called me up just out of the blue. He has a very gruff voice. He's a very gruff man. He's so gruff that I remember every word. He said, "You're Christensen?" I said, "Yes." He said, "I'm Andy Grove. You've heard of me?" I said, "Yes." He said, "I hear you've written a book and I don't have time to read academic drivel like you guys put out but some engineer in our company read this book and she says that you're predicting that Intel is going to get killed and I need to know why you think we're going to get killed." I said, "Actually, I know nothing about Intel, but I'd be interested to meet with you." So he said, "In two weeks we have a meeting of my direct reports. I'll give you 30 minutes to tell us why you think Intel would get killed." I reminded him that Intel isn't mentioned in the book, I know nothing about Intel. Anyway, I show up and in this gruff voice when I walked in the room he said, "Look, stuff's happened to us, we don't have any time for you. Look, I'll give you 10 minutes. Just tell us what this means about Intel." I said, "Andy, I don't have an opinion, but I have a theory that has an opinion on Intel. What that means is I've got to explain the theory and then." No one ever told him theories had opinions so he sat back. Five minutes into it he chopped me off and he said, "I got your stupid theory. Tell us what it means for Intel." He explained that he really did get the theory of disruption. I said, "Look, before we can talk about Intel I need to describe how this process of disruption worked in an industry totally different than yours so that you can, in an abstract sense, see how it works." I described how Toyota came in with rusty little sub compacts called the Corona. This was in 1997. You see that Detroit was dead. Grove said, "OK. I get it. What you're telling me this means to Intel is," and he went like this and he said, "There are two of these Toyota Coronas at the bottom of our market and they're just killing us down there and it feels good to be killed because when we lose volume in the lowest profit parts of the product line our profitability improves as we retreat. So what you're telling me I've got to do is go like this and kill those buggers and then come up." That's what they called the Celeron processor. I learned one thing, but I've got to extend the story. If I had told Andy Grove what he should do about Intel I'd have been killed, but rather than teaching him what to do I taught him how to think. Then it was obvious what he should do. I started doing this I think you noticed that. I always have to use a theory before. I was then interested that Andy Grove didn't stand up in front of the company and announce, "Ladies and gentlemen, we're going to go to the bottom of the market," because it just was counter to the profit logic of the company. What he did was he set up a seminar. Lasted a whole day, brought 100 people at a time, and he did it 20 times over the course of a year. That's 2,000 of his top people spend a whole day on disruption. I did it first and handed it over to him. We present a little about the theory, break out groups to discuss is this happening to us, present a little bit more, break out groups to discuss how could Intel disrupt other people, and then break out groups and discuss how do we need to reorganize ourselves. Last year, Intel shipped about $30 billion from products that bubbled up out of these break out groups. Had they not done that, Intel would have been blown off. They're in trouble now because they needed to keep doing this, which they haven't done since Grove left. I talked with Grove a couple of years ago about how he created all this growth and he said, "You know, your stupid theories don't give us any answers but they gave us a common language and a common way to frame the problem so we could reach consensus around counter intuitive courses of action." I just thought that was brilliant. Paul: Of course, what they missed later was what was abundant and what was a scarce resource. It turned out it's electricity in the next generation. Clay: That's exactly right and they just completely missed that and they shouldn't have. John: Electricity is of short supply? Paul: Sure because in a server you plug it into the wall and power is cheap and flows like water and in a phone power is your biggest problem and the battery dies if the processor draws too much and they got killed. Clay: That's exactly right. Paul: Can we ask you to relate this theory to the news business? We've been working on that and interviewing people and we haven't found a dumb one yet. You can look at a 40 year arc of change of digital technology coming to the news business. Many people who absorb your theories, can quote it, understood, try to invest, and they still got killed in the end. We're trying to figure out is it that they didn't absorb it enough or that sometimes there is some disruptive force that goes beyond the profit dilemma that you just can't do anything about if you're standing on the wrong shore. Clay: Great question, Paul. Let me offer two answers, one of which is its cause is finance professors, also. There are some that have set up online entities like boston.com and so on and as long as they stayed and were managed independently they actually were quite successful. They don't employ as many people. In finance, we teach our students this paradigm that you should always ignore sum costs and fixed costs and only look at marginal costs and marginal revenue. If you're looking at the cost of creating a completely new entity like boston.com versus the marginal cost of using our existing organizational structure and lay this on top of that, when you're a manager and you look at on the menu the marginal cost of using what we have versus the full cost of creating something new, always the marginal cost trumps. You might send it out, but marginal cost thinking every day causes the accountants to want to pull it back in. That's one problem is that many of those that could be at the next generation of business just gets brought in and killed. The other one, which I think is more productive, is a subsequent theory that is in chapters five and six of the next book called "The Innovator's Solution". What it says is that if you think of there being a layer. In telecommunications we call it the stack. Michael Porter would say these are the value adding process steps to get something to a full product. If at one of these layers something is getting commoditized through disruption it will precipitate a wave of decommoditization and growth opportunities at the layers above and below. It's true that if you're in the layer that's getting disrupted you might go to the beach at low tide and stand out and hold your arms up and command that the tide not come in and the tide actually doesn't care. Commoditization just happens, if you just sit there. Instead, when this happens very often it unearths growth opportunities the other way. I'll give you a couple of examples and then talk into the news business. A car has become commoditized because the components inside the car are made by the same group of people and so competitors, inside it's all the same. They can't differentiate themselves. On top of it, there are a number of these things, but at General Motors, which is getting killed at this layer, they started this thing called OnStar that is the next layer up. This year, OnStar will generate about $4 billion for General Motors and their net profit is one billion dollars and it has negative net assets. It's a marvelous product. Alex: What is it? Clay: OnStar? Alex: Yeah. I've never heard of it. Clay: It comes only on General Motors cars. It has 1,500 sensors in the car and so if you ever get in an accident it will immediately dial 911 for you and tell the police exactly where you are and they will tell you that the force came from the front, the left so that the ambulance people can get prepared for what kind of surgery they might see. Then they will call somebody else if you want somebody else to come. Alex: I got it. John: It also has a concierge that can tell you where to find the good barbecue restaurant. Clay: The best thing about it is if somebody steals your car they can tell that the person driving the car is a thief and you hear the voice of God come out from the top and it says, "I know you're a thief. I want you to pull this car over to the side because in 10 seconds I'm going to take the power out of your engine and if you stop in the middle of the road you're going to get killed. So pull it over but, by the way, don't think you can get out because I'm locking the doors and the police will be there in about 80 seconds." It's marvelous. [laughter] Clay: As this happens and Skype commoditized the transportation of data, and you look at all of the things that have emerged on top of Skype, and when eBay bought it they just, "Oh my gosh, we've bought a commoditized business," and other people then build things on top of it and below it. In this industry, I think that what's happened as the core business is commoditized is on top of that, extraordinary entrepreneurial opportunities are emerging. I look at what happened to Businessweek and Fortune versus Forbes, and I'm a bit proud to say that Forbes read this stuff and thought about it. The other two just wrote it off. I think what Forbes has done is, rather than employing the journalists, they let them be independent. But a whole bunch of them have created blogs and businesses around blogs in which these journalists have become the people to go to, the big names in different dimensions of business news. They as entrepreneurs have been very successful by creating a business around their thinking, whether it's good or not, and so Forbes becomes a platform on which these people pay to have a podium of dissemination of truth, and they can aggregate stuff. It's worth thinking about how they did it. Paul: I don't want to talk much more, just one question. How much do you think the challenges were the economic analysis, the business professors problem, and how much is also a cultural question? Because we met an awful lot of people who saw this and didn't even deny it going on, but didn't necessarily have... We'll jump to the end and come back, which is a lot of the innovation that's been successful in communication or what looks in many ways like [indecipherable 53:22] has taken pieces of its business, like advertising, was engineering driven. It was a really different set of people with different training so it wasn't just let's use your steel example both sets knew how to make steel but they took a different economic model. Clay: Yes. Paul: This was almost a different set of folks with completely different training. It wasn't just an economic problem. Clay: Yeah, you're exactly right, Paul. Paul: What does an industry do then? What's the possible course, or do you just have to realize you can yell at the tide, but it's not going to stop? Clay: I'm trying to learn about this stuff, too. John: Another way of phrasing that question is Google has almost 50 percent of the traditional revenue share of the news business now, almost 50 percent of the advertising share. They're a pure engineering company, and they're competing with all these other companies that have an engineer here, an engineer there, but they're a content creation company, so... Clay: There's another piece of our research that I think can be useful, if you define your job correctly at the beginning, OK? In this case we implicate the professors of marketing as the cause of this problem. Here I am, Clay Christensen. Unfortunately, I have all kinds of attributes. Unfortunately, I turned 61 years old last week. Unfortunately, my shoe size is 16. Unfortunately, I'm six feet eight. Unfortunately, we sent our youngest daughter off to college. I have a lot of other characteristics and attributes, some of which are good, but these characteristics have not yet caused me to go out and buy "The New York Times" today. There might be a correlation between my characteristics and the propensity to buy "The New York Times," but they don't cause me to buy "The New York Times." What causes us to buy something is, stuff happens to us. Jobs arise in our lives that we need to get done. Some of these jobs arise unpredictably. Sometimes we know they're coming. When we realize we have a job to do, we reach out and pull something into our lives to get the job done. The causal mechanism behind the decision to purchase you is, I have a job and this would solve the problem for me. The strange thing is that the conclusion of that is, that understanding the customer is the wrong unit of analysis. Understanding the job they're trying to do, that's what's critical. If you understand what the job is, then you know what are the experiences in purchase and use that we need to provide so that they will sum up to nailing the job perfectly? Then, what do we need to integrate and how do we need to integrate it so that we can provide the experiences to get the job done? I'll give you an example, but the job is a compass. The job rarely changes. It's very stable over time. Out there somewhere there's a job to be done, which is, "I need to get this from here to there with perfect certainty as fast as possible." Julius Caesar had this job to do, but the only thing he could hire to do the job was a horseman and a chariot. Abraham Lincoln had the very same job to do and he could hire the telegraph or the railroad. Ronald Reagan had the very same job to do and he could hire FedEx. The job itself hasn't changed at all. If you focus on the job to be done and organize around that to provide the experiences to get the job done. Then, when new technologies come, if it helps you nail the job even better, people don't ever compete against you. I'll give you an example about this and we can bring it to newspapers. If I say, you get a call from your sibling, and announces, "I just moved into Palo Alto. I've got to move into my new apartment tomorrow, and I need to furnish my apartment tomorrow," that's a job. Somebody has that job to do. Is there a name that pops into your head, when I've got to furnish my place tomorrow? Paul: There are two options either Craigslist or Ikea. [laughter] Clay: That's right. That's exactly right. Paul: But not the "Mercury News." Clay: That's right. Ikea has been focused on that job to be done for 40 years, and they have no competitors to do the job well. They used to make crummy furniture 40 years ago. They still make crummy furniture today, because they're not organized around the furniture business. They're organized around the job business. If you look at what's happening to the newspapers, Craigslist picks off a job to be done. "The Metro" picks off a job to be done. Realtor.com picks up, and every one of them is focused on a single job to be done, and they do it well. The newspaper is trying to do everything for everybody and they can't complete. I bet you that if we could spend some time, there still are jobs to be done, for which there's no compelling solution that you could organize around these things. It's really important that you never try to do everything for everybody. This would be fun if you guys want to talk about it. I have a few ideas. Alex: I would love to talk about it more. Yeah, let's do. Can you take two more questions, or we'll leave it at two? Clay: No, we're OK. Diane: Hi, my name's Diane. I'm a second year student here at the Kennedy School. Thank you so much for talking to us. I listened to your talk with the Niemans where you talk about this topic. I'm thinking about it from a television point of view, because I used to work at a TV news network. I'm trying to understand what the analogy here might be of making the network a platform of some sort, because there's the network that owns all these local stations. They either own or operate it, or they're affiliate stations that are independently run. What would that look like, transforming to this new medium where people are watching, getting information online from whatever destination? Does it mean completely getting rid of these physical television traditional broadcast based stations and transforming those to some kind of a model that's just completely web based? It's such a huge [indecipherable 1:01:47] I can't even begin to fathom. Clay: Yeah. That's a great question. The first part of the answer is don't think that way. Because from the customer's point of view, they're not in the television business. They don't think about that. They have jobs that they need to get done, OK? Understanding these jobs will be applicable to the television business as well as the newspaper business. I'll give you an example of one that kind of caught this. They came to us, I don't know if it was Gannett or one of the others, owned a weekly newspaper in Palm Springs that was in Spanish. It was just struggling along. They kept thinking that we just need to get fresh news and timely news from Mexico to put in this newspaper, and so they'd invest in that but it had no impact on sales or profits whatsoever. Then we taught them about jobs to be done, and we went out with them and just watched when a Mexican man bought the newspaper. What did they do with it? What they'd do is they'd flip through it and then they'd throw it away. What we figured is that the job they needed to get done was they had no interest in news from Mexico, where they came from. Here I am in America. I'm a minority. I actually think that Mexicans are wonderful people and that our community here is a vibrant community, and instead of feeling like we're at the bottom of the pyramid in America, we need to feel like we're members of a vibrant community. What they did is they changed to try to provide the experiences needed to get this job done, which is they need to feel like they're part of a vibrant group. Step by step the news just disappeared from the newspaper, and more and more pictures of people who live there who are members of that community doing interesting things started to take more and more of the column's inches. You just saw people just waiting to get this on Friday. They'd flip through it, and then they'd talk about the friends they know. "We need to tell them about what we're doing, because..." It became very successful because the job is different. If you think that the business is defined by the product you can miss stuff like that, but if you understand the job, you can...Now, that's a very different business than journalism. Anyway. My guess is that customers don't think about, "Oh, geez, should I go this from the newspaper? Should I get online? Should I watch television?" They don't think that way, they have a job to do. There's a job, which is, "Oh my gosh, there is so much news out there. Can somebody please help me find the news that I need and that is reliable? Would somebody please do that for me, and could you ask them please to tell me what I need to know that I don't know that I need to know, so that whenever I'm in a group people think that I'm well informed?" Diane: The journalists need to be psychics and teachers, basically. Clay: Yeah, but there are algorithms, like Netflix can tell you, "I think this is what you need to watch next." Somebody could do that with the news. You really could, you know? Student: Aggregation curation requires content to be aggregated and curated. What strikes me about jobs to be done analysis is it does leave a gap where a news organization might have a mission to inform the community. You were just mentioning jobs to be done analysis. Investing in news made no sense there. It seemed a little bit like what you were mentioning on return on capital invested, where cut the denominator because the denominator makes no sense here. If jobs to be done analysis is driving your product line, then it's very hard to invest in a full product line to meet your entire mission. How do you balance between your mission to cover a community and the fact that in some cases that won't necessarily serve the major job to be done? Clay: OK, so a couple things. Once you talk about your mission, you can tell other people that...You need what I think you need, and you need to go around and figure out what's the job. I think what's happening is the two things that were just core to your profession, which is unearth the news, record it as best you can, and distribute that. The "New York Times," their global network of journalists out there, nobody could copy that, but now anybody who has a cellphone can do that. That's been commoditized, and in all cases what happens there is some of it is very accurate and insightful, and others is crummy and not accurate. Then the other big thing is on their editorial. If you wanted to know what you need to know, you read the editorials. If they made a position on something, you aligned with them. They were very powerful, and now there are so many blogs that that's been disrupted, too. You need to then just go to the above and below to say, "Now, where else are there opportunities?" This idea, what it means is it's a different business than what you're in. If you want to preserve journalism as a profession, then you got to go to Forbes and do something like that. Why are the community newspapers still quite vibrant? Right? Even though the national ones have gotten killed, and the reason is that every community has the same job to do as the Latino community in Palm Springs. Revere, Massachusetts. People who live there have the same job to do, and the local paper does that well. That's the problem. If you try to see the customer's point of view, then you see an opportunity for you to get the job done well. Anyway, that's not a very good answer. Alex: If Clay can take one more? Clay: Yeah, that would be fine. Erica: Thank you so much, Clay. My name's Erica, and I research millennials and how millennials and the next generation are looking at innovation. A lot of what I been seeing is that there's a rise of, when you think about the printing press enabled a rise of IQ for humans because of books and newspapers. And in the same way right now with technology and new infrastructure we see a new type of connectional intelligence capacity. With that, concentric circles, those that are most powerful aren't just innovating, but those on the tiers, a 24 year old using different tools, not just technology, but marshaling and sourcing differently is really happening. I was really curious about what you're seeing in relation to innovation across generations, given that we've always seen that innovation has come from the edge of ecosystems. Is there anything different that you also see with this new generation? Clay: That's a great question. I don't have much to say, other than that the way you're framing it is really important. You're looking at me, Clay Christensen. On the street, if you ask people, "Who are the best thinkers about innovation?" almost all of them will put Clay Christensen as one of the top three, unfortunately. But actually my personal habits relative to technology froze around 1990. Paul, I bet you have similar things, even though you created this magnificent company. John: He's an early adopter. He's all over. Clay: Is he? [laughter] John: He's actually a show off. [laughter] Clay: So you have all of these things that go on, and the next generation catches it because their habits are still fairly fluid. And for the people behind, there need to be companies that emerge that transform this into things that we can use. That actually really is an important insight that you have, is as the baby boomers come to this age, that translation doesn't occur. They give us very simple things that from a technical point of view are simple, but from the jobs to be done point of view, they're not solving that problem for us. Anyway, great question.. ...
VIDEO: YES

Dick Costolo
BIO: YES: Dick Costolo is the current CEO of Twitter and was...
TRANSCRIPT: Martin Nisenholtz: The standard question that we ask everybody is just to go back and think about the first time that you realized that this thing called the web I guess in your case, it was the web. I don't think you go much back before then was colliding with media. And what that meant to you. Dick Costolo: It was actually in one of my second or third, depending on how you count startups, when we did SpyOnIt. I was working with your team, in 2000. The notion behind SpyOnIt was, we will send you web based, email based or SMS alerts when something you care about on the web changes. We first thought that we would set it up for things like, people will want to be notified about stock prices moving or eBay auctions that are about to close, that are under some price they want. Cutesy web commerce type things. What we noticed was, people started to set them up for being alerted about content. For example, I'm a venture capitalist and I want to know when any one of these other VC firms updates their portfolio pages. We started to see more and more people set up those kinds of things. We realized, "Oh, people are starting to use the Internet to track the news on their own." There was a migration there, a natural migration for me and my SpyOnIt co founders, from there to Feedburner, which became the, "Now, I don't want to be alerted about it anymore, I want to start to have a feed come to me about it." You can trace the progression from SpyOnIt to Feedburner, to Twitter even thought Twitter wasn't something I founded. Martin: Tell me about Feedburner a little, would you? Dick: Sure. The notion behind Feedburner was, if media and content is starting to be something I want to know about as fast as it happens, in the early 2000's, people would say, "I get up every morning and I look at these nine sites." It started to become obvious to us, the founders of Feedburner, that there were getting to be too many things you have to go check in the morning. Remember there were these, they called them, I don't know, My Yahoo. These half attempts at, "Assemble your home page and we'll pull in all these widgets. It'll tell you what's going on." But they weren't really very good, frankly. With the invention, if you will, of syndication, RSS, we realized, "Oh, this is the future. What you'll do is you'll subscribe to a bunch of RSS feeds, and they will be brought to you and delivered to you. You'll only have to go to this one thing to keep track, in real time, of the 50 things you want to be interested in." The idea behind FeedBurner was, in this world where all content will be syndicated and what you'll catch up with in the morning is a feed instead of your 90 different sources you go to, somebody needs to sit between the publishers and the subscribers and create some sort of frictionless way of making sure this stuff gets shared easily and is trackable and traceable. The content providers are still going to need to make money, so they'll want to put ads in their feed and on and on and on. That was the idea behind FeedBurner, and we were right. John Huey: What year was that? Dick: We started FeedBurner right at the very end of 2003. We had our product in the market in 2004. John: This is before Facebook. Dick: Yes, that's right. It was based on the syndication standard, RSS, that Google Reader and some of these other things were based on. Martin: Then Google acquired you, right? Dick: Mm hmm. In the summer of 2007, they acquired us, again on the hypothesis that as content is syndicated and more and more people are getting content in syndication instead of going to XYZ.com, it's going to be important to be a part of that world of syndication. A publisher clearinghouse, if you will. Martin: Dick, what did you learn about content, and maybe even if you could, specifically about news content during this era of SpyOnIt and FeedBurner? Were there any takeaways from that period of time? Even into Google and Google Reader. Dick: One of the things that became evident to us was...It's interesting, I started to see it first around technology journalism in my RSS feeds. I would have my six or seven technology feeds, probably more, that would come into my reader. You started to notice that you saw a lot of the same kinds of articles with the same kind of content from eight or nine different sources, with maybe one or two journalists going into much more detail. It became clear to us at that point that this is going to have profound implications for news companies because we no long...The "Detroit News," "Detroit Free Press," "New York Times," "Washington Post," and 90 other papers aren't going to need a Jerusalem correspondent because, generally speaking, it's all going to be the same stuff with the occasional deep, in depth analysis. I'm oversimplifying, of course, but that started to become obvious when you would see these things all come into your feed at the same time and realize. In the future, which was upon us, since I'm getting these things from multiple sources, it's not going to be the case that I need to have eight journalists covering the same thing anymore. You've seen the finalization, if you will, of all that with things like BuzzFeed and the likes of course. The massive simplification and synthesis of what's going on without a lot of detailed analysis as the opposite side of the spectrum of a Washington Post or New York Times or "Economist," which you still go to for the, "Hey, I want to read the 14 pages about this." Martin: I just want to do a little sidebar now because I know that you started your career as a comedian, but you were a computer science major at the University of Michigan, right? Dick: That's correct. Martin: So now you arrive at Google... John: Wait a minute, he's a comedian? Dick: I'm actually giving the commencement address at Michigan next weekend, so I'll tell you the four second version, which is that the computer science department at Michigan, at the time, was in the Literature, Science and the Arts school. My senior year, you know you had to have your N number of credits to graduate. I had to have so many arts credits, because I was in the arts school. I thought, "Gosh, what's something I could start taking where I wouldn't have a lot of homework, so I can work on my operating system stuff." I took this theater acting class. I took another one my second semester, senior year. At that point, I had gotten the bug and decided, "I'm going to go to Chicago and try to get into Second City and do improvisational comedy, instead of taking one of these CS jobs." So I did that. John: You could have been Tina Fey. Dick: I know those guys. Steve Carrell and I were in the same group when we first got to Chicago there. I saw Steve at a fundraiser for the Lucille Packard Children's Hospital out here, last year. We were looking at a photo of our group, from 1986, I think, in Chicago. He patted me on the back and said, "I'm really sorry it didn't work out for you." [laughter] John: You just won the best sidebar story in our interviews. That's a sidebar. Martin: Dick, the reason I brought it up is because you created this wonderfully funny video at Google. Obviously, Google's a very material part of the story, since they've taken roughly half of the advertising business, online. What was it about the Google culture that didn't work for you? Or maybe it did work, but was just kind of interesting and funny, in a way? Dick: I could talk about this for an hour, in and of itself. There were lots of things about the Google culture that I loved. If I had to start, just name two, one of the things that I loved about the Google culture that I've tried to bring to Twitter is...Larry, Sergey and lots of other folks at Google are really great, but I'm using the past tense since I'm describing when I was there... I always observed they were really great at questioning why something was the way it was. Even down to everything. Travel policies. "Wait, why is the travel policy this way? Why can't it be a different way?" Your first instinct, sometimes, is to think, "OK, let's not over intellectualize everything." But it really worked. It was smart. I thought it resulted in lots of interesting new ways of approaching problems. Larry would ask questions like, "Why are there so many plugs?" You might think, "Because we have to plug the electricity into the wall." But he takes it to the nth degree and you start to think, "Yeah, why are there so many plugs?" I thought that was great and people did that throughout the company. The second thing about the Google culture that was fantastic that I've also brought over here was, everything that everybody does, on a quarterly basis, is measured against some quantifiable metric and you're held accountable to that metric. You don't generally have people wandering around, not accountable to anything or not measuring what they're doing. That meant, any time something would launch, you would have a set of metrics that you could look at on a dashboard, that would tell you exactly how well the launch was doing, against what you said you were going to try to do. Those are things that are great and I've certainly brought over here. There wasn't particularly something about the culture that didn't work for me, so much as it was just, I wanted to be in an environment where I was more in control of my own destiny. Google's a big company. I'd been used to being the CEO or running the company. John: Can we shift gears here and go directly to Twitter and journalism, Twitter and the news? This is going to be a fairly long winded question. But there are three things that have happened to us here, at Harvard, since we've been here, that fuel this question. One, Michael Sippey, who was CTO and social media guy for the Obama campaign, basically, has told us from day one, that all he really worried about, during the last campaign, was the Twitter trending. Everything else was off his radar. Secondly, we have a CNN correspondent here, Peter Hamby, who covered the campaign. He's writing a paper, actually, about how meaningless the campaign — the "Boys on the Bus" is — because everything is done on Twitter and everyone gets their news on Twitter. They're not just talking social media. They say Twitter specifically. Finally, last weekend, we're here and the whole city goes in lockdown. There's this (Boston Marathon bombing) terrorist incident. Everyone is still talking about the Twitter coverage, good, bad. Can you help us understand how Twitter became such an integral part of news coverage and how much of it was just viral, people adapting to its abilities? How much of it was actually designed by people at Twitter and encouraged by people at Twitter? Dick: I'm going to answer your last question first and then go back and take a longer run at the first part of your question. The answer to your second question is, it has absolutely been the case that our users have adapted to the format and made it the platform it is today. As opposed to, we had this amazing idea that we had invented the future of the way real time coverage would happen. That was all our users. In fact, so many things about the product were initiated and created by our users, at replies and hashtags and everything else. That's the answer to the second piece. The answer to the first piece is, my perspective is that we're building this global town square. What I mean by that is, if you went back to Ancient Greece, the way that news and information was passed around was, you went to the Agora after lunch in the town square. There was this unfiltered, multi directional exchange of information. I might go into the Agora and say to Martin, "Hey, my aunt died." Martin might say, "Euripides' goat passed away." We would exchange some information. By the way, the politicians were there. The musicians were there, et cetera. There were this multi directional, unfiltered exchange of information, which was interesting in all sorts of ways. With that advent of technologies that made it easier to distribute news, geographically and with less friction in time, starting with the printing press, then radio, broadcast television, cable, on and on. It was always in service to a broader geographic distribution and less delay in time but at the expense of losing the multi directional aspect of it. It became more and more one way. And losing the unfiltered aspect of it. It became more and more here's what's going on from the very few of us to the very, very many of you. In fact, if you go back to the elect...talking about the campaign. If you go back to the campaign eight years ago, there would be a debate. Then CNN would say, "Now, we're going to go to Frank Luntz, who's back here in the room with six people, and Frank's going to tell you exactly what to think or what everyone in the room thinks about happened tonight." But it wasn't. It's Frank telling you what he thought happened tonight and what these six people said. Along comes Twitter, and it's got all the benefits of broadcast distribution. It's got immediacy. The information is transmitted around the world in absolutely real time. It's got obviously the breadth of geographic distribution but all the benefits of the agora. It's multidirectional. The President's talking to me, but I'm talking back to the President. CNN is broadcasting the debate, and I'm saying, "I don't think he answered that question." It's certainly unfiltered. You don't have to go to the broadcaster any more, during the basketball game or after the basketball game. You go to LeBron, and LeBron goes to you. That has been why we're seeing the campaign unfold on Twitter. There's no more, "Now let's go to Frank Luntz to see what people thought about that question 20 minutes ago." Because as the question happens, people are typing into Twitter, "I thought he dodged that question." We already all know what we all thought about the answer. Martin: One of the things that has been a persistent theme during a lot of our interviews. It's kind of a follow up to this question, has been that the guys out in your neck of the woods, and to some extent, some of the folks in New York, like the Tumblr folks, tend to be engineers. They tend to start as folks with engineering backgrounds in the leadership of these companies. You mentioned Larry and Sergey, engineers. They create platforms that are extremely scalable. To your point, it's the users that determine, to a very large extent, how they're used. The content folks are run by traditional media professionals, whether they're journalists or not. Do you think, let's just say, the disparity between value, whether it's economic value or the notion of how extensible something is in the future, is at root an engineering versus a media mentality? In other words, journalism, many people have said, is in quite a crisis right now. Is that crisis a result in some part, of not having an engineering mentality underneath of it? Dick: No. You can come at this from either side. Maybe I'll come at it from the journalism side. One of the challenges is that news organizations, perhaps, have been trying to economically match the money that the technology distributors are making from real time distributions of alerts and news. "This just happened in Boston." Dick: The benefit that the journalists have over the technologists is their ability to do these in depth, content rich analyses and essays around things. Instead, they've tried to optimize, in many cases, for "We have to be the fastest and the first and the best distributors." But the technology's always going to be the fastest and the first and the best distributors. The technologists are going to be particularly bad at the in depth analysis and the content and the thoughtful reporting. There's that real, tremendous value in the in depth analysis and thoughtful reporting that perhaps...I'm not running a news organization. There haven't been enough attempts to monetize that as opposed to trying to compete with the technologists at being fast. John: I've been surprised, in the wake of this bombing in Boston and the manhunt and all that. I've been surprised at the way that so many people in journalism have talked about Twitter as if it's a person or as if it's a news organization or as if it's done something wrong. Am I missing something? I think of Twitter as a tool that people are using. Dick: No, I agree with you. It gets back to this notion of the global town square, and some people are interpreting that as it's another broadcaster. The reality is that it's just a tool that's allowing everybody to be a broadcaster. I do think it's that global town square aspect to it that is creating this dissonance. For example, you've got these government officials in a number of countries in which we operate who will send us these notices saying, "Hey, Twitter is talking about the fact that this government official did so and so, but there's an injunction preventing media companies in our country from talking about that." [laughs] We're not the ones broadcasting it. You can tell everyone in your country they can't say this, but... John: The second part of this is there's a guy up here that I met at the Niemen Foundation who's a computer scientist. He was one of the first employees at YouTube, and he, for some reason, went to journalism school after he did all this. He's now trying to develop a tool, I think he calls it Keeper, which is a tool that journalists could use to help navigate, filter their Twitter feeds. Sort of like what happened to Yahoo and what happened to Google, there are people doing this now with Twitter. Is that a good thing? Is that inevitable? Dick: That's great. I'm hopeful that, and I think it will be the case that...Just one minute. We think of ourselves as very, very complementary to what other media companies are doing in a way that maybe other companies maybe previously haven't. We want to provide and foster the ability for the ecosystem to create tools that journalists can use to do better reporting on what's going on in Syria or some research they're doing. In fact, I had a television producer talk to me, quite a while ago now, about using Twitter to research where Mubarak had hidden many of his assets. Twitter was turning out to be the best place to research that because these professors across North Africa and Egypt were using it to talk to each other about where those assets were hidden. We want to provide those kinds of filters and tool, and we're encouraging third parties to build them as well and hopefully providing them the resources to do so. Martin: Last question, Dick. Over the weekend, you mentioned the town square. Obviously, if you're in a town square and some wacko stands up and says something, you can see him. The AP was hacked, and for a little bit of time on Monday, created a significant problem. What do you think of that? How do you react to that? How does that fit into the town square metaphor? Dick: I'm glad you asked me that. There are two aspects to the town square metaphor that we take very, very seriously, and one of them is that some wacko stands up wearing the Associated Press reporter's hat and badge and how do you make it easier for everyone in the square to recognize that account's been hacked or it's not real. One, we have to do a better job here of helping these organizations understand how to create secure identities on our platform. That's everything from strong passwords to two factor authentication and on and on and on. There are lots of actually other, even more interesting ideas in that realm, and we're working on that and with those organizations. We want to do that. We have to do that. The second thing about the global town square is you want to encourage and allow political speech. Yet there are many, many countries in the world that it's not OK to walk into the town square and put up a flyer that says the president's a jerk. In fact, not only is it not OK, you'll be hunted down and punished for it. We have to balance our desire to facilitate anonymity and pseudonyms as identities on Twitter. One of the Tunisian folks during the revolution in Tunisia, his Twitter ID is Slim404. If he had used his real name, he would have been tracked down. At the same time, when people can hide behind anonymity, they tend to say more disgusting and revolting things because nobody's going to find out who I am and come get me for this, so I can just attack and maybe even physically threaten these people. We have to provide the right kinds of tools and capabilities in the platform to make it easier to achieve that balance and strike that balance. That's a really hard problem, but it's something we take seriously and actually have a bunch of people working on. ...
VIDEO: YES

Chris Cox
BIO: YES: Christopher Cox is Vice President of Product at Fa...
TRANSCRIPT: John: It's April 1st. John Huey and Martin Nisenholtz, interviewing Chris Cox at Facebook headquarters. Martin: Facebook obviously was created without journalism in mind. Yet, even from the early days, you had this notion of a news feed, and even in the latest incarnation, actually talking about newspapers as metaphors. Can we start with the idea of news feed, and what that means to Facebook? Chris: Totally. It really started with the core layer underneath the feed idea, which was this concept of the social graph. That was first explained to me when I interviewed at Facebook, almost eight years ago. It was 2005. I was talking to Dustin Moskovitz and Adam D'Angelo. Dustin was the VP of Engineering, and Adam was the CTO. They were two of Facebook's super early employees. They were describing to me, who was a potential engineer, who they were trying to recruit to come on to the engineering team. This is November 2005. Martin: And you had just graduated from Stanford? Chris: I was a graduate student at Stanford. Martin: OK. Chris: My background was in AI and NLP, which is using computers to read. They described to me this idea that Facebook was the seed of a collaboratively created directory of people. At that time, Facebook had around 5 million users, so the idea that it was this seed of something that could grow to actually be really, really big, but that had the property that each member of that network was creating their own projection. So, it was a collaboratively built directory and it was interconnected. Each person was connecting to their real life friends. That was a new idea to the extent that the rest of the networks that had existed on the Internet didn't have the property that people tended to be themselves and tended to connect with people that they really knew in life. But if you had a seed that had that property that was strong and engaged it was actually growing and could become something really, really exciting, which they were calling "The Social Graph" this idea of a collaboratively built directory of everybody in the world, where each person was responsible for their own entry in that directory. Martin: They had that vision, even in 2005. Chris: They did. We weren't sure whether to call it "The Social Graph," or whether to call it something else. There was a bunch of debate internally around what to call it, but the key thing they did have was the word "The," which was important because it meant that the idea was to reflect something that was a reality that had just never been mapped out. That was a powerful idea, for me, as a graduate student, once I wrapped my head around it. Then, if you could imagine that existing, there's this directory that you're in, and your mom is in, and your sister is in, and your brother is in, and your roommate is in, and your college professor, all the way up to Barack Obama and John Boehner, and all of the public figures in the world Beyonce and influencers in every different category. If you could imagine a world where every one of those people had an entry, and every one of those people were connected to the set of people in the world that interested them, you had the underpinnings of a circulatory system that could be a publishing platform, where each person was receiving updates from the set of people that interested them, all the way down to their cousin and all the way up to the President of the United States. That publishing system they called "Feed," and my job interview was, "How would you come in here and help us build feed?" Feed was to take the home page, which at that point told you how many friend request you had and turn it into this living newspaper and this was the words that they were using. Martin: Even then. Chris: Yes, it was called feed not news feed. It was cool, because at that time, it looked like Facebook was a college directory, right. But to contemplate having public figures on there and non college students on there and all other kinds of people was a really interesting idea. It was a powerful idea. So, feed was around as an idea at the company all the way back in 2005. I joined the company then and then spent the next year working with the small team to launch the first version, which was news feed. I was just taking the activity of Facebook and putting it on the homepage in a stream. It was very simple. Martin: I remember when that happened and I have to tell you, because I have a very, sort of like the shoemaker's son, I mean I had this very defined notion of news. I just didn't at the outset understand the idea of news feed in that context. Chris: Totally, and that makes a lot of sense because at that time on Facebook, there weren't like buttons. You weren't sharing links from the rest of the Web. You didn't have a culture of a lot of the things that go on. There weren't comments you can like a status update. There weren't videos. There wasn't a platform integration. There were a whole bunch of things that comprised the way we think about what Facebook is today that weren't there. In short, Facebook wasn't plugged into the rest of the Internet in 2006. It was this little world where people were updating things about their lives and those things were being shared inside of Facebook. But it bore little relation to the rest of the Internet, and the rest of the Internet bore little relation to it. John: But it wasn't walled but this wasn't interactive. Chris: It wasn't super interactive and the main reason for that was one of the big innovations of Facebook was privacy. The idea that you could put a photo on the Internet and say I only want my friends to see this was not something that resonated with 99 percent of Internet users, because in 2005 the idea that you would upload a photo of yourself to the Internet was insane. Martin: Or that you wouldn't be anonymous. Chris: That you would publish anything under your name was an insane idea to most people who are living outside of Silicon Valley or who weren't already a part of broadcast media. Martin: Right. So news becomes a metaphor for what, Chris? I mean for things that are relevant to you? I'm just trying to connect the dots here. Chris: Totally. Well, when we launched news feed, it was not about... Martin: ...journalism. Chris: ...at all. It really wasn't I mean with a capital J. We weren't spending a lot of time thinking about our interaction with the news industry. But if you look at conversations between people as a proxy for what matters to them, if you were to just sit on top of city sidewalk and watch conversations all day long and ask, "What are people talking about?" you probably find that a lot of what they were talking about was not being reflected on the Internet yet, which is, "What's going on with your cousin? How's your baby? Tell me how work was yesterday? What did you do this weekend? Have you traveled anywhere recently? Are you going anywhere soon?" Those sorts of conversations, which are meaningful to us, did not yet have a home inside of a digital space, which is what we saw as Facebook sort of filling. Martin: So from the outset, there were these identity, call them identity programs like Geocities and Tripod and then evolving into things like Friendster over time. Like your point is they were mostly anonymous worlds or they were... Chris: They were all a little bit different. But I will say that from a social network perspective, you never had a social network that was also a living conversation. So Geocities was a bunch of conversations but it lacked, as you pointed out, authenticity and it lacks scale. So you weren't getting my mom on Geocities. And my mom is important if you're trying to recreate some of the aspects of the conversations that happen in the real world. For other sorts of social networks, you either didn't have identity and authenticity at scale or you didn't have conversations that were happening. I think in retrospect that's part of what was so interesting about news feed was that sort at the venn diagram of real people at scale and discussion and conversation, you had something growing for the first time. Martin: OK. Now we're in 2005, 2006. So you're now beginning to, in a sense connect to the rest of the Web. Chris: Yes. Martin: What happens next? Was it the 'share,' or the 'like'? I can't remember. Chris: So the like button came, I believe it was '08. It may have been '09. And share was around earlier than that. We noticed with most features we built in Facebook, we just watch what people did. They were usually trying to break a feature that already existed. And then you're say, "Oh, well, people are going and checking each other's profiles all the time. Let's just build a page that shows you all the updates." With share, we just noticed that people were cutting and pasting a lot of URLs into the little box that says what's on your mind, which was an indicator that people wanted to share links which is a no brainer. It'd been happened on email for the last 15, 20 years. So, the like button was taking the sort of obvious behavior that people like sharing links and just putting it underneath the title all over the Web. We built a simple one line of code that let any publisher say, "I want to put this on my article" and then people can like it and they can see which of their other friends liked it. It was no brainer in retrospect of a feature. John: So now you're a news distributor? Chris: Yes. John: And you're all in the journalism business? Chris: Yes, which is cool because we were never writing content. I mean the cool part about our relationship with journalism is that we very, very, very clearly never wanted to create content. We've always said we're a medium. We don't create content here. We're in Silicon Valley. We build this connective tissue so that people can quickly distribute content to their friends. That's all we've ever done. We are all avid news readers. So if we can make it a little bit easier, remove a little bit of the friction between a great piece of content getting published on the New York Times and me finding out about it the next day. That's awesome. Except that the way we chose to do it was letting people connect to either an article or a journalist or the publisher themselves and then rely on being able to get some of that content from them when it's good. Martin: We'll get into the kind of direct connect between journalism and his or her audience in a few minutes, because that's a clear kind of, I wouldn't say it's a trend, but it's certainly out there. The blogosphere. But it seems to me, so you went through this era, and this is a little bit more recent, of having a bunch of news companies create these things called social readers. It seems to me that that didn't, I'm not sure how you feel about those as products. Without going into any single one of them, it just did never seem to me... Chris: It didn't work. Martin: Yeah, I didn't think it would, but why did you think it would work? Why didn't it work in retrospect, I'm sorry. Chris: I think there were a number of reasons it didn't work. But I think in retrospect there was a level of intentionality that goes into the sharing of something you read that you liked that we didn't in that product. Meaning, I liked this article and I didn't like this article is the conversation that you and I have in the street. And we don't have the conversation, "I read these 10 articles." John: OK. So it lacked authenticity in the Facebook environment? Chris: Not even in the Facebook environment. It just didn't reflect the real world. John: Yeah, OK. Martin: It's not that useful. John: It's a pretty package. Chris: It definitely wasn't useful but I think the reason it wasn't useful is that it didn't reflect a conversation that you would ever have with somebody. You and I have never sat down, well, we don't know each other, but you never sat down with a friend, go through all the articles you read. Martin: Yeah. Chris: You probably start with the ones that you liked. So there were a bunch of ideas for how this could turn into something really, really good. But what we decided was that this was just running uphill. The thing that was working really, really well was just being able to like something and share it. So, let's just focus on that working nicely. And then this was cool idea but it didn't work out so we censor it. We've been censoring it. Martin: That makes sense. Now, bring us up to date in terms of where you are today with the latest iteration of news feed. Chris: The latest iteration is trying to do two things. The first is make the content sort of more respectful of its original home. If you a link attachment inside of Facebook, all of our new designs are trying to do a better job of presenting the image, the headline, the author and the description in the way that an author represents them on sort of where the article is being published and that may seem like a nuance. But because the headline and the image get so much investment and time from the publisher, if we can make those a little bit bigger and a little bit nicer, we feel like we're doing a better job of like having a good, strong, positive relationship with the publisher but also giving the user something that they understand and recognize "Oh, that's from the New York Times. Oh, that's from the Washington Post. Oh, that's from the Economist." Martin: Talk about the overall vision here and how you think Facebook is changing the way people interact with journalism and both in terms of making it more useful but also in helping journalism continue in some very real way to a generation of people who are oriented toward information somewhat differently than the older folks. Maybe that's a stereotype that you don't want... Chris: No, no, no, no, no. I mean I think the data supports what you're saying is that younger people do not read newspapers as much as older people do. Martin: Well, they never did. What I'm say [indecipherable 0:15:26] vis à vis... John: But the difference is. Martin: They never did. John: Yeah, the older people didn't have alternative means to...except for maybe the radio. But they didn't have Twitter. They didn't have Facebook. A young person can sit there and do nothing and they're not going to miss most of the big stories. They might miss some of the nuances or some...Bt nothing big is going to happen in the world, they aren't going to know about it because it's going to just wash us in. Chris: I think it's too early to say it's being fair, and I wouldn't want to say, "Here's exactly what they're like, what's going to happen to journalism." Martin: I'm not a [inaudible 0:16:09] . [crosstalk] Chris: I can say that some of the most interest ... John: He's already answered. Chris: Well, I think one of the things it's doing is letting, it's exposing us to more types of information than we may have seen otherwise. A lot of studies that we've done kind of, that reference filter bubbles and the whole conversation are on filter bubbles. There is an argument that said, "The Internet is going to destroy deliberation because we're all going to go into these corners where we're each only going read the articles that come from the people that we're close to and that we resemble." We've done some studies that show that a lot of the content that people are actually reading are coming from a little bit more dissonant group of people, not their close friends, not the closest 20 friends but the next 500 people out. John: Well, even intuitively, wouldn't you think that they would get bored in a bubble with just 20 people ultimately? Chris: Absolutely. But the interesting part about Facebook... [crosstalk] John: ...it's boring. Chris: Totally. But the interesting part about Facebook is that it didn't really change your relationship with your 20 closest friends, because you were already calling them on the phone. John: Right. Chris: I think what's interesting, what was new about Facebook, was your relationship with the next 200 people, who you didn't call on the phone, and you didn't have coffee with, and you weren't writing emails to all the time. John: One of them may be a Major League Baseball player, who's your friend. Chris: Each of them probably has some interest that you probably wouldn't have happened upon and read about. I think where Facebook plays an interesting role in journalism is where each of those people now provides you a little bit of a signal on something you never would have looked at. That to me scales and becomes really, really interesting over the long run. I'm close friends with a guy named Aung Zaw, who's the publisher of the Irrawaddy, which is one of the main journals that supplies information about what's going on in Burma. He's been living in Thailand for a long time. The reason he's been living in Thailand is because he couldn't publish a journal in Burma. What he tells me is that the most important Internet service in Burma is Facebook, and the reason it's important is because it gives people a reliable way of finding out which news and links are relevant to them, from a group of sources that they trust. Martin: That's really interesting. John: Yes. If you look at the Arab Spring, and you look at Egypt, which Facebook became a part of geopolitical history in that event, it's caused me to go back and look at past events like, say, the Civil Rights Movement. If you said that there wasn't an institution of organized journalism, that was willing to put people in harm's way, and stand up against the government in some instances...Or even the Pentagon Papers pick anything you want would social media have gotten a Civil Rights Movement? Would it have ended up in the same place, anyway? Would it have been quick? You don't know. Chris: I have no idea. John: I don't know either, but it makes you wonder. Chris: Yep. I have to think that they're both going to need to be around, and that one doesn't replace the other. I don't think...If you go look at Watergate, investigative journalism was not something that could have been funded by the kind of economics that social media currently creates for journalists. John: No, but on the other hand, somebody might have tweeted you with something that... Chris: That's true. John: Deep Throat might have been broadcasting. Chris: [laughs] It's true. I don't know. Martin: I doubt it, but... John: Well I do, too. I've said this too many times in these interviews, but it seems to me that it's harder to get away with anything today than it's ever been. Now that may not be true at certain kinds of levels that are only ferreted out by... Chris: I totally agree. John: I mean, what can you get away with? Chris: Yeah. And the other question is whether that will change what the public expects from their leaders. John: Yeah. Or will they just get used to the fact that... Chris: I have to think they will. I mean, the more that is exposed... [crosstalk] Chris: Yeah. And you have to think that that will change, as well. You know, the more we learn that everybody has done something that they regret at some point in their life. John: [indecipherable 0:20:27] late at night... Chris: [laughs] But you have to think that that will change as well. Martin: I'm on the board of a little company called Sulia. Chris: Yeah, I know Sulia. Martin: Good. Jonathan's company. I don't know whether he invented the phrase I don't think he did but we tend to call what Sulia does the "interest graph." What's the interaction, in your view, between the social graph and the interest graph? Do you guys have any interest in channelizing what you're doing, and finding the best people out in this huge place? Putting Sulia totally aside, I just used it as an example...To kind of organize this a little bit more coherently? Chris: Totally. Facebook already uses concepts like "Where are you right now?" You're in San Francisco, so we should show you events in San Francisco. It's not the social graph. It's knowing that you're in San Francisco, and knowing that 12 of your friends are going to an event at the Elbow Room on Saturday, so maybe you should find out about it on Friday night. If you're really interested in Alicia Keys, and she is in the news a lot, you'll get a story that says, "Three recent articles about Alicia Keys." We'll know that you like Alicia Keys, and we'll know that those are the most shared articles on the Web that day about Alicia Keys, so you'll get a story about it. If you don't like those stories, you X them out, you'll stop getting them. But on balance, we look at the performance of those in terms of, "Yeah, people do actually engage with these." That's looking like a super promising direction. The high level problem we think news feed tries to solve is, there are billions of pieces of content being created in a day now on the Internet. A lot of those are photographs, a lot of those are URLs that have long form content associated with them. There are tweets, there are pins. There are all kinds of stuff going on, and that's only going to accelerate. In that world, what is the system that's going to help you find the 0.0001 percent of things that might actually be interesting to you, and might change your life? If you look at all of this information with that lens, you start to get at some of these things pretty quickly. Martin: Recently, LinkedIn acquired, I think, Pulse, or maybe they're trying to acquire Pulse. I could never quite tell whether they closed the deal or not. Chris: I'm not sure. Martin: I'm not, either. But that seems like another way in here. They have an algorithmic approach to organizing news content. Why do you think that what is, in essence, a social network, is becoming so much more structured? It's purely usefulness, right? Chris: Yes. Martin: Making it more relevant, more useful, more... Chris: I think it's as simple as, these relationships have been, for a long time, the primary way we get information about our world. That could be gossip, it could be political opinions, it could be career advice. All of these things have come from a set of people in our life that we trust. That's been true since the beginning of time. Until very, very recently, you didn't have a way of super lightweight digital tools for using these relationships to share and discover information. That's what's happening, right now. Because Facebook and Twitter and LinkedIn are all sitting on versions of, "Who in the world do you use in order to help you figure out what's going on and make decisions?" It's very, very natural to me that you would take an exploding amount of content on the Internet, and try and give people tools for using those relationships as a way of finding what's interesting. John: Isn't part of the structure to do with the revenue model? The structure helps in targeting ad revenue. Chris: Which structure? Martin: The combination of all this rich data and intent, should be signals that... Chris: In some ways...In an indirect way, it does help ad targeting. Although it's not why we choose to go after "Let's build a 'Like' button, and let's give it to every developer and publisher on the Internet, so that if people see an article that they like, they can click it," rather than opening email, and putting in the names of all the people they want to share it with, and then hitting 'Share.' They can just click a button, and that becomes a universal signal. That can be a really, really, really cool way of helping keep this kind of content alive. In a world of people growing up that don't read newspapers. It's that simple. We all grew up being news junkies, ourselves. If you just look at a pie chart of what people do on the Internet, a lot of it is news, and a lot of it is entertainment. Most of the entertainment is watching music videos, or listening to videos, or reading celebrity gossip. We always kind of looked at it as, "Well, to the extent that people are having conversations about this stuff all day long, what would it look like to project that city cafe into a space on the Internet? What would that even look like?" That's really the quest we've been on for a while. Martin: I take from your point before about creating content, that all of the folks who have written and talked about Facebook Twitter is a different company, and LinkedIn is a different company, and they can speak for themselves but Facebook acquiring the Washington Post, or something like that, in order to have a proprietary feed, just makes absolutely no sense to you? Chris: No. If you look at what we're doing now, it's "Make great content." That's what you guys do. Put a "Like" button on it, we'll give you one line of code and a "Share" button. And then, if people, when they see it and they read it, they can share it into Facebook, and when people click on it, more people will read your article. That's a good deal for everybody involved. [laughs] [crosstalk] Martin: I don't know. The folks at Google feel the same way about Google News, and the whole link economy is... John: But to get to the center of mediation part of the business model, Facebook even more than at Google, although Google has the lion's share of the advertising of anybody Facebook would be the place where, when you talk to really thoughtful ad clients, they want to be talking directly to Facebook. They're their own publisher now, right? Coca Cola. Those people. They're a Facebook content creator and a revenue generator. That's kind of a new model, isn't it? Chris: I don't think so. They've been creating websites for years. They're in the publishing business. John: They've been creating websites, but kids don't go to their websites, because who wants to go to the Coca Cola website? Chris: That's right. Martin: No, it's not right. They have one of the largest promotional destinations on the Web. They have a whole promotional suite. I forget what it's called, it CokeZone or... John: I know they have a lot of traffic, and they give away a lot of stuff. Martin: They really do. John: I just think that Facebook has become, to a generation, for a lot of brands... Martin: No doubt. John: It's all content. Martin: It's yet another way for brands to publish directly to users. John: So when you're distributing this content...Can you talk a little bit about all the downstream companies that have come along in the wake of Facebook? Are they competitors, strictly, to you, or do they build an environment that you benefit from? There are so many things that feed off Facebook. How does that work in your head, when you look at it in the future? Chris: I look at it as an accelerant to any idea spreading. The idea can be, "There's a new app you should check out. It's called Pinterest. Or Spotify. This is something I'm using, I want my friends to use." Facebook becomes an accelerant for that app getting traction. It can also be an accelerant for a piece of journalism, or a publisher. That's why you hear about reports about things like the Arab Spring. It can be an accelerant for discovering somebody that nobody really knew about before. There's a phenomenon around George Takei, who's become one of the biggest publishers in Facebook. He was somebody who wasn't really in the public eye as a publisher. In the idealized version, Facebook just makes it easier for a good idea, or a great person who is influential, to get their ideas out in a matter of seconds or minutes or hours, rather than months or years. That's how we've always tried to engineer the system, in such a way that every person is getting the highest signal presentation of the content that was created in the last hour, that they could possibly care about. The reason that we've built ourselves as a platform, so that Pinterest can plug in, and Instagram can plug in, and "The New York Times" can plug in, and Coca Cola can plug in, because in the economy of the future, attention is a scarce resource that is not growing. Information is exploding and growing exponentially fast. That, to me, is the value function that defines the modern world. You have people waiting in line for the bathroom. They have their phone open. In that last hour since they've looked at their phone, a million world events have happened. Here are 22 boxes with 22 little red dots behind them and they can go press them to figure out what's going on. One of them is a blog, and one of them is a magazine, and one of them is Coca Cola. The question is, what are they going to do with their time? We view Facebook, and this is why we've given this presentation of being a living newspaper, because so many people are using it, and because all of these publishers are plugged into it. It's a good place to start, because it aggregates together all of these things for you, and then can launch you off into "The New York Times" or to Instagram, or to Pinterest, or what have you. Martin: It's a way station on the way to where you're going, in a way. Just like Google is, was... Chris: Google absolutely is in the domain of, "I'm trying to find something. How do I find it"? Facebook is building out a bunch of stuff around search. But, the original core of Facebook is not, "I'm trying to go do something. I'm trying to go find this. I'm trying to go do that." It's, "I have five minutes. What's going on"? Martin: I've also always thought that the name of "Google hangouts" was ironic because Facebook actually is where you hang out. [laughter] John: You don't "hangout" at Google. Chris: It's been pretty successful, "hangouts" has been pretty successful, and they're really cool. John: We use it in this project. I'm not knocking the project. I think the branding is... Martin: ...is interesting. John: ...is inspired by Facebook. [laughter] John: Because Facebook, like you say, you don't go there to...You're hanging out. Chris: Yeah, and it's more akin to just sitting on the side of a street and watching people go by, that doesn't satisfy a task but it's something we find ourselves doing a lot. Martin: I guess what's interesting to me is that, you talked about the places people go, but the places people go, whether it's the New York Times, or the Bleacher Report, or whatever, Business Insider. I forget the guy's name, but the guy that co created the Bleacher Report wrote a blog post recently about how content was a good place to be. I actually agree with him, I think he's really running against a trend in venture capital that I think is wrong, which is that content is not a viable place to make an investment. On the other hand... John: He sold his company. Martin: ...If you want to have a huge home run, I mean huge, it's never in content. It's always in platforms, right? I think maybe that's really the struggle that the content folks have with some of the relationships with companies like Facebook and Google in particular. It just seems sometimes like all the value accrues to the place you go to get the content, not to the content itself. Chris: Yeah, is that true though? Martin: I think it's true from a market [indecipherable 0:33:36] perspective. Chris: Is it true in music? Martin: In music? Chris: Yeah. Is it true in games? Look at "Angry Birds." Angry Birds is an absolute runaway success in content. It was helped and accelerated by platforms like Apple and Facebook, but it absolutely was a runaway economic success all of its own. Martin: Maybe in entertainment it's different. Chris: In film, in music, you're going to find massive commercial success. John: You're back in the journalism tank. Chris: In journalism, it's a harder conversation. John: In journalism it, tops out at two, $300 million, quits growing, and ultimately disappears. It's a good play but you need to make it fast. Martin: I mean Arianne's company, Huffington Post, was a huge home run, 320, OK. 320 would be a joke in Facebook. So, that's my only point that a huge home run in content is a rounding error in platforms. Chris: That's fair although I would say that both platforms and content are extraordinarily...our businesses where the exceptions are extraordinarily rare. Martin: Absolutely. [crosstalk] John: [indecipherable 0:34:54] platform that changes the world. Chris: Well, that's why I said what I said about the venture world. Maybe the...I'm not a venture capitalist so. Martin: I'm not either. [crosstalk] John: There's a lot of hand wringing about the decline of the traditional business model surrounding journalism and it's been going on quite a long time. It's reached the sort of critical mass. Now, there's a lot of things really are just dying or will soon be dead. There's a lot of finger pointing and hand ringing and I think Eric Smith called it denial litigation. Martin: There are four stages. [crosstalk] John: But I think that and in the case of Facebook and the journalism industry or the publishing industry, traditional mainstream publishing industry, there's been a lot of back and forth and there's been deals and agreements, but how do you think that that industry views Facebook now? What do you think they are? Chris: I can't say as a whole how that industry views us. I mean I hope they view us as how I feel we are which is we don't have an answer to how to save journalism but we are in a place to help and with some very simple tools we can do go a long way to make journalism have a more reliable and understandable home inside of Facebook. And it's something we're committed to trying to figure out with them. John: You have a huge head start on several whole generations of how they get a lot of their information. You have a big block on that. Chris: On what? John: On younger generations of how they're getting a lot of, if not most of the information that they're getting, you and a couple of other, you and Twitter, say. Chris: Different. John: Very different. Chris: Totally. John: But without Facebook, would Twitter would have worked? Martin: I think we've made an assumption here. What has Facebook done, Facebook reaches everybody basically. If you are a billion plus, it's not only a young person... Chris: It varies widely depending on where you look. I mean like I said... John: I'm not saying only young people look at Facebook. I'm saying young people tend to get a much greater percentage of the information, I'm assuming, I could be wrong. I'm basing this on the fact that I have kids and they get all their information on Facebook whereas my contemporaries get of things off Facebook but they have multiple other inputs. Chris: Yes. John: Does that data support that? Chris: So we don't have any proprietary data that tells us what people do when they're not on Facebook. What you're reading in comScore or [indecipherable 0:38:10] or whatever cross media reports, are the same things we're looking at that describe how young people or different demographic cuts interact with Facebook versus TV, radio, newspaper or other services. So I don't have anything particularly insightful to say there. The thing to me that's really interesting is if you look geographically at how different Facebook's usage is in a place like the Middle East where there's not as rich of an ecosystem of other mediums, where they can get the same sort information, so Facebook gets used much more for things like link sharing. Burma is another great example because there's not reliable other channels that you can turn to to get a good story about what's going on or at least this is what the data would suggest. John: What are the percentages of US the numbers? It's over a billion in total. Where is it? Martin: How's the breakdown? Chris: It's all over the world. I mean you can basically imagine it as a pretty good cut on the world right now if you take China out where Facebook is not available. We're growing pretty quickly in the developing markets. Martin: What's the Chinese social network called, again? Chris: There's a few over there. Martin: And Facebook is literally not available. Chris: That's right. Martin: Neither is the New York Times. So... [crosstalk] Martin: Is Time available? John: On and off. Depends on what's in it, week to week. Martin: Where I was trying to go with this notion of the younger cohort is simply that, if John's right, and there's more of a concentration of young users, and this is a supposition, but let's assume it's true for now. I assume that part of the rationale for news organizations being more forceful on Facebook, is it's a kind of on ramp for younger folks in terms of journalism. It could act as an on ramp. Chris: Yeah, and it's just free distribution. Putting the "like" button on an article takes a few minutes. It's free distribution. I think the economics, in terms of how should I invest my time if what I care about is readership, are pretty simple in favor of "this is a tool." On us, it's just about how do we do a good job of getting that article in front of the people that want to read it. John: And how does the publisher recover the cost? Martin: It's just pages. John: Which, unfortunately, the economics of that are currently declining. Chris: That's another set of issues, but right now, we're just trying to give distribution to people to create great content. It's a simple deal for us, and hopefully for them. Martin: Can you imagine a point which Facebook becomes a kind of, point of subscription, I mean, a kind of e commerce center? You've played around with virtual currency for a long time, and is there a way that you can imagine publishers using it as a subscription funnel? I'm just wondering whether you... Chris: Sure. Martin: I think that was the thinking behind some of the social readers, maybe the Wall Street Journal's social reader. I don't know, I wasn't obviously part of that decision making. It just seems to me that if there's going to be a really productive intersection going forward, it's going to have to be in that arena. It's going to have to be...not just Facebook sending traffic, which is valuable in my view. But it's Facebook somehow becoming a kind of newsstand, for lack of a better metaphor. Since you're using the newspaper metaphor in your news feed. Chris: Sure. It's absolutely possible. We offer simple tools right now, so any publisher can use a login with Facebook button if they want to, that's another line of code. Martin: Right. Of course, yeah. Chris: Our strategy right now is build really, really, really simple tools, and let them get adopted and used. Then make them work better, and just work off of the organic activity that's happening inside of their system. That's how everything we've ever built that's been successful, has worked. So, that's really kind of where we're focused right now. Martin: What do you see next? Can you talk a little bit about where you're going, rather than where you've been? I know this is an oral history, but we also ask people about...to look forward a little bit. I'm not talking about ten years. John: Well, it's a living history. We hope it continues. Chris: Yeah, totally. The thing we're really focused on is giving people better tools for organizing and curating their news feed. They spend a huge amount of their time on Facebook. Of their Facebook time, a huge amount of that is looking at news feed. But we haven't yet started to build the really powerful tools for how you organize that and create sections out of that. Or different feeds of music or news or whatever else that you want to create. We're spending a lot of time on giving people tools to do that. So if you're a hardcore music fan, it turns out all of the DJs and artists that you like are already on Facebook, or a lot of them are. All they want is to show up in San Francisco, and have all of their fans in San Francisco be at the show. In order to do that, they need a reliable way of getting all of their fans in San Francisco. That repeats itself for lots of different types of publishers in lots of different industries in lots of different places. We're focused on just taking this newspaper metaphor, which is different obviously from the New York Times, but it just says this is a place you can go to every hour or every day or every three days and get a reliable sense of what's going on in these different areas that we care about. That's really how we're focused on approaching the future. John: So, it becomes a richer creation tool, instead of just a consumption tool. Chris: Absolutely. It's also something that the reader has a lot more ownership over. Martin: Do you have any...I'm not asking you to criticize or not criticize the business, but just in terms of Facebook, what have you learned from Twitter, that might be useful? Well, let me ask you the questions. Chris: Yeah. I think one of the great learnings of Twitter is the simplicity of the model and how generative that can become in terms of the platform and the content that gets built upon it. I think from the very get go, that was something that Jack and the creators of Twitter were really focused on, is the simplicity of the model. The number of characters and the number of primitives, and the minimalism associated with Twitter. I think they've done a really nice job of executing on that. John: But is that a limiting factor in any way? Going forward? Chris: Things always beg to grow a little more complicated. [laughs] Everybody wants more tools and more features and very rarely do people write in and say could you take some stuff away. So, yes, there's always a pressure, but I think that one of the great learnings of Twitter is the power of that simplicity. Martin: Even though the stuff you're creating is, in a funny way, making Facebook a little bit more complex. Chris: Which things? Martin: Well, the organizing. The notion of...yeah. Chris: Sure. Martin: I don't mean to say that it makes it more difficult to use. But, I just mean to say, that it's no longer as flat. Chris: It's no longer just one feed anymore. Yeah. We recognize that, but still, our intuitions, and the feedback we get suggest that it makes sense. You put it in front of people and they get it, and they like it. They're not like, why are you giving me just my family. [laughs] Or why are you giving me just photos. [laughs] John: [indecipherable 0:45:55] happenings like Instagram... Chris: Yeah, and Instagram is a great example of photography itself being its own culture and its own...It's not just the same kind of photo as on Facebook, it's actually a pretty separate and slightly different culture. I think that's really, really exciting. The best thing Facebook can do, in a world with Instagram and a bunch of other things like it, is to build a home where you can go to, that can sort of shoot you off to whatever is the most interesting. Martin: What do you take from the vine experience? You obviously acquired Instagram...we're now seeing the same kinds of tools beginning to emerge in video. Chris: Yeah. It's really cool. We're about to have a world where billions of people have video cameras. That's two decades after growing up, if somebody on your block got a handy cam, it was a huge deal because you all felt like maybe you could all become publishers one day, and maybe you could all become directors, and producers. There's this little creator in all of us that gets excited about the idea of publishing something that could influence somebody. I think that's real. I think if you look at why are all of these things succeeding right now, it's because everybody has that inside of them. Now, we're having generations that grow up that aren't just inundated with fear of the being online, and so they're starting to publish things and it turns out it's not so bad. And Vine, I think there's probably going to be another 100 things like it that we can't even imagine yet. [laughs] And that's awesome. I mean what could be more exciting than that? Martin: It would not be a Facebook interview if I didn't touch on privacy for just a second. Chris: [laughs] OK. Martin: I know you're interested in privacy, if you can believe what you read online. Chris: [laughs] Martin: Sorry. Chris: Yeah. Martin: Just talk about privacy a little bit. Are we in a kind of post privacy world, or do you think that's just a cliché? Chris: I think it's meaning something different. I think privacy has always been a word that points to a disconnect between what you expect and what happens online. I think the more people are learning how to use these tools, and their friends and family are using them, and they're becoming part of normal culture. That we're just going to learn how they work. Privacy is always a problem. When caller ID came out it was all about privacy. No longer does anyone see who's calling them and worry that it's a privacy invasion because we've gotten used to it and we know how the tool works. My sense is that it's something we need to spend a lot of time on educating people on and we need to be very careful and responsible about, but that, like with any medium, the more people use it, the less people are trying to figure out how it works, and that it becomes OK. John: I always thought caller ID was a perfect illustration of human nature. Everyone wanted to know who was calling them, and no one wanted anyone to know they were calling me. [laughter] John: But you can't have it that way. ...
VIDEO: YES

Gordon Crovitz
BIO: YES: Louis Gordon Crovitz is an American media executiv...
TRANSCRIPT: Martin Nisenholtz: We are here at 15 West 52nd Street on March 14th, my wife's birthday, with Gordon Crovitz, the ex publisher of the Wall Street Journal, the ex chief digital officer for Dow Jones, and currently the founding co CEO, I believe, of Press+. Gordon, why don't I start. Why don't we talk about your first time. That is, when did you first realize that electronic publishing, digital technologies would affect newspaper publishing or journalism? Gordon Crovitz: I remember that moment very well. I was based in Hong Kong in the mid '90s, '95 or '96, running a part of Dow Jones that had electronic publishing, but the old fashioned kind. I came from a three or four hour meeting. The question was, "How long would it take for developers to be able to use non English language characters on the green screens that Dow Jones was then offering to traders and others for real time information." I was back in New York for a meeting and Neil Budde, who was later the founding editor of the Wall Street Journal's website, showed a group of us off his laptop this unbelievable product, which was the first iteration of the Wall Street Journal's website built on HTML. He explained how he had done it and he explained this HTML. It was the most amazing thing I'd ever heard. We saw the demo and I asked him at the end of the meeting. I said, "That was fantastic, but how many months is it going to take to develop that? Time to produce it? That [inaudible 00:02:04] looks fantastic, but really how long is it going to take?" He looked at me said, "I don't think you understand. It's live now." The contrast between electronic publishing in the old days, the pre Internet days and the Internet couldn't have been more stark to me. Martin: From there, you did what? Gordon: From there, I came back to New York and helped sell that part of Dow Jones, the old fashioned terminal part of Dow Jones. It's called Telerate. Then became responsible for what at Dow Jones was still called electronic publishing as opposed to print publishing. That included everything from real time news and what became Factiva, the news retrieval system, and the Wall Street Journal's website and the other websites of the company. One more historical point I have here, I don't think it's going to be very visible, but what I have here is an advertisement for the Wall Street Journal from 1899. The headlines says, "There are 180,000 shareholders in the various newly formed industrial companies. Are you one of them?" It suggests that if you are an investor or hope to be one, you should read the Wall Street Journal. The interesting thing is the graphic. What you can see here is a broker. This is Trinity Church in the background. It's Wall Street. You see a ticker machine, which is a Dow Jones ticker similar, by the way, to the ticker patented by Thomas Edison, [inaudible 00:03:40] . This is a Dow Jones ticker and the message to readers is, "You can get your news from the same source that your broker is getting his news from." Of course, he's getting it in real time and you're going to get it once a day. In fact, the history of the Wall Street Journal is Dow and Jones had all this extra copy lying around after their doing their real time news. They said, "Let's put them into a daily newspaper for consumers, not just brokers." The whole history of the Wall Street Journal was how do you get more information to more people more quickly? There'd been an effort within Dow Jones to create a consumer version of the Wall Street Journal pre HTML. That's why Neil Budde was working on this project. There was a thinking machine, one of those giant computers in Princeton New Jersey offices. HTML, the beginning of the Internet, and the Wall Street Journal's website was a radical achievement of that goal of trying to get news and information to people electronically and not just on a once a day basis. Martin: Yes, I remember that proprietary service. I don't remember the name of it, but it was like AOL... Gordon: It was. It was originally called Dow Jones News/Retrieval. Martin: But there was a lighter version... Gordon: It was licensed to AOL and Prodigy and some others, Dow Jones online. John Huey: Dow Jones is retrievable going all the way back into the '70s, right? So dial up, telephone system. Gordon: It was, and when John and I were in Brussels in the early '80s, I don't know if John knows this. I memorized the code to get access to Dow Jones News/Retrieval. On Saturdays, I would come to the office and I would read newspapers because that was the only way to get newspapers that were not Belgian or maybe French in Brussels at that time in the early '80s. I backslashed back to...This time, people were going to Berkeley and places like that to get master's degrees in information and library science to be able to use systems like Dow Jones News/Retrieval. The news junkies in the '80s, there was Dow Jones News/Retrieval, there was Nexus, which was still pretty new. Those required private networks and a lot of knowledge to be able to use them. John: How long did your progress go on with developing the website and the web business before you came to the debate of free versus paid? Gordon: I can't take credit for that decision because I was still running the very high charging real-time financial news, part of the business in Asia. That decision was pretty much locked down by Peter Kann, the then CEO of the company. John: At the beginning. Gordon: At the very beginning. There was never, as I recall and as people say, never really much of a debate. The debate was really how much do we charge? It was never is this going to be free? I think one reason for that is that unlike most newspaper companies, Dow Jones, since its very beginning, since even before the Wall Street Journal, was selling news electronically to subscribers. The whole revenue base was subscriptions for what's now the Dow Jones News Wire and the other services. Of course, we were charging for the print version of the Wall Street Journal, so I think it was natural to [charge]... John: You always had two streams of content income, in other words. Gordon: Correct. John: From the beginning. Martin: And they never had a significant classified advertising business like most newspapers did that needed [protection] ... Gordon: Exactly because it was not a metro paper, there was not a lot of classified advertisement, very little. I used to keep a running chart on revenue volatility comparing the Wall Street Journal, largely advertising based and the other revenue streams, which were almost all subscription based. One was as beautiful flattish line that grew over time, but not very volatile. That was a subscription part. Advertising looked like EKG of a dying person, up and down. By several years after the launch, it became clear that the most valuable revenue stream, the Wall Street Journal franchise, was digital subscription revenue. Very high renewal rates, extremely high profit margin. Martin: One of the interviews we did was with Larry Kramer, and it was interesting. He said that he prayed every night that you guys would continue to maintain your pay wall so that he could build his business. How do you react to that? Gordon: Well, of course, in many ways, he was right. One of the reasons that I approached Larry to ask him when CBC MarketWatch was independent company, to ask him what he thought the future of CBS MarketWatch might be, and would he be interested in being purchased by Dow Jones? One of the reasons for that discussion was, and this is going to be very hard to believe now, but at this time just 2003 or 4, the Wall Street Journal's website was sold out in terms of online advertising at a very high CPM. Martin: Not hard to believe. Gordon: Forrester Research was projecting 80 percent increases in revenue for publishers like that, far into the future. I didn't want to give up the subscription revenue. There was no technology, at that time, to get the best of both worlds. There was no opportunity to charge in a different way. It was an old fashioned pay wall, which meant, to get virtually any Wall Street Journal content, you had to be a subscriber. That did suppress the number of visitors and suppressed advertising inventory. There are better ways to charge now, that allow you to get around that. But at that time, one of the reasons DOW Jones bought Market Watch was vastly to expand the number of page views and to sell those ads as part of a Wall Street Journal network, which included the opportunity to increase prices on the MarketWatch site. Larry was right. He was able to grow Market Watch into quite a large audience. I would say it also served a somewhat different audience than The Wall Street Journal, because it was very focused on individual investors, whereas The Wall Street Journal is more of a broad business brand. So individual investors were either going to Market Watch or Yahoo Finance. But I was glad to be able to reward him with an acquisition for his work. Martin: One of the themes that keeps coming up, over and over again, is this notion of culture, inside of the large journalistic institutions. And the idea that they just, in their native cultures, simply couldn't adapt. Did you create a separate division and if so, was it for that reason? In other words, talk a little bit about the culture, back in the mid '90s, and how that evolved over time. Gordon: There certainly were cultural differences, at that time, between the print folks and what we would now call digital folks. We then called electronic folks. The Wall Street Journal had one big advantage, which was, as part of DOW Jones, it had always been electronic publishing. So there was in the DNA some focus on electronic publishing that didn't exist at most or maybe any other newspapers. That meant, especially in the news department, which was for most of that period, run by Paul Steiger, a deep understanding of how news flowed through different ways. A lot of Wall Street Journal reporters had had to file DOW Jones ers. Real time, to the ticker. John: Oh, listen. When I went to work for The Wall Street Journal in 1975, you spent two weeks out of every four, working real time news all day long. It was a wire service. There were no news moments. It was, when you got the news, you reported it. That very much presaged what became the online news mentality later. It was an easy adaptation. We were all trained to do that. That was something that didn't happen to the rest of the news business for 20 years. Gordon: Right. So that was a huge advantage. It was especially visible in the news department where, organizationally, for most of that period, until 2006, there was a structural separation, between print and electronic publishing. But especially in the news department, especially with Paul Steiger running it, he really ran it as an integrated group. Even though, during that period, the editors of the online journal reported to me, but in fact they worked so closely with Paul, it was hard to say exactly where they reported. And it was never an issue. That was very different from the experience elsewhere. I can remember taking the head of Time Inc. Digital to lunch of breakfast, every 18 months, the new on. It was about every 18 months there was a new one. I developed a little analogy for that person. I said, "Within Time Inc. you are a German prince with this great role and a castle with a moat around it and hot, burning oil you can dump on people if they try to get in your way. The problem is, you're surrounded by other German princes, the brand managers for all those different brands. They've got hot oil and sharks in the moat. You're never going to get anything done. " Dow Jones is different. It's so small. We're like the grand duchy of Luxembourg. We have castles, but the moats don't really work anymore. The oil is tepid. It's easier to get stuff done, easier to work across different silos and different organizational structures. In part because it was smaller and in part because of this... Electronic publishing was already in the DNA. Martin: Let's talk about the difference. What you've just addressed is a kind of sense that there was an alternate distribution, an electronic distribution possibility. But when Neal showed you the website, obviously there's a great creative difference between publishing on the web and publishing even in the traditional electronic form. Yet most newspapers mostly repurposed their print or even wire copy into the web, while guys like Yahoo and others were developing applications on top of the content. Can you talk about that? Do you think that was the right approach back then? Was it the only possible approach for a business like The Wall Street Journal, or for that matter, any other journalist organization? Gordon: There are brand expectations that, at the end of the day, are very influential on business strategy. The brand expectations for a Wall Street Journal reader, in print and online, are kind of the same. It's delivered in a different form, but it they still want the business news delivered in a highly credible, authoritative, thought out way. They want some element of, "Don't waste my time." The print Wall Street Journal, the "What's News?" column in the pre Internet era. Those of us who are old enough to remember what it was like to get the print Wall Street Journal in the morning. The "What's News?" column solved two enormous problems for millions of people. One problem was, "What happened that I needed to know about?" The other problem was, "Do I really know about something else?" The "What's News?" column achieved, for business people, for many years, the value of delivering to that person, "Here's what you need to know about...and by the way, if it's not in the 'What's News?' column, don't worry about it." John: And it was in order of relative importance. That order of importance, along with The New York Times, page one frontings on Reuters every night, became the two central ways to know what was important. That was when hierarchy mattered. Gordon: Imagine what an easy life it was for news consumers then. You didn't have that many sources. Some editor told you what was really important. If you were gone to the office you didn't have to worry that your boss knew something you didn't know and vice versa, by the way. Paul Sagan: Then that changed. Gordon: And then that changed, and online for the Wall Street Journal there was still that sense of this is what's really important. This is of less importance. And, of course, as technology allowed...somebody recently used the phrase, "the nuggetization of content." So each individual story or part of a story or a Twitter reference to a story, all of those pieces of content flow in such different ways now. And for many people Twitter is the new version of the print, "What's News?" column. This is what my friends are reading. I'd better read it also. So I think traditional brands had a difficult time with that transition to real time news, and a difficult time with that transition to letting consumers determine how they wanted to consume the news. That's a very different experience from the more traditional approach to publishing. John: And by the way, the guy who was the most legendary for setting the order of that, "What's News?" column every day now sets the order on the Bloomberg home screen every day. Gordon, you've got to back up a little bit. Dow Jones always kept one eye on Reuters for various, for your wholesale business and your news service business, so you were always watching Reuters and their slow encroachment in the U.S. and your global competitor. Do you...I'm not sure where you were when Reuters made the decision to sell content to Yahoo, which then created Yahoo Finance and Yahoo News off that, but we've identified that as a fairly seminal moment in this progression. Do you recall that and what you thought? Gordon: Absolutely. It was a seminal moment. Reuters, a fascinating company had gone from being a general news service very similar to the AP to becoming a Forex trading platform and developing enormous revenues in the real time market, and that's even by that period, which was the mid '90s, Reuters was already generating almost all of its revenues and earnings from the real time financial services market. What consumers think of as the Reuters brand kind of like the AP brand, tiny part of the business. So for Reuters it was a great opportunity to extend their brand, particularly in North America, and because it was not a significant revenue stream for them at that time, not charging or charging very little was not a big corporate risk to them. It did lead...in my case it contributed to some very awkward discussions with companies like Microsoft, and AOL, and others where... I recall one in particular where we were going down to renew a licensing agreement, I think this was with Microsoft. We wanted to renew a licensing agreement where Microsoft had licensed Dow Jones content. They didn't have access to the Wall Street Journal brand because Wall Street Journal content was only available to subscribers, but it was version of that called, "Dow Jones Online." And we walked in expecting a renewal of the seven figures that Microsoft was paying to the Wall Street Journal, and the topic instead became how much was I going to pay Microsoft to distribute Dow Jones News. Think of all the exposure you could get. And I asked them to repeat their notion, and they really wanted me to pay them. We didn't agree to do that. That did not seem like a good business model to me. And then next thing I knew was a jump ball between Reuters and Bloomberg, and as I recall at the time Bloomberg paid Microsoft to distribute some news. I think Bloomberg has since rethought that strategy but it was a very odd time in terms of publishers establishing value and different publishers had different strategies. And in the case of Reuters I think they would say it was a smart move for them to develop a lot more awareness of their brand in the North American market, and they didn't have much money to lose anyway. So I think it was all part of the creative destruction of traditional business models, and different companies took a different attitude towards how best to deal with it. Martin: Gordon, I want to just return to this notion of culture and consumer expectation, because I think it's at the nub of a lot of this stuff. There's a school of thought that basically says that if folks like you and me and others in the mid '90s had really pushed much harder to try and transcend those expectations and pushed the brand much more aggressively into a direction that was, call it more sustainable over the long term. We wouldn't necessarily be in the position we're in today, whether at Journal or the Times. Essentially, interestingly, the business models have kind of converged. I have my view of that. I'm not going to proffer it here, but what is your view of that? Were you...do you feel that you were aggressive enough in pushing the culture to do perhaps to get out of its comfort zone and do more than it could have possibly done? Gordon: I think when you look back you have to say nobody did enough. I mean Yahoo became an old media company within a few years. I take some consolation from that. So I don't think any of us in traditional media companies did enough. On the other hand, we did quite a lot so if you think about the case of the Wall Street Journal, in retrospect the big question was not so much, "Can we do more digitally?" I think looking back the real question was did we do enough to create different revenue streams?" Because at least the way I see things advertising, generally speaking, print, online, every form, is in a downward trajectory that will continue in terms of being a support for journalism, for newsrooms. And so the way I would kind of recraft your question is did we do enough to find new revenue streams so that we would not be so dependent on advertising and so that all the companies like Google and others, Facebook, now Twitter, others that are going to get a bigger share of the advertising market because of the way they address the market. Did we do enough to create sustainable revenue models to support that journalism, and there I think we all have to say we didn't do enough. Martin: So let me ask that question a different way, because I think culture questions are important. Was it more a question...is the difference between cultures in the old organizations more on the margin, or was the real cultural difference the technology culture? The Valley versus the East Coast would be the easiest way to put it, but just the application versus the content creation and editing? Gordon: I think, yes...I think the focus that you would expect from a journalistic enterprise on the journalism on the news on telling stories and doing it in media that people are familiar with that was obviously a limiting factor if the contrast to that was using algorithms to create a Twitter to turn that into a news product, which, by the way, I think it is. LinkedIn is a news product now for many people. Facebook, obviously, for many people is a news product. I think it was very hard for traditional publishing companies even to imagine those services. By the way it was hard for the founders of some of those services to imagine what they would become. On the news side I would say generally, and this is true definitely for the Wall Street Journal, there were always ideas bubbling up of new ways to present content using digital technologies. When Dow Jones acquired Market Watch from Larry Kramer in addition to the page views to sell more ads, the other really attractive feature was the video. I think CBS Market Watch was, I believe, the first of their sites to have video on the home page, and that led to an enormous amount of learning about digital video, and the Wall Street Journal now I think is producing four or five hours of digital news every day. Paul: Video news. Gordon: Video news. There's another part of this cultural question, which I think is also a very important one. I mean I'm not sure people appreciate this. At least in my experience it was the business side of the publishing companies that were more conservative, more change resistant, than the news departments. Paul: Well, that was the Innovator's Dilemma. They were the ones protecting the current streams of revenue and profit, right? Gordon: Absolutely. And they had advertising goals to hit for the year, print subscription revenue goals to hit every year, and even at Dow Jones, which I think was placed in a fortunate position for many reasons, even then it was really a challenge to break down some of those silos until there was just a mass restructuring that followed, a really brutal economic period where the Wall Street Journal as a brand was unprofitable for a couple of years. Being unprofitable for a couple years was liberating. It made it a lot easier to say, "Whatever it is we're doing now, the presumption shouldn't be that's the right way to do it." And it did lead to a massive reorganization, a restructuring, that fully integrated the revenues and expenses for digital and print and made it just one integrated part. That made it so much easier. But that took until the mid 2000s, so it was a good decade of trying to avoid cannibalization, of internal friction over the way people operated and what their incentives were, what they were paid to do. The tension for a publicly trade company like Dow Jones was at that time, quarterly earnings versus the longer term shift to more digital less shift, more consumer revenues, less ad revenues. So all those things were going on at that time, and that is one of the reasons I think it's hard for traditional companies to be the place where innovation happens. John: So, Gordon, if Dow Jones had one eye on Reuters, or at least a corner of an eye on Reuters, you also had one eye on the New York Times which had the aspirations of becoming the other national newspaper. And so you're watching Martin and his colleagues over there launch their website which is free and growing rapidly and becomes huge. What are you thinking in the other camp when that's happening? Gordon: Right. John: And feel free to say what you were thinking even though Martin is sitting right here. Gordon: [laughs] I'm going to. The other one... Martin: Well, we had quarterly lunches all during that period... [pause] John: So, Gordon, Dow Jones also had one eye open for the New York Times, which had aspirations to become the other national newspaper, and it was taking a radically different approach with its web business, which was to give it away free, and that had great results. It grew rapidly and created a lot of revenue. In the other camp, what were you thinking? Gordon: I remember taking...Well, we alternated, Martin and I, taking each other to lunch every quarter to I guess was a mix of commiserating and strategizing and exchanging notes. On the digital side, we were happy to tell each other how things were going, whereas I think our print colleagues at that time would've really had a hard time doing that. They were established competitors for advertising and other things. We had a lot of discussions about it and there were two very different business models. We obviously admired the product of the New York Times. I was happy with my revenue streams, which was a mix of ad revenues and subscription revenues. Martin was a happy with his growth. Eventually, the two models kind of converged, where there's a freemium approach. There are still a lot of people getting free content with the New York Times and at the Wall Street Journal but a lot of subscribers. I think the New York Times is well on its way now to being where the Wall Street Journal has been for awhile, which is a huge percentage of the profits in those brands coming from digital subscribers. I think we had a close eye on the New York Times. When you asked me that question though, what flashed before my eyes, which I had forgotten about for many years, was an article in the business section of the New York Times about the Internet being such a great new thing. There was a box, a chart that contrasts the value that the market had established for different brands. In that box was a contrast between thestreet.com and the Wall Street Journal. The New York Times reporter said correctly, the market had said there was more value in thestreet.com than in the Wall Street Journal. There were a lot of things we kept our eyes on. We had to keep our eyes on the public market, on how things were being valued, on technology. Certainly, during those quarterly lunches mostly that Martin and I had, we focused on all kinds...mostly the business of what can we do? What can these properties become? What are the revenue streams going to be? How do we try to maintain some value in the kind of journalism that is done at places like the New York Times and the Wall Street Journal? I think that's a continuing challenge. Paul: Talk a little bit about the non traditional but established competition that came in as well, so CNN, which was a free but dynamic and...They were used to just doing news when it happened, as opposed to on a printing deadline. Then of course, Yahoo!, which we talked about, and MSN when it went live. Gordon: Yeah, I think within the Wall Street Journal, I think one of the reactions was reflection again of the brand, of the Wall Street Journal. I remember when Bill Grueskin, who was then the online Journal editor. He had met with a software company that had figured out a way to send not just email alerts, but alerts that would actually pop up on someone's screen if they happened to be at that website. Bill and his team came up with a great idea of sending news alerts. He's one of the first company publishers to do that. Bill said, "But we're going to do with the Wall Street Journal way. We're going to do maybe three or four alerts a week. It's going to be something that really matters, so then when somebody sees the alert, they're going to know it's something substantial." That was a different approach from, I think ABC made a very nice business out of doing news alerts, but it was a lot of news alerts to a more mass audience. The Journal again, because of position it had as being for a different kind of audience, was able to say, "The winner of the NCAA basketball tournament." That's not a news alert for the Wall Street Journal, but if Alan Greenspan at that time coughed, maybe that was a news alert for the Journal kind of reader. We certainly had an eye on other additional publishers now being able to publish very broadly using this new medium, and some would just have Paul like CNN or broader. There was CNN/FM during the time as well which was more of a competitor to a Wall Street Journal or a Market Watcher, Yahoo Finance. There were a lot of competitors and so I think part of the action of the... Paul: CNBC. Gordon: And CNBC, of course, of course with whom the Journal had a deep relationship... John: But first the Journal tried to buy what became CNBC. Gordon: Well first we were competing. So when I was in Asia, Chris Graves and some others on a shoestring started ABN, Asia Business News, in Singapore. And my recollection which may be through rose-colored glasses, was that we did a good job competing with GE in Asia, and Europe was kind of jump ball, but they downgraded the U.S. and ended up, obviously, acquiring the Dow Jones assets with a long term relationship, but a complex one that did limit to some degree the amount of video that the Wall Street Journal would be doing on its own. And that has also shifted over time. Martin: As you fast forward, are there any models today, entrepreneurial models mostly, but not so much the traditional ones trying to [inaudible 00:36:00] , that you think are sustainable over the long term? Any examples, companies that might be particularly interesting in business news in particular? Gordon: Well, I think if the question is what business models are sustaining journalism there days? There are two companies that seem to have a successful model, in particular Bloomberg and Thompson Reuters. They both have very large news organizations but they're funded off of a different product. They're funded off of their data products and their workflow products for financial professionals. They're able to establish and maintain large news departments. They're doing more and more enterprise journalism of a kind that they never did a decade ago. But they can do it because they've got billions of dollars in revenues from people who are using their services for professional reasons. And by the way they have almost no reliance on advertising revenue. It's almost all subscription revenues. I don't think that's necessarily a model that can be replicated for many other news publishers. But if yourself who's got a good model, that's a pretty good model. Now it may be that LinkedIn and Twitter and Facebook develop similar models where they have other revenue streams where the news is a value to their users. We'll have to see if that turns out to be a place to sustain [inaudible 00:37:45] . I think though that we're in sort of a middle period where there are many, many news brands that do have incremental revenue streams that they can bring in to help with that transition away from somewhat reliance on advertising revenue. Press+, which is the company that Steve Brill and I started a few years ago, was designed to help all kinds of publishers, generate digital subscription revenues, whether it's the New York Times or McClatchy or Lee Enterprises or Gatehouse which [owns] lot of very small newspapers. Everybody is doing quite well in terms of new revenues from that source. It's not enough to replace the advertising revenue that is still declining: print [and] online. But it takes sustainable recurring high profit margin revenue stream that will also help publishers, particularly newspapers, make the transition away from five sections, seven day a week print products to something else in print. Maybe it's one section every day. Maybe it's a couple days a week, but otherwise much more digital publishers. I think we're in the middle of...well, I don't know if it's the middle. We're in the process of determining what revenues streams will support journalism. I don't think we're really in the middle, honestly. I think it's more the third inning than the fourth or fifth. John: You mentioned Thomson Reuters and Bloomberg, which, arguably took a good bit of their market share from the path that Dow Jones had been on for a long time, which was proprietary news and data to professional investors. Was there anything about the disruptive nature of digital media coming to Dow Jones that was related to Dow Jones not thriving, ultimately, in that era? Was it a distraction or was that an unrelated event? Gordon: I think it was a somewhat related event. I think, looking back on the history here, Dow Jones had acquired a company called Telerate, which, in the '80s and '90s was a real competitor in the fixed income market, the bond market with the upstart called Bloomberg, and in international markets with Reuters. Telerate ended under a lot of pressure and Dow Jones ended up selling Telerate. My view of what happened is related to this topic, which is that, for several years in the 1990s, the product development within Telerate depended, to a large degree, on the revenues from print advertising. So in good years for the print Wall Street Journal kicking out a lot of profits from the print Wall Street Journal, which at that time was almost all from advertising. In those years, Telerate would have some elbow room to invest in the product. In tougher years and there's a cycle at that time and it worked out for years, there was less money for Telerate to invest in product development. One thing we now know about digital publishing, electronic publishing is, you can't miss a cycle or two of product development and be competitive. Bloomberg and Reuters had one business that was serving financial professionals with data with a little bit of news. But they were and are data businesses. As Telerate missed out on some of the product development, its market share fell precipitously. In retrospect, one of the lessons is that it's very difficult to run a company with multiple revenue streams and different business models without giving each part of the company its own set of resources to invest in what's required to make it successful. Paul: John has come up with this metaphor of swimmers and tide. Some of the things in tide were completely ... orthogonal. And most were ad related so probably didn't affect businesses you were in, but they affected the broader category of news, business models. One was Craigslist, clearly orthogonal to the Journal but not to daily newspapers. That one's a pretty obvious impact, and the other one was paid search though. Search went from search to paid search and today, still takes more than half of all the ad dollars. Gordon: Absolutely. Look, I would say it's even broader than that. To question John Wanamaker, the department store magnate of the 19th century, he was asked, "What was the secret to your success?" He said advertising. The following question was, "Gee, how do you know which advertising was worthwhile and which wasn't?" He said, "I knew half was wasted. I just never knew which half." Well, digital technology has reduced that uncertainty around the 50 cents to get a dollar's worth of bang for about a dime. Part of it is search. A larger part of it, I would say, is the ability of corporate marketers to become publishers themselves, to get their brand distributed, their products described in different ways. There's some advertising, but a bigger and bigger share of corporate marketing now goes to other things, it goes to companies on websites, to... John: Facebook campaigns. Gordon: The Facebook account, right, and obviously, to search, which is a highly measurable, highly effective form of advertising. In the case of the Wall Street Journal, I remember comparing the spending by IBM in the Wall Street Journal, which went from tens of millions of dollars in just the Wall Street Journal to well under 10 million dollars for all print advertising. The Wall Street Journal was, I would actually argue, the first traditional publisher, really, to see the effect of digital technology, even before Craigslist happened. The Wall Street Journal's advertisers were predominantly financial services companies and technology companies. Marketers at those two companies were the first to see the opportunities of online advertising, and the first to reduce print, which was then also seen in publications like Business Week and Fortune and Forbes, certainly the Wall Street Journal. And to move more of that spending online, some of which the traditional brands got, but it was trading analog dollars for digital quarters, maybe. John: Yeah, the advertising page is in the business magazine category, between 2001 and I think, 2005, they dropped something like 10,000 pages. It was just a shocking. Gordon: Peter Kann got a letter from a reader in about 2000, something like that. And the letter read, "Dear Mr. Kann, You owe me a new dog. I trained my dog to pick up the print Wall Street Journal and bring it to my desk, and Monday's newspaper was so thick and heavy the dog had a heart attack." [laughs] So there was a time when the Wall Street Journal, like a lot of print publications, was just chock full [crosstalk] . [pause] Paul: Gordon had one more story. Gordon: I think it's relevant to this question of cultural differences within companies and trying to grapple with business models. There was a meeting in early 2000s where the tension between the analog part of the company and the digital part of the company were made very clear. It was a proposal from folks on the print side of "The Wall Street Journal" to offer access to "The Wall Street Journal"'s website to all print subscribers on renewal for free. On the digital side, we were highly offended by this notion because we had spent years trying to establish value for the digital part. You couldn't get access without being a paying subscriber. But from the point of view of the print folks, they were trying to keep their ABC number at a level that they were told it needed to be to support the advertising. From their point of view, it made all the sense in the world to give something away if it was going to improve renewal rates. There was a meeting scheduled. All the different concerned people came to a meeting, as you do at a big established company. I don't think I ever did this at any other meeting. It's kind of smart alecky. If anybody had ever done it to me, I would have been highly annoyed. I had a prop for the meeting. It was a giant conference room table. I put in the middle of the conference room table a toaster. For young people seeing this, a toaster was like a convection oven, but just for slices of toast. I put in the middle of the table a toaster. At that time, banks would give toasters to people if they opened an account. You'd get a toaster as a premium, as a giveaway for something else. I put a toaster in the middle of the table. People gathered around the room. We started the meeting, and somebody said, "What's that toaster doing here?" I said at that meeting, "What am I doing here? You want my product to be your toaster. You want to give away the digital version of 'The Wall Street Journal' after all these years of establishing value? Are you crazy?" Fast forward to today. It does turn out that the right model is to approach all the print subscribers to a newspaper or a magazine, and have a price increase that gives them digital access and allow them to opt out of digital. At Press+ we now have hundreds of publishers testing all kinds of things a lot of data. The data all say this is a great model. You increase the price on renewal. You communicate to the print subscriber, "Now you've got all digital access on the Web, and mobile, and iPad, and Android, and whatever other versions you might have. It might be a 25 percent increase on the subscription price, but you get digital access also. And by the way, if you don't want digital, just pay your old print price." If that's the offer, 90 percent of the people pay a bit more to get digital access. If I knew then what I now know, I would've had a different attitude toward the toaster. It would have been, "Charge some more for that toaster." But at that time, it was an example of the kind of tensions within large established companies based on...your position really did depend on where you sat. Martin: Well, the same thing was true on the advertising side. I mean, people wanted to merchandise the inventory as part of a print buy. Gordon: Yeah, so there was a lot of value added, meaning I'm not going to charge you more for it. Paul: That was the term. Gordon: Oh my God. It was kind of force bundle without value. I think publishers are getting much smarter about value and where the value is. That helps explains why so many publishers now are charging for at least unlimited access to their digital versions. But it sure took a long time for companies to figure all that out. ...
VIDEO: YES

Nick Denton
BIO: YES: Nick Denton, born August 24, 1966, is a British jo...
TRANSCRIPT: Martin: March 14th, 2013. New York City, Nick Denton. Hello. Nick Denton: Hi. Martin: As I was saying before, one of the very interesting things about interviewing you for this project is that you kind of straddle both worlds. One of the few people who do successfully. Could you begin, actually, with your career at "The FT," and just talk a little bit about that, and kind of when you first hit the electronic side? I think you were a print journalist for a while, right? Yeah. Nick: I was always a geek. When I was based at The FT in Budapest, I used to get on a little train in Vienna which was the closest place you could buy "Wired Magazine," and all the Mac enthusiast magazines. I used to go once a month to Vienna to pick up that, and eat sushi. Do the other things that you could do in the developed West. I always had a leaning towards technology. In '96 switched from the investment banking beat to the tech and Internet beat. I had to step off staff in order to, Because I wanted to go to San Francisco. I'd read "Wired Magazine." I believed that something was happening there and was actually a little bit disappointing when I arrived. It wasn't quite what I'd imagined, that South Park, I'd imagined this digital epicenter where the new web was being born. It actually seemed to be inhabited by a few homeless people, and maybe two or three people who could have conceivably been web designers, but I still believed. I closed my mind to the visual evidence. Martin: So you left The FT and were you still working for [crosstalk] ? Nick: I was still working for The FT. My final piece for the The FT was a story about... Paul: I noticed this table jerks, so you guys should not lean on the table, but I needed to tell you that. Martin: Yeah, that's OK. Nick: My last story for The FT was profile of a company called LinkExchange. Ali Partovi and Tony Hsieh. They actually had LinkExchange and they had DrinkExchange, both of which I ended up emulating. LinkExchange with a company called Moreover, which packaged up news links and had as the idea, kind of a link paper click economy around news links. DrinkExchange, I did a company called First Tuesday, more or less in parallel. Martin: We'll get into that in a minute. Nick: I basically stole their lives. My last piece for The FT was a profile of the founders of LinkExchange. Which ended with, "...and this looks like way too much fun so I'm out of here." [laughs] Martin: Then you start Moreover right after that? Nick: I started Moreover and First Tuesday sort of not immediately after, it was messy. You have to find yourself the right partners. I had actually also before leaving The FT, Richard Lambert who was the editor at The FT at the time, asked me when I was in San Francisco to tell us what we should be doing. I wrote a memo which unfortunately I've lost. Martin: That's such a shame. Nick: I wrote this memo which said it is pointless for us to report what others had done better. We should be seeking to add value and where others have done a story better, we should link to them. This was... Martin: Heresy. Nick: It was heresy. It was revolutionary. Unfortunately, it was still sort of revolutionary in the newspaper world 10 years later. That was the extraordinary thing. The extraordinary thing was not that it was revolutionary then. The extraordinary thing was that it was still revolutionary and still sort of now, even revolutionary. That newspapers insist on rehashing stories that have been better covered elsewhere, instead of taking and moving the story forward. There's still a huge amount of duplication in the efforts of the news industry. Martin: Moreover is what? Nick: Moreover is a news search engine. A news search engine, which ended up getting diverted into enterprise information management. I think we call it dynamic information management. I was very proud of that phrase. Now, I'm totally ashamed of the fact that I was proud of that phrase. When the bottom fell out of the consumer Internet market, that seemed like the only option for survival. I ended up going to conferences with corporate librarians, and pitching this service as dynamic information management. The company was eventually sold to VeriSign, respectably. Martin: What year was that? Nick: It was sold to VeriSign after I'd left. It was sold to VeriSign in 2005. Martin: Did you start Gawker before 2005? I just can't remember. Nick: My mother was sick, and died. I moved back to England to be with her, and, then, actually, just to be with my family. After that I was trying to decide between San Francisco, New York, London, and Budapest. I was rather lost somewhere between traditional journalism and the Internet, somewhere between those four cities, somewhere between media and technology. Martin: But you did start Gawker. When? Nick: I started Gawker as a side project. My most successful ventures have tended to be side projects. Martin: I remember that you were writing, at the time. You didn't like the dot com boom. Nick: I didn't like the dot com boom, probably, because, I'd been at the heart of it, in Europe. First Tuesday was about as "boomy" as you could possibly imagine. It started as a party. It was a boom party. It became an event series. Sponsors attached themselves to it. It made money, accidentally. Martin: Just be careful what you say. Nick: In a way that I was sort of ashamed of. I didn't like having made money that way. Martin: But, I remember that you started out, and you may still have this view, that what you were doing, when you started Gawker, was very, very modest. I just remember the modesty of it. That it wasn't going to make a lot of money. That it wasn't going to be a big business. I guess, because people had a sense that that's what you were trying to build. Do you remember any of this? Nick: The story goes a little bit further back. Martin: I'm interested. Nick: When I was in Silicon Valley, we reached out to people like David Winer. I wouldn't say we were friends, but I knew David Winer. I did become quite friendly with the founders of Blogger, with Evan Williams and Meg Hourihan. Meg Hourihan who I ended up working with later. Evan Williams, who I was going to partner with, before he was acquired by Google. I was entranced by Blogger. Moreover had a joint venture with Blogger called Newsblogger, which was a combination of Moreover newsfeeds, and the Blogger platform. It was, actually, written by a guy called Matt Hamer, who currently still works for me, actually, out of Kansas City. The idea of Newsblogger was that you would consume and write about the news at the same time. It was, actually, very much ahead of its time. It was something like what we're doing now, in many ways. The act of reading and writing, in a truly interactive news environment, cannot be separated. They have been separated, but, they cannot be separated, not usefully separated. We tried to buy Blogger. In fact, my excuse, at least, for resigning from Moreover, or saying that I was going to leave, and initiating a search for a new CEO, was because the board had overruled me on the acquisition of Blogger for $2 million. Which is again, it certainly sounds like a good story in retrospect. It's a good narrative. I also introduced Jeff Jarvis, who was then at Condé Nast. I introduced him to Evan Williams. When I was pitching Moreover to Condé Nast, Condé Nast ended up putting in $4 million. As a side benefit, they got introduced to Blogger, and ended up investing in Blogger which I think was one of their most successful Internet investments of that era. I'd been involved in blogs sort of tangentially. After 9/11, I was politically more engaged than I had been before. I wouldn't say I was...There was a breed of war bloggers. They called them war bloggers. People who started writing because they were moved by 9/11 or subsequent political discussions. They were moved to write. I had a personal site on which I wrote about politics. Actually, I think most of it is actually off the Internet now. I should probably put it back on. There's some embarrassing stuff about what we should do with Iraq. I think my idea was to partition the damn place, or send in the troops but don't take Baghdad. Martin: I think that's what Joe Biden wanted to do and he's about to run for President, so you're not too far behind the times. Nick: It's very easy writing, it was very easy writing in that environment. It was basically as easy as writing features for The Financial Times had been hard. The more spontaneous, the quicker the turnaround, the speedier the feedback, the more I enjoyed writing. I wrote well. I wrote better than I had at The FT. That was an education for me that actually there was a certain kind of writer, maybe most writers, who work better in more conversational and interactive environment. I setup Gawker as a side project. At the time, I was working on a thing which became called Kinja. Kinja's the name of our new interactive news platform. We've recycled the name. In fact, Matt Hamer, the guy who wrote the code for News Blogger worked on that project and is one of the key guys, one of the key developers on the new Kinja. I've been trying to do this forever. Like most things, you have one big idea in your life and you just keep worrying away at that until you get it right. Martin: We'll get to the what the big idea is in a second, but what is... Nick: Gawker and Gizmodo are side projects. I'd met Peter Rojas who then worked for the Red Herring. I'd met him I think actually probably was in San Francisco. Maybe it was New York. In fact it was at dinner at was it Steak Frites, which I think was a restaurant somewhere around Union Square, with Om Malik and Pete Rojas. We were discussing an idea which was, what if you just took Wired Magazine, the magazine that I used just to travel for Vienna for, has a section called Fetish Section, which is cool gadgets. Whenever I'd pickup the magazine, I would go straight to the fetish section. What if you just put out the fetish section? What if you got rid of all the junk that surrounded it and you put out the content, the information, the news with the highest value and you did it instantly. You didn't have to wait two months for the thing to be published, you didn't have to travel to Vienna to get it. What if you just did that? I hired Pete Rojas at then I guess $1,000 a month. I'd made some money off the sale of First Tuesday, $3,000 a month for Pete Rojas, another whatever it was, $2,000 a month I think for Elizabeth Spiers at the beginning. Then I put Pete Rojas up to $2,000 a month. So $4,000 a month even though there was no advertising at the time. This was 2001, 2002. I thought I can fund that forever. I can fund that. People are still reading stuff on the Internet, sooner or later there's going to be money there. I knew that. Martin: But you must also have had a vision of what your... Nick: No. Martin: You did not? Nick: No. In fact by then I was actually very distrustful of the very idea of vision, or plan, or anything. If something seems fun, if it seems interesting, do it. Don't think too much about it. Don't strategize too much. Just do it. Because I'd had more success...Moreover was a respectable exit. Moreover was my grand plan. Moreover was my theory. This thing was going to revolutionize news. First Tuesday was an accidental company. It was a party that somehow became an events business which got bought for more money than should have been paid for it. I was skeptical about the ability of either my plans. I was skeptical of planning, generally. I've stayed that way. Martin: This is very interesting. Do you think that's like a break point or a distinction between traditional approaches to web journalism and... Nick: No. That's just me. Martin: Just you. Let's continue with this. You start Gawker and... Nick: Gizmodo first. Martin: Gizmodo first. Nick: Gawker was 2002. I'd moved to New York in May, 2002. I'm working on this coding for a blog of all blogs, a blog aggregation service, which was then called Lafayette Project. But then it was later called Kinja when we launched it. The things that were successful, because the initial Gizmodo launch wasn't that successful, didn't get a huge amount of attention. But the initial Gawker launch did at the beginning of 2003. It was some combination of maybe geographical concentration. It was a very kind of Manhattan sites, particularly there. It appealed to people who "The New York Times" was too general for them. For them, New York was downtown New York and maybe little bits of Brooklyn. There's a certain demographic, it was a certain part of the city and here was a site that appealed to a very specific group who are very well networked, who would talk amongst themselves. It was a very good place to start in many ways. The site got buzz almost straightaway. Our launch party was maybe two or three months after we launched, Kurt Anderson came. I didn't know Kurt Anderson. None of us were connected to him in any way, he was a figure. We'd all heard of him. He'd edited "Spy Magazine." Gawker was, to some extent, the successor and [inaudible 17:20] to Spy Magazine. But that was a measure of how quickly the thing took off. One of the reasons it took off, I think, was because there was nothing else going on at the time. They were all carpetbaggers, had been washed out of the market. There was no Internet advertising. The initial business model, to the extent that there was one, was that, "Maybe we can make some money off of [inaudible 17:43] fees." That was the extent of it. Or otherwise, "I'll just fund it for as long as it takes." It took off. When something takes off like that, you should just plunge straight in. I wouldn't say I plunged straight in. In retrospect, I should have gone more aggressive sooner. Martin: That was part of the humbleness that I was talking about before. There was no Internet advertising. I can remember you saying, "This is never going to be big." Nick: That was a result of two things. Firstly, I'd had the experience of a wildly over hyped start up in First Tuesday and in companies that I'd covered. But I'd felt it personally. First Tuesday didn't get as much of the backlash as maybe it deserved. Because it was the frothiest bit of the froth, as far as companies go. We were seen, in the UK, as having ridden the hype. We'd got out, but I wasn't the face. There was a woman. Generally, women tend to attract attention, both positive and negative. She got the worst of it, during the backlash. But I was close enough to that to know that was not a path I wanted to ever go down again. I knew that this was going to be a success. I knew I didn't want to get any outside investment. I knew I never wanted to have outside investors again. Why would one over-hype it? What's the purpose? You're just going to draw attention to it. You're going to encourage competitors to come in. I'd come out with lines like, "Why are you so obsessed about the revenue model? Who cares about revenue models? In any case, these things make less money than a hamburger stand." That was one of my lines. Like, "Don't look here." That was later characterized as being Denton reverse spin. Eventually, they did think there was money in it, precisely because I was downplaying it so much. But in any case, it's very hard for anybody to write a story about that. There's just too many levels to unpack in a simple news piece. Martin: Then, from Gizmodo and Gawker, you started to roll out some other brands. Infamously the Fleshbot website came. When was that? Nick: Was that the third? Martin: I thought it was. Nick: It was early. Martin: Is that still alive? Nick: No, we sold. We didn't sell it. I gave it to the editor. It was more trouble than it was worth. Martin: Why did you just start it? I'm just curious? Nick: I got a kick out of being a pornographer. It saved me from ever being tempted by respectability. Funny thing, people thought it was for money. [laughs] The story of my life or my business career is everybody thinks everything is for money. I'm practical. I have a working company. But it's almost never been the primary motivation. Martin: I assume a lot of the other chatter that was going on back then was, you'd created a kind of digital magazine model here. It's not a magazine, in the sense that it's anything like that. I don't mean it in that way. But in terms of brands. Nick: We did call them titles. I called myself a publisher and we saw Conde Nast as being...We'd like to be, for our demographic, as prestigious as Conde Nast. There was definitely an element of that. Martin: There was chatter that they might come in and acquire you. Nick: We got two acquisition feelers, ever. I got invited into MTV when Tom Freston was running it. It was Judy McGrath organized the...I was invited in to see her and then Tom Freston did a drop in. At some point, I realized, "This isn't just a get to know you. Maybe there's more interest." I was trying to parlay that acquisition interest into... Maybe some partnership, let's get to know each other. I can dangle the prospect of an acquisition which will never happen, in order to get them to do something for me. The only other time was Jeremy Phillips of News Corps, who is a friend of mine, pinged me the day after AOL bought Weblogs Inc. "Some bright spark here suggests that we should at least ask you." But we don't actually get any offers anymore. Martin: Why do you think that is? Nick: Maybe because there's a poison pill, even if it's not Fleshbot, which was my previous poison pill, that we take on too many vested interests. The big difference between Gawker and other media organizations is that we have, really, no sacred cows. There is no list. There are no protected people. That is rather uncomfortable for a lot of other proprietors. Martin: I'm looking out into the newsroom. I'm seeing a screen with a lot of graphs on it. At some point, you must have realized that you could program these sites based on real time data, Chartbeat data, whatever it is that you're using. I'm not sure. When did that happen? Or is that erroneous? Nick: No. It started with Site Meter, which was used on every personal blog. That wasn't unique to us. Anybody who set up a personal blog at the time tended to have Site Meter and anybody who had Site Meter became rapidly obsessed by Site Meter. "Where's my traffic coming from? What's the chart?" We had some of our early bloggers that put Site Meter up... It would be on their screen permanently. They were doing it themselves, naturally. I started paying people bonuses based on their Site Meter traffic. Martin: When was that? Nick: That was early. Might have been year one or year two. It seemed like a very natural way to do. Initially, it was $12 a post which worked out, for Spiers and Rojas, at about $2000 a month. I didn't really want to pay them. They wanted more money, as these things started getting more successful. I didn't want to pay them base, so I tied it to traffic. That's more or less my recollection of it. Later on, I realized that the underlying dynamic, the tension within Gawker and probably within myself, is the tension between the initial editorial mission, which is let it all out, all of it, everything, and my competitive side. My desire to beat Jason Calacanis. That's intentional. You do a story that gets the traffic. Maybe in order to get the traffic you simplify the story a bit, you don't tell the full, complicated truth. Martin: He had developed Engadget just about at the same time. Nick: What he did was he came in with a bang. Initially, he had a bunch of trade blogs. I wasn't very worried about those. They seemed boring. Pete Rojas to whom I would not give equity because I wanted to maintain a coherent organization. I didn't what to have separate bits of equity in separate titles. Pete Rojas wanted equity. I wouldn't give him equity. Calacanis poached him. Engadget was Pete Rojas'... Martin: Revenge. [laughs] Nick: It was. Pete Rojas got equity. He owned half of Engadget which meant that Calacanis doomed himself, in the sense that he would never have a coherent company. But that was a price that he paid, in order to get a head start. Then he, quite quickly, launched in cars and video games. Did he launch before us in cars and video games? Maybe we launched. Martin: Jalopnik? Nick: Jalopnik and Kataku. But those sites were... If we didn't launch immediately after him, it would have been in anticipation... Martin: So you viewed him as your early competitor? Nick: It was painful at the time. I was stuck in Brazil. I hear about this site called Engadget. I go on and it's very much like Gizmodo. I look at Gizmodo and Pete Rojas was fulfilling his contractual obligations. It was brutal. It was a very effective move. Calacanis is the best competitor I've ever had, in terms of his willingness to do things that most people are too decent to do. Martin: He develops this, but pretty quickly sells it to AOL. It's not like he's in the... Nick: But not before he has got our juices going. Martin: So that was good for you? Nick: In retrospect, it was good. You never know whether these things are good or bad. Martin: You want to stop for a second? Paul: It's saying that I should change files, so we don't run out. Martin: This is great. Paul: Three, two, one. Martin: Sorry. Nick: Just to finish it off on Calacanis. At one point, Engadget had at CES...They'd sent six people down there. We had one person, Joel Johnson, who ended up burning out, because Calacanis threw a lot more resources at it. We ended up in an arms race, Gizmodo versus Engadget. Auto Blog versus Jalopnik. Kataku versus Joystiq. In retrospect, it was useful, in the sense that...Wired Magazine, for instance, did a profile on the rivalry between Engadget and Gizmodo. When you have that Coke versus Pepsi dynamic, it doesn't leave a huge amount of room for other people to come in. In a way, a duopoly is more stable than a monopoly. It worked. It forced me to get more aggressive, to take the whole thing seriously. I didn't want to lose. Unfortunately, it also focused us in on traffic much more than even we had been at the beginning. You could argue that it pushed us too far in that direction. We started losing sight, a little bit, of the initial impetus, what I saw as the underlying principle of blog publishing which was that it was true and conversational. There was nothing between the thought and the page. You'd have a thought. You'd put it down on the page. Don't think about it. Don't worry about the traffic. Worrying about the traffic, that acted against the spontaneity of blog publishing. Those are the two forces that have always been in contention. Martin: So bringing us further now, you're on two floors. You've got a fairly large newsroom here. Something must have happened between the time that Calacanis sold to AOL and now. How did this grow? Nick: Consistently. Even after 2008, where I actually cut the costs by 35 percent. Within three weeks of Lehman going down. I'd been so scarred by the dot com bust that there was no way it was ever going to happen to us. We were not going to hold on with loss making ventures. In business terms, that was probably the biggest interruption, except that there was no interruption in sales growth. We rationalized our titles. We'd always been pretty ruthless in getting rid of things that weren't working. Once you fire your first editor in chief, once you close down your first unsuccessful site, then subsequent actions become par for the course. If we were to do it now, people wouldn't think, "Gawker's in trouble." They'd think, "That's just Gawker doing what Gawker does. It's a relatively ruthless organization." Martin: It's a creative destruction. Nick: Yeah. Martin: How many titles are there? Nick: There are eight. We have launched 18. We've killed, sold or folded in 10, more than half of the titles that we've launched. That's a good discipline. I've had some unsentimental advisors and colleagues, who are much less in love with these properties than I. There's this woman Gabriela Giacoman, who actually worked with me on Moreover. Martin: She just left? Nick: That's Gabby Darbyshire. Martin: Sorry. Nick: The two key Gabs. Martin: [laughs] That's unusual, sorry. Nick: I think women tend to make better decision than men. In many cases, they're much less emotionally attached to products. They have less pride in things. Gabriela would typically come and say, "I love the guy who writes this. I love the site, but it's really not working for us." There'd be no politics in it. There'd be no agenda. Also, knowing that I control the company makes things way simpler. Because it's not like somebody else is angling. Particularly, with someone like Gabriela. If they come and say that Consumerist is causing us more trouble than it's worth, I know that's the truth. Martin: Nick, I apologize for having to go back. But we talked about putting out 4,000 bucks a month and then skipped forward, very quickly, to this fairly large enterprise. When did you first start taking advertising? When did the business model that you're currently embarked on begin? Nick: Day one of Gawker.com you could argue. I put a Gawker ad. Martin: You personally sold the ad? Nick: No, I didn't sell it. [laughs] I found a Gawker banner and thought, "That seems high end." I put that on Gawker.com. They never complained about it, probably never even noticed. Paul: There is actually, I think, legal precedent in the newspaper business, decades before, where somebody did that. I think an upstart Chicago paper took Marshall Fields or something. They got sued and actually it was upheld. Very strange [inaudible 35:20] . No one else. Nick: I wanted to establish the principle that this is a commercially supported website. Don't come and freak out later if we put banners on this. It was from the beginning. Martin: Then you hired a sales staff? Nick: Gabriela was taking sales orders. We were order taking for a long time. We were order taking right through until Andrew Gorenstein, who came in from Conde Nast, who joined us nearly two years ago. He would argue that we were order taking until he pretty much came on. We had hot sites. People wanted to advertise. We had hot sites and hot categories. Consumer electronics. We had the hot gadget blog. Martin: That's a nice place to be. Nick: It's a nice place to be. We got to choose. We got to take Wired Magazine. We chose the highest value bit of it. That's the big problem the newspapers have had. Start ups and new ventures come in and pick off the best bits. They leave The New York Times with the Baghdad Bureau. Martin: We'll get to that a little bit later. Nick: [laughs] Sorry, I didn't mean that as a dig. Martin: No, I know you didn't. Somebody has to be in Baghdad. Paul: But used cars used to pay for it. Martin: Well, not at The Times. By the way, just as a question, I know the answer, but you never thought about charging for these websites, did you? Nick: Too much of an egomaniac. Writers are egomaniacs, too. The best writers are egomaniacs. How can you hire a good writer and then put them behind a wall? Martin: The reason I asked is because, subsequent to the boom in advertising, especially IAB standard units, there seems to be a depression a little bit, certainly in pricing. Nick: Not for us. Martin: So you're still running IAB standard units? Nick: What do we run right now? Even on the new model sites, we run medium rectangles, 300 by 600s, push downs and billboards. We are moving away from that. But there are plenty of advertisers that don't have so much of a story to tell. For them, banners will probably continue to be a good way for them to... Martin: Why do you think that you're continuing to see growth in the banner business? Certainly, it's a tough business for a lot of people. Nick: We never allowed networks in. If you want to buy the Gizmodo audience, there's one place to buy the Gizmodo audience. The front page would have value. Only one advertiser can be on the front page of Gawker on a particularly hot movie release weekend. We have advertisers who need to lock in those dates. Once you have that sense, there's limited supply of this... You know when people talk about the unlimited supply of inventory on the web? That's the biggest load of bullshit I've ever heard. It's ridiculous. It's like saying there's an unlimited supply of paper in the world. Yes. It's irrelevant. What matters is that you create opportunities that are unique. The front page of a site, on a day, if it has an exclusive sponsor on that day, that's a unique opportunity. Only one person can have this. Either it's going to be HBO or Showtime. If you want that particular date, you better lock it in soon. There's a limit to how much discount we can give you. That's how we get pricing power. I don't see the web as any different than any other medium that's ever existed. Martin: I'm just going to give you the argument back. The argument back is that, unlike any other medium that ever existed, you've got a player called Google that looks at all the behaviors across the Internet, including in its own search engine, and can give you the best parts of the Gizmodo audience for a third, a half, maybe even a quarter of the price that you charge. Those banners may exist on other sites, but the targetability, the measurability is incredibly precise. That's the other side of the argument. Nick: When we don't run the networks, most of the networks can't identify who the best Gizmodo readers are. We've kept those networks out. We've kept them out for a reason. We have a monopoly on the supply of our readers, to advertisers. Martin: No, you may have. But there are so many folks in the market place, who are in markets, say, searching for a TV, or searching for whatever category, a PC, whatever. They're just very easy... Nick: By best, you mean people who are about to purchase? Martin: Yeah. Nick: The jury is still out on that. As the eBay study showed, advertising to people who are on the verge of purchasing may not even be useful. Maybe they've actually made up their mind. When they're typing "Sony" into Google, maybe that was because they read some article, two months ago about Sony. Their brand perceptions may have already been established. I'm skeptical of the orthodoxy on that. It hasn't applied to us. Martin: That's great. Let's pivot. Sorry. Let's move a little bit toward the traditional media side, if you would just indulge me for a few minutes. You raised this point about the new folks coming in and picking off the best pieces. Do you think anybody on the traditional side is doing a good job these days? Do you think anybody has a survivable business model, in a more traditional context? Nick: I don't really know or think about it. Sorry. I don't think the 2002 generation web companies are in any better position than the newspapers, really. I look at other efforts that were started at the same time as us. I don't really see them able to transcend their origins or achieve real critical mass. Or do stuff that's even that interesting. Martin: Can you give me an example of one 2002 circa? Nick: One example, Perez Hilton. I'm trying to come up with something that isn't run by somebody I know. [inaudible 42:58] Lockhart does a great job, but that's still a small outfit. Martin: Specifically, talk about how you guys have moved beyond that. In what ways? Nick: I don't think we've done even 25 percent of what we could do, what we should do. I don't think we've transformed the process of making news, making a story, in the way that I'd have liked. Martin: Can you talk about that a little? Nick: It's the prime motivation for Kinja, which is the latest, hopefully greatest, effort to truly transform the news publishing. I don't want to say business because I don't like...Business comes after news publishing activity. You look out here. This is the Gawker newsroom. Maybe five other sites have teams here. People come in, in the afternoon. We have 180 people across the company, about 100 of them in editorial. As the sites got bigger, in order to compete with people like Jason Calacanis, they became more cumbersome. It wasn't just simply the quest for traffic that caused people to think twice before putting a thought on the page. But also process. Making sure that somebody else wasn't doing the same story. When you had three writers, then you needed an editor over them to coordinate between them. You could allocate people to particular beats, but then sometimes those beats overlap and you need someone to arbitrate demarcation disputes, for instance. You need to coordinate what goes up when, who's covering for whom. It's a little bit like building a skyscraper. The taller it is, the more of it that you need to devote to the foundations. You end up with the Burj in Dubai, which is basically a complete unviable skyscraper, which has more foundation than it actually has usable space. That's what happened. We became like you. We became like The New York Times. The New York Times becomes more like blogs. The blogs became more like traditional media organizations. But sluggish. A little bit too over thinking stories that they would talk about, that actually wouldn't publish. The original idea of Gawker was when I was at the FT, I was always struck...Was this in my memo? The best stories are the ones that you hear after the deadline. That never make it into the paper. The stories that one journalist would tell another journalist over a drink. What really happened? For a journalist to ask, "What really happened?" That is a measure of the failure of journalism, whether print journalism or the new online journalism, the failure of that online journalism to expose it all, let it all out. The key problem that we're trying to solve now, that we've always been trying to solve, but with renewed emphasis now, is to erase these false distinctions between editor and writer, between writer and reader, between writer and reader and expert and subject and source. All of these people should be contributors. All of these people should be publishers. All of these people should be able to not just simply respond to discussion but to initiate a discussion, to initiate a topic, to develop a story together. If we do a story in house, the act of publishing that story should be the beginning. It should not be the end. The sources and the subjects, who are used to operating in the shadows, like Ahmed Chalabi, talking in the shadows to Judy Miller. These sources, who are used to operating in the shadows, should be brought out into the open. They should be publishers. They should be contributors like everybody. Maybe they need the protection of anonymity, which I do think is important. But they don't need the protection of a traditional, journalistic, one on one, private conversation in which all kinds of corruption and manipulation and trading of favors for access can take place. Kinja is our effort to blow away all of those distinctions. The fact that the marketer is up here, in the top right, in a 300 by 250 rectangle. The fact that the editor, the subject and the source are pretty much invisible. They may have had involvement in the post above the fold, but you don't see their involvement. You can't see their fingerprints on it. It's just somewhere in there, somewhere you can't really trust. How much of this is the writer's judgment? How much of it is them being manipulated by some PR person? Then you have below the fold, often below an ad, in a different kind of type face, in a way that's clearly subordinated, you have the commenters. If you treat them like they're in a ghetto, that they're second class citizens, third class citizens, they will behave that way. They will not contribute useful information. The whole idea of the web, of web publishing, of news publishing on the web was that...Do you remember this whole idea of capturing the intelligence of the readership? Martin: Of course. That's why we bought Abuzz in 1999. Nick: Do you remember that concept? Do you remember that concept? Does anybody talk about that now? Does anybody ever talk about that? Martin: Part of the reason they don't is because it turned out that the readers, often times... Nick: Were stupid? Martin: No, not stupid. Nick: The problem was the systems that we had, the commenting systems. Martin: Overwhelming is the word. Nick: They subordinated those people. Therefore, what kind of people went in there? People with a chip of shoulder that was somehow fed by that lower status. People with too much time on their hands. People who were simply carping critics, who didn't have anything useful to submit. If you ever asked somebody interesting to say, "Come in and discuss this me?" They would say, "Are you serious? To go into that cesspool? That toxic cesspool?" Of course, they're not going to go in there. If you let the place turn into a slum then no, the high class people will not want to go in there. That was the initial impetus, what I call the tragedy of the comments. The fact that if you actually have no ownership over a discussion branch or strand, if there's public ownership it becomes like a badly managed public park. No one cares. It gets strewn with rubbish. The trees are bare. The sheep come and they eat the grass. You can see the commonly owned lands from space. They're the ones that have been denuded of all vegetation and life. Our ambition is to make everybody...It's almost like a small holder economy. Everybody has the potential to be an owner. You should have rights over your space, over your content, over the discussions that you have yourself initiated. Everybody should have control over the responses to their posts on their own page. Everybody should have a blog in our system. Every contribution should be a post. Every post should have an owner. Every owner should have control over the subsequent discussion. That's the principle that we're pushing at Kinja. Martin: Any question? Paul: Sure, sure. Just a question of how you observe what's left of...You're talking about the dilemma of The Times. We probably all want there to be a bureau in Baghdad and a bunch of other places. If all the good stuff gets picked off, how do we get that stuff? Nick: It's somebody else's problem. Paul: I didn't think you were doing it here. It's all our problem though, if it doesn't get figured out. Nick: Somebody else can worry about that. I believe in division of labor, and that if there's a public interest at stake, well then the government should do something. I'm solving another problem. Paul: No, and I get that. I wasn't going to put it on you here, but you spent a lot of time in both worlds. And you know models in what works and doesn't, and wondered if you have seen something that you thought...No, it's just not going to work, so we're going to have to have another solution. Nick: It wouldn't work with us. Paul: No, no. I'm not implying that it would work for Gawker. Nick: That's the only perspective I can really have. People just need to be clear, a little more clear headed about this. If it works commercially, then let it work commercially. If you think it has some purpose that cannot be funded through advertising or through subscriptions, well then you better look at taxation or subsidy or donations, or something else. But I don't try to have it all ways. Also it's boring. This has been talked about forever and people haven't done anything very interesting. Paul: Good. Nick: Aren't you bored by that? Paul: Bored by what? Nick: That topic. The circularity of discussions around that. Paul: It depends on what the...I don't think there is one topic. I think there's a lot of topics and you've touched on one of them today. If you're talking about the free versus pay thing, yeah, I'm very bored by that. Nick: I haven't even engaged with that. Interesting things tend to come from the side. Weibo has had probably more effects on Chinese media and Chinese democracy than anything that's been brought up by an academic or anything that's discussed in some conference. It's the service and the facts that change things, and not really any discussion that we could have. ...
VIDEO: YES

John Dvorak
BIO: YES: John Charles Dvorak (born April 5, 1952) is an Ame...
TRANSCRIPT: Dvorak: The question, you sent some preliminary questions so I looked at them. I was actually a writer in high school. In fact, I think I was first published as a poet in the fourth grade, but that's another story. In high school, I was in the school newspaper and then I went to the University of California Berkeley, and I was on the Daily Cal. I was always intending on somehow becoming a writer, somewhere along the line, but during the last Great Depression in the 70s, I ended up working for the government, which I didn't realize at the time was the perfect thing to do during a downturn. I was writing about wine freelance here and there, but it was pre- Parker and so it wasn't a big thing. John Geddes: It wasn't ratings and… John Dvorak: Nobody knew what they were doing. But while working for the government, they got an HP 3000 minicomputer, and I decided this could be useful to me to organize my life. I was going to learn how to program it, so I took some programming classes at Cal, and then learned some basics. I started getting interested and that's when the microcomputer first came out in 75, 76, 77. 77, the first West Coast Computer Fair started the ball rolling in the Bay area. I got a Sol 20 with the North Star floppy, and learned North Star BASIC and some other languages. I then found there's a lot of public domain software that wasn't getting any distribution, so I decided to start selling it in bunches. I started a newsletter and then the newsletter was doing very well, so much so I had to quit the job with the government and ended up selling a lot of software and doing this newsletter. It turns out that the only reason people put up with me was because the newsletter was decent to read so I started doing some freelance work, wrote a couple pieces for InfoWorld and something over there happened, the editor that they had working under the editor-in-chief was not getting along with the staff and so I came in. I was hired over objections of the staff because I had become enough of an industry insider that I could get this job. It turns out I was a natural and it turned out the only reason I was a natural was because the previous editor was one of these mean guys. Ever watch a football team? You have the crappy coach who can't get the team and then they get a good coach, a coach who is a soft touch. That was me. I promised everyone that they would win a Pulitzer and I did promise that. Markoff actually was one of my writers and he got one. But anyway, that's where I actually learned to write professionally. But there's a difference between (professional and non-professional) but you don't know it until you do it. Which is, a professional writer has certain usages and awareness, it's just hard to put your finger on but you can usually read it. “well this guy is a professional, you don't like him, but at least he knows what he's doing. That's because I was working under some very strict copy editors and also people like Markoff and Paul Friedberg and others I would write with. You do team writing together, and you hear "Oh, you should never say that." The one I remember the most that I passed along to people, because they commonly do it, is using the word "stated." He stated, I'm stating something. If you put it in any copy, this is a warning to writers out there who want to be professionals. If you put that in there, the editor immediately thinks that you're a rank amateur. But there's other things, too. There's a lot of stuff that's just eye-rolling material. But these guys enlightened me, because I was using self-referential style, which is annoying to people that don't do that, or especially if they're over-trained at the journalism school. But anyway, while I was there, I developed a couple of columns for myself. Then I got a couple of book deals, and I couldn't afford to stay there, so I left. I just kept moving, I was a freelancer and I've been a freelancer ever since. That doesn't mean I haven't gone to work here and there. For example, right now most of my income is derived from new media. That came about, about five or six years ago, when I noticed a lot of my friends — everybody is getting fired anyway. The magazine is going to close and this is looking grim. To be a money- making freelance writer was not going to be easy. I decided, I knew Adam Curry from the past because I was part of the CNET startup in '93, '94, something like that. Curry was auditioning at the time, and I met him then. I knew he was running this podcasting operation in San Francisco called "PodShow." I figured the only way, it's very strange. This was actually the strangest part of the story. You know you can try to do podcasting, but when you go to a company and worked there for four years as vice president of development and you actually learn how to do it right where you learn what kind of gear to use and you don't make the mistakes that you are commonly making here with your amateurish operation. It's quite obvious. But I'd just like to state it. You find out that it's not only ridiculously brain-dead easy to do all of this stuff. But for some reason, I don't know what it is, but I think in a lot of professions there's one psychological barrier. There's something that you can't get over, unless you're pushed over or you actually have to be for a living. John Geddes: Once you surmount that? John Dvorak: The joke is, it's not much to surmount. It's not like you have to be a PhD to do podcasting. Now I'm still writing for PC Magazine. I still write and I'm also a partner at New Domain and I write for them occasionally, when I have something to say. But I'm doing a lot of podcasting with the No Agenda show and DH Unplugged. I work in Catalina with the TWiT.TV operation, I do some work there too and it's all based on my earlier connections to the business. It still tech-related. Generally, except the No Agenda podcast is all politics. It's all news deconstruction, so what we do is we take a look at a news story and we figure out what public relations agency might be behind it. We find out what they're up to, who else they represent, we put two and two together and say this is what's going on. You find out a lot of NGOs are, we deconstruct them. We look at their tax returns. We see where their money is coming from and where it's going and all of that sort of thing. Nobody else does that. We're dealing with the newspapers should be doing, generally speaking. We have a very large audience of people that all think that everything's corrupt, which is what we promote. John Geddes: You promote corruption? John Dvorak: We promote that everything is corrupt. One of the things I've done over the years, I've always, like a lot of normal writers, I've always warmed up to public relations people and sales people. Because I think you can learn a lot from them, not that you should be letting them tell you what to do. I go to the Edelman conference that they have, this big, who's influencing who. It's essentially strange insiders. When I went to this last one, I see a lot of writers that I know that are now working for Edelman. It's all part of this massive, native advertising movement that's going on with the newspapers. To me, it's disgusting. But you find out a lot of interesting little tidbits, including the fact that the public right now, in the "Who do you trust" category, the public is trusting, not the police, not the government, not the media is way at the bottom of the list. Lawyers and all, NGOs, top of the list. John Geddes: Of whom they're trusting? John Dvorak: Of whom the public trusts. If you watch television, these talking head shows, you see a lot of NGO guys coming around for various organizations in one way or another. These guys are the worst. They're untrustworthy and if you start digging in to them, you find the usual suspects. You find one guy is here, here, here. And they all have an agenda, it's horrible, so you dig into that. It entertains a lot of people. John Geddes: The remarkable thing about it your career writing and commenting, is to some extent you were among the first brands in the business as far as that. John Dvorak: I was somewhat aware of that. In the late 70s, I had gone to the Direct Mail Association because I was doing this newsletter and other things and I wanted to understand more about direct marketing. I took this three-day seminar with three different segments. One of them included ad copywriting, but specifically direct-mail copywriting, which I used to this day, these techniques. The techniques of direct-mail copywriting or any advertising copywriting is slightly different than normal prose, because you're selling something. Even if it's just an idea, the techniques to do this is skewed just enough that it's valuable for writers to know how it works. I use that, it's very effective. Before I got here, I just finished a sales letter which I call them, we do a newsletter for the No Agenda show that goes out twice a week, which I write, and it is a sales pitch to support the show. It's got news in it too, it's got a couple of tidbits, but generally speaking it’s ‘Hey the show is on tomorrow can you make sure you listen.’ A lot of people, I coach people on some of these on new media and getting them to do a newsletter is like pulling teeth because it seems like a throwback. you know “Email is dead and all this other crap” but it's extremely valuable. We derive probably a third to a half of our income from the results of that sales letter. But I learned that skill, too, and that I can always fall back on. I mean, I have probably six or seven really cool ideas that I've been sitting on that I know I could direct market if I was broke but that doesn't happen. But yeah, I was aware of the branding thing early, and I've always been aware of it to whatever extent you need to be aware of it. I think most brand name writers are people that people know. They probably are aware of themselves as a brand, especially book writers, they have to be. John Geddes: In the circles you were going in, in the technology reporting circles, you were among the first. What's interesting is, let me ask you two questions. Number one, you’ve got all the skills to manage your brand. You were never quite under the halo of another institution. John Dvorak: No, that was back from when I was a little kid. Everything is all linked. When I was a little kid, a little kid in the second grade, I was out. Are you getting any of this? Is this thing on? John Geddes: Yes, I've checked these things. John Dvorak: By the way, this noise is just lovely for today. John Geddes: When you're a little kid? John Dvorak: Second grade. I lived in a tract that was in the middle of nowhere. It was all the baby boomers, a tract for people who came back from World War II, flat tops. There was this one factory nearby that a lot of people in this tract worked at. I think they went on strike. I never even got to know then whole story. I've seen this everywhere, and I noticed it even to this day. They went on strike, somebody bitched about something, not getting enough money, and the factory just shut down and left. All these people were screwed because they didn't have any secondary source of anything. We're getting a breeze here now, which is going to make noise in this machine. You might want to put it down here. Yeah, that may or may not be better. John Dvorak: Hopefully the breeze will come and go. You need one of those muffins. Actually, the kittens are the best for real wind. When I was working for the government, I had no choice. But I never liked the idea of working for one entity, so I always had multiple things going on so if they all caved in, there had to be something, because I liked the income stream. That's why I wrote so much, at some point I write every day. Which people were always like, "How do you write so much?" I was like, I always think of people like Herb Caen and these famous columnists in the big newspapers that write probably 800 words, or close to it, daily. How hard can it be?" I mean it's just a regimen. If you write a lot, you can write a lot. It's not all gold and it's never going to be anyway. I like to read. I read and collect essays, essays I like. In the early days I'm reading Camille Paglia. I'm reading her and I'm thinking to myself, "This woman can kill an essay. She makes everyone else look sick. It's unbelievable how good her stuff is." It was just astonishing reads, it's beautifully structured, it went on. Then I found out it took her two months to write one of these things. John Geddes: Yes, it's not 800 words a day. John Dvorak: It's a lot different. I also have a friend who used to work at the Wall Street Journal who always commented. He made this comment once. He said, "Hey, we're not Hemingway here. This is newspaper fodder. It comes, it goes, who cares? It doesn't have to be that perfect." I could never achieve that, I don't think I could put the time in to make a Camille Paglia essay. It's just too much work. John Geddes: You want to move on. John Dvorak: And what does sheget back from it, you know? John Geddes: How did you keep your distance? Because you were managing yourself, and managing your business, my brand business. How did you keep your distance from the people you were covering, the access mattered. How did you? John Dvorak: I always had a bunch of theories about this and I try to tell people this. I'm also at odds with the New York Times ethics policies for a number of, I believe, good reasons and I've made arguments about them. I could go on to it here, but I do it all the time. One of the things I keep telling… this was mostly regarding junkets. I don't think that I should be paying for, out of my pocket or my publisher's pocket, a junket to Korea to listen to a brainwashing session. They should be paying me to go there, because it's their brainwashing session, why should I be paying to go there? That's what it is, it's a brainwashing session, and I always tell people. The New York Times has this thing that you have to pay to go. All these little newspapers adopted the same policy but they could never afford to send anybody. The New York Times had exclusive coverage. I thought this was the trick. John Geddes: Self-interest. John Dvorak: I had this complaint, I still have it. I always tell people look, you're going to go to this thing. You're going to feel obligated to maybe say something nice. I used to be convinced that you should tell people that they paid your way and I'm not even convinced that's true anymore. You go to this thing with the following attitude — you're never going back. If you write good things about them they say their job is done, you're done, you're never going back. So I would even resist doing that, which I guess pushes me in the opposite direction, there's an argument about that. If you write something bad about them, you're not going back because they think you're a jerk for taking their money and then condemning them. Just be honest because you're not going back. That's a fact. I've never been back to the same thing. I've been invited here and there, and I was always freelance, so I would always take a lot of these deals, and I would let the companies pay. The Europeans do that, by the way, almost always. I worked for PC Mag UK and that's when I found out about this. The guys said, "No, you're not paying for that. These guys what you to go, they can pay." That was always my attitude and I've always had this distancing thing is the question here. You can become friends with people, and in public relations companies that's their goals, to make everybody their buddy. You're friends, and you have people like John Markoff whose rule at the Times still is "I won't even talk to a public relations guy." Because he actually does make friends of all of these old coots in the industry and I've always felt that you could kind of get to a point making friends, but you're never going to develop that cut- throat type of burn-your-bridges style, which I actually like to read and I enjoy when I see it. Because it's a farming community, the tech business. Everybody knows everything. They all know each other, and they all chitchat amongst themselves. It's a real hard thing to do. It's very difficult. I do it, but what I discovered is that if you have a reputation of just being mean-spirited and negative, which is my reputation, you can actually be mean-spirited and negative with people that you know and kind of get away with it. You can't go overboard. John Geddes: But they think it's you. John Dvorak: Yeah, it's me, that's the way that guy is. That's kind of how I did it. I can't say I get invited to a lot of dinners, but I probably could have if I wasn't using this trick. I used to be, when I was the editor of InfoWorld, we used to do — This is an example of the way we think about these things — The problem with this magazine during this era, when it was growing fast was the page count would jump all over the place. InfoWorld came out weekly, which was different than working with other types of publications, especially monthlies, and all of a sudden you had a big hole that you had to fill. Under my desk, I had started collecting press kits, and press releases and essays written, it would have been like a native ad-type material. I got the idea of soliciting this, so I would call the public relations people and say, "You guys, your client is Seagate right? I need a piece on how hard disk technology is going to change within the next 10 years", and I'd ask them to give me a piece. They were just in heaven. So I collected a shitload of these things, so I would then take the piece and I would start the edit, and I'd take every reference to the company out. Then I'd give them to the copy editors and tell them what I wanted. I wanted the piece to be a clean piece about what I wanted the piece to be about, without a bunch of bull crap from whoever. OK, so the joke, I used to do this. A lot of people, at the time I'm sure they'd be irked if they knew this. I would occasionally, in my office, I had a closed office, I would bring the staff in to listen to me on a call with one of these people. They'd all be there like this and they'd be irked because they sent me this big piece about the company, and there was nothing about the company (in the printed piece.) I would apologize profusely and ask them for another piece. John Geddes: It may have been native advertising. You were using the source material and taking the sources out. John Dvorak: Taking the advertising out, yeah. I could get three pieces out of almost anybody. John Dvorak: That was it. After that, they figured it out. Butthere was a lot of it, I had a stack this big of these pieces. A lot of them were actually pretty good, a lot of these people were actual writers and with the editing we had, it was dynamite. That kind of thing, I've always been a little bit more creative because I've always worked for myself as the brand. I'm always paranoid that I'm going to lose everything. Because I've had a bunch of publications pulled out from under me over the last couple of years. PC Magazine, the print publication is gone. One of the editors said which is why I went to new media, I saw it coming, luckily, six or seven years ago. One of these guys said “The problem is, you cost too much, you're too expensive.” I'm cheap, by the way. I'm not an expensive writer. But in today's world, where people are giving it away, where they're selling pieces for 25 bucks and the native advertising people are floating shit around for free. It's like (hard), unless you're in Vogue or Vanity Fair or whatever, and I think those people are doing it, too. John Geddes: You said six or seven years ago you noticed that. What triggered that? What was your course? John Dvorak: That's a good question. What got me to jump into the podcasting? I was seeing other people doing it and they seemed to be doing OK. I'd have to think about it, that's a pretty tough question. I think it was either something one of the magazines, maybe it was when PC Magazine dropped its print edition, that could have been it. Or it could have been, I've wrote for Forbes for a while. John Geddes: You wrote for Forbes for a while in the early part of the decade. John Dvorak: I was brought in for way too much money and too big of an expense account to be kept. I knew that was a problem when I got the job but I was brought in for a purpose. They were going to go public as a separate operation and they never did. Then a new guy came in from the Financial Times, he looks at me and says, "Why are we paying this guy, this joker so much money?" So I was out, and I had gone. Then I went over to Larry Kramer, and I asked him for a column, he was looking for a column in MarketWatch, so I worked there for about six years. Then he left, and my editor left and everybody left and it was taken over by women and I was out. It may be when I lost the MarketWatch job that I said, "This is turning bad", because it wass being run by people that I didn't think were very competent. Financial publications tend to be interesting because most people don't understand how it works. Fox Business is a perfect example of a company that doesn't get it. All companies, to be successful, and I'm not counting news publications like the Wall Street Journal that have a lot of news articles, but generally speaking, CNBC is successful for one reason and one reason only. Barron's is successful for one reason and one reason only. All of these people are successful because all people want are stock tips. It's just top to bottom stock tips. That's all people want to see. They just want to stare at something and do stock tip after stock tip after stock tip. They don't care about personal finance or how to organize your wallet or some story about pandas at the zoo, which is what Fox Business does, which is completely screwed up. CNBC is the place where the money flows, because it's stock tips, stock tips and more stock tips. MarketWatch, when I was ousted, I was also noticing that they were pulling in a bunch of content and this is going on a lot. A lot of outside content going in, this is free material. This is like me with Info World. John Geddes: Info World was all PR stuff. John Dvorak: Yeah, essentially. This isn't good. You had to go toward the more modern things going on and that is new media. If you really look into new media and you look at some of these kids. If you really start searching around YouTube, you're going to find 15 year olds, 14 year olds that have millions and millions of viewers and subscribers and they get a big cut from Google AdSense. I was at the races, the drag races in Sonoma with the Red Line Oil guy in the back, because he was one of the big sponsors. We're floating around, and one of the drag racing guys come by. This girl comes over, I guess it's his daughter and she's like 13. She's got heart-shaped sunglasses and I find out she's making like $4,000 a month because of some piece of crap she does on YouTube. She's making 50 grand, a 13 year old. John Geddes: We weren't doing that at 13. John Dvorak: She was just so full of herself, I actually thought it was very funny. She was a big star. John Geddes: Now that you've spent a couple decades in this business, at least. John Dvorak: More than that. 79. John Geddes: What's changed in technology, what's changed in how it's covered? John Dvorak: It's covered very poorly nowadays because what's happened was there's a golden age and I believe it was from 1987 to about 1997. Maybe a decade. That was when everything was popping. Everybody was doing well and there were experts that were explaining what was going on and they did a good job of it. Over time, there was a couple of things that had happened. One is an incursion of ''wanna-be’s,’’ I know this itsince I was a columnist, pretty much. I did very few news stories. Everybody wanted to be a columnist, because you got more attention than the other guys. You see a bunch of people coming in trying to do that, and they couldn't sustain, usually, because it's more work than you would think. Then I started noticing, and I don't want to blame this on the J schools or anything, but J schools have always taught that you can be trained as a generalist and that you can do anything. You could go into technology, but that's not true. In fact, the people that can cover technology really need to be involved enough that they can see the BS, because the scene, from the beginning actually with Regis McKenna, who invented modern public relations as far as I'm concerned, decided to develop this technique of tricking people into quoting analysts that he had, in his view, primed. You prime a bunch of analysts. You get a journalist who doesn't know anything. “Here’s who you want to talk to.” Then you can quote these people and I don't know generally what you would call them, but they're acceptable to be quoted by the editors. You've got the three quotes from these three different boneheads who were pre-primed. That was what we were always fighting against because we knew about it. Then over time, we couldn't fight against it anymore because there was too much of that and not enough people that cared. Many of the writers were sucked off into a technology company and they got a lot of money. A lot of then disappeare, and then they could never get. This is an interesting group, because I knew almost all of them. They would get frustrated by what they were seeing, because it was a slow degradation of tech reporting into gizmos, too many gizmos and gadgets. You could see that coming, not enough truth. The last vestiges of real technical reporting were the EE Times, and that was bought by somebody and the next thing you know it's online and nobody reads it. It was just a slow degradation after about '97. The Internet came in around '93, '94, and then by '95 it was starting to catch on and by '97, it was full hold. Now, it allowed people to just start your own publication. Some of the best tech writers like the Tom's Hardware guys and these people at have specialties. John Geddes: How do you fight against that? If we presume that that expertise gives you that additional filter to cut out the bullshit. John Dvorak: Right. John Geddes: If you presume that, how do you fight out against becoming an insider? It's almost like there is an incestuous mentality. John Dvorak: It is a problem, but you're better off, I think, being slightly an insider and being a little bit too close to stories than being a dummy. Because then, what they really want to sell is now, you're giving it to the public as opposed to what you can resist. If you're an insider, you're like, "This is dumb." -I know, but we're trying. You should write about it.” No, no, it's stupid, and you can do that. They know themselves it's dumb and stupid, so they're like, "OK, fine." But I would always try to hang out with as much of these high end guys as I could. Not because of their companies and I would never write about the companies, but to get the gossip. Because if you don't hang out with these guys, you don't get any gossip at all. Gossip is really “they're doing what?” The public is interested, no matter whether there's technology or celebrity, or whatever. They're always interested. That's why the Apple gossip sites that are so popular. "Oh, here's what Apple's going to do next!" It's all gossip. John Geddes: But it's interesting that the additional thing that came in across your term is that it went from being a cohort, tight knit. Describe this. Who were the relationships between the journalists themselves in the 80s like, versus the 90s, versus now? Was it camaraderie at one point, competition at another? How did it get? John Dvorak: It never became competition inside of a publication. In other words, to people inside, yeah, actually there was competition, but it was always friendly, good competition. Like competition in a football team, where the guys are trying to be the tight end and they compete. The competition was there in a standard journalistic competition, from what I can tell, in the 80s. The 90s was getting a little scattered because of the Internet coming along, and then all of a sudden there were people surfing the web, and there were concerns about search engines when AltaVista finally came out with one, and Yahoo had their directories. It created a moment of confusion that settled out and blew up with the dotcom thing when everyone was crazy. Now, I was doing a TV show for about four years at TechTV, which was owned by Paul Allen eventually. This was called Silicon Spin. Silicon Spin was an old-fashioned discussion show that had, there were the two wingmen and I was the guy in the middle. If you see that today this guy is living in the 70s. Because right now, you should put a guy on one of the sides, then you want to have a group of three, at the most. Anyway, that was the spot. There were these maniacs that would come on, this was in '99. These guys would come on and they'd talk about WebVan and how it's going to change the way we buy our groceries, and how this is going to change the way we do this, the way we do that, the way we do this, everything is going to change. Brick and mortar is dead, stores are dead and everything is going to be online. They were crazy. I'm thinking, "This is nuts, this is bullshit, there's no way this is going to happen. It's not going to happen. It may happen over 100 years but it's not happening tomorrow." I always called these guys out, constantly. The only interesting thing about the show is that I would do this. I would say, "This is bull crap", and they always had the same response. I wrote a couple of columns about this years later, "You don't get it. This is the new economy. You,you don't get it." OK, I don't get it, but I still think it's stupid. That was giving me. It said to me that insanity had crept into the business at all kinds of levels. I was just seeing it everywhere. I was living in a madhouse. We went into the next decade, 2000, 2010 that was when you had to make your move to get out of the craziness because we had a nice crash, which pushed a lot of people out of business. Journalists had to go work for public relations. To be honest about it, I don't know how they could do that, but it was just, you know? John Geddes: Do you think it was because of the money? John Dvorak: Oh, yeah. John Geddes: You were covering a sector, the people you were covering in the course of while you were staying there is a journalists became multimillionaires. John Dvorak: I know. It's funny. John Geddes: Do you think, "Where's mine?" John Dvorak: I know people that do that, but they're thinking as in, "Where's mine?" Because a friend of theirs just made 10, 20, 50 million dollars overnight. In the 80s and 90s, the kind of money that people make from startups, I remember walking around with Bill Ziff, and an editor friend of mine, Paul Somerson in New York City, wandering around. This was in the mid to late 80s. This was when Bill Ziff is one of eight billionaires in the world. Now there's 800. John Geddes: Good point. John Dvorak: That's what I'm thinking. There's a couple of things, one there is an inflation that they are not talking about, and I always refer to it, you should check this and follow this guy, ShadowStats.com. John Geddes: Shadow.stats? OK. John Dvorak: Yeah, he's a mathematician who does real statistics. He shows the true unemployment rate, the true inflation rate, all of the stuff. The true unemployment rate is a lot higher than what they tell us. Anyway, as this billionaire thing became overnight billionaires, overnight billionaires, you start to think how can I leverage this to a billion? You're a billionaire overnight, literally. It was literally creating havoc with everybody. It's not as though you can't make a decent living and a good one as a writer, if you're productive and you're not an alcoholic, you're not on drugs and you don't do all these things that are always problems for anybody in the arts. I remember Jared Cornell, the novelist is a friend of mine. I would always ask him about this, "Why don't you go do something with this company?" He says, “You know I like this job." John Geddes: That's the difference. John Dvorak: A lot of guys see that little thing. There's been a couple of writers that have made lots of money out of the blue. It's not that they can't accumulate a, but just instinct, that's the trifecta. What the hell. He's got 10 million dollars. It drives a lot of people a little nutty. But I've always had good cash flow, so I've never really worried about it. John Geddes: The other thing about you that's true, as an editor at that time, people would say to you, "Tech will change the world." John Dvorak: Yeah, for the worse. John Geddes: Not to curse this, but it turned from a boast. John Dvorak: It has. For the worse. I have always said, I was doing this from the beginning. Tech has made me successful as a writer, because I got on it early and I stayed on it and I stayed in the right realms to know what I'm talking about. If I don't know what I'm talking about, I relent and I say, "I don't know anything about this, so I'm not going to talk about it." Generally. I jump in once in a while as a mistake. But from the early days, I have said that they should shut down the Internet and redesign it. I've been saying this since about '97. What a joker, this guy. He's just kidding. No, I think it's horrible. It's ruined writing careers for a lot of people. It's also screwed up the market, the audience is all scattered now because there's all these online publications they cater to small niches, very few. I mean, the New York Times is a good example. It's probably done the best job of hanging in there, because they did get online and they had the online product ahead of all the rest and they tried to get their prices up. But you just have to wonder, at some point when are they going to pull the plug on the print? When they do that, print is still important. I think print newspapers, for example, even though I subscribe every once in a while, then I get sick of the piles and say, "Screw it." Then I get behind. You can't read a New York Times subscription in particular, even the local papers but the New York Times in particular, if you get it daily you can't get through it in any reasonable way. They start piling up, especially the Sunday ones or the magazine. You say, "Oh, I wanted to read that." You never do. It produces guilt. It has all kinds of negative health benefits, so it's got to go. John Geddes: Here we are on the day after the Bay Guardian announced they're shutting down. John Dvorak: I did not know this. John Geddes: Yes, announced yesterday. Now with your Bay area history, what is your reaction? John Dvorak: The funny thing was, I got a long lecture. There's a group of small newspaper guys, and the Bay Guardian was the most ironic for a number of local reasons you'll never get because there were always arrogant. There was the San Francisco Express, that group, I think they owned the Village Voice. I don't know, there was a bunch of these. I had a long discussion with one of the principles, and he was going on and on about why they will always be in business and he had a very unique argument that was maybe deluded. The Bay Guardian, it seems to me would've fit in that model and it didn’t because it folded. I blame a lot of this, of the folding of print media on the advertisers. They've been sold a bill of goods on the Internet and they don't get it, and they don't have, they're just completely… I would blame, for example, the lessening impact and influence of the big computer magazines on Intel. I blame Intel for this whole fiasco because they stopped advertising in these magazines and the way they used to, because they would subsidize other advertisers in a big way, Dell would get a piece of the action. Intel is throwing tons of money into the business, keeping a lot of them doing well and creating a focal point of influencers that were mostly pro-Intel. You had all the writers in any of the magazines because there were only a couple of chip makers, you had Intel and AMD. You would be promotional and once they scattered on the Internet with all these little sites and everybody saying their own opinion then that impact was gone. That whole thing was disappearing. And it also disappeared partially because of the editors themselves. I always blame the editors for the demise of their own publications, because they never adopted the diversity model where they would really go and look at every word processor, for example, that came out of the woodwork. There would just be Microsoft Word, Microsoft Word and Microsoft was never an advertiser, to any extent, anywhere. So instead of diversifying, instead of taking the focus off of one company and building them up so they are so huge and they never advertise, you might as well just shoot yourself in the foot. You should have been talking about anything but Microsoft Word just to keep these little companies in business. John Geddes: Do you think that's the original sin, in a way, was that Chinese Wall between editorial and business? Editorial always said don't take the business into consideration. John Dvorak: This has always been an interesting point of contention. It is debatable among the various philosophies, amongst the writers themselves like myself. I've always believed that writers, and I think it's generally true, writers should have a self-interest. People always say, "I was never told by the editor not to write about this huge advertiser, General Electric, the slam piece I could have done. I was never told by anyone not to write about General Electric." Of course you weren't, you don't have to be. You would have to be an idiot to write it. You don't do these things, and most good journalists have self-control. They do know what's going on, and they say, "If I want to get fired, I'll write about this. If I want to get called to the carpet, I will write about this." Because they know that's what's going to happen, so they don't write about it. That's the self-censorship that takes place. Because of that, you would have to assume they have some thought that there is some business interests involved, it's not just all about them. Apparently not. I guess they thought it was about them because they never took it one step further and said, "Why am I writing about this one company to an excess, just because they have their public relations coming in and out of here daily?" At one time, Microsoft's public relations operation was unbelievable. They would just talk to everybody and they were never advertisers. That's the joke of it, because these readers, all you guys are is shills for advertisers like Microsoft. No. John Geddes: You are a man with a point of view, you've always had one. John Dvorak: Yes. John Geddes: That's good. John Dvorak: It's objective. John Geddes: It's your point of view, I'm not sure I would say it's objective. John Dvorak: From your perspective, a lot of these things are probably violations of some sort of thought process. John Geddes: No, it's not that they don't quite ring true.I’ll blunt. I'm in an industry. You're in an industry, you know? John Dvorak: It's much closer to write about real estate, but what's the point? I think that the New York Times in particular, even though it had so many layers, I’ve written for them a couple times, of edit. It was amusing. I don't know if they can keep that up, so they are going to have some issues in the future. Now, you might not think writers, the argument would be whether the writers self-censor. You would not want to ever say that the New York Times ever did that, which is something if you found a guy did that, they would get called to the carpet. That's bullshit. John Geddes: That's a good point of view. Here's another question. How well did we see, did anybody see this thing coming in to destroy our planet? The meteor that's called Internet, or called technology or something. John Dvorak: It's the Internet, really. John Geddes: It comes in to destroy our world. What does it say about journalism, that in terms of our own existence, we didn't predict it? John Dvorak: By the way, I have written about this, especially about the newspapers and I have pointed the finger at the New York Times with that same exact comment, which is these sharp operators couldn't even see their own demise coming and they're giving us advice about the world? I'm not writing for the New York Times, I'm not writing for a newspaper, so I can do that. If I was writing for one of them, I probably wouldn't do that, again self-censorship. But I think there's something to be said for the argument that how do you know what happened and you didn't see it coming because you weren't paying attention. I didn't see the iPhone coming and I was paying attention. I have written a bunch of negative pieces about the iPhone because I never saw once. I was goaded into it by CNBC and these other people, because I need to be the negative guy. Meanwhile, these other guys at CNET say, "You're full of crap, you don't know what you're talking about." No, it's going to fail. I had to eat crap for that among other gaffes. But I think the Internet did creep up. That's one of the problems, it just crepped up on people, because it really started in '69 and it was turned over to the private sector. John Geddes: ARPANET. John Dvorak: It was sneaking, sneaking, sneaking and then when the World Wide Web came along, it didn't just take off. In fact, some people had gone all-in early on the World Wide Web and then failed because it still hadn't taken off. The World Wide Web, I think it was invented in '89 or something, and it showed up in '92, then it was only on Macs and Mosaic and those browsers. It was '92, and it wasn't until '99, seven years later, when the dotcom thing, which was all Internet-based, skyrocketed. When that happened is the time that everybody should have gotten a clue, because of the nuttiness and the Internet sneaking up like this. That's the point. And I think right now the clueless ones are the broadcasters. They're in the same boat as the newspapers. The newspapers are doing what they can and I think some will survive. I am concerned about the pay going down for writers, the journalists at the Times are well paid, but that doesn't work. The broadcasting situation is more interesting which is why I'm in new media because now anyone can be a broadcaster. Everything's going to gravitate toward streaming. With newspapers, it was cheaper to go online or magazines mainly to go online, do your magazine there, cut costs all over the place. Because you don't pay for printing, you don't pay for ink. You don't pay for giant presses. John Geddes: No distribution. John Dvorak: The New York Times has huge facilities and distribution trucks driving around. All of that stuff, gone. Look at all the money. The Internet takes care of it. The Internet does the same thing to broadcasting, only the difference between broadcasting and the newspapers, I just wrote a column about this, it runs today in PCMagazine. You can read it because I'm working on the speech. It says that the impact is skewed from the newspaper, but the newspaper, you have a business model that is completely ripped apart because people go online, they read one or two pages, they read a couple of stories, they're done. With the newspaper, they're thumbing through, they're seeing all these ads, it's a different phenomenon. With broadcasters, they probably think something like that is going to happen, but no. With broadcasting, the Internet broadcasting, putting the images over a Roku box like Leo does, it's the same exact experience to the user. John Geddes: That's true. John Dvorak: Something's on the TV, you're watching it. The Netflix guy is the only guy who has a clue about this. He is all over it with those little productions. Unlike the newspapers, where you go from a newspaper that you have to look at and it gets all over your fingers, to an online thing. John Geddes: The reader experience is different. With the broadcast it is the same. John Dvorak: It's the same and anyone can broadcast. Now you've got a situation where it's going to develop where these guys are going to, what I wrote about is, for example, there are old broadcasters, Leo Laporte would be one of them, Tom Leykis, down in Los Angeles they've all moved to online broadcasting. They're their own boss now. They can do productions the way they want. They don't have the suits, which is always the problem with broadcasting, more so than in any other media. These guys, they don't know anything. They're coming, "Nah, I think it should be this way." Those guys are going to be short-lived, the suits. The broadcasters, they're trying to deal with it, and they can't. They keep hiring these amateur new media people in there. The pressure to say, "Yes." The yes-man thing in a broadcasting environment -- big ABC we're talking about, NBC -- has got to be horrible. You probably can never say what you think. I think it's going to be very interesting to see what happens to them. John Geddes: What do you think happens to journalism? Are you optimistic? Pessimistic? John Dvorak: The thing is...I've always said this. I say that it's true with music. It's true with art, fine arts, painting. People do certain things because they really like it. The best journalists have always been journalists. They like reporting. They like to go and report. They go digging around. They come up with stuff and then they report on it. That's a core group of people. They're not going to go away. They're going to find some other way of surviving. Maybe they'll be stuffing dolls on the side, I don't know, but those guys never go away. I don't think journalism per se is going to change much so far as news gatherers out there that do a decent job. What's going to change is the journalism schools that are cranking out cogs to work in big publications, which are not going to exist. There is going to be the New York Times, I don't even know if the LA Times will exist, because it's so messed up. The Washington Post for sure, now that Bezos owns it. That may happen to some other publications, where a rich. John Geddes: One of the 400 Dow, as it were. John Dvorak: I want to call them rich fucks. Some rich fuck will buy the place, which is not unusual. In California, the Tribune used to be owned by Knowland, who became the governor. It used to be more that way in the past so I think we're going to go back to an older model of journalism and writing where you have that. The older model and that was the one I always thought was in play, but it's not, was you had a very conservative fart owning the place and then a bunch of liberal kids trying to subvert the place. That always made for, to me, a good newspaper. John Geddes: It always created tension. John Dvorak: Yeah, the tension is perfect. As opposed to everybody being in the same boat. I'm not as pessimistic as everybody else, I just know that this paroxysm or whatever you want to call it, this twisted screwiness that's going on is a dislocation situation that is creating a dysfunction in the whole thing where it looks like we're all going to die. Radio changed with television, television changed. John Geddes: It's all cyclical and journalism will exist. John Dvorak: It can't not. I know too many people that are natural journalists. John Geddes: They need to ask questions. John Dvorak: They like to write it so everybody can see that they dug it out. But J schools, I think we'll have a problem because they're not teaching enough new media at all and they don't have anyone who can teach it. They're still thinking they can …journalism schools create a neutral writing person who wrote very well and could be plugged in to any number of jobs around the industry. They can work for the Plain Dealer, they could work for the Times, they could work for the Inquirer whatever and they would fit in. They weren't training writers like myself, that's for sure. As everyone knows, I'm not the product of a journalism school. I don't have any of the earmarks, but I know what they were doing and it was creating, it was a trade school to me. Putting these people in these jobs. They get a desk. Right now, they have to rethink that fast because there's no jobs. John Geddes: But still, at some point, Esther Dyson said that the best thing she learned from journalism was skepticism, to check the facts. That's what Esther says. John Dvorak: Esther was, one of the things you learn early on in tech reporting is you don't pay any attention to demos. They're all bull crap. I don't care how good or cool they are, if you don't sit down with the product and play with it, you're not going to get it at all. Esther always demanded demos. This was a matter of point. Esther, I love you, you see this. I do know Esther quite well, but she always demanded demos. John Geddes: I'm sure. I have to thank you, this is been a wonderful chat. John Dvorak: I don't know if it did any good. John Geddes: You know it did. Trust me. John Dvorak: Don't tape over that. That's got an HD disk and a card in it, right? ...
VIDEO: YES

Lewis DVorkin
BIO: YES: Lewis DVorkin is chief product officer of Forbes M...
TRANSCRIPT: Martin Nisenholtz: OK, let's start by my saying that I'm at Forbes on March 7th, 2013, with Mike Perlis and Lewis Dvorkin. I just want to begin, and to the extent that you can make it as tight as possible, if you could just give us a little bio and tell us how you first met, your first time with digital journalism. Give us a five minute bio, a wonderful way to begin. Mike Perlis: Want to start? Lewis Dvorkin: No. Mike: I come from a mostly magazine background. I started my own company in Camden, Maine, in the early 80s called "New England Publications." We published "Canoe and Kayak" magazine, "The New England Guide," "Maine Invites You" and a whole series of other print publications. Interestingly enough, we also started a couple of machine specific computer magazines at that time for the Tandy Corporation. One was called Color Computer magazine and another was called Portable 100, which were designed for early branded PCs. In those days you really couldn't understand and couldn't use PCs unless you had a community. We created that community by publishing these magazines. That's back in the 80s. I moved from Maine, after being smitten with the magazine publishing business, to the real world of publishing by joining Rodale Press, where I helped start "Men's Health" magazine, and "Women's Health," and "Quick and Healthy Cooking," and also amassed what we called the Rodale Active Sport's Network, which was "Runner's World," "Bicycling," "Cross Country Skier," "Backpacker." From there I went to... These were relatively long stints, I'm getting older, but it sounds like I can't keep a job. I went to IDG, because I really thought the technology space was heating up. Martin: What year was that? Mike: That was 1986 or 1987, 1987. I ran a division of IDG in Peterborough, New Hampshire, which specialized in publishing magazines, not unlike the magazines I'd created in Maine, that supported specific machines, specific operating systems. "Amiga World," "Apple IIs," a Commodore magazine called "Run," a magazine called "PC Resources," which was for Microsoft based operating systems. It was a really interesting, very exciting time. It was the real beginnings of the PC era and early experience with desktop publishing, which was very much the future in those days. Machines like early Apples and the Amiga were the machines of choice there. This will sound like a crazy confluence of events, but based on my youth and my experience at Rodale with men's titles in the sport's area, somehow I was recruited to be the president, at 36 or 37 years of age of "Playboy." I moved to New York, and I became the first publisher of "Playboy Magazine" who wasn't Hugh Hefner and was the president of the publishing group. I worked there for five years. It was a very different time in the world of Playboy. Arts and Letters were of great importance there. Reporting, journalism, even humor and the interview, for sure, were real staples of the core magazine journalism community in those days. But I also, in that time, started Playboy.com. 1993, 1994. It was a very early -- dial-up, like everything else, reflection of the Playboy media franchise, digitally. From Playboy, after an interesting five years there where I accomplished a lot of what I wanted to do, but unhappily, was not able to surround Playboy with a group of other men's magazines. A car magazine, health and fitness magazine, a consumer electronics magazine, creating a men's publishing group. Mr. Hefner didn't want to do that. He wanted everything to be Playboy. I decided to move on. I went to work for Condé Nast for a couple of years, as the publisher and head of forming a men's group at Condé Nast. GQ and Details were fundamentally the assets there. From there I began doing a few entrepreneurial things, but went to work at Ziff Davis, as the CEO of the publishing group, at Ziff Davis. We sold the publishing group at Ziff Davis in 2000. SoftBank had been the fundamental backer and principal owner, even though it was a public company, of Ziff Davis. I went for 10 years, to work in venture capital, for SoftBank, at SoftBank Capital. During that period of time, half by design and half by luck and happenstance, really took a deep dive into digital content and digital publishing. We invested in Belief Net, Associated Content and Huffington Post. And Buddy Media and BuzzFeed. I had the real pleasure and rare opportunity to have real access to the early days of all of those businesses. And lots of the business names that you wouldn't recognize because they didn't make it. but we had a very strong share of successes. And from that 10 year experience and during that period of time I came to know the Forbes family and was advising them, in many ways, based on my experience in the venture capital space. With other digital content companies, helped design the early days of Forbes.com and its being separately operated from Forbes Magazine which, I think, was fundamentally a very important thing. In terms of... Martin:: We'll get into that. Mike: Yeah. We'll come back to it. But being a completely separate company allowed Forbes.com to develop in ways that other traditional media companies weren't able to accomplish. I advised through that period of time. When I decided I wanted to get back into operating, two years ago, in the very beginning of 2011, it also coincided with it being the right time at Forbes to reunite the digital side of the business and the traditional side of the business. In fact, it happened a little before I joined the company. That merged company was very appealing to me. It really merged my interested in traditional media and brand management and my experience in digital. So I became the first non-Forbes member to be the CEO of Forbes media. As part of that process I was introduced to Lewis Dvorkin, who had been on-board for six months as the chief product officer. His company, he'll talk about that . Had been acquired by Forbes and became the fundamental driving engine. Before deciding to join the company I had to make sure that I agreed this was the right engine and the right guy. Lewis and I had a fantastic lunch and really connected in a powerful way. I was able to match what I thought was a great business opportunity with a great business partnership. We've been operating that way for more than two years. Martin: That was great, thanks. Mike: I'm sorry. Probably a little more than five minutes. Martin: No. It was perfect. Lewis Dvorkin: I've had this rather remarkably unplanned, orderly career. Through the different media businesses. I started out as a copy editor at a joint venture between DOW Jones and the Associated Press, where we took content from both operations and basically supplied that content to the banking industry or the petroleum industry. There were some, also, consumer pubs that would take that content. That was my wire service world. From there, I moved on to "The New York Times," which was a year after "Business Day" came to life. Martin: What year was that? Lewis: 1974. No, excuse me. It was 1978. I spent four years at "The Times," where I was a copy editor for the Business Day section. By the time I left I was working with Soma Golden at the Sunday Business Section. I was running that with her. Between then, I was working as what then was called a back field editor, editing stories of the correspondents. So a wire service, newspaper and then I went to Newsweek Magazine, from there. Which was one of the great experiences for me. I was the senior editor of the business section for four years. I'd spent four years at DOW Jones, four years at "The New York Times" and I spent four years at "Newsweek," where I ran that section. And then was recruited by Norm Pearlstein, to come to "The Journal" and be the page one editor. And did that for a bit. Then I moved on. I found myself in television. At that time, there was this very big deal that happened, called "The USA Today" television show, that started out immediately, with no pilot, with 100 syndicated stations around the country. I went to work for, I think it was Tom Friedman. He was the star of "The Today Show" for quite a bit, and he moved onto this "USA Today" TV show. I worked there for about six months, but I actually was really recruited by a guy named Jim Bellows, who was a mentor of mine over time. Martin: He did videotex for awhile. Lewis: He did. But he was the great alternative editor around whether it was "The Star" or "LA Times." He made his way around there. Then I wound up doing some things in between, but I wound up starting a magazine that was funded by "Newsweek." Which was my entry into the digital world. It was a magazine about what was then called cyberspace. It was a quarterly magazine with a modest little website, and it ran its course as most magazines do. It wasn't successful at all. I found myself at Forbes. Back at Forbes Jim Michaels called who I had met. He said why don't you come here, and I spent four years here basically packaging cover stories, editing cover stories, and things like that. Then I got a call from a dear old friend named Jonathan Sacks who was working at AOL. He said, we have a job for you down here, and I said why not. I packed up my stuff, and put my dog in a car, and we drove down to DC or Virginia. I spent eight years at a... Martin: That was in 2000? Lewis: 2000, which was... Martin: Right after the Time Warner... Lewis: I'll never forget that because I remember listening on the radio in the bathroom that AOL had purchased Time Warner. I'm going what, you got to be kidding. Literally three months later, I was working for AOL. It was March, 2000. I went on as the editor of what then was the welcome screen. Went on to run news and sports and entertainment, and run AOL.com, and helped re-launch...People forget that it didn't quite work at first. But I helped re-launch a little property called TMZ.com. I spent six months of my life in LA doing that, commuting back and forth. Martin: Felt like six years. Lewis: Felt like six years, but I learned a lot. Then I decided I wanted to start my own company. I had an idea about a new way to produce digital news. Actually, it happened right here in this room. I was sitting here, Tim Forbes was sitting there, and Jonathan Miller was sitting right there. They had first met, and I had individually told them about my idea. They agreed right there to fund my idea. That's how that worked. I created the company. That was in May, June of 2008. We had some success. Martin: What did the company do? Lewis: The principal behind it was building a tool set of publishing tools and enabling journalists, academics, authors, people with knowledge and expertise to create content with our tools and to build individual brands and communities around their knowledge. To incentivize them by paying them on the size of their audience. The bigger the audience, the more they made. Martin: It was an About.com concept? Lewis: It was not dissimilar. There were similarities to it for sure. A lot of what goes on in this business is similar, just an evolution of certain things. But the About.com was built more on a search kind of model. This was built more in the era of social media where people like that would find traffic in social media versus search. Then two years later, Forbes bought the company. I became the Chief Product Officer. The team came in. Team, three of us, four of us including myself, and spread out throughout the organization. Pretty much Mike picked it up from there. After six months we were still moving. Mike came in, and the story in the last two years has been very interesting. Martin: OK, let's start with a broad question about the long arc of this. Someone once said, "There's the tide." All the events and activities, technologies, that are affecting journalism. Then on the top of it there are the swimmers who are making the decisions, reacting to those events. There's some question now as to whether the swimmers were going to drown regardless of whether... That the tide has been so strong, that the traditional approaches to journalism are just unsustainable inside of this. The other side says, "Well, no." That certain decisions that have been made over the years have greatly affected the outcomes. Do you guys have a perspective on that? Do you think that if certain decisions had been made differently, particularly in the mid 90s time frame when a lot of this was being first developed, that things would be different today? Mike: You asked a couple questions in there. But something that I think is worth exploring with us and other people that you talk to is, the decision seemed to have been taken by the industry in that time frame. That content on the Internet should be free. If there was a time machine that we could get into and go back in time, and we could change one thing about the business. Who knows where this would take us. But I remember thinking at the time wow, MapQuest. I would pay $1.00 a month for MapQuest. I was using it all the time, it magically took me from one place to another, gave me a map of anywhere on earth. They were giving it to me for free. There were dozens of companies like that there were venture backed, venture funding. They had unreal business models because the money came not from people buying the service, but from investors. If pay walls, as we've come to know them today or for-pay, consumers paying for products, had been more the culture of the early days, there would be a different set of economics associated with the Internet today, and it would be very different. Martin: That's very interesting. Just to reflect on it for a moment, as we've talked to people, there are two things that surfaced during that period. The first was that...We spoke to Dave Graves, who did the Yahoo deal on behalf of Reuters. Reuters, instead of going retail. It was a wholesaler, licensed its wire service to Yahoo, and Yahoo basically ran with it in a free context. It pretty much instantly became the largest news service on the Web, and I believe that it still is, in terms of users. CNN, which had no history outside of... Obviously, you pay for cable, but CNN? CNN.com comes up, and I don't think there was any thought inside of CNN. We haven't yet drilled into that to charge for the service, because they weren't charging for their television service, except through the cable operator. How... Mike: That's a big "except." Martin: Well, yes, but they're not retailers either. My only point is this is where the tide comes in. The collision of these forces, in 1994, 5, 6, are occurring. I'd like to just drill a little into that, in that context. Do you think, if all of those people had said, "Jeez, our content is worth something. We should be charging the user for it..." Mike: It's such a complex issue. I don't want to trivialize it. I chose a very narrow, specific example with MapQuest, which is very different than CNN or Yahoo. It's a service that had immediate and real value, and it was given away for free. The idea was, remember all the conversations which you'll hear from everyone. "If you build it, we'll figure out the business model. Get the eyeballs. Get people to come." It was all built on an advertising-funded bias. You have to talk about the small, very service-oriented businesses that provided a valuable service in the moment for people that they would have been glad to pay for. That's at one end of the spectrum. Huge sites like CNN and Yahoo were different, but I think...No one was thinking way out into the future about diversifying revenue streams, and all the various things that we think about very hard today. Martin: Right. Do you have a perspective on that, Lewis, or...? Lewis: On that part? Martin: No? Lewis: The other side of that is what content was considered. That has in some ways slowed things down from happening earlier, that when those decisions were made, that all of a sudden there would be digital content, it was viewed that it's going to be exactly the same. Just put the print content. Put the magazine content. Digital content equals print content. Well, that set in motion a period of time that was how newsrooms were structured and whatnot, and actually more importantly, what wasn't being done to create the kind of content that actually was right for the medium. Martin: You guys are really hitting on...I mean, you've hit the first two points perfectly. It's great. That's the other side of it, which is that the notion in those years was that that the Internet was simply a distribution channel. It wasn't really a "new medium." In retrospect, in your view, is it a new medium? Lewis: It is today. Mike: Have you heard the...? Sorry to interrupt, and you can build off this, but it's so illustrative when people talk about... Whenever media changes, it experiences that same dynamic that you described. When motion pictures first became a possibility, film was born in the early 1900s, what did they do? They put a tripod in front of a stage, and they filmed a play, which is the same as taking a print magazine and putting it up digitally. Film really only became extraordinarily exciting as its own medium when you started moving the camera, when you started taking the camera on location, when you started doing all the things that became moviemaking. When you were just taking a picture of a play, it was bringing that play to the masses, but it wasn't taking advantage of the medium. Radio to television, news, it's... Martin: I really want to drill into this, because it's such a crucial piece. Today, we have the iPad, and "The New Yorker" basically takes its magazine and it puts it on the iPad. You're in the magazine business. You... Lewis: This is not going to work. The experience and the desire of the individual using a tablet or an iPad to control how they access it and what they do with it, and to be able to explore both inside the app and outside the app and to the web, is unique. You just can't have a captive place and just deliver them what you want. There are still so many organizations that just refuse to understand that you need to be open and not closed. Martin: Do you think that's a generational problem, or is it... Lewis: Generational from the leadership perspective, perhaps. Martin: Well, OK. That's one perspective, but I was actually addressing the other perspective, which is that baby boomers are used to reading in a certain way. Lewis: AOL created community. It was all known back then. It was known that you give people a community, and you give them the ability to connect with each other, content that's interesting to them will be created. That was really what AOL was about, and it didn't take it to the next level, right? Then there was this other thing on the side, called Tools. When I got there, there was Community, there was Content, and there were Tools. Tools would be things that you would...That's what would attach you to AOL, because, whether it was Mail, or whether it was connecting with friends, or different sorts of tools that you used, calendars and all that stuff, which never really worked at AOL, I might add... [crosstalk] Martin: It is interesting. I joined the Times in '95. I came from the interactive world. My orientation was Yahoo. It was a wonderful directory of the Internet. I arrive, and I'm thinking, "The Times could do this." I mean, it's... But I realize, within literally a week, that to go there would have been culturally very, very difficult, not only because the culture just wasn't ready for that, but because if it was an engineering-driven...Yahoo was an engineering-driven company. Lewis: AOL is a marketing-driven company, which is vastly different. Martin: That's interesting, but AOL somehow managed in the late '80s to discover exactly what you just suggested. They did build their business on communication and tools, not on content. Lewis: Because there were some three smart guys in the room, maybe even one or two, who came up with something called Instant Messaging. Martin: That was Yossi Vardi. Lewis: That took off, and that changed everything for AOL. It became cool. Remember that? Mike: Yeah. Lewis: IM, Instant Messaging. Every team had to have Instant Messaging. Then, they tried to load everything into Instant Messaging, and then it just didn't work. Mike: You're talking about a couple different things. You built into your original question, a question about journalism, and journalism's ability to morph and grow and evolve into the new digital space. What AOL and Yahoo were doing were extraordinarily exciting and compelling, and had media implications. But, what you were talking about a few minutes ago, relative to where was the great content, where were the hundreds of years of investment in expertise and the development of content, and why... Were they going to be able to, are they going to be able to, or will only a few be able to take the lessons, the quality that comes from years and years of experience, and carry that into the digital age? The ability to do that has been a rare event, frankly. One of the things that excites Lewis and I so much. This sounds a bit self-promotional for oral history, but we really believe it. In a few places like Forbes, we have had the ability to build on a very strong and authoritative and highly disciplined journalism background, and build, maintain that, and grow it in our print product, transplant it, and imbue our digital product with that same ethos, and deliver on the same message. Our space is business and finance and entrepreneurs and capitalism and the economy, but we're able to deliver a traditional — although it's less and less traditional all the time — magazine brand of journalism that treasures its history and the way that we do stories, but also can act as a front door, an authoritative front door that infects, a bad word, everything that we do on forbes.com, to an audience that's now 45, 50 million unique visitors a month. It's been rare that a traditional product has been able to find its way, without losing its way with its core product, to the digital space in a powerful way. You can, on one hand, you could name the people that have been able to do that. Martin: Well, Lewis, I want to go back to what you said before about the repurposing, because I think, along with Mike's point about free versus pay, this is a critical point. If you could go back, and you were like Adam at "Newsweek" in 1995, what do you think the digital product should have looked like back then, if it wasn't just simply taking the magazine content and...? Lewis: It's easy to say now. Martin: Well, that's why I'm asking, because it is...It's easier to say now. It may not be easy, but it's easier. Lewis: What I've learned is that what could have happened back then was really freeing journalists. Look. You go online...You get a print product, there's nothing you can do with it once you read it. You can't talk back to it. You can't change it. There's nothing you can do with it. If "Newsweek" folks back then were using digital, they would start to communicate with the audience who could talk back. We could start to let the audience take our content and do things with it and create their own kind of versions of it inside. Now we're using our content so the user could feel that they were participating in the experience. So take our content and make it available to be used in different ways as we're communicating with folks. But back then, it was like you don't touch, this is our stuff. You don't touch it. And by the way, we don't talk to you. You read us. Right? There wasn't that notion of you need to be authentic with the audience. There was that wall that existed and you never crossed it. And that has taken, my God, it's 20 years now for people to come to understand that you actually need to engage with your audience, not just speak to them. The thought of doing that back then never would enter anybody's mind ever. Doing those kinds of things and actually saying a story doesn't have to be 2,000 words, but it could be packaged in a different way that maybe is video. Well, video wasn't possible back then. But in other words allow the person to decide I want to go from here, to here, to here within this story, not go in a lineal fashion, but to be able to pick and choose different things. But back then it was, "No, we say you start at the top and you go to the bottom.' That's the way you do it. No one would think in terms of making a nonlinear version of the story. Martin: So let's go down the road now that you started before, which is a third piece, which has to do with Forbes' decision, and I understand you weren't part of that back then, to break out as a separate organization. When I think of Forbes in the magazine business, I think of them as being really the only magazine that really, truly... Jim Spanfeller was a part of this as well, but got fairly large on the web as opposed to some of the others. Mike: Well, it's interesting. There's an interesting oral history gem here. So that when I'm dead you'll know this. Only a few others will know, but we're all old. And that's that when I was at Ziff Davis, and I hope you'll talk to Eric Hippeau because Eric, as it relates to Yahoo and so many other things of subtleties in this space, has been at the heart of many of these things. Martin: We'll try to do that. Mike: And I'm not leaving your point about forbes.com, but some of its roots come from Ziff Davis. Eric very wisely chose at Ziff Davis when we launched ZDNet to set it up completely separately and independently with Dan Rosensweig as the CEO of ZDNet and with me as the CEO of Ziff Publishing. Martin: Did you hate one another? (laughs) Mike: We liked each other. One of the reasons it worked, I think, was because late at night we liked each other a lot, but during the day I considered him a terrorist. But we all knew what we were doing. We knew we couldn't build ZDNet if it was shackled by having to work at the same pace and with the same teams that were putting out weekly, bi-weekly, monthly magazines. It just wouldn't work. We were able to build a completely separate, independent unit that built off of the brand authority and brand quality and tests and research and market research that the magazines had been building for decades. We were able to build an independent ZDNet. And it flourished, and it did very well. It became very big. During that period of time, immediately frankly after we sold Ziff Davis, I met the Forbes family. And I shared that story with Tim. I wasn't the only voice, but I was a voice that had direct media experience. Tim said, "Well, what would you do if you were launching forbes.com? He said, "Well, I have a parochial view of this, but we've just had great success with this at Ziff Davis. And I suggest that you set things up as a completely separate and completely independent operation. Separate building, general council, HR, you name it. Completely independent." And it also created friction. It was difficult. But I think everybody on both sides of that wall, if you will, took great pride in the fact that forbes.com built quickly. Forbes was doing something entrepreneurial and rooted in what we actually cover. And to build a market. Tim actually at the time asked me if I wanted to come and run forbes.com. Martin: That's interesting. Mike: I said, "I'm not the guy. I'm a nice guy. I want everybody to get along." But I know the guy because he worked for me at Ziff Davis; Jim Spanfeller. And Jim fit the Dan Rosensweig mold more closely. Jim, as you know, built a web 1.0 really powerful business off a traditional brand in a way that nobody else was doing in the marketplace. And again, as I said, when we put it all back together, it made sense for me to join Lewis and build it as an integrated business a dozen years later. Martin: Did you want to say something? Lewis: That was a fascinating era because everything was built off the back of portals. And that's the way it worked. There was no other way to get traffic to your operation but to either go through Yahoo or AOL or to some extent MSN. That was the way. And as part of AOL at that point, we held the spigot. Yahoo at that point wasn't what it is today. We were the fire hose. You did it our way, or it was the highway, which was the wrong way for AOL to approach things. Martin: That's so true. At the same time as you were at Ziff, we were breaking "New York Times Digital" out of the "New York Times." We were going to take it public. I remember the one comp we had for my options as the CEO was Dan Rosensweig's tracking stock. Mike: Tracking stock. Martin: We basically patterned "New York Times Digital" down to the comp in terms of CEO compensation on that. But one day we were about to take this company public and we need traffic, right? We need distribution. (David) Colburn (from AOL) shows up at my door. $89 million to get traffic to support ours. We said, "We can't afford $89 million." But I'll never forget that figure. Lewis: You need venture capital for that. Martin: Well, we raised money from Dan Nova and Fred Wilson. The anchor tenancy. We were going to have the anchor tenancy of news. Lewis: But that attitude wound up being the absolute clash point, if that's the word, between AOL and Time inc. That power to drive traffic and a bunch of people sitting in Dullas telling a bunch of people sitting in New York, New York elite editors, we're in charge. You're not in charge. There you have it, right there. Mike: And I think that goes to the point. Martin: All the way down hill. Mike: Culturally it goes to the point you were making before, which is that the old line editors, it doesn't make them bad people, by the way, were raised on and built their business and expertise on the one way communication you were describing before. It was broadcast. It was experts using expert skills to tell a story. Whereas at AOL, you were sharing content and sharing messaging. It was completely different. It could not have more different cultures. Lewis: But AOL wasn't right at the time, nor was Time inc. or whatever. Everybody was somewhat wrong. And I remember walking into the Time inc. building. I felt like I had to wear one of those bulletproof vests, right? Martin: Or one of the suits we were talking about. Lewis: Yeah, it was ugly. It was ugly. Some of those meetings were... Martin: Well, what were they like? Lewis: 10 people on one side of the room, 10 people on the other side of the room. And no one paid attention to anybody else. And the two guys, literally it wasn't much different from that. One guy from Time inc. and one guy from AOL. And it was like an hour later, finally when I got the language. But it was like we're out of here. They said the same thing so that's the way it went. Martin: So fast forward, now most of these "separate organizations" have been "integrated back." Including the one here, at Forbes. Mike: I don't know that there were that many of these separate organizations. Martin: Well, no, the Washington Post had an organization that was actually across the river. It was separated geographically from the newspaper. We had "New York Times Digital." That was integrated back in 2005. You guys had the Web 1.0 Spanfeller thing. That was integrated back. There were quite a few actually, and they were all basically integrated back. Good idea, bad idea? Mike: This may get into an area of distinction that's more subtle, but there's a difference between in the newspaper business where there were a number of separate organizations. The magazine business, not so much. I think for us. Martin: CondeNet, right? CondeNet was separate from Conde Nast. Mike: Yes, but it wasn't built.. You talk to Sarah Chubb and others who managed that, but it was really about building off of the marketplace that Conde Nast operated in. Not a specific brand that CondeNet was building. Here, it was Forbes. We have the luxury or the scarcity to have been dealing with one brand. And I think in retrospect it's allowed us to build a business here that is focused on one marketplace. And that serves that marketplace. Martin: And is that because the print journalists and the print advertising people were ready at a certain point in time? For the integration. In other words, the reason that you articulated before, the reason that you wouldn't have had the integration is because there was... Mike: There was something called the worldwide financial collapse in 2008 that forced a lot of issues. Like everyone, we had to make cuts here, we had to make consolidations. It also happened to be the right time to manage the brand in a consolidated way. But lest we make you feel that this was a simple and non-confrontational time, and particularly when Lewis got here and began to change how we were gathering and distributing and creating content, there was a lot of, I hope you don't mind me saying, there was a lot of are you in, are you out? Are you on board or with a new way of doing things, or are you going to go somewhere else? A remarkable number of very talented. Maybe it's because of how entrepreneurial our marketplace is here and how people try to think like capitalists and how to build businesses. Remarkable number of skilled and talented longtime journalists joined Lewis' new program and a lot left as well. And a lot of new people. We were looking at some statistics yesterday, they were remarkable. Lewis: As I look back over however long it is, to Mike's point here, you had even at AOL or wherever you were, it was print journalists trying to figure out a new medium. Over those years, there developed a whole group of digital journalists, people who only grew up in that medium, who actually used it. The print journalists weren't using it; they were just filling it, right? But you had people out there using it. And soon they moved into the professional workforce and they became bankers and journalists too. Right? And they made their way into journalistic organizations because they used it, they grew up on it. And that started to change with content on the web digitally. To the point that Mike just made, in the last two and a half years 25 percent of the current Forbes editorial product work started in the last two and a half years. Think about that. Mike: And we haven't increased the head count. So correspondingly, that means 25 percent or more left. Lewis: And none of those 25%, this is not saying, oh, a reporter for a reporter. All new skill sets. All new skill sets that never existed here because these are the people who grew up using this from birth who became journalists and part of the media world. That's what's really changed. Martin: And talk about the benefits and trade offs of this a little bit. Lewis: Well, it's funny, I actually think about that a lot right now. The benefits are that there are people who the technology is who they are. They understand it. They live and breathe it. It's just natural. They don't have to think about it. They think how people communicate and use content and the benefits cascade from there. There are some regrets in this when I look at it that most of those folks coming on have never had that classical journalistic fundamental education. Right? It's just a generation that skipped all that. And there are some core things that you really need to know. And the economics of the industry don't enable them to be taught so much. You don't have the editor banging on your head for five years before you can get the next level. You miss all that. But I do think that what we're trying to do here at Forbes to get a little promotional in some ways, I guess, is we have a lot of folks here who came from that world and made it to the next world. And we have a lot of new people who never experienced that world and everybody is kind of training each other now. And I think that's a good thing, but there's never enough time to really do what the guy who trained me did. Martin: To actually practice the craft. Lewis: To practice the craft for a decade. You get thrown right in. Mike: Lewis has an All the Presidents Men poster in his office. A very abstract concept to most of the people who come in and visit with you on your team. Martin: And speaking of that, we just had the Goldsmith Awards two days ago, yesterday at Shorenstein. And the investigative reporting prize, you just listen to these five or six finalists. And it's just incredible. These people are spending six, eight, 10 months solving a really, really important problem either in their local communities; the winner was the "Chicago Tribune," but it was for this fire retardant scandal that took place where a physician actually lied about the benefits of fire retardant chemicals on behalf of the chemical industry. These things take time and they cost money. And do you think we're losing that? Lewis: Look, you're certainly losing. I'm not going to put this in the same category as a safety kind of thing that takes deep investigation. But there are reporters out there, and they collect stories over years and years. We've just had an example of it where an individual at Forbes who followed a particular wealthy individual for four or five years took all of that information that she gleaned and put it into a piece that had significant impact in saying this person's business and whatnot was somewhat suspect about what they're worth. So you can still do those things, but it's not necessarily done as just go do it and nothing else for 10 months. Right? You have to do many, many other things along the way. It's just hard to say this is what you're going to do and nothing else anymore. Mike: You'd appreciate this, this particular example is very real and very live right now. And it's an example of really good quality journalism and real courage to do something tough in an environment where you know it's going to ruffle feathers. But when that happened this week in our organization culturally. Martin: What was it? Mike: It's Prince Al-Waleed, at its core we do our billionaires list every year. We list him at $20 billion. He thinks he's worth $29 billion. Martin: I have the same problem. Mike: I couldn't live on $20 billion. But it was a much bigger story than that because he's tried to manage the process of how we access his wealth and how we'll report it. The reporter that Lewis was describing has been following this for years and she wrote a very brave and courageous piece about a very powerful guy. Not just dealing with the issue of are we right or is he wrong, but what's his modus operandi? What is his context? Where is he? How does he operate? But more to the point I was going to make there, we try to celebrate those things here. And yesterday and the day before and since this story broke, because at its core it's real journalistic piece. And everybody takes pride in it. Everybody is walking tall here on both sides. Lewis: It's not just about the money. It's the way he runs. The Saudi economy is built on something. They profess to have, for the Middle East, one of the more open markets. Now they're going to have to look at how this guy operates there. It has repercussions. Right? It goes beyond whether someone is worth some ridiculous sum or more. Ridiculous sum. It goes to how the economy runs. Mike: But the reason we're telling this story is whatever your medium is, there is an appreciation for that kind of storytelling. And then of course we run it in the magazine, or we run it first on forbes.com, and tens of millions of people see it. People respond, people react, people comment, people share; it becomes an event in peoples' lives, and it becomes a huge traffic driver. Martin: I want to switch gears for just a moment. When we all got into the business, there was this relationship among publishers, advertising agencies and their clients that had existed for decades. The publishers created the inventory. The agencies basically represented their clients in placing that media. That was a system that, it seems to me, over the last 20 years or so, has really broken down significantly. Now, there are parts of it that are still intact, like broadcast television and cable television to some extent. It just seems to be somewhat unraveling. As it's unraveled... Lewis: That's kind. [crosstalk] Lewis: He has a word for it, I have a word for it. Martin: As it's unraveling, what we've seen is the ad tech industry has come up. We've seen two companies, but mainly one, Google, essentially take an enormous share. If you just do it on the money, Google takes a significant, significant piece of the search advertising market, and not an insignificant, now, piece of display. It's probably in the 30 percent range this year and growing rapidly. Where does this lead? You talk about 50 million uniques, and that's wonderful but, where does this lead in terms of the next phase of publishing? How do you think about the business model? Lewis: Which model are you talking about? The revenue model? Martin: We're talking about the revenue model. We're talking about advertising and the issues surrounding it. Lewis: I'll let Mike speak for himself, but we've built, basically, very simply. Content is content. That's what the digital world has wrought. Anybody can create it at anytime, and anybody can distribute it, and anybody can get traffic for it. There are really two key principles that I think remain today, that remained when we got into it, people want expertise and they really want transparency. I want great people creating content that I can read, that gives me knowledge that I want to know who they are and what they're speaking about. That was 25 years or 50 years ago. Those two principles hold today. The question is, how do you do that? What is the manner that you do that in so that you make sure you have that great content? The audience knows who's speaking and everybody works together. That's where my head is. How do you build a business off that? Mike: Two things I would comment on, but there are a dozen that we could comment on, but two that I think are important to your point about Google and Google's impact. The Internet has tilted the scales in the advertising community towards ROI because you actually can, in so many instances, see the return on investment that you get. Google has taken that to almost electric meter status. It's a plug it on the side of the building and watch it spin, so it's a bit of the "Revenge of the Nerds," in that the direct marketing world is manifesting itself in media in a way that is, must be very satisfying to the long-time members of the DMA. Finally, people are looking for results and return. I think that's going to play to the ability to look for ROI in your advertising plan, and is going to play an even more powerful role as time goes by, and will manifest itself in automated and programmatic buying and selling of space. Martin: Can Forbes make a business out of programmatic buying? Mike: Sure. It's a part of our continuum of ad products. Return on investment dynamics and everything we could say about that is, directionally, one of the places the business is going. The other is native advertising. Lewis and I smile about it, because just a couple of years ago we launched AdVoice and what we now call Brand Voice as a way to, in a very organized and very structured and very transparent and extraordinarily providing access, way... Opened up our contributor base platform to marketers. Like our full time staff and like our freelancers and like our, now, almost 1000 contributors, an advertiser can use the same tools, clearly marked, transparently from an advertiser, to express themselves from a thought leadership standpoint. Not to sell cars or talk about a special this weekend, but to talk about their expertise, their leadership in the sector that they operate in. Users, readers value that. They want it. They're excited about it. Lewis: There are other people doing this. There's a media community out there that goes like this, because many years ago, before I came into this, someone said, "We're the protectors of everybody out there." I'm not sure who appointed them the protectors of everybody. But certainly in the world we live in today, consumers have the ability to read and to verify. They read something, with a click they can go say, "Who else has something to say? Is there somebody else that has a different opinion?" Whether it's a journalist speaking it or a marketer speaking it, or an audience member. Everybody can check everybody. So I'm not sure who needs to be the protector anymore, except for the person's ability to be able to find their own truth to things. Martin: I don't want to get into the middle of the oral history. But you talked about transparency before. That's where the line comes. You wouldn't want your Saudi reporter, for example, to be a member of the royal family and not disclose that. Mike: But that's the key. Transparency is a long, respected tradition of the media business. It just is. It must stay in force. The line should get brighter and brighter. The brighter it gets, the easier it is for the consumer of that to make their own judgement. Martin: Mike, can you envision a point at which Forbes starts to charge for its content, its users? Or do you see a free world? Mike: I can't. For our core product, I see our moving down the road with the current business model, Forbes.com. Lewis was talking about iPad and tablet distribution of product. What we were really talking about, a few minutes ago, were replicas. Your example of The New Yorker, ingloriously, is actually called a replica, which speaks to everything we were saying about it. But as technology as evolved, we've launched a new tablet product, that we should show you when we finish, that really excites us. Because it is far from being a replica. It takes a PDF format that you'd expect from a tablet based product. But because of the advances in the technology, and because we have a rich Forbes.com world behind this, it allows you to travel seamlessly between that PDF format and the world of Forbes.com. You can immediately go deeply into video. You can go deeply into any story that someone's telling that starts in that PDF format. But always come back to it. We'll charge for that product, to your question. And I think it's something people will be willing to pay for. Lewis: They are. Mike: Yeah. 100,000 people have tested. Lewis: We've had a couple hundred thousand downloads. I forget the number of actual annual purchases. You know the drill. Martin: Yeah, I do know the drill. Lewis: But people will pay for it. There's the print that they pay for, for one generation. That's showing up in a vastly different experience for a new generation that picks up their tablets every day. Mike: I sat next to a lady on the train this morning, who was in the middle seat. There were two people sitting on either side of here. Me and a woman who was by the window. I was on my iPad. She was on a Kindle. This woman was reading the newspaper. It seemed like an exotic event. It's not so long ago that everybody on the train was reading The Journal, The Post, The Times. They all had their ways of reading it, folding and snapping and navigating through this. This woman had her hand in front of me with the newspaper. I looked around the train and I realized she was the only one on that car reading a print product. Everybody else was... It's mind-boggling. Lewis: What I see on the subway... Mike: And sharing it, too. By the way. I was sending people articles, commenting. Just fascinating. Lewis: I'm on the subways now. There was a period of time where everybody had a cell phone in their hand. I go into trains right now and Kindles and tablet users on the subway are overtaking smartphone users on the subway. Martin: It's actually affected the crime rate statistics in New York City. Because it's theft, if you steal somebody's iPad or Kindle. And that's happening a lot. It's affecting the stats. Lewis: A cell phone, no one's going to take that. It's in my hand. But you see a thousand dollar piece of equipment on the subway. "Hey, what the hell?" Right? Mike: I don't know how you'd go about fencing somebody's iPad anyways. But there must be a way for pennies on the dollar. But when I mentioned the woman with the newspaper and how anachronistic she seemed, I was going to your point about generations and your question about generations. The generational impact exists on both sides of the provider, customer aisle. Customers are readers. Users break down what they look at by their age and their stage and their technological capacity to take on new things. But on the business side, to Lewis' description of new people coming on board with different skills, it's also generational. In an almost mirror image, to the people receiving the content. These folks that come on board now, our kids' age, in their twenties, they speak technology. They use computers, akin to our speaking our native language. You don't have to teach me how to put sentences together in English, because I know how to speak English. That's the way they interact with technology. If I have to speak in French, I have to think about. I have to be taught. I have to be told. That's the way our generation has to deal with technology acquisition and technology use. This generation of folks who are coming in now, they don't need a guidebook. They don't need to be told how to make that monitor work with this PC. They speak the language. They go in and they do it. Martin: Do you think there'll be a magazine in five years? Mike: For Forbes? I do actually think for Forbes. We've launched in the last several years we've really picked up our international licensing opportunity. We're now at 26, 27 countries with local language editions of the magazine. There's a lag. Will it be as big a magazine in the domestic marketplace as it is today? Probably not, but it's very important to who we are and what we're all about. We can produce it profitably because of our circ economics, where it's hard for other folks to do that. There will be Forbes. There will be other magazines that don't go out. Lewis: There will be other magazines. There won't be weeklies, newspapers. The great thing about when you have a magazine that is considered, and you sit back with, and that feels like you are entering an experience that people have spent a lot of time putting it together and you consume it like that. That's not a daily, and that's not a weekly, but that is maybe a monthly, or every three or four weeks or whatever. Those things people really want still. It's how they sit back and catch up. No one's sitting back to catch up today, on what happens today? They need to catch up with what they've missed. That's a lot of what I think we need... ...
VIDEO: YES

Esther Dyson
BIO: YES: TRANSCRIPT: John: Deal that was. Esther: Well, yeah, I'd comped the fall of my freshman year. Basically, my Harvard experience was the Crimson, it really wasn't Harvard. I never went to class, I proofread for money, I wrote news stories for love. Then I started doing mostly movie reviews. After I got out of college, well, I took six months off to write free. He was actually a Crimson alum. Nowadays, he would be called a sexual predator, but then, he was just a dirty old guy. I worked for him, he was a stringer for the National Catholic News Service and he had some other clients. I got to interview Bernadette Devlin, who is in the Irish Parliament. Then I went back and finally graduated. Then I got sort of dish-washing jobs for two years, and finally ended up as a fact checker for Forbes, where I formally joined the Holy Church of Journalism as an altar boy, and worked there for three years. And I loved it. But by the end, I realized, even at Forbes, they were more interested in kind of crafting a story than in really telling the truth. I thought I'd go somewhere where telling the truth and making judgments and uncovering things really mattered, so I went to Wall Street. There again, I discovered it was mostly, as sell-side analyst, you were selling stocks with a story rather than actually trying to figure out what was going on. So then I joined the newsletter, where it really wasn't a newsletter, it was more like a monthly analysis of the structure of a rapidly changing marketplace, which at that point, was the personal computer and the software business and then became the internet and online. John: You were one of the first, in a way, who created your own personal brand with the newsletter. That it really became...My journalism path has been more of institutions, where the institution mattered more. You were precursor in all points, that it's your image, your word, your statement that matters, not the institution's. How did that feel? Is that different? Esther: Interestingly, the thing I joined was named after Ben Rosen, who started it. It was the Rosen Electronics Letter, and it was Rosen Research. After about a year, it became clear that he had a huge conflict of interest because he was also Chairman of Lotus and Compaq, just journalism things. We tried to sell it to Business Week, and I think, to either Ziff Davis or Pat McGovern. Then I thought...Ben is, he's handsome, he's rich, he's famous, he's powerful. But still, I was working with him in the office. He was definitely just a human being. I thought, "If he can do it, I could, too." I said, "Well, why don't I buy it?" I did. Then I took over and I carefully renamed it EDventure and Release 1.0 without my name visibly in it on purpose. But at the same time, the first year I wrote a review, I think it was of the Macintosh an d Steve Jobs gave me a horrible time. He said, "You're masquerading your crummy, stupid opinions as those of Ben Rosen." I was like, "Dude, I renamed the thing. I'm not trying to pretend to be Ben Rosen, I'm trying to establish myself." But now, everybody thinks I founded the thing and I keep correcting them. But no, Ben founded it and then it changed personality with somebody else. But people become institutions in a way that they didn't used to. I mean, that's one of the fundamental things of the Internet, you can...instead of this whole thing about the theory of the firm, the reason you have a firm or an institution is because it's cheaper in terms of time and resources and everything else, to have this institution, because it's too hard to get all those resources out in the market place. But now that's changed. Any individual has access to the world's greatest libraries, they have an accounting system back-end to manage their business if they need it, they have distribution channels, so the individual becomes primary. John: Did you have any Eureka moment? When did you sort of realize that the present is not going to be the future in a major way? Esther: Not really. So another thing,in addition to calling me the founder and people call me a futurist...I always like to say, "The goal is really to understand the present." You still can't predict the future, but you can explain the different ways in which it could unfold, when it's possible and when isn't. There really isn't that much change as much as there is an unfolding of the internal dynamics. That's a fine point, but it's still... John: It's still legitimate. Esther: Yeah. It's not, "Oh can you predict the future," or suddenly everything changed. It's more, "What were the structural movements that led to this transformation?" John: How did that epiphany or that knowledge unfold? Esther: For me there weren't that many epiphanies because I never... John: Because you never thought... Esther: I never had this notion that I knew what was going on, or that I could predict the future, so it wasn't like, "Oh my god, I was wrong." It was more like...I don't really know what's going to happen, but here's... Again, it's more trying to figure out what's going to happen, and how. The one epiphany I had was every year, because I inherited PC Forum from Ben Rosen, and we started with the hardware panel, which at one point it was John Roach from Tandy, it was Rod Canion from Compaq, it was the guy, whoever it was of that particular year from IBM. And bout three years in, this hardware panel was so boring because fundamentally nothing changed. But it was always the hardware panel, the software panel, and other stuff. I had a dream that I was kind of running PC Forum but I was also on a beach. And, I was with this hardware panel and was beginning to slide into the ocean, and there was a woman from Regis McKenna who raised her hand and said, "But this is what you wanted, this hardware, isn't it?" Then I realized that I'd liberated myself by starting with the software panel, with Bill Gates, and... John: That's a vivid dream . Esther: That's probably the one real understanding the software business, the big thing was the change in software distribution from disks to downloading. Also the change what compatibility did for PCs so you could run across machines. Then there were things that weren't really epiphanies, but you needed to understand the big machines versus the decentralized small things. Then of course the Internet and basically the change in balance of power between the individual and the institution, or the world at large. John: With that, other than that, do you see hallmarks, do you see IBM? Are there memory spurs such as AOL Time Warner, such as Facebook, such as the end of Lotus, that trigger that confirm for you? When these episodes occur, did they signal you in your path, did they signal you a new inflection point? Esther Dyson: They were just milestones, in a sense. One of the more interesting things that happened that was unremarked at the time was when you originally started on email there was MCI Mail, there was CompuServe, there was the actual internet. And t was incredibly difficult to communicate from one to another. You had your CompuServe friends. Then I learned how to do the "@" addresses so you could take someone who's on CompuServe and you could... John: Address it to them. Esther: Yeah, and it would go...Sort of in the same way, in 1989 I went to Russia. Before that, I had an MCI Mail address. When I was in Russia, it was amazing because you could not call people. Once I left, when I tried to get...The only way to communicate with people was email. The Russians all had email addresses because the phone system was so bad. I first used it mostly with Russians. Meanwhile, in Russia, they were using UUCP. The only way to get out of the country was through NIPAS, which was basically a government network that connected to Vienna where there was some kind of nuclear institute and then you could get out to the rest of the world. About 1989, 1990 some guy in Finland called Johan Helssingius, Julf Helsingius who later ran something called Anon.penet.fi. He created a direct connection to the university in St. Petersburg where there was a guy called Leo Tomberg, who was an Estonian. And suddenly you could actually get onto the real Internet from inside Russia. John: And that was...? Esther: That was more of an inflection point. That was where the technology really created that big shift. John: Let's talk about commentators and journalists who are watching what was going on. You talked about your relationship with Steve Jobs when you wrote that. Do you think we've reached a world where companies feel they don't need journalists? You were a go- -between, you are between them and their audience. Esther: They don't need journalists for PR. They still need them, one, to figure out what's going on in other companies and to the extent that they really want to understand the world. The role of journalists has changed. It used to be every journalist did some analysis and some of just what's happening. The what's happening part is easier. Fundamentally, you can use an algorithm or a filter to read all the press releases or all the rewrites of the press releases. But you still need a Kara Swisher to get the scoops. You need, whether it's Om Malik or somebody to tell you what is really important versus what people are following. And then the thing that's most missing, which is not what happened last week but what happened last year. Again, what does this mean? Not necessarily 10 years in the future, but what is actually happening this year. Suddenly mobile...everybody's telling you mobile's important. But what it really means is that all the new stuff is mobile first. It doesn't just change "oh, mobile is hot, you should invest in it," it changes the importance of SEO and marketing. There was something you were talking about yesterday. It changes how apps are found. But at the same time, a more interesting change is, for the last 10 years, people have been better at getting their calendars managed. You now get memos and invitations, and put them automatically into your calendar. Just enough so that I never trust my calendar, they don't do the time adjustment correctly. I end up being in Chicago, and my meeting is wrongly listed as being at 9:00 AM, and it's really 8:00 AM Chicago time and I'm late or whatever. But I would say probably a lot of 20-year-olds don't look at their calendars, because they expect to get alerts from somewhere or push notifications, if you like. Suddenly, people no longer consult their calendars. They wait to be told. And if they're not told, then they miss their meetings. In that case, how do you as a vendor of some kind or a party planner…. the world's changed again. John: Interesting. You had said the world has changed for you and for me, in the sense that when you use to do a piece of analysis, it would be a page to 2-1/2 pages long. We've now gone from sites where people look first at something in a headline, something first paragraph to a world where they follow you on tweets. How does that change in attention span, how do we grapplle with that journalism? Esther: That's a real challenge. First, there's an awful lot of people out there who don't really understand the world. Sometimes, I wonder well what's in their minds. Of course, 50 years ago what was in their mind was "I Love Lucy" and the President is important. So maybe, people weren't that broad visioned either, but the world has definitely gotten more complicated. I don't really know. That's the biggest challenge. It still matters to understand the big picture. There's just a bigger gulf between people who think and then people who are just floating on the flow. John: You would argued at one point in a blog post, that readers need to read more critically. Now that anyone can say they're a journalist, it's up to the readers to read more critically and determine if they are. Have you seen any strides in that direction? Esther: The readers need to be fact checkers. John: Fact checkers. Esther: Sometime ago, we realized the readers need to be skeptical about advertising. Now, first they need to be skeptical about whether what they’re reading is advertising. They also need to be skeptical about where the stuff they're reading comes from. It's not suddenly simply skepticism that is the motivation here, but where does this come from, does this person get it, or are they blinded by... John: This prejudice or whatever. Esther: They're blinded by the perch they're standing on, but the second is, simply, you need to provide your own context. The Tweets need to come into something that you have constructed if you're not going to read the context around it as you would in a normal news story. John: Yeah. That's true. Esther: But it's much easier to find that context than it used to be. It used to be pick up "The New York Times," and if you hadn't been following the story. John: That was the purpose of The Times then. The purpose of The Times in time to come may be slightly different. Esther: The purpose of The Times, on the one hand, is the support of its shareholders and family to uphold. The thing that in fact is a fundamental thing is, take any institution it has multiple purposes depending on either the onlooker or the participant. The purpose of The Times for the customer, the purpose of The Times for the people that write about it, the purpose of The Times for its employees, for its owners. That's not different but, again, it's getting more complicated because, that horrible word stakeholder, actually, there are more stakeholders in most of these things because institutions used to be discrete objects. They had shareholders, customer, employees, but they were pretty well defined. That's one of the difficulties. All these porous boundaries around everything. John: As you know, there has been a change in audience for journalists. The audience, when we began, used to be faceless. They used to be a mass. Esther: They would listen to you politely. John: They would listen to you politely. Now that's not the case. Esther: No, also, one of the more interesting things about social media, especially in countries like Myanmar or Russia, people are writing their own history. They used to depend on the official version written by official people. Now you have something that's much more incoherent, more genuine, but not necessarily clear or... John: Or necessarily accurate. Esther: Not necessarily accurate. The problem is the accuracy is so multilateral and so heterogeneous that only a journalist god could…… Accuracy has to incorporate a lot more different strands. In the old days if there was a single narrative you were either a good part of it or you were some little outlier, but now, again, history itself becomes decentralized. John: Yeah, very much. It's fascinating because it is not just the audience, not just the journalists, all of this is journalistm. As you said, it's the unfolding early on. People would look back and say, "How did we cover this era?" "How good a job did we do over the last 20, 25 years of describing what's going on and the meaning behind it?" Esther: Some people who are doing that very well, but they might not necessarily all be being listened to. One thing I was talking about and thinking about last night in this conference. One of the big controversies right now is, "Oh my god, Facebook is manipulating people's emotions." They're not adding anything. They're selectively eliminating either people saying, "I had a great time vacation. It was so wonderful," or people saying, "Oh, I'm really sad. My dog died. I'm just in a bad mood today." Those comments are contagious. There's still a question about, "Are people feeling impelled to present themselves as more cheerful when their friends do, or are they actually being cheered up?" I suspect they're changing how they present themselves, rather than how they feel. I think they probably feel worse. The problem is, what people don't get, is there is no default. You are being manipulated. I cannot create Facebook without manipulating people. If I'm making no choices, I'm drowning in information. If I'm making choices to present the friends they like, as indicated by "likes," I'm creating a filter bubble for them. I'm cutting them off from the rest of the world they might see. The challenge is how do you act in a world where you have more knowledge and more responsibility? That's what we're really facing. We know now about children being abused in Ethiopia. We know that if you go to half the places in the United States, if you walk into a school, you see children's lives being blighted by careless teachers, by bad parenting, by bad food. You can predict that. What is your responsibility to intervene? And if you intervene, then you're responsible for intervening well. People who pay attention at all are facing this crisis of knowing too much, being too aware, being complicit in so many bad things. If you walk away, in theory, you're leaving a default, but you're leaving something that you should feel guilty about. John: At the same time, you're in a world where the user of social network, by default, doesn't necessarily care for authority, but cares more for the peers and the friends. There's not an authority to trust out there. I respond more to my friends. Esther: And are they better or worse than the authority, who knows? It's kind of like, "You can't be fired for picking IBM." You can't be blamed for trusting the authorities, but maybe you should have been, especially in Germany during the war. John: Right, exactly. To circle back, you said you think some people have done an admirable job of covering this evolution, but are not necessarily being listened to. Why do you think that is? One would think the accurate information and good predictions always should create a following and an audience that grows over time. Esther: There's s difference between accurate information and vision around the context. If you want to be in journalism the best business model is writing about business because there's somebody wiling to pay for accurate information. "Yeah, I really do need to know whether oil prices are likely to go up or down based on what's happening in the Gulf and in Canada. Is fracking going to be regulated? I'll pay for that info." John: There's a premium for accurate information. That's right. Esther: A premium about the philosophical, ontological state of the world? It's harder to get people to pay for that, partly because everybody's competing to provide this for free… McKinsey Global Institute promoting McKinsey, universities (promoting) people with grants. There are different kinds of journalism. There's the "rewrite the press releases." There's investigative journalism, find out what people don't want you to know. Some people will pay for that sometimes. Probably the best business model for that in the in the end is philanthropy. It's definitely not government support. Then there's the maunderings of the philosopher..that's research institutions, center for the arts and society kinds of things. Then there's stuff about Jennifer Aniston and product reviews. That's very, very fund-able through advertising. I love watching the way "USA Today" has really become a traveler's newspaper. They cover the airline industry and the weather exceptionally well...and sports. John: Yeah, because that's their audience. Esther: Right, whereas "The Post" is inside Washington. John: The Times is The Times. There's been a greater focus on these as a measure of "How do I exist in the future?" Esther: Yeah, because the advertising...You no longer have the classifieds supporting all the other stuff. It gets unbundled and the things that are not supportable need to go to Jeff Bezos, or Paul Steiger (sponsors) or whatever. John: Final question. Are you optimistic? Pessimistic? What do you think about journalism in the...? Esther: Fundamentally I'm an optimistic person because that's the only way to be effective in the world. You have to be cynical, yet optimistic. About journalism? There's a holy church of journalism, which isn't doing that well, but there is, if you like, the faith, or the religion of journalism, which is searching for the truth. That still exists and it will persist. The truth is two things. One, it's the perception of the present accurately and, two, it's the unfolding of the present into the future. The present will always unfold into the future. John: Whether you are there or not. Esther: Yeah, and whether you understand it or not. Of course, some part of journalism is even understanding the past, not just the present. As long as there are people out there to think about the state of the world, there's somebody interested in perceiving the truth. The truth will always exist. The perception of it is what we're talking about. John: But will the... Esther: Will that perception be spread widely by journalists? Yeah, to some audiences. I'm spending a lot more time out in the sticks of the U.S. Just as I learned about Sri Lanka, maybe I'm going to learn about Jackson, Tennessee or Clatsop county, Oregon. It's easy to be dismissive. It's not just easy, it's tempting to people on the coasts to think the people in the middle don't get anything, and they do. Yet, at the same time, you can live a life where you don't really need to pursue the truth, you can just exist within it. John: It's easy, but I think that ambition to pursue exists in you, exists in me, and exists in others of our world. Esther: It also exists in people who want to understand what's going on. You may not need to understand what's going on in Washington, maybe if you just understand what's going on in your own community, and you think skeptically, "What is the mayor really trying to do?" That's seeking the truth. But it probably helps to see it in the context of American history, economics, sociology, psychology, all these other things that really affect how all this stuff works. John: Because it's all pointillistic. All these have little paths impacts on understanding. Will the news business ever be the same? Esther: No. Totally. It's not the same now. It's the fragmentation into both different topic areas and, again, different purposes, different motivations. They become so fragmented. The purposes and the coverage areas and the financial models have all split this thing apart. John: Someone said recently: do you think journalism was bound to fail? Because that drive to get it right -- TK, which you mentioned -- means you can't really be a beta culture? You can't be a beta because of willingness to fail, whereas in journalism, the drive is always to get it right. Esther: That's somebody's mistaken vision of journalism, as the printed word that cannot be updated. There's some people in the news business whose drive is to get it right, as opposed to people who are comfortable unpacking it in public and then correcting it. Whether I spelled the guy's name yesterday or I was wrong last year, but that's not journalism. Everything can redefine itself. There's the news business as it was. There's journalism as the -- I would call it a trade, of finding out what's going on and reporting it. And then there's truth-seeking, which will persist regardless. Finding out what's going on and reporting it is a trade that's changing dramatically, but it will survive as well. The news business, per se, won't. John: Thank you very much. Esther: Thank you. This was fun. I have't done this public speaking in a while. ...
VIDEO: YES

Philip Elmer-Dewitt
BIO: YES: Philip Elmer-DeWitt (born September 8, 1949) is an...
TRANSCRIPT: John: Great. I'm talking today with Philip Elmer Dewitt, who is in western Massachusetts and I am in Cambridge. Philip, why don't you tell me a little bit about your career path? How did you get where you are? What's your journalism career like? Tell me. Philip: OK, well I was a Watergate baby, Woodward and Bernstein were my heroes until I actually had to work with Carl Bernstein for a year and was disillusioned. Columbia Journalism School, a couple of graduate schools I dropped out of. I knocked around in book publishing for many years, was nearly broke when an Oberlin graduate friend of mine who was a temporary secretary at Time was going on vacation and she needed a fill-in. This was like 1979, I was broke and I worked as a temporary secretary in the summertime, and this was a time when the senior editors were a little uncomfortable having male secretaries. It was a little easier for me to promote my way, I worked there, did that for a while. Floating from section to section, got a view of the magazine and then saw where I might fit in. I couldn't claim I was a writer, but there was this job, research reporter, I thought I could probably pull it off. I did that for a while, reporting. I reported a cover story on kids and computers, based partly on my experience as I've been introduced to computers the same way Bill Gates did, actually at the same time. On a terminal, connected by modem to a PDP-10 minicomputer in the early days of time-sharing. He was much smarter than I was and did much more with it, but on the strength of my reporting, which ended up being the lead of the cover story, they gave me what they called a writer's job at Time. The situation was...this was 1982. Time had all this computer advertising coming in, and no editor to support it. They needed some computer stories to justify this. There was sort of a bake-off between me, who actually had worked with Bolt, Beranek and Newman as a little programmer back when they were inventing the Internet. I actually worked down the hall from a guy who had invented how to separate someone's name from their domain. He said "Oh, you just use the @ key." He's just down the hall from me. Anyway, the People writer also wanted this job and he knew how to write at Time but he knew nothing about computer science. They figured it would be easier to teach me how to write than to teach him. John: How to understand computers? Philip: Yes. I got a writer's trial. I'm a slow learner, and everything I wrote for years was rewritten by senior editors. I like the joke that a monkey would learn how to write a Time story... ...with the kind of instruction I've had. I did that. We'll get into this a little later, but the editor's interest in computers has waxed and waned. In 1982, they were very excited about computers. They have a very smart West Coast correspondent named Mike Moritz who had an inside track to Steve Jobs. He was writing a book about Apple at the time when the Macintosh was being developed. On the strength of Moritz connections and his reporting and me taking a very senior writer by the hand and taking him down to COMDEX and showing him this huge economic explosion of computer companies and software companies. They made the computers and machines of the year that year. Moritz was great. He was very patient to put up with me because he knew what was going on and I knew nothing. He took me by the hand for a while. He ended up going to Silicon Valley and becoming a venture capitalist. Among the companies he personally backed were Google, Yahoo, PayPal. He's a multibillionaire now, a very, very smart guy. I wrote computer stories for many years. A lot of them were computers and banking. I found a pimp who was doing productivity studies on his women and using the latest Apple II program, that kind of stuff. One of the things that interested me, in your notes you asked about eureka moments. One of the moments, it was a combination of things. When I was working at Bolt, Beranek and Newman, we had teletypes and I had this fantasy. It would be so great to have a teletype at home. Then I could be connected but my dad would never let me have another phone line. How was it going to work? Then later, Moritz would tell me we're watching computer companies that even the PC market...you know, we won't really know what these things can do until they can all be stacked together. I talked Time into letting me buy an Apple II and getting a modem, and I was just really eager to get online and find out what people were talking about. That was my fantasy, that you could sit in a room and connect with people around the world and just listen in and participated. At the end it slowly came true. I was very excited to report on what I found there, and the people who were there. I did a bunch of stories, Network Nations, things like that. TIME, ran a couple of them, thank you very much. You've heard that story. What else do you got? That's your war stories about summer camp basically. John: It's all that stuff. It's funny. You almost paint a picture of your interest in technology, or you got the job in technology almost opportunistically -- by accident -- with the woman at TIME...being a second you took in the job with the receptionist. As you said as well, your interest goes back well before that. The interest in computers was there. The writing opportunity bloomed late. Philip: I'm the son of a World War II veteran that was a radio engineer on the Italian front who met his wife in Algiers, but I was a kid who always had a book in my hand. I was a reader, and when I went to Oberlin after the experience with BBM, where I was directly controlling computers. Went to Oberlin and there was no computer for me at Oberlin. I ended up becoming an English major and I went to graduate school in English, and it was really only later when journalism and computers became a thing I could make a living out of. It felt right, it felt like this tapped into something that I knew, and gave me the satisfaction that I always got from writing for the newspaper. So, there were times there...I nearly got laid off in 1992. I don't know when it was, actually, 1990 in the first wave of layoffs, which came periodically at Time until it shrank to what it is today. Leon Jaroff, God bless him, the science editor argued that Philip knew something about an important field here. It was important at some other time to do something about this stuff. Also the Gulf War broke out and I found another little niche for myself writing about military technologies. They asked that the computer section be broadened. First of all, they call it high tech. I didn't like that, I convinced them that that wasn't classy enough at the Times, call it technology. So, I ended up becoming the technology editor after a while. As I said, the interest in computers from a journalistic point of view at Time would wane and wax. It waxed again when Walter Isaacson became editor of the back of the book. He’d always been in politics, but Walter went on to write the Steve Jobs biography, which is what he's famous for now. Then, he was really one of the smartest and most ambitious people at Time, and as back of the book editor, suddenly I found that I was in demand again. He's very interested in…”What is a Powerbook? I want to know what a Powerbook was.” You know, the brand name of an Apple computer. I hadn't been able to write about that stuff for quite a while, so I wrote about Powerbooks and then he had me write about...he just fell in love with the word "cyberpunk." He wanted to put the word cyberpunk on the cover of the magazine and I had to figure out what the hell. I mean, I knew what it was, it was a term that a school of science fiction writers called themselves. But to make it a Time cover story, I actually went back and read the hippy cover story for Time and used that as my model. I had this whole thing about the cyberpunk, “We are all cyberpunks now" was my kicker. One of the other Time writers wrote me and said he wanted to kill himself after he saw that. John: Isaacson was there and you had Paul Sagan doing it at the same time. Time, Inc. was really off to a fast start in the early 90s. Philip: Yeah, yeah, yeah. The other cover story I did at Time under Walter's supervision was the cover image was a bunch of TV sets going into your eyes, and what did they call it? Oh, the "electronic superhighway." We were searching for the right metaphor, and both the cyberpunk cover and the electronic highway cover, gave me a chance to slip in a little of my agitprop, the way it felt to me. I didn't think the cable companies or that the phone companies got it. I thought they saw the Internet as a bunch of tubes or wires, and what interested me was what went on with the lights that were inside the wires, the community that existed within the wires. Which I mostly knew through the Whole Earth 'Lectronic Link, I don't know if you heard of that before, but the WELL was like a gathering spot of plugged-in journalists and writers and activists and Grateful Dead fans. Anyway, it was an interesting bunch of people, and I used them a lot for story ideas, and to bounce stuff off of as a key part of this online community. I tried to use our coverage in the sense that there was a life inside this thing they called the Internet that was interesting. And Walter was receptive to that in a way that previous editors had never been. John: So, it was really the community aspect that you think you spotted early and the hole in the view of the telecommunications companies to a great degree . Philip: Yes and the editors were blind too until Walter came along. It was under Walter that we cut a deal with AOL, this was before the horrible merger. Walter wanted to use CompuServe but I persuaded him that AOL was quicker and had a better interface. It was going to take-off in a way that CompuServe wouldn’t because it was really well equipped for the middle of the road. At the time, magazines and newspapers were panicking that they are going to miss out on the boat unless they somehow got into this walled garden called AOL. So we did a deal where we gave the readers early access to the content of the magazine on Sunday night, before it hit the stands, with a promise that we would open up chat rooms where they could talk with the writers and the editors who did the story. We were never able to deliver that many writers and editors but it was enough that it felt like the real thing. And I hired a guy from the WELL who was like their biggest rainmaker, who was always at the center of the biggest discussions. Tom Mandel was his name. He and I ran the bulletin board on AOL which was really my first taste of how you can just get overwhelmed once you start interacting. Our first experience was, the first trouble was with the gun guys, the Second Amendment guys who hated Time ever since Time had done a cover story that had a picture of everybody who had been killed by a handgun that week. Terrible reporting job, it's horrible to put all that stuff together. Time did it, great coup, and they just never forgive us for it. Once they had a chance to yell at the editors, they really did. That was an experience because first of all, guys who know the Second Amendment, you don't want to argue with them because A) they know the Second Amendment in a way you never will and they have all these stats at hand and B) they have guns! You don't want to piss them off too much. I did that for a year and then Mandela got cancer and died. Walter sold the whole thing to CompuServe for a million bucks or something. The community that we built got shut down. They tried to move it to CompuServe, it never caught on. Meanwhile, we went off and started this thing called Pathfinder. When you own the biggest brands in journalism or among the biggest brands, Time and Fortune and Sports Illustrated and People, why do you start something with a different name? It's bizarre. That didn't work. Paul Sagan had a hand in that I think. Walter, as soon as he got a chance, swooped back in to become managing editor of Time and left that horrible mess. For me, I finally had learned enough. I was a good enough Time writer to do cover stories. I did a whole bunch of cover stories. A lot of them were sex in America, artificial insemination, people getting fat, environment covers…. But I did a cover on Microsoft. It involved going to Seattle and getting yelled at by Bill Gates. The next week I did a cover on cyber porn that was the end of my career as an Internet journalist at Time. I had kind of worked this source, a student at Carnegie Mellon who claimed to have exclusive access for what he described as what people are really interested in sexually not what they say they're interested in. He had it because he had access to which pictures were the most popular on a pornographic bulletin board. He also had all these stats one usenets, where porn was at that time. He gave me an early shot, a few weeks early look at his thesis which was being published under the supervision of a distinguished internet professor at Carnegie Mellon. One of the big internet universities. Anyway, so I did this cover story that just blew up in my face. The research, it turned out he was an undergraduate, the research was a little bit shaky. I didn't have the necessary caveats in it. I had ignored the advice of the Electronic Frontier Foundation that told me not to touch this thing with a ten-foot pole. When I did the story anyway I became persona non grata. One of their lawyers decided he'd write a book about this story and went after me, all guns blazing. The guy who had written the study changed his name and skipped town. We never heard from him again. I was left holding the bag and I just got so much hate mail. I couldn't write about the Internet without getting crucified ...no matter what I did. I became a science editor and spent 12 years editing science. Walked away from sex and didn't come back to it until my friend Josh Quitt, who was editing a little magazine called Business 2.0, also owned by Time Inc., invited me out to help him try to save it. This is the end of the story there, if you worked for Business 2.0 you had to blog. Because I was flying back and forth between Brooklyn and San Francisco to try to keep my marriage working, I figured if I picked the right topic I could pay for all my JetBlue flights. I thought I'd either do...he was paying us 5 bucks per thousand hits. There might be money made. I figured I'd write either about sex or religion and I didn't think my wife would like if I wrote about sex so I decided to write about Apple. It took off and it turned out when Business 2.0 died and Fortune reeled me back, by then it was the biggest draw at Fortune.com. I worked out a deal where I could take a retirement package and just write my blog and I've been doing that for seven years. That's where I am. John: Excellent. You mentioned your primary eureka moment was when it was pointed out that when these computers are networked together, tied together, that will be when everything goes up. Were there other eureka moments along the way or was that really the primary (one)? Did it take a path that you expected? Philip: Well, I wish I could say that I predicted that the Internet would become what it was. I think I understood how the Internet would intermediate and change a lot of things. One of them would be that if everybody can make content, I mean, anybody can be a writer, anybody can be a filmmaker, anybody can make videos, anybody can be a journalist. What had been a one- way street where journalists would decide what was news and shove it down the pipe was going to change into something much more democratic and free-for-all. I didn't anticipate that Craigslist would just cut the legs off the business model of the newspapers. It basically killed newspapers across the country. A lot of the stuff we saw early on. I mean, back in the early 80s I was writing about online banking and anticipating the friction-free electronic transactions. I didn't think it was going to take 30 years to get to Apple Pay. You know? I think a lot of what I knew, like a lot of us, I learned from watching Apple. How important the user interface was in the early days. I remember writing about the mouse early on and getting trashed by the Windows users. “Why would you use a mouse it just slows you down?” I wish I had saved all the things that people said. Now because I write about Apple, Apple is just a fascinating case study anyway. How Apple relates to Samsung, Microsoft, Google and...None of this is a eureka moments but that's what is exciting me. John: OK. Now, tell me this, you had said when you first started moderating on the AOL site when you guys put up a site on AOL how that was the first time you were overwhelmed by an online response. Chart out again what you saw when you came back to writing the blog at Business 2.0. Did the users change? Did how you engage change? What happened? Philip: I remember AOL...this may be more personal than what you're asking for. I always felt that I had to be careful what I said. I was a representative of Time Magazine which took itself very seriously. I remember if anybody complained about anything, eventually it would get down to someone at the office saying, “Well fuck them, this is Time Magazine.” “We're Time, you're shit.” Good God. I don't think I ever had that, I have too much inferiority to feel that way. I did feel like I had to be politics careful and I didn't really engage fully. I'm not sure I still do. I'm conscious that I have a byline online, I'm representing Fortune. My byline is my brand. Funny, when I started at Business 2.0 working for Josh and Josh had just pissed off Apple, terminally it turned out they were never going to advertise with him again, because he'd run a picture on a cover of Business 2.0 of what he thought the iPhone was going to look like. This is a year and a half before the actual iPhone came out and it was a piece of shit. It looked terrible. It was nothing that Jobs would ever approve and I think Jobs had actually warned them off it. He said, "Don't run that." They ran it anyway and Jobs just pulled the plug. He was never going to deal with them again. He was very surprised when I told him that I was going to go with them. He said, "You are? Why would you do that?" Quittner, when I said, "Maybe I should write about Apple," he said "Oh yeah, great. Apple 2.0: news from outside the reality distortion field." That was this old story that Jobs...that if we got too close, you’d start to believe what he said. If that's your tagline you write a very different kind of blog. I used to say at Time I didn't want to write about any technology if we couldn't say something nasty about it. You always had to have some distance from the subject or else you were just sucking up to them and doing advertising. When I first started to blog I wouldn't write it unless I had some way to twist the knife on Apple. There was always a critical element to it. I did a lot of stories I probably wouldn't have bothered with now because I just looked for the juicy part of...I could see how to twist the knife. Later, I think with...and again, this may not be relevant to you but over the course of seven years my attitude towards Apple as a story has been shaped as much by what the other people were writing. If you follow because I'm writing for the Fortune audience I'm following the business of Apple a lot. People get that story so wrong. A lot of what I'm doing turns out to be press criticism. There's just such bad journalism going on. A lot of it in places like The Street where Jim Cramer's property.. ...that's such a den of snakes. There's so many people with shorts (positions). Guys who were trying to manipulate the market and the revenue. FUD it's called, the old IBM term, fear, uncertainty and doubt. You've got trolls, who are just out there trying to generate nasty comments. You get actual sock puppets they call them, guys who are actually are working for Samsung and pretending that they're regular readers and they're out there stirring things up. Anyways, I fi”nd myself doing a lot of questions, what you're reading about Apple is wrong.” I'm now accused of being a fanboy by some, and maybe I am. Maybe I've gone native, is what they used to say. You spend too much time in South Africa covering politics. John: There's another parallel that during your career, you've gone from there being a handful of people covering tech in the early 90s….. Philip: We would do lunch together, every week. Once a month, the tech journalists would have lunch. Steve Levy, I think you talked to him, was one of eight or 10 people. That was the entire New York tech crowd. Now, I swear there are 100 people writing just about Apple. John: Like most celebrity coverage… has covering Apple, where the people you've talked to regularly, 20 years ago, have become fabulously wealthy. Has jealousy fueled any of this? How do you play with that as a journalist? Philip: I don’t see that many, the fact that some of them are fabulously wealthy… the journalists aren't fabulously wealthy, there are very few. Moritz was really the exception. The number of journalists who are smart enough to go become venture capitalists… the Venn diagram. It is much noisier thing these days and a lot of the action has moved, certainly moved to the newspapers. If there's a story in the New York Times, it's usually a couple days late. I'm on Twitter. to keep track of the eight or 10 people who have their antenna out for Apple news, and have an attitude about it. Those are incredibly useful people. I'm also plugged into the investor boards, guys who bought Apple at $9 a share and are now mostly millionaires and are very attuned to anything that might change the value of their holdings. They also have their antenna out, they're great sources of...even if you have to filter it because all they want is for the stock to go up. So that's sort of parochial because it's just Apple stuff, but you know what? It's funny, because I haven't found a beat that's quite like that. Fortune.com for a while hired a guy for a year to write about Google. Google might do that, as well. He did a good job, he's done all the stories. It didn't quite take off the same way, there wasn't the same passion. Part of that was because, if you stuck with Apple through the lean years, when Jobs left and when he came back, you took a lot of shit. There's a fierce, there's probably some religious parallel of persecuted minorities that get to come back…. John: It's the bounce back effect. He's alive, he did it. Philip: I met the followers who made it through, were in the desert with him. Now he's back and so they just have a passion for this company that's a little irrational. One of the things that makes it a very exciting beat, because there is also on the other side the people who hate Apple irrationally. That's been a moving target it was first the IBMguys, the Microsoft people, the Windows people and now it's the Android side. For a blogger, whenever you've got two groups that hate each other, that just clicks. You get this effect where if you write something, if you participated in a discussion, you have a vested interest in that discussion and you are going to come back every hour to see how people have responded. You also have that going on on the investor front, because you've got the bulls and the bears, the people who are trying to talk it up or trying to talk it down. The comment stream on my blog after the spinoff, after Time Warner spun off Time Inc., was pretty much ruined and we’re trying to build it back up again with stock prices and everything, but I've always cared almost as much about that common stream as I have about what I was writing. I've always cherished that relationship with the readers and done everything I could to make it a hospitable place. That's the people, the bandwidth hogs we used to call them, and we encourage the people who are saying smart things. It's funny because whoever redesigned the Fortune site didn't care at all about that. John: It's interesting, you used to word…someone commented to me in one of the discussions we had….how journalism always had stars. Now the stars are brands and what was once a following has now become an audience. Is that just the way you want to nurture your comments, you used the word brand. Do you view your byline now as a brand and is it different than it was 10 years ago, 15 years ago? Philip: When I was writing for Time magazine if people liked a thing, that's great. There, you had no contact with your readers except for an occasional letter to the editor, and they don't have any feeling they can talk to you. Within the building, you're basically anonymous. People don't look at bylines in editing. They probably don't on the web, either, but there are ways that they're starting to. I'm not sure I'm so much of a brand, but take someone like John Gruber. Have you ever heard of him? He writes a blog called Daring Fireball, he probably makes as much money selling T-shirts as he does from the blog, but he also has a podcast and the podcast turned out to be enormous. They make a lot of money, they make a lot more money from the podcast than from the advertising or the blogs or the T-shirt sales. He is a real brand and I aspire to be as much of a brand as John Gruber is. There's a bunch of young guys coming up, Ben Thompson has got a blog called Stratechery. There's a whole crop of guys in their 30s who are doing this, really smart. Some of them were developers, some of them worked for Apple for a while or Microsoft, and they now are working for venture capitalists. They've been gathered up by the venture capitalists from their reporting and their blogging and the writing. Those guys, it's not quite journalism, but in some ways it's better than journalism, you know? It's more timely, it's smarter than your average heavily-edited written spot, written from files and correspondents or pieced together from three quotes from analysts. These are guys who really know their stuff and are calling it like they see it and it's just good. It's good reporting, it's great analysis, it's immediate and they've got a relationship with their audience. It's great stuff, it's as good journalism as I've seen done in 30 years. John: How do you think journalists have done covering this era? How is journalism done covering the last, let's say 20, 25 years? Philip: I'd give them a "C". They've missed huge things and people who believed what they are writing made huge mistakes. Probably still the biggest, the worst merger in the history of capitalism is still Time Warner with AOL. As a journalist, believe me, that was all bullshit. Certainly, believe me, this case was bullshit. Talk about buying high and selling low. I think the Apple story has been done wrong by most outlets. The New York Times they won a Pulitzer Prize for that. John: The factory? Philip: On Apple. I don't know, when we were worried about science and the environment, we would talk about conspicuous mega fauna. The big animal that when it died we know that there's something bad with the environment. So, for that animal to die, hundreds of smaller species already died. I don't know, picking on Apple because it tried to minimize it’s taxes or because it’s using low cost workers in China, that's just a basic misunderstanding of how the tax code works and how and where the subcontractor ecosystem is these days. You can't get work done. It's worrying that Apple is under so much pressure to bring those jobs back to the US, hire goes to a New Hampshire phone to make Sapphire for them, and those guys just so badly botched the job that just when Apple needs the Sapphire, they declare bankruptcy. So Apple has to pay pennies on the dollar and deal with these thieves in Manchester, New Hampshire who sold their stock just before this whole thing blew up. That doesn't happen in Taiwan or not so frequently that you can't actually do business with them. John: Now you said, that was interesting. Journalism gives us, you give it a "C" for covering tech. Do you think that, are you optimistic about journalism? Because the guys you mentioned in their 30s, “it's not quite journalism, but it's good. It does X, Y, Z, answers the questions.” How about the part of the craft you grew up with — journalism? Are you optimistic about it in the future? Are you pessimistic? Where do you stand? Philip: No, I think there is a world of hurt yet ahead. John: In terms of the business model, or...? Philip: The business model, yes. I mean, the newspapers have lost their monopolies. It's nice to be a monopoly it helps to pay for bureaus in Bangkok. If you can't do that, if you can't afford it, then you can't cover the news like you used to. I met someone this summer who, they ran operations out of Paris where they sent videographers into war zones, because they were too dangerous that none of the networks would send anybody in there. So they pick guys with a death wish and send them in and they get captured and they get their heads cut off. That's a tough business and it's just terrible. That's probably not a great example, interesting. My heart is broken by what’s happened to Time magazine. We used to be able to...when we wanted to do a story, you could query bureaus all over the world. You have a researcher working for you, the thing’d get edited three times. If you're looking for a great quote, you’d have five to choose from because you've got so much good reporting. You could write a densely-packed, well-informed piece on deadline, and what did they have instead? That was so expensive, it was the most expensive magazine in the world to produce and instead they could hire a columnist who could write it from clips. That’s back to the original model at Time magazine which was a cut-and-paste job done by a couple of Yale guys. So where is good journalism being done these days? The New York Times is still doing it, run by a family and something like a monopoly in the media center of the world. The Washington Post is not so great anymore, the LA Times.. And the number of small towns…I’m now in a small town in western Massachusetts,Greenfield. They have a little paper called the Recorder, it's a county seat, 17,000 people…the front page picture for the last three days has been fall foliage and it takes up most of the front page. And the picture yesterday, the top left and bottom right corners were the guy's thumbs. John: Well, here's a question. Some people differentiate journalism with a big "J" and journalism with a little “j”. The future for the big "J", because the news business sucks, is bad. But the little "j", they say there's so many more ways to publish them. Philip: It's true. A thousand flowers, a million flowers are blooming. The problem is changing, the problem is, how do you filter, how do you find the good stuff? There is still a role for journalists, pointing to people who do the good stuff but that may not necessarily be in the form of something that gets printed in a paper. John: Somebody said to me, the problem now is the readers have to get smarter about what to trust, how to evaluate, the way to do it. Do you see that happening? Because once a while ago, there was a halo effect from a brand, you lived within an institution and the institutional standards were taken as ruling your life. Now, people trust their friends and their peers more than they trust (institutional) brands. Philip: I think we're in a transition, certain brands still carry a lot of weight. The three networks news broadcasts haven’t gone away but their audience is a fraction of what it was, and a whole generation now gets that kind of news from Jon Stewart. It's funny, delivered with attitude, but it's serious enough to feel like you've learned something. My daughters read the Huffington Post headlines that's how they get their news. I think the readers are always smart, they're always smarter than the journalists give them credit for. You find out when they write the letters to the editor. The old adage that whenever someone reads a news story about something that you know something about, there are errors in it. That's always been true. So, they are different approaches being taken to how to solve the filtering problem. Google's approach will always be machine learning. Same with Facebook. In fact, there's a couple of great pieces today in the New York Times, what's his name, Carr? John: David Carr, about the newsfeed on Facebook and the designers. Philip: It made me go back and take a closer look at what they've done with the newsfeed, because it really is very different from what it was. It used to be just the guys I was friends with, and now I have no idea where that stuff is coming from. I would love to get control of it and I'm feeling like, if I wanted to interact with my readers, I have to go to where they are, to where they want to talk. Some of them are coming to the blog, way fewer than they used to be. I'm working on Twitter. I post all my stuff on Twitter, Facebook and LinkedIn, but I have to do the next step, which is to follow up and go see what people are saying and get in the conversation with them. I think that's part of the job. That's what comes with being the kind of journalist I am, which is a hybrid of the old and the new, because I'm writing with the support of Fortune. Thank God, because I don't want to go out and sell ads and homemade T-shirts and do podcasts. That's a job where I can just report and write, that's what I want and I want to keep it that way. I hope I don't have to get to the point where I have to start my own blog because it's a different business. John: Absolutely different thing. Excellent. Well, I want to thank you. It's been great. It's been a great chat, informative, because I think what's been wonderful is, you've straddled. You've straddled. That's fascinating, that's fascinating. Philip: Yeah, I'm still straddled, I think. The end of a generation of journalists. The guys who grow up now, they're not going to… You know what's funny? It may be that what they aspire to when they start their blogs is "I hope I get hired by Fortune magazine and they put me on a medical plan.” John: Just like some people we know. All right, thank you very much, Philip. ...
VIDEO: YES

James Fallows
BIO: YES: James Fallows is based in Washington as a national...
TRANSCRIPT: James: The way I got into this business, I had started working for "The Atlantic." I'd written for The Atlantic as a freelancer when I was in my mid-20s down in Texas when my wife was in graduate school there. I was working for the "Texas Monthly." I joined the Carter administration. I worked for him for three -and-a-half years as a speech writer. As I was preparing to leave the Carter administration and work for The Atlantic, I'd seen just as a little glimmer of technological possibility. The White House is bringing in these Linear Display Writers, which were these 1970's-era, very crude by modern standards, word processors. I thought that was a promising step for the people in the writing business. In the springtime of 1979 when I was first on The Atlantic's payroll, two things happened. One is I was doing a very, very long series for The Atlantic. This was probably 25,000 words in total about why I thought the Carter administration was having trouble. I realized I was typing the name Zbigniew Brzezinski about a thousand times both because I was mentioning him so often and because I was retyping drafts. I thought there has to be a better way to do this -- apparently a macro key for a real typewriter, just set her up. I'd been doing that, but about the same time my father-in- law, who is now dead, had been a business man in the machinery area, who was working in Ohio and Kentucky said he had come across in a peanut warehouse in Kentucky, an optical eye system was able to sort darker from lighter peanuts as they were coming down the line." The brains behind this was something called a Processor Technology SOL-20, which was, by my lights, the first real personal computer. It was before any of the Apple models were usable. It was after the Altair, but the Altair wasn't really a personal computer. It was famous as the only computer that was made out of wood. It had these beautiful walnut housings. I went up to the place in Ohio, I bought this computer from the peanut warehouse people, and spent the next while setting it up so I could use it to write with, and that involved, first, figuring out, or I could do it, how to use both, capital and lower case letters. That was something that had to be figured out. There was a software program called, The Electric Pencil, by a guy named, I think, Michael Shrayer in Palm Springs, which was the first word processing program that I had ever seen. The disc, the memory storage then was literally a Radio Shack tape recorder where you'd store things on tape and it would take hours to store them and it may or may not take. Starting in 1979, this was how I did my work. I always had scientific and technological interest, so I found this interesting. I taught myself some of the earlier programming languages, partly because you had to, to make things work in those days. As the late '70s, early '80s were on, we were in DC for the years of ’79 and ’80. We went back to Texas, to Austin, Texas in '81 and '82 just as part of a reporting exercise. That was when, I think, Michael Dell, he was probably still in college then, but the Compaq business was just getting going. The TV series, the "Halt and Catch Fire" series, that was just that time in Texas when we were living there. I was involved in covering Compaq for Texas Monthly. It was interesting to see, at the same time, as one other log on the fire, I think in, maybe, late '79, I did a long reporting project for the Atlantic where I spent about six weeks on the road, but half the time in Detroit and half the time in Silicon Valley. I saw the young Steve Jobs at Apple when they had their first little office in Cupertino. I got to see Gordon Moore, Andy Grove, and I think, Noyce. I never got to Noyce, but Moore and Grove were there at Intel. The HP people were then a big source of the high end activity. Maybe what Google is now, HP was then in terms of being a huge burnished place that could afford extra resources. This was interesting to see as a culture and as a phenomenon. The business aspect of it were interesting, mainly, in the micro-sense of seeing PC Magazine, which went from being 50 pages to 500 pages. It was so interesting to read all these things, from Gateway computer in the Dakotas and all these...Eagle computers in California, all these other things that were Alta Vista starting up around the country. It was really interesting that as a culture, as an era, as a tool of possibility, because I liked these things. I liked doing the programming. As things went on, and momentum developed, I started doing articles in the Atlantic. I did one, I think, in '81 called, "Living with a computer," which I think was one of the, if it was not the first, it was an early article in a general magazine about what personal computing might mean for how we think and how we work and all that. I described some of the adventures I had with the Processor Technology SOL-20. Through the '80s I did a number of what we'd now consider Ars Technica-type things of "Here's the way you can recode a certain part of WordStar." “Here's how Word Perfect shows you to reveal codes.” “Here's why Lotus Agenda is the holy grail of informational software.” I've remained very interested in this whole realm as it's diverged to become all of life. I'll just add a couple of other stations along the way. The only unhappy time I've had as a journalist were the two years I was editor of US News and World Report under the controversial, I'll call him, owner Mort Zuckerman. When that came to its fated end, I thought, Well, I've always been interested in software. One, I've worked in it for a while. For six months I was on a program design team at Microsoft for Word, for what became Word XP. I was working on the “track changes” feature which we all use every day and on something called, "One Note," which was a research tool. It was interesting to see. I had been a foe of Microsoft on antitrust grounds but I had liked the people there. There was only one person who I really didn't like. That's a whole separate thing, but most of them I liked. I enjoyed being part of that team. I've stayed in touch with the people. As the software business has diverged into being a gigantic business, I'm less interested in that than some other people are. I don't really care whether Yahoo is going to be able to survive or how Google and Amazon work, even though one my sons now works at Google and a lot of Google people are friends of mine. The business is of passive interest to me the way some other corporate events are. The effect on the journalism business is, of course, of very direct interest to all of us. My essential line is journalism is in crisis and always has been, and it's a different form of crisis we're having now and some result will come. At The Atlantic we were talking three or four days ago about the lost Golden Age of the Blog, which is we considered it was 2009. We're looking all the way back to 2009, 2010 as this Ralph Waldo Emerson-type episode. When the Industry Standard was a magazine, I was living on the West Coast. Actually, to finish the Microsoft story, I was in Seattle '99 and '00 at Berkeley, teaching at the Berkeley j-school with Katie Hafner, you probably know for a year or so. John: Yes, I know Katie. James: The Industry Standard then was the fattest magazine in America and publishing one year before it went out of business. I was a columnist for that with Larry Lessig and with, I think Steve Levy might have done that. I don't remember, but it was a fun thing to do. Fred Vogelstein was there. There was a memorable retreat for the Industry Standard staffers who, like most young reporters, a mid 20s to early 30s crowd. It was at the PlumpJack Resort in Lake Tahoe. This would have been, probably, Christmas of '00 or somewhere right around that time. I had bought my first little propeller airplane by then, so I flew up from it. I've been flying for quite a while, but this is the first time I had a little plane. I flew up there from the Concord airport to the Lake Tahoe airport. I gave these people a speech saying, "Look around you. You're complaining about having to generate too much copy to space out these ads, et cetera. This is not how it normally is. Notice this, be grateful for it. This is not how your life as reporters is always going to be." I think about a year later, the magazine was out of business, having been the largest one ever. I've stayed in touch with all of those people, too. The business of the Internet is not so interesting to me. The effect on the journalism business is interesting. The possibilities for writing is sort of a solved problem in terms of the tools and the Internet. The program Scrivener is the solution. That's the best program there has been for writing. The Holy Grail of organization, idea-manipulation software, that is ever revolving, too, and it's interesting to me. Some of the personalities in the business are interesting because I've known a number of them. It's now, I think it's been published so I can say, when Larry Page did his, the letter for Google's IPO, I helped him write that. Essentially, on the point of why Google was setting up an ownership structure that was different from other public corporations so they could do the kinds of things they're doing now. I've never had any financial dealings with Google. It's the shape of the world we're in. I think if the question, "Is the implications for journalism," that was not. I didn't sense that early on. It was more the other implications for the way people would be able to travel around the world or the way that your intelligence would change when spot knowledge would become a commodity, and to what other things would replace spot knowledge. That, I just think, is interesting. That's my opening pitch. John: OK. Did you have any "Eureka" moments, specifically? Something that you said, "Aha, tech going to take over the world is no longer a boast, I can see it happening." James: To me it was more incremental just because I was first starting to see these people in the late '70s, so it was brick by brick by brick. There was a time when, suddenly, most people you knew had word processors and there was a time when most people had email. I got on this system, this oddball system, called, MCI Mail, in the early '80s, which was something that you could send to other people on MCI Mail, and that had its limitations. I guess, as there's been one connection after another, when email systems became interactive and connecting. I do remember -- I can't recall the exact year, but it would be sometime in the '80s -- when on some bulletin board I was dealing with, it could have been about OS/2. It could have been about the Victor 9000 computer, which I was using then. It could have been about some other research stuff. Somebody said, "Holy God, I've just seen this product Netscape, from these students at the University of Illinois." I guess it would be the precursor of whatever was the precursor of Netscape, that was the first time you could do graphic stuff. John: It might have been Mosaic or something like that. James: Yes, it was Mosaic. They were referring to Mosaic and saying that. At that time, it was too hard to set up on most computers and the connections were too slow. But hat was something worth… As email became interactive, as Mosaic came on too, one began to see what that would be. The impact of portability. I got one of the very first Compaq and Osborne gigantic suitcase ones. When we moved to Japan in 1986, I took one of the Compaqs with me, the size of this huge sewing machine that was on the plane to get over there and lug it around. I think the first portable I got was...that Compaq was not a portable. First of all, what we think of as a plausible portable was a Toshiba, that was then in the late '80s. And Radio Shack. The first time I thought, "Here's an elegant product" was the Radio Shack model 100. I don't know if you've seen those in your day. That remains an elegant machine. I have a fond spot, retrospectively, that hit a certain plateau in combining design with function. The Radio Shack 100 was one of them. The MacBook Air, which I got when I was living in China in 2008 was another. There's something that I was going to say on the Eureka front. It was more incremental just seeing one by one by one, the spread of the machines and the things they were able to do. I guess the main thing where I was an early scoffer, but I have an excuse, was when the first Mac came out in 1988, as we would remember. I was living some place, I guess I was still in Japan then. I'd had, by that point, about six generations of non-Mac machines. I had the Processor Technology SOL-20. I had some Gateway. I had, maybe, an Eagle. Then I had the Victor 9000, which was this really elegant machine, too, and then some Compaqs and all that. The very first Mac was simply not capable. It couldn't do things. It was too slow. It was too clunky, so I said, "This thing needs to be better." I think even the Apple board of directors didn't see the way this could fully evolve. I did remember a couple of years after that when Steve Jobs was introducing the Lisa, I went on a sales call at Apple headquarters and saw him show off this Lisa, which looked like a much more impressive thing. One of the trade shows I was going to then I saw him in his NeXT machine incarnation of seeing what does this look like. By then, I could see this was going to happen. The very first Mac was in 1984. That was just before I moved to Japan. I was always more in the mode of saying, "This is interesting to me. "It matches my pattern of how I think and stuff I'd like to do," as opposed to, "I'm Balboa on the peak some place and saying, I see the new world." John: At the beginning, in the early '80s, there were a handful of people covering tech. It blossomed when PC Mag and all those came in. How has that culture of coverage that you've seen changed? James: I guess it's changed in a predictable way through the mainstreaming of things. There was a time when I first started writing about this in The Atlantic in the early '80s. It was as if I was describing travel to Burma. It's very much the way I feel now writing about aviation. The great majority of people know nothing about aviation and are afraid of it, so you had to explain all of the basics. "Here's why having an aileron fall off would be a bad thing." That's how it was with personal computing. Most people didn't know anything about it. You're in the role of the classic middle man, going from a realm where people who had expert knowledge and you’re conveying that to people. The journalism then in mainstream publications like the Atlantic, you could have what we think of as an incredibly small-minded, news-you-can-use-type emphasis of "This disc drive, which can hold five megs, costs you $99,etc.” Early on it was just sort of that pioneer-era journalism. Then there was the PC Mag period with John Dvorak. I don't know if you've talked with him. John: I've talked to him. James: He was exemplifying the cool kid phase of the cool kid slash asshole phase. John: That's right. James: There was a lot of Robert X. Cringely and all these people. I was interested to read that but it was all of these little wars in the Valley. I always had friends in the Valley, but I was not living in the Valley. I knew these people. Probably 50 times in my life I look back on it and say, "If I made the business choice then, I would now be a billionaire." My wife and I were there when Larry Page and Sergey Brin -- and we'd known them for a while -- invited Eric Schmidt, who we'd also known for a while, into the Google office in Palo Alto to make a deal with him. So I was arm's length from the Valley. I felt about the Valley intrigues the way many people feel about the Beltway intrigues. It just was not that interesting to me but I did love reading the magazines just because the baseline of performance was so relatively low that each month's new increment in software or products or performance or the fast- grindings of Moore's Law made a difference. You actually wanted to buy something every six months. The journalism was corporate intrigue, wars within the Valley, user guides. Edward Mendelson, who was writing for PC Magazine then about writing and computing, I felt some kinship with him. There's also this guy Peter McWilliams. I don't know if you have come across references to him. John: I haven't. James: He's dead now, I believe. For anybody who may see this any later period of time, what I'm about to say I haven't looked up. I think Peter McWilliams may have died during the early AIDS era. I think his role was as a non-out gay man. I think I recall that. He had very interesting books about computers and your soul, computers and your personality. Mendelson had these works about how you think with a computer, and he was interesting to me. Peter McWilliams I actually met one time and went out to his place. I met a couple of other people who I found interesting as thinkers. There's Bill Gross. I don't even know what his latest company is called. Not the PIMCO Bill Gross but the guy who invented Lotus Magellan. Lotus Magellan was one of several early programs that thought this is brilliantly elegant and it really was. I'll circle back to that. I stayed in touch with Bill Gross through the years because I like the way he thinks through these tools. Also, Bob Frankston and Dan Bricklin of VisiCalc. I don't know them as well, but I met them in those days, too, and really liked what they did. Mitch Kapor I knew better, less because of 123 and more because of Lotus Agenda, which was also a really elegant, a timelessly elegant, program. Did you ever use Agenda? John: Yes, I did use Agenda. That's why I smiled. James: I spent a lot of time in the Agenda forums. Eric Schmidt I met in the same way when he was at Sun Microsystems. I remember very clearly having lunch one time with him out on Palo Alto. This would have been just before Java became popular as a concept. This is probably the early '90s. I was having lunch with him and Wendy and he was saying they had this whole new idea of how you could store the programs in a non-physical computer but somewhere outside your computer in a cloud of data and programs and what it would mean to have these Java programs. I wrote a piece about that for the Atlantic. I never felt one day, 'Oh, life is all different because of the Internet and because of the tech revolution.' I feel, in an ongoing process of 500 different ways, that things are different. Last year, for example, meaning 2013, The Atlantic held a conference we do usually in San Diego with UCSD called "The Atlantic Meets the Pacific," where the theme has largely been health sciences and information science and the convergence of those two things, wearing sensors, having ways to have your own personal genome. That will be a profound change, but it's one of several. I think the analogy would be to electricity or gasoline or aviation or something else. I think the three of those as opposed to television where a new, enabling technology changes everything in different ways. I'm not in the camp of the Internet changed the world. I'm in the camp of the Internet changed the worlds and different ways people operate. It means one thing for us in journalism. It means something else in political management or whatever. John: You just mentioned three of the things. You wrapped up three or four of the things people have said. Number one, they feel that tech journalism has become more like Washington, like there's a politics. There's the question of access. There's the question you brought up of distance. There's a question of covering something where wealth is thrown off in huge amounts to people you cover. As a journalist, how do you balance all of those things? James: To go through these in maybe a different order -- and you can remind me of ones I'm leaving off -- on the wealth, my view here is this is the latest version of an ongoing issue, both in society and for journalism. For example, when I was living in Texas, both in the late '70s and the early '80s, I lived in Texas both before and after I worked for Jimmy Carter because my wife was getting her graduate degree at University of Texas Austin. I was working for Texas Monthly when it started, and then I went back there with The Atlantic. There was the same question then about the energy business. T. Boone Pickens was getting going. You had these wildcatters who were making what were then big fortunes. The question was what was this wealth doing to this community? When we were in Seattle in '98, '99, and '00 it was what is Microsoft's wealth doing to Seattle? Again, that's a tech world. It's a different scale from what current Internet wealth is. We were in Pittsburgh. My wife and I recently had a reporting project. 100 years ago it was what is coal wealth and steel wealth doing to Pittsburgh? American history -- I'll confine it to America -- is the story of a lot of these things happening over time. A lot of different technologies have made a boom. I think of that in that context of it's a second Gilded Age. The strains are very similar to what they were in the late 1800s, early 1900s. One hopes the solutions will be similar to what they were when you had a wave of reforms, both in civic society and legislation. I think of covering the wealth as being you look at it now, you see how much there's a bubble, you see what it means in San Francisco, but this is a story we have seen before. That doesn't blind you to the parts that are new, but it's context worth bearing in mind. John: How do you personally strike that balance? You, Markoff, all these people. You were working with Microsoft, working with people that became wealthy on a scale that we as journalists never... James: This may just be me. I've always felt lucky to have enough money, and I never really have cared that much. I have some good friends who are journalists who are really concerned about the money they're leaving on the table, but my theory is if you're in this line of work you're not fundamentally motivated by money. I'm very glad to have enough money. I have a nice house you see behind me. I have a propeller airplane. I feel very fortunate. I sent my children to college. I was thinking I know seven or eight people as friends who are billionaires. I have at least one very close relative who is very, very prosperous because of this whole world, but that's, to me, interesting rather than upsetting. I am more upset by people I know who are incorrectly respected for what I view as crappy writing. That doesn't bother me. I find it interesting. Are you bothered by that? John: No. That wasn't my calling. I'm here to bear witness. James: If it bothers you, you should get in the business. There's plenty of room. There's plenty of people. I know a ton of one-time journalists who now work for these tech companies and that's what they should do. John: How about maintaining distance, to follow on in the rocks you've had to navigate around? James: Daily newspapers will cover these things, and I've done daily newspaper work over the years. I've had two different roles. One is with The Atlantic and the other is with The Industry Standard. The Industry Standard I was a columnist where my job was to have analysis or opinions about things. Both there and The Atlantic I find you can go a very long way by just declaring interests. So whenever I've written anything controversial involving Google I've said for the record, I've known Eric Schmidt, Google's current CEO, since worked there. Recently I've added a caveat and one of my immediate relatives works there. I have a son who sold his company to Google so he now works there. I think that if you tell people anything that if they knew it later on they'd think, 'Why didn't I know that?' If over time you seem simply to be in the tank for one company or another, that would be a problem. I've found it relatively easy in my Atlantic life to say you should know that my son works for this company. Nonetheless, I think their Gmail has gotten better here but I don't like what they've done with their maps. John: How about the comparison with Washington versus the Valley in terms of clusters of reporting? James: I've spent now, in the 40 years since I got out of graduate school, about half my time living in DC in this very house and half living other places. That's been intentional. It's been usually two- or three-year periods where I'll be in DC for a couple of years and go someplace else. In that time, we've been to Japan and China and to Malaysia and Texas and Berkeley and Seattle and other places. It's because while I like DC physically as a city, I'm from desert California so this is as cold an East coast climate as I can stand. We have friends here we have known for 40 years. It's a physically pleasant city, I think. The journalistic culture in DC I hate and I hate it because 95 percent of the effort is on 1 percent of the news. There should be nobody going to White House press conferences or maybe eave the White House press conferences to C-SPAN. This was a way of saying for the past year and a half now my wife and I have been flying around the country in our little plane just trying to say “What does the current state of the American economy look like if you're covering a place like Sioux Falls, South Dakota, Sioux City, Iowa, Greenville, South Carolina, Allentown, Pennsylvania?” Not because there's just been a disaster there like the gas pipe explosion or not because somebody did a campaign swing there, but just to say if you're covering this as a real place, what does it look like? How do people think about it? That is so much more interesting. I think the coverage in the Valley is probably better. Number one, I may think that because I'm not there. I don't have the same intimate exposure to its problems. Second, there's more real change, in a sense. Change in DC is periodic. You and I are talking two days after a midterm election. Starting two days ago, two days minus one hour ago, was “what's going to happen in 2016 elections?” I think that no prediction about elections should ever be written or published, because they're wrong and there's no accountability for them. Reporting the polls, that's fine. The culture of DC journalism is worse than the culture of Silicon Valley journalism. I say that knowing nothing about Silicon Valley journalism, but it can't be worse. John: How about this? You adopted tech as a writing tool. You dove into it because it would help you hone this craft better. Did you ever feel that it becomes an existential to the craft, to the craft of journalism, not writing? James: To the business of journalism. I'll be precise what I mean here. We all know that the business of journalism is under threat for reasons, we all could point to 90 articles on this, the business of newspapers, in particular. Let's have a spectrum. On one side there's simple business concerns of keeping your publication, finding a way to pay writers and reporters. On the other is the intellectual craft of writing, and there is a lot of, in my view, horse shit that was fretted about in the late '70s and early '80s about “we're going to have a certain ear. It'll just be different with a screen.” I think that's not true. I think if it were true you'd have some market test for it, that books would be more successful written by people who didn't use computers. There's nobody now that doesn't use a computer except some kind of George Will character who wants to have a quill pen. I think the market has spoken on the fact that people will be good or bad writers and have their variety of voices independent of the medium. For each person there's a different balance. In terms of the craft of journalism, I view that as, again, I categorize that in two ways. One is being able to have people on the scene, whether it's in Burkina Faso or Allentown, PA or name your locale. That, again, is a different version of an old problem. As far as I can tell, journalism has always had a problem of paying for reporting. What you would think of as serious reporting, whether it's international or state house or investigative has never paid its way. It's had to find different host bodies to latch itself onto. Whether it was the evening tabloid 100 years ago people could read in the subway or whether it was, when I was a kid, the Los Angeles Times was 500 pages per day because it was the only real way to reach the advertising market of the southern California basin. Even my hometown was 70 miles from Los Angeles but still it was the main advertising vehicle. That continues to change and a new host body needs to be figured out. We're in the process of that. I think the craft of describing the world may actually be improved now. If you have a combination of professional reporters as as you can find ways to pay them with the skills they have and real-time, opportunistic video and reportage. For example, as we're speaking, the democracy protest in Hong Kong or in the recent past, they were covered in a way that would not have been possible even a decade ago because of all the Twitter feeds and the on-scene video. The combination of professional reporters, opportunistic video, a forum for people who would not have been able to get through the filter of op-ed pages or whatever else. You can have some guy at Hong Kong University or some woman at the University of Seattle say, "I know about Hong Kong and I'm going to give you my blog posts and people can get to it," along with all the other chaff, too. The news has been….We tend to have a view of it as being tidy and Edward R. Morrow is giving us the truth. I think it's always been fairly chaotic, and the overall chaos may be somewhat better in its overall mix than what was the case before today. John: Do you feel that, when you talk about filters, the falling away of institutions as brands and journalists becoming more brands than institutions? Is that good? Is that bad? James: It's good and bad and different. My meta point here, as I'm sure you all have inferred, is I have a view of journalism as I do of America as being like the sea -- always changing and yet always constant. Journalism has always been in some kind of crisis. People of my vintage, being older than yours, but probably yours, too, there's a reason people tend to forget that. For maybe two decades after World War II there was this artificial authority and stasis which was not how the news had normally been. The play, The Front Page, was written the way it was for a reason. The William Randolph Hearst, "Get me the picture, I'll get you the war," however that slogan goes. That's the business we are a part of. Just as American politics is terrible now and has usually been terrible. The late 1800s had many of the political problems we have these days. It doesn't mean you don't fight against them. I think that the falling away of filters makes the news business different, both better and worse. I think my personal philosophy is to look for ways to encourage the better. The Atlantic site, for example, our magazine, the oldest publication in the United States now -- even more than your august newspaper -- has completely repositioned itself to be a successful, going concern that involves a lot of three-ring-circus-type of stuff. We have this huge events business which means we spend half our time not reporting or writing but being emcees or talk show hosts. We have this website that puts out hundreds of articles per day, a very small portion of which would have been in The Atlantic magazine of yore. We have The Atlantic magazine of yore and current day. The question is whether the moving average of all of this can trend in a positive direction. I think that, for our publication, it does barely. I think for the media, in general, information has been a "more is better" proposition since the time of Gutenberg. We're a part of that movement, too. John: The interesting thing about the time of the Gutenberg and this Gutenberg parenthesis that some people talk about is your relationship with the audience now. When you began in this work you were on a mountain. You got a letter in the mail once every three weeks or something like that from a reader. Now it's constant. Plus or minus? James: Both. It's a huge plus in the sense that, for example, when I was living in China. I could hear from people both across China who cared about China in the rest of the world, those in China who get to a VPN to get around the firewall, in a way that just would not have been possible back in the olden days. Even before the Internet, I would get lots of physical letters from people, but they were slower, it was harder to answer them, I was less likely to answer them. For me, personally, on balance it has been a clearly positive thing. The main negative is the feeling that you never have any rest. Everybody is a slave to the 10,000 messages you have that, in theory, you should look at and answer. I know a lot more about more parts of the world because I can be in touch with people this way. There was this silly Panglossian moment in the early days of email where people thought, 'Oh, you can send a message to anybody. Therefore, anybody's going to answer,' as if there were no finite limit on time. I think John Seabrook did a piece in "The New Yorker" about email with Bill Gates who was all, "Oh, Bill Gates answered to my email." There's a finite limit on people's attention and a finite limit on people's time. The fact that you can send an email to everybody does not mean they can answer all of it. I reached, a couple years ago, peace with the idea that most email that I get I'm not even going to look at because I just couldn't. But the stuff that I look at is, you may have had some experience with that part of my operating philosophy yourself, But it's necessary, just as in past life you couldn't see everybody down the street. On balance, it's more good than bad, I think. John: Do you think that the news business could have ever seen this coming? Was there anything they could do, this media that destroyed their world? James: Yes and no. I'll say that The Atlantic actually did. We started a website 20 years ago in 1994. Scott Stossel, who is now our magazine editor, was just out of college then as a college intern. He and I, and Gwen Stevenson and Lowell Weiss -- they were all in their 20s, I was then in my 40s -- we put together our first site. I think that if you want to have a case of somebody that saw it coming it would be us, probably because of our marginal existence all the way along. We thought we've always had to scramble to keep going. Another extreme, I think, would be the poor Washington Post, which is a tale of 100 unfortunate turns along the way, including, I think, the big one of whether Don Graham could have signed on when he became a pal of the “evil” Facebook people. I say it partly just in quotes but partly not, "attached" the Post to Facebook, which would have given them permanent existence. I think if you take the long landscape of incumbent institutions reacting to fundamentally different technologies, the news business has done about as well as existing institutions do. It's still around. I have always said, about The New York Times, in particular, that the Internet is simultaneously making it more influential than any other single news organization has ever been and also having the worst business challenges that it's ever faced. I think that contradiction will be resolved in favor of the former. The fact that the New York Times has been allowed by the Internet to be international dominant, that will be monetizable at some point, as opposed to the business problems overwhelming the influence. The Times,like everybody is in the process of figuring that out. Is there a counter-example of a business that saw things coming better than the news business? Saw the Internet? John: No, I can't think of one off-hand, especially existing businesses. James: That's the point. I think, again, I draw this analogy that the United States is always in decline and yet always dominant. I would liken the United States to the existing news organization of having all sorts of challenges but responding to them, in the case of the US, better than other incumbents have. The jury's still out on the Roman Empire, which lasted longer than the US did, but that'll take another hundred years. I think the news business, if you compare it with… There’s a difference with the Big Three automakers. People needed to buy cars, you could never get cars for free the way you get news for free. They had a more manageable challenge, but they were blindsided by the airlines and had problems. I think the news business you can bewail the fact that it was caught by surprise, but show me an incumbent industry that did a lot better. Except The Atlantic. John: Last question. Lo