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. Looking back over the 30-odd years, 35 years, you've been dipping your toe in these waters, how do you think we, as journalists, did covering this era? James: I think, overall, pretty well. To me, because I've spent a lot of my time overseas or in oddball places, I've had a two-part test about journalism, both how I think about it's being done and what I should do. The test is, what do I know by being someplace that I didn't know just by reading about it? You always want there to be some gap, because that's the arbitrage advantage you have as a journalist, but if there's too much of a huge gap you think, 'What's wrong with the journalism and how it's been casting things the wrong way to me?' For example, you talk to anybody living in China for the last five or six years the version of the gap, until about a year ago, why is everybody talking about China as this world-conquering superpower when you look around the place is about to fall apart? What is all this China uber alles stuff? When it comes to the tech world, I don't know that there's the same kind of gap between what you come to learn about the place and what we've read about it all the way along. It seems to me that journalism has followed both the technological innovations. Most people know about Moore's Law, about Moore's Law for 10 years. Most people have a sense of some of the ripple implications. The science sections in the Times and other pages have done a good job. Most people know all the business drama. I think this is something that in terms of an ongoing revolution, journalism has done OK, I think. Is there a strongly contrary view by other people? John: There is a somewhat contrary view because they view the evolution of many of the journalists, they're viewing it much more on ground level. You're stepping back. They're almost saying we've evolved into much more of a cheerleading force than a prodding force looking at things. Some of the anthropological things we've fallen down on, is what some of the people said. James: I'm sure in the range of journalism there's been better and worse, some of the fanzine-type magazines that were there during the boom. TV has been generally terrible on all of this. I think that if you wanted to look back over 20 or 30 years of journalism, was it basically telling you what was going on? I think it's basically been telling you what's been going on, so that seems OK to me. John: Great. Thank you very much for... James: My pleasure. John: ...giving your time. James: I think my only camera/computer cam session I've ever consented to do. John: That's wonderful. Thanks again. I'll get the transcript all done and send you a copy. All right. Thank you very much. ...
VIDEO: YES

Roger Fidler
BIO: YES: Roger Fidler is an internationally recognized new ...
TRANSCRIPT: Paul Sagan: All right, so, I have to know the date. It is March 4th, 2013. This is Paul Sagan with Martin Nisenholtz and John Huey, and Roger Fidler doing a hangout recording for the oral history that we're working on at the Shorenstein Center at Harvard. Martin? Martin Nisenholtz: Thanks so much. Roger, tell us about your background and how you first became involved with information technology. Roger Fidler: Oh, how much time do you have? Martin: Well, we have about an hour for the whole interview, and we have 10 questions, so approximately five minutes for this piece. Roger: I'll try to keep it short. I guess my first involvement with digital technology and the digital transformation of newspapers began in early 1974 at the St. Pete Times, when they brought in their first Harris standalone editing terminal. From there, I went to Detroit Free Press in May of 1974. I was at the time the only person at the Free Press who would touch a computer. They had these standalone systems that are very primitive by today's standards that {inaudible} had, but I began playing with it. I was the graphics editor at the time for the Sunday magazine, experimenting with it to see what I could do, finally was actually starting to do even some pagination, having to code it to make it work. From that point, I began to look to the future and realize that we were going to be bringing computers into newspapers almost every area, and that the next logical step down the road would be to make our content available digitally from the newspaper to the consumer. Around 1977, went to Knight Ridder's school where they basically assessed people at Knight Ridder for management positions. One of the things they asked me is what I wanted to do in 5 years or 10 years. I said in five years I thought it's really important to have a position in corporate dealing with the digital transformation of newspapers, and maybe creating a position of director of newsroom technology and design. I was of course told that there was no such position, and wouldn't it be better just to start on a managing editor track, and get me to a small newspaper and move me up that way, and I wasn't interested. In 1979, in January, Jim Batten called me actually while I was in Pennsylvania helping to found the Society of News Design, and asked me if I could come to Miami to talk about a new project that they wanted me to be involved in, but he wouldn't tell me what it was. I flew to Miami, met with Batten, who told me at the time, "This is our top secret project." He called it our Manhattan Project, to develop an electronic publishing system that was being developed in England at the time called View Data or VideoText. He wanted me and this group of three other people that had been chosen to go to England, learn all we could about the Video Tech service, one that was being developed at the time called Prestel, and then come back and help to build a similar system in the United States. Being a sucker for an opportunity to travel anywhere in the world, the offer to go to England was enough to get me going, but I was certainly excited about the possibility of seeing what this was all about. In England, I began working with Videotechs view data terminals. Creating the first computer graphics for frames of information to be displayed on a home TV set. These were the early online systems that connected the home TV set to the home telephone, through a modem, and a black box to a database that could have a range of content that people could access through the system. From 1979 to '83, I worked on the Viewtron project. I had dual roles, because at the time when we started this, it was a secret project. We weren't allowed to talk about what we were doing, because we were afraid at the time, The Times Mirror, and other companies might get a jump on us, so my title became "Corporate Director of Newsroom Technology and Design." Which is one that I had originally suggested back in '79. That, and had created that as my cover, but I was also working with newspapers on pagination systems, and redesigning the papers for Knight Ridder at that time. During that time, in 1981, early '81, we had a person come to Knight Ridder [inaudible] who had developed at Westinghouse, the first active matrix liquid crystal displays. He was convinced that the future would be thin displays that could be used for portable devices. He was starting a company called Canolusion, and wanted to know if Knight Ridder would be interested in investing. Batten had me look at the prospectives, to see this first display that was only a couple of inches square. Seeing that I thought, "Yes. If you could have something that was closer to magazine size, maybe this would be the real solution for digital newspapers in the future." At the time, you may recall back in the late '70's, early '80's, there were already people predicting that at some point newspapers would be replaced by digital technology. Paper will be displaced by digital technology, and had concerns about that. Of course newspaper executives were all worried about what that would mean for their business. So in '81 there was the APME that invited a number of editors and designers to write an essay and, perhaps, create some images of what they thought newspapers might be like after the year 2000. So I wrote an essay where my idea was that, by 2000 or soon after that, we would have magazine sized display devices that weighed about a pound, that were thin, with touch screens, instant on, instant off. Very simple to use where you could access newspapers from anywhere in the world as well as books and magazines and other material and created a mock up for that, that was included in that essay. At the time, everyone thought I was totally crazy. This was total science fiction in the minds of the editors I talked to. I remember, John Woolley, who at the time was the editor of the Viewtron project, said to me something to the effect that that was a "nut ball idea," that would never happen. It's interesting that I've received many emails from former Knight Ridder people and people that I had spoken to about this idea for a number of years, who came back and said, "I guess you were right." It was nice to hear that. From that point in the 1980s, I stayed with the Viewtron project until it went commercial in 1983. At that point I was thinking about how I could take what I had learned about computer graphics to use that skill and that technology to create information graphics for print. I convinced Batten that I should go off and find a computer system that would work for that purpose and then develop a service that would provide information graphics to our newspapers. Went out looking, met with people from IBM, Xerox and other companies. None really had a system that was ready to go... Martin: Can I interrupt for just a second, because I don't want to skip through Viewtron. It's come up a couple of times in some of the other interviews. I guess the question that I have is, do you take any lessons from Viewtron? In other words, it was a very bold and costly experiment in the early eighties. But it was shut down. As we all know, it was termed a failure. What lessons did the company or did you learn from that? Roger: Quite a few. Actually, I wrote a chapter for my book that came out in 1997, called MediaMorphosis, Understanding New Media. The chapter was Lessons from Failure, where I described the project, what we were doing and what we were trying to accomplish. And that we were, essentially, in that first wave of online development. One of the lessons, of course, is when you are developing any new technology, those who are involved in the project believe things will move much more quickly than they actually will. It's just normal human nature for things to take a while before they catch on. Paul Saffo, at The Institute For The Future, talks about his 30 year rule. That usually in the first decade of a new technology, as it comes out of the lab, not a lot of understanding about it, there's not an audience prepared for it. Often, that first wave fails. The second decade, a newer technology emerges, people are becoming more aware of it. It starts to take hold, but even there, there are still a number of failures. Then it's the third wave, or the third decade, where by that time, if it's a successful technology at all, it becomes commonplace. People accept it as part of their everyday lives. That's certainly the case of online. We were talking about online in the early eighties, but very few people knew what it was. The technology was very slow. We could use it through the home telephone, but it didn't have the capacity to do things very fast. We also made a mistake of assuming that it was going to be the newspaper content that was the most appealing content that would drive the service. Even though our research was showing us, the things that were driving the service more in the early days was email, online chat, the auction services we had, games, entertainment. And that news was not the top feature that people were looking to. Even though when we'd interview people, they would say news was what they really wanted. When we were following what they actually did, it was quite different from what they said they were doing. So its lesson is clearly, not to try to move too quickly. The belief, and I still believe it to be true... Had the Viewtron project been more of an ongoing R&D project to deal with digital technology, more as a lab and experimenting at a lower cost, rather than ramping up quickly to, at one point, they had close to 250, almost 300 employees...They were putting a lot of money into it to try to go national. So when they couldn't see a large enough revenue stream from it, they shut it down, believing that it wasn't going to catch on. Steve Case, who was developing what became AOL later on, was also working on an online service. And going fairly slow and building it. We know that, at some point, he became a multi millionaire because of his deal with Time Warner. But at any rate, it was a recognition that the ideas that I was pushing, with the idea of a tablet that could be used by newspapers to deliver content, was going to take a while. So when I was predicting, early on, that it would be in the first decade of the 20th century before the technology and the audience was ready for a tablet, that proved to be pretty accurate. Even my book, in 1997, I created a scenario for newspapers that had September 21st, 2010 as the point at which tablets would finally find a large audience. And become relatively popular. It actually turned out to be pretty close to that time with the Apple iPad. Martin: Let's fast forward a little bit. Tell us about the Boulder R&D facility that you started in 1992. It sounds like, in contrast with the Viewtron trial, which was a big, very large corporate effort, that this was more of a skunk works. How did that come about? Roger: Excuse me. A little brief intro to how that came about. As I mentioned about the graphics service...My meetings with Steve Jobs, when he had produced the first Apple Lisas we could actually get a computer hooked up to a type setter that produced camera ready graphics, was a major breakthrough for us. With that arrangement with Apple to bring those services into the Knight Ridder newspapers using, first the Lisa, then later the Macintosh, when it became available... To start what became Knight Ridder graphics network. I founded that. We moved our headquarters to Washington DC in 1986. I convinced Knight Ridder there was a business there, that we should start selling our graphics outside of Knight Ridder. But we needed a way to delver the graphics to the Macintosh computers, which at that time, didn't have a communications service. Working with Apple again, they brought me into their field test for Apple Link, which was really the first point and click way of delivering graphics and photos and stories on a computer that was simple for people to use. We field tested it, immediately convinced Jim Batten that we should license it from Apple and then re brand it as Press Link. We launched the Press Link service, shortly after we launched the Knight Ridder graphics network, to be the delivery medium. Beginning of 1988, we split Knight Ridder graphics and Press Link, which I was heading together, so that I could devote more time in Miami to developing Press Link as a global network. Which I did, up until 1991. At that time I wanted to continue pursuing my idea of the tablet. In fact, we had been meeting with a company, RayCam, in 1990 about a display technology very much like the e ink technology, to develop a tablet device. And again, made a proposal to Knight Ridder that maybe we need a skunk works where we can develop this sort of thing. But Knight Ridder was not ready for that at that point. I applied for a fellowship to the Freedom Forum, which at the time was Gannett Foundation fellowship, at Columbia University this is the one that Ed Dennis was heading up and was accepted. Fall of 1991 I went to New York, began to study seriously the technology that would be required for a tablet. Developed a working demonstration of what a newspaper might be like on tablet to proceed with that. And also developed a more sophisticated tablet mock up that I could use to demonstrate all of that. At the end of that fellowship, in May of 1992, New York Times had run a story, just beginning of June of 1992...about the tablet vision. It was a full page with a major introduction on the front page of the business section. Right after that, Jim Batten and Tony Ridder and Bill Baker of Knight Ridder flew up to meet with me in New York. We talked about, "What would you like to do next, Knight Ridder?" So about a month later I had been working on a proposal for creating a skunk works, went to Miami to meet with the three executives at Knight Ridder and proposed to them creating a skunk works in Boulder. I had put together a budget proposal. As it turned out, after I made the proposal and suggested Boulder, Colorado, because Knight Ridder owned the Daily Camera and I thought it would make a good, small newspaper to work with us on our ideas... But have a separate facility there. And a small team. Tony was trying to convince me either to go to Boca Raton or Philadelphia. I was convinced that Boulder was our best shot. Because one, it would attract good people to it. I didn't want to go to Silicon Valley, because of the cost and also competition with other organizations for good people. Finally, they gave into that and agreed to establish the lab in Boulder. Part of that was because Jim Batten and I had built up a strong trust. All my efforts to establish businesses had been successful. It was because of Jim Batten that that became possible. We had a budget. I think we started out with a $350,000 budget. We were able to hire several people to work with me. That was separate from my salary. I also asked for a significant raise, which they came through with. Went out, set it up. The goal of the Knight Ridder information design laboratory, as I set it up, was to be the point operation for...This was at a time when the Internet was just beginning to become known to people. The first web browser, the matrix web browser, we began to work with. We began creating a website, at the time, for the Journal of Commerce that, I think, would have been one of the first fairly sophisticated websites for a newspaper. Unfortunately, just as we completed that website and had it ready to go, Tony Ridder called me up at one point, very early in the morning, and said to stop work on it. Without any explanation. So we stopped, although we continued on our own to work with it. Then, about a week later, we found that why he'd called was that Knight Ridder had sold the Journal of Commerce to Pearson's, which owned The Economist. He didn't want any technology we were creating to go with it. So we stopped. It was somewhat disappointing for us. Because we already had something going that could have been exciting to follow. At the same time we were pursuing the idea of the tablet. Paul: This is still the dial up era, though? Roger: What's that? Paul: This is still the dial up era. Roger: Yeah. Dial up was still the predominant way that people were getting AOL. By that time, in 1992, was the dominant online service, which was a dial up service. But we were beginning to see the web and web browsers emerge as a competitor to that, at that point. By 93, 94, the web was starting to look as a serious opportunity. Paul: But it was still dial up against dial up. It was not a broadband era. Roger: They were starting, in some cases, to have a continuous connection at that point. But yeah, it was still a very small number of people who had that capability. Again, at the time, we were also pursuing the idea of the tablet. Batten had become a believer. And Tony, to a certain extent, that the tablet would be a future. But they didn't have an idea of how long it would take or if that technology would emerge. We began to meet with companies like Toshiba, Sony and others, to get a better sense of where the technology was and how quickly something might evolve. Keep in mind that in 1992 to 94, all we had were black and white monitors on laptop computers. So color was still down the road, although starting to become cheaper. And liquid crystal displays were still very expensive to make. One of the things that changed the attitudes was, in 1994, we created a video at the lab that has gone viral on the web in recent years...The electronic newspaper vision. In that video, we used a mock up that we created by my design. Then we used the prototype demonstration electronic newspaper on a Macintosh computer. And put all that together for the video. We circulated video tapes of that to organizations internationally, more than 200 of them. I demonstrated it at conferences. It got a lot of attention at that point. And for companies that were interested in following through. In fact, it got so much attention, we had people calling us wanting to buy our tablets. Which we had to keep explaining didn't exist. I think if we had had tablets at that point we probably could have done very well. Microsoft expressed some interest in what we were doing. But we didn't know for sure if they would actually come out with something. Which they did, finally, in 2002. With the Microsoft Tablet PCs, which were not quite what we wanted, but at least a first step. In that time at the lab, we had a small staff. We never exceeded a million dollars in expense. The idea was to keep it a low budget skunk works where we could try ideas. We would bring people in for think thanks. I argued, sometimes with great frustration, with people at Knight Ridder, that it was important for us to bring other newspaper groups in. We brought people in from The New York Times, Washington Post, LA Times, others to come meet with us at our lab. We would have brainstorming sessions and discuss what might be the future of newspapers and how we should proceed. Martin: Now Roger, at the same time, Knight Ridder is really investing significantly in Mercury Center, out on the west coast. And in an effort a little bit later called Real Cities, as I recall. So were you competing with Mercury Center? Were you colleagues? And when did Batten pass away? He died in 94, I think, right? Roger: 95. Martin: OK. So that came a little later. Roger: Behind the scenes, what was going on was that I was very close to Jim Batten. I was a person that Jim trusted in dealing with new media. Bob Ingle who had been, previously, executive editor at The Miami Herald and who had a close relationship with Tony Ridder, was the one that was pursuing Mercury Center. And then went off to pursue other things in Silicon Valley. In many ways, yes. He and I were competitors. And not working well together. He considered the tablet idea to be a totally worthless idea. Even when I was doing the Knight Ridder graphics network and Press Link, he argued that we should be pursuing something more like Pixus, which was more of a TV based computer graphics system rather than the Macintosh. As a result, when he went out to San Jose as executive editor, he was very reluctant to bring Macintosh computers in the San Jose...In fact, San Jose Mercury was the last of the Knight Ridder papers to bring Macintosh computers into the art department and to come online with Press Link. Partly because of Ingall's belief that that wasn't where the future lied. Now of course, Macintosh computers are standard throughout newspaper for computer graphics and online services are pretty much the standard today for delivering those graphics. The problem was that in 1993, as you may recall, Jim Batten had an automobile accident that was caused by a seizure. They didn't know for sure what caused it. He almost died at that point. And then seemed to be getting better. But then, in 1994, they diagnosed him with terminal brain cancer. They did surgery. They did a number of things to try to save his life. Between the end of 1994 and his death at the end of June of 1995, Tony was taking more of the reins of Knight Ridder. He had made it clear that he really didn't see any value in having a skunk works. He wanted things that would turn a profit quickly and was putting his bets on Mercury Center and on Bob Ingall's ideas at that point. So there were discussions, by the spring of 95, about either shutting down the lab or having it come up with something that we could do as a business model to turn it into a revenue generating operation fairly quickly. At the time I created a prospective for what I thought might be something we could do early on. But of course it would take, and I made it clear that I thought we were talking probably about five years out before the technology would be there to make it into a successful business. About that time, Knight Ridder hired a woman to be Vice President of new ventures. Sharon Scooter. She had been with Pete Marwick. The fact that, at the time, Knight Ridder's looking for a Vice President for new ventures and had brought people out to the lab...The people who came out to the lab to meet with us clearly thought the lab was the right direction for Knight Ridder. In fact, securities people had told us that the lab was probably worth two or three points, or more, for Knight Ridder on the stock market. Because people could see that Knight Ridder was looking further ahead than just the next quarter. Regardless of that, Tony made the decision that we were going to shut down the lab, decided not to go forward with any further projects. They offered me and several other people from our lab the opportunity to go to San Jose, to work with what was going to become Knight Ridder digital, as a spin off company. I decided that I did not want to do that. I would have to work under Bob Ingall. I decided that we didn't see that as a good choice. So I decided to take early retirement. We had several people from my lab did go to San Jose. One of them went to work for Apple. Another one went off on his own elsewhere. Everybody else scattered. We had a really good team. We were doing a lot of things that could have been useful to Knight Ridder. Like working on knowledge bases that are now fairly standard, but at the time were new. That we could have done with our newspapers and working on other kinds of tours. Martin: But by 1995 you've already been at this for like 20 years. At that point, is anything beginning to gel, in terms of why these journalistic institutions, and in particular, Knight Ridder, don't seem capable...You've been through the Viewtron failure. You've been through now, this Mercury Center thing that isn't really taking off. They're shutting down Boulder. Is it Knight Ridder or is it something more endemic to corporate cultures? Roger: I do think it was endemic to the whole culture. Keep in mind that, in the 1990s, newspapers were making quite a bit of money. There wasn't a sense of urgency to move to digital. The failure of Viewtron and the failure of Gateway, which was the time mirror equivalent of Viewtron both of them ended in 1986 gave the impression to many of the executives of newspapers that this is not going to happen any time soon. It's not worth putting a lot of money into. We probably should keep an eye on it. But print newspapers are doing just fine. In fact, there was a certain amount of belief that, if we can control it, we'd like to keep the digital down somewhat, so that the print products wouldn't be competitive. Paul: Are you describing the perfect innovator's dilemma problem? Roger: Yes. It was. Most of their thinking was how to use the technology, the digital technology, to protect the print product, to protect the franchise. That was what I head a great deal about. We have to shore up the walls around our franchise to protect competitors coming in and taking away our audience. So much of the early effort, even with setting up a digital enterprise, was, "How can we spin something off that would be an IPO, that would bring some additional money to the newspaper company?" It would be more to support the newspaper operations, rather than necessarily to build an entirely news business down then road. When I wrote my book in 97 it was published in 97 about the digital future of all mass media, there was still a great deal of skepticism about that future. It wasn't until right after the turn of the century that news organizations began to feel the real pressure. Of course, by 2007, it hit very hard. So all the predictions I was making early on did come true. Partly because the industry was very reluctant to use the profits they were making at that point to prepare themselves for the future. And to develop alternative digital products. John: Roger, when you think back on that era and the whole 20 years and the competitive landscape, what competitors stand out in your mind as people who you worried about or looked as equally focused on the issues as you? Or ahead of you? Who did you admire or fear? Roger: Obviously I had an interest in both Apple and Microsoft and considered them to be the two most likely candidates to develop the underlying technology and infrastructure. We had been working with several of the telcos. And also with General Electric Information Services, which had an extensive network that I had worked with on the Press Link project. We were looking at how we could use that technology more. But keep in mind that Google didn't exist at that time. There was no Face Time. Most of the things that we now are taking for granted were not competitors at the time, because nothing like that existed then. John: Was there anyone else in the media business or the publishing business? Roger: I'm sorry. John: Anyone else in the media business that you felt like was on top of it or headed in the right direction? Roger: Not really. There were a number of experiments that had gone on in the eighties and nineties, along the lines of what we were trying to do with Viewtron. Certainly in the broadcast media there were things like Qube, The Source, that they were trying to develop. TeleText services were being experimented with. None of those seemed to take hold in The United States. To my knowledge, in the 1990s, the Knight Ridder information design lab was the only skunk works specifically looking at the digital future of the media. So we had no competitors. The Mercury Center effort that originally began with AOL and then migrated to the web afterwards, was designed to be something that Ingall had believed would generate a profit for Knight Ridder fairly quickly. Because that's what Tony was demanding. That's been the problem. Newspaper people are used to the idea that you've got to be able to make something successful. Like starting a new section at a newspaper. I was involved in several new section startups, like Business Monday, at The Miami Herald, in 1993. We turned in a significant within the first quarter after we launched it. Newspapers could do that with their print products. But with digital technology and going into new fields that wasn't so easy. Typically, in the magazine business, they expect it takes about four years to get to break even. Newspaper executives are not willing to wait four years for something to break even. Martin: Regarding the present state of the art...Let's just get to the present for a moment. You had this vision of a tablet 30 years ago. They're now mainstream and many publishers have adopted tablets by creating native and web apps. Can you give us a sense of what you think of these efforts? What is your view today of what the industry is doing? Roger: I do still believe that tablets hold a great deal of promise for publishing. I'll be honest, I am disappointed with what newspapers have done so far. With very few exceptions. Most of what has been done so far has been to do digital publishing at the least possible cost. Part of that, of course, is because the economy has forced that on many news organizations. Obviously, you know from experience. At The New York Times you were involved in developing The New York Times app for the iPad. Which, at the time, I thought was certainly a step in the right direction. As far as I know, very little has been done to update that app since you left. While I think the idea of an automated, template driven approach makes sense from a business standpoint, unfortunately it doesn't take full advantage of the capabilities of tablets. To be able to provide a much richer environment for reading and for newspapers. I was disappointed that The Daily project that Murdoch had launched was shut down prematurely. Probably because of the trouble they're also having internally, within News Corps. But they were doing some very innovative things. By the time they shut it down, they actually were producing a product that loaded quickly and yet had a combination of automated content presentations...as well as presentations that involved designers. That's my belief that you need a hybrid product for tablets that allows the designer to add those elements of surprise to the presentation that makes it a much more interesting and enjoyable experience, to read a digital newspaper on the device. Rather than having everything, essentially, looking the same with no elements of surprise in the digital edition. Magazines, I think, have been far more innovative and far more willing to experiment. That may be the lesson that newspapers are not taking to heart at this point, that we learned from Viewtron. We're still in an early stage of the development. This is the stage that newspapers should be doing more experimenting, more innovating. Trying new things. Until they reach something that starts to really grab hold. Most of what I see right now is everyone following everyone else and not a whole lot of fresh ideas. Paul: Roger, do you think it's a fair summary to say you described an industry that never had a chance? Or several decades of trying? Your bold experiment was one of the boldest. And you described an under equipped army to go into this battle, if that was less than a million dollars a year. That's fairly trivial, in this space, compared to what... Roger: Right. Rounding errors, at Knight Ridder, they used to say, Paul: I'm sorry. Say again. Roger: They used to say it was rounding errors, at Knight Ridder. Paul: Yeah. And in the tech space, they wouldn't even find it as an error. They wouldn't even bother to round that size. You're talking about an industry that it sounds like it never had a chance, that had unreal expectations. Contrast that with the other thesis of original sin. If the industry hadn't given away its content for free, had kept its powder dry, it would have done fine. Do you think either scenario would have led to either equipping efforts better from the start, or earlier would have helped? Or was that just too early anyway? Or not having gone with the free model or any other path that would have had a better outcome than the one today? Because the one today's very bleak. Roger: Most of the executives I've spoken to agree, now looking back, in hindsight at the decisions that were made early on with the web to give away our content for free...The assumption at the time was that we would get so many page views that we could sell high priced advertising into it that would pay for the services. They were afraid that if we charged for access that it would cut the number of viewers and make it impossible for us to get advertisers interested. In all fairness to Bob Ingall and Tony Ridder, they did originally believe, with Mercury Center, that there should be a subscription price for getting the newspaper content, they should not give it away for free. I think that probably was the right decision at the time. But they acquiesced a short time later, as more of the newspapers decided to go with free access. We could have done a combination of both, of having some free access, but still having something that people paid for, from early. That would have made it easier for us to build that product into our business models more successfully than it has been possible since. John: Another way of framing the same questions that Paul just asked... It sounds like, to me, in listening to you...Is it fair to say that you really were seeking solutions that involved becoming a technology company. You were trying to morph into becoming a technology company, and developing software and hardware. If you look back on it, obviously, that would have had different consequences. But it's a little unreasonable to expect an industry like this to morph into... Roger: Let me correct that. At no time did I believe that Knight Ridder should become a technology company, that we should develop hardware and build hardware and market hardware. Software, maybe. But my belief at the time was, technology was advancing at such a pace that anything we attempted to do would be run over the top of very quickly by companies like Apple and Microsoft. I saw Apple and Microsoft as being the companies most likely to develop the underlying technologies that would be needed for the tablets. That was the reason for my meetings with Apple and Microsoft. Software, what I was more interested in was figuring out how a newspaper would be able to migrate from being a broad sheet print product to being, essentially, a magazine sized product that could still retain the immediacy of a newspaper product. With both its combination of linear and nonlinear navigation. And provide a rich reading experience and interactive experience for people. Martin: Roger, I think John was actually going in quite an interesting direction here. I want to explore it. I understand and certainly can totally respect your answer. But if you contrast it with, for example, what Jeff Bezos has done, in the tablet area...Everybody forgets that, before Steve Jobs came out with his tablet, there was this thing called the Kindle. Which was really the first one to succeed at mainstreaming reading. They were not a hardware company. They were a retailer. So there is, at least in that case, a precedent where somebody said, "Hey, my industry is likely to be under attack. I'm going to go create this new device and a set of software and software services that enable it. I'm going to take that out to the industry ecosystem and make it work." And guess what? He did. So I'm not sure that I totally agree with John here, with respect to the ability of an industry to go into a direction like that, given that Amazon has just done it. Maybe there's something unique about Amazon. Roger: There is something unique about Amazon. What people forget easily is that they went into developing their own tablet because they already had a large array of content available that people could use the content with. So it would keep people tied to the Amazon.com product. But the Amazon.com product had already been developed fairly well by the time they came out with an e reader. Before that, I was already working with companies like iRex, out of Holland, that was developing an e reader. With Sony, with other companies. And Plastic Logic, that had developed their own version of e ink technology, for a more magazine sized device. In fact, I Rex even had a magazine sized device before they came out with the Kindle in 2007. We were looking very closely. That was when I was first at Kent State and then here at Columbia, beginning in 2004. Looking at the e ink technology as something that could be developed. In fact, we talked here, even at Missouri, of whether or not we could use our computer science school to develop our own version of the tablet that could be marketed. I discouraged it because, again, my argument was that...Bezos had a fair amount of money to be able to put into developing a tablet. We would not be able to compete with that. And Apple, I knew from contacts, was already exploring the idea of a tablet. But they obviously weren't revealing very much at that point. John: Amazon had a store, scale customers. They were a very young company. They weren't protecting a century of legacy business. Their legacy business was finding new ways to sell people things. So that was very much a part of their culture. As you say, they had a ton of money. And they had a huge library of content, which is still bigger than anybody else's. Martin: I hear you. I just think there's a leadership issue here that we haven't completely nailed. John: The irony, the leadership issue would be that Roger and others make a good case that Knight Ridder was the innovator and yet, in the end, they were one of the first to go down. Roger: Let me bring you back to that. When we had the laboratory in Boulder, one of the mantras I had is that, "Newspapers need to realize that they are no longer competing against each other. They're going to be competing against new, digital enterprises that could take our business away from us." Unfortunately...And Martin, you're probably well aware of how things worked at The New York Times. Everybody wanted to do their own thing. New York Times does its own thing. Washington Post does its own things. Los Angles Times, Times Mirror, all of them wanted to do their own thing. Even though at the lab I opened the doors to other companies... My idea in 1994 was that I knew it was going to take us a good 10 years before the technology could finally be there to do this efficiently. But if newspapers could work together and decide on standards and the concepts that we wanted, that either as a consortium of all the newspapers, or working with a company like Apple or Microsoft, develop the appropriate technology that we could all use as a platform. And have a standard way of presenting and delivering that content. My argument in those meetings that I had was always, let's not compete based on technology. Let's compete based on our content. John: We had the same effort in magazines. Roger: And if we develop the technology we can all use then we benefit. Martin: Wasn't that The New Century Network? Isn't that what...? Roger: Not exactly. The New Century Network was also looking at how advertising would be able to adapt, which was also very important. They took the idea to try to bring the newspapers together. Unfortunately for the same problems we talked about, of newspapers wanting to do their own thing, the internal squabbling within The New Century Network prevented it from doing very much. That continues to be something of a problem. That's one of the reasons why I formed The Digital Publishing Alliance, here at The Reynold's Journalism Institute. To try and get newspapers working together. So that we can do things that we each benefit from what any one newspaper is learning. And then be able to apply it to the benefit of each news organization. I keep saying newspapers, but I look at it more from the standpoint of news organizations, rather than newspapers, per se. Getting back to your basic argument about developing the technology. My vision had always been that we would have to be working together, as an industry, towards a common set of goals in the technology to be able to provide a viable technology and business. I've always believed and I still believe that no one newspaper would have been able to do that alone. Because, unlike Amazon, which was selling an array of books and other content products, and was independent of the individual newspapers that they were bringing on to the Kindle...So they could take a piece of the action from everything sold on that device. Newspapers were looking at it more narrowly, based on their individual newspapers. As you may recall, there was a lot of discussion early on. Why don't newspapers go out and buy a bunch of these devices and give them to their subscribers and buy custom devices. Philadelphia newspapers actually tried that with the Android tablets, to have their own device that they would market with their subscription to the newspaper. My argument against that was that people are not going to buy a device just to read a newspaper. They'll buy a device because it has a much broader application, and newspapers are only one of the reasons that people are going to use that device. Where newspapers I think were unable to deal with that, unlike Apple and Amazon and others who've gotten in the business, is they saw the bigger picture of all of the kinds of content that could be available to the tablet, where newspapers still very focused on their own niche within that application. Paul: Roger, one of the things we've really focused here on is a technology and scale tsunami that hit the news industry, particularly the newspapers. The scale of the technology companies and the technology that came along, but there was also a business model tsunami or several that hit. One we talked about was this idea of the newspapers moving from, "You have to pay me for my content," to giving it away for free. You also had this ad tsunami of free classifieds on the one hand, and infinite inventory displacing the market or hurting the market for display advertising, what happened with banner ads on the web. Unclear to me you're even positing that the industry could have survived that first tsunami of scale and technology. The other one was almost more damaging. How do you think about the changes in business models, not just the changes in technology that were coming along? Roger: Mm hmm. The classified one was certainly the most damaging blow, and Craigslist took a huge chunk of money away from newspapers, and newspapers didn't see it coming. We talked about that earlier. In fact, we were experimenting with different ways we might be able to do classified, even at our lab in Boulder back in '93 and '94. Looking again to the future, and how newspapers again working together might be able to establish a new business model for classifieds. The classifieds, as those who are in the new service know, was a cash cow, and newspapers were really reluctant to do anything that might interfere with that cash cow internally. Rather than cannibalizing their own business to create a new business, they unfortunately left the door open for organizations like Craigslist to come in and take it away from us. Yeah, it was a technology wave on one hand. The other was entrepreneurs who saw opportunities to do things that made it much cheaper and much more accessible for people to do things that newspapers had pretty much had a lock on for years. Martin: We have about three minutes left. Any thoughts about...You were very prescient 30 years ago. What do you think journalism will be like 10 years from now? Do you think this notion of institutional journalism survives, or do you think we're headed to a world where 10,000 tiny little flowers are blooming, and maybe Facebook owns the rest of it? [laughs] John: Twitter. Twitter. It's all Twitter. Roger: It may follow the pattern that has happened with other technology, other enterprises, is that right now we're at a point where we had centralized the business, now it's fragmented. We have lots of fragments out there trying to develop a viable business model. If I had to place a bet on the future, I would assume that what will happen somewhere in the next 5 to 10 years is a lot of those fragments will start coming back together again to form a new type of enterprise. I'm not sure what it'll be called. I think journalists will still play an important role, having professional journalists and people contributing content into some kind of package content that's made available to people. I would expect to see more of the media in a sense going back to where the media was at the turn of the 20th century, with more media being very partisan and more biased so that you know where it's coming from. In a sense, going back not quite to the idea of the Republican newspapers and Democrat newspapers and so on, although that may happen, but I think you're going to see that happening. I think Fox News is leading the way in television. Not I think to the best of the world's [laughs] interests, but you see what's happening with MSNBC and CNN and Fox being very partisan and fragmenting the market there. People who watch Fox know what they're getting from Fox. People go to MSNBC know what they're getting there. I think news organizations are going to be moving more into more specific political and sociological orientations. Martin: Coming from Knight Ridder, any thoughts on local, how that evolves? Roger: I hope I'm right, but I still think that small local newspapers continue to survive for quite a bit longer time as a print medium. It just has to do with the convenience of it and the way people use that medium, particularly advertisers and local [inaudible 58:33] who know that medium. They'll see declines over time as larger papers have, but they are by far in the strongest position I think for retaining a business model that still keeps them alive. I'm not quite sure yet how digital's going to play out in the local market. You're seeing individuals starting small local enterprises. They don't generate a lot of revenue. It's hard for them to actually make enough money to support even a couple people. The small established newspapers, if they play their cards right I think continue to still exist 10, 15 years from now. It's the metropolitan newspapers like St. Louis and Kansas City and others that I think are in the most serious difficulties these days. It's hard for me to see how they will adapt and survive in the not too distant future. National newspapers like "New York Times" and "Wall Street Journal" I think will come through all of this and survive in some form, because I think there's still that need for some type of national product that covers international news as well as national news pretty thoroughly, but there's not as great a need for the metropolitan newspaper as there once was. ...
VIDEO: YES

Julius Genachowski
BIO: YES: Julius Genachowski (born August 19, 1962) is an Am...
TRANSCRIPT: Paul: It is Friday, April 13th. This is Paul Sagan in New York, Martin Nisenholtz in Cambridge and Chairman Genachowski in Washington. Thank you for joining us. Julius: It's great to be here. Paul: Why don't you give us the two minute resume, because I think it's obvious what you do and have been doing for the last few years. But you actually came to this, not necessarily in the traditional Washington way, but with a content information and even a news background at Beliefnet. Maybe set that stage and then we'll jump right into the topic. Julius: For a little more than a decade before taking on this role as chairman of the FCC, I was in the Internet and media space in the private sector. For the largest piece of that, I was a senior executive at IAC Interactive Corp., which owned and operated a number of Internet media and e-commerce businesses, from Expedia to CitySearch to USA Network and Sci Fi Channel. The Beliefnet piece that you mentioned, I was on the board and an investor in Beliefnet, which was the largest online spirituality site. I was also on the board of an online content company called the Motley Fool. In the "for what it's worth" department, at Columbia for college, I was not only around the clock with the "Columbia Daily Spectator," but I relaunched Columbia College's oldest newspaper called "Active Columbiana" to compete with the Spectator, which was great fun. In college, they had a publication called Newsweek on Campus. And I interned at the "Columbia Journalism Review" and I worked for Fred Friendly, the former president of CBS News when he was at Columbia working on the media and society seminars. Paul: A long background in and around the space. You came to this job in Washington, and one of the things that you did was clearly worry about the state about where journalism and news was going to go because after the Knight Commission report came out, you commissioned a staff to go look at this issue of journalism in communities and concluded a few worrisome things. Can you share that and your thoughts and then thoughts about are we going on a better or scarier path going forward. Julius: One of the central goals of the FCC since its creation has been having a vibrant, healthy news and information world in the United States serving the information needs of all of our communities. This is always a challenging job for the FCC because we are and should be prohibited from doing anything that violates the First Amendment. The agency has tried to be thoughtful over the years with how do we ensure that we have a communications landscape that fosters journalism, that fosters news, that fosters the provision of local information without, in any way, compromising vital free speech principles. Point number one. Point number two is, it was very clear to the Knight Commission, to me, to any of us who were around the space, that the digital revolution was having, is having a significant disruptive impact on the provision of news. You don't need to be a deep researcher to know that local newspapers have been under tremendous pressure for some time. It's unfortunate. We've taken it for granted at this point, but newspapers have shut down. Ten years ago, people would have thought, "Well, that's crazy." And there have been significant cutbacks in resources directed at local news, at local TV and local radio. Following up on the suggestion of the Knight Commission, which I supported, and following up on our broadband plan, which focused not on news and content issues, but on what do we need to do as a country to unleash the economic opportunities of wired and wireless broadband? Following up on that, I commissioned a report on the information needs of communities in the digital age. By commissioned, I mean we put together a team here at the FCC and brought in a terrific former journalist and former Internet entrepreneur named Steve Waldman to run this effort. And he produced his report, at this point, about two years ago. It's called the "FCC's Report on the Information Needs of Communities." Paul: And it concluded some worrisome things. Not all, but some. What did you do after that and how do you think about the government's role going forward because, as you said, you have to be very mindful of the First Amendment issues. The traditional, I think, place that the FCC's nose went into the tent here was either monitoring the broadcast world and access rules or the cross ownership with print, but otherwise didn't really have any formal involvement in journalism on the Internet or even print journalism. But those worlds are colliding, or have collided and come together, and that's changed, at least your view and the view of others of the government's possible role. Certainly, people are going to look to you or your successor and Washington to play some role or not in this. It would be great if you could speak to the questions embedded there. Julius: Let me describe the report a little bit... Paul: And we'll link to it off of this interview, but I think, given the headlines would be really helpful. Julius: Great. I have to say, I'm proud of the report. It was recognized by a pretty broad set of people who have different perspectives on what the problem is and what the solution might be as a thorough, fact based assessment of the landscape. It found that there were both opportunities and challenges and then it tried to be concrete about what the challenges are. On the opportunities side, let me start there before we get to the challenges, new communications technologies, the Internet, mobile, are creating new distribution channels for news and information at much lower costs of distribution. You or I could start a news and information business tomorrow on the Internet at a much lower cost than if we wanted to do exactly the same thing 20 years ago and we needed to launch a newspaper or TV station. This is a general fact about the Internet and opportunities for new businesses. The cost to get started and the barriers to entry are a lot lower, particularly in a world where we preserve a free and open Internet. In fact, there are lots of examples of online entrepreneurs that have started news and information businesses. But the report also found that, when it comes to news in particular, while the distribution costs may be a lot less than they are historically, it still costs money to report the news. Reporters don't work for free, nor should they. The business models to generate revenue to pay for reporters, even on the Internet, are not where they need to be to support a robust reporting operation. The report found a few different things. I think it tried to be intelligently nuanced. It identified the largest challenge around local news and information as opposed to national news and information. Local journalism, covering the mayor's office, the governor, state, city, local agencies, that's where we've seen the greatest cutbacks and the hardest economic challenges, as compared to national news. That doesn't mean there aren't issues there, but there continues to be vibrant coverage of Washington. Local news and information, particularly in the area of accountability journalism is where the report found the biggest challenge. The report drew a distinction that others have drawn, but it's important to keep in mind, between opinion and journalism. The Internet is great to facilitate the wide distribution of many different opinions. It's much harder when it comes to building a reporting entity, particularly if what you're trying to do is build reporting teams in lots of different local communities. So those were, essentially, the findings of the report. Paul: It leaves the natural question which is, what is to be done and does the Internet, as it evolves, fix the problem or does it get worse, and where do we look for answers to that? Julius: The report had a number of conclusions and recommendations, and some of them are broad in nature, but we had call it medium and long term optimism about these trends. One is doubling down, pressing forward on strategies to increase broadband adoption in the U.S. The number of Americans who could sign up for broadband, they have infrastructure available to them, but who don't is very high. It's about 30 percent of the country could sign up for broadband but don't. We've got a 70 percent adoption rate. Paul: And that's very low compared to other developed nations, too. Julius: I'm not sure that that's true. It might be low compared to city states like Singapore, or countries like Korea, but it's not low compared to Europe overall. It's not low compared to China or India. It's much higher than China and India, and roughly comparable to Europe, overall. In any event, it's not good enough. It should be at 100 percent. When you think about it from the perspective of the economic models for online news, it's a big deal because if you go from 70 percent to 100 percent, you've increased the potential market by almost 50 percent. In thinking about the economic model here, adding that many people to the base could have a very positive effect, number one. Number two, the report emphasized the importance of preserving Internet freedom and openness. If we move toward a world where content creators on the Internet have to pay, particularly on a discriminatory basis, to reach customers, that would be a negative for the economic model for newspapers, particularly startups. So that was a second major point. Then, the report said there are no silver bullets in solving this challenge. It suggested a series of ideas against a backdrop of encouraging a willingness to experiment with First Amendment friendly ideas that could improve the ecosystem. What's an example? There have been some interesting developments around non profit entities getting into the local news and information business. And the report described some IRS tax related challenges that make that harder than arguably it should be. We've actually been encouraging the IRS to take a look at this and remove barriers to non profits providing local news and information services. The report had some recommendations around increasing transparency of government information. Because one of the things the Internet does, potentially, is lower the costs of reporting if government information can be accessed more cheaply. So the more that everything the government does is easily available online, the lower the cost of collecting information and reporting. If everything the government does is streamed online, if all of the documents and all the information is available online, it means if you're a local reporter, wherever you are, you can stay in your office or even stay at home and get all that information. Pushing forward on transparency and disclosure was an important recommendation. The report suggested that the FCC experiment with modest reforms to broadcast ownership rules that could help local journalism. An example might be allowing radio stations and newspapers to combine and see if there could be efficiencies that could help local newspapers succeed. And then, in general, the report encouraged us to do what we've been doing, which is look at all the ways that there might be barriers to local broadcasting, TV and radio. From becoming multi platform providers and increasing their revenue by seeking revenue from multiple platforms. So those were some of the recommendations in the report. Paul: Looking forward now, and it will be someone else's problem because you're going to leave office, so not asking you to make a partisan speech or speak for someone's future policy, but the FCC has a mandate to try to keep news and information local, diverse and accountable, I think. Talk about the challenges in the Internet age with the questions of consolidation, the things that will likely come before the government and certainly the commissioner, ownership of broadcast, more than anything else, because that's one of the things that you're asked to rule on. But it will be tied to newspaper ownership. You talked about the need for local journalism, which often comes from print, which is really still in a free fall. And, as you said, some newspapers are disappearing or, if not disappearing entirely, they're disappearing almost by the day. Monday's gone. Tuesday's gone. Wednesday, Thursday, Friday, Saturday, Sunday is all that's left in some communities. Can you frame the questions and maybe how, at least the things that will get put on the scales to balance the decisions that the commission will probably have to think about and that the industry ought to be preparing for. Julius: I guess a couple of... Paul: I'm just going to tilt the camera down a little bit. We seem to getting a little more ceiling. There we go. Julius: Is that all right? Paul: Yeah. Good. Julius: A couple of points. I know you didn't mean to say this, but it's worth pulling this out. It seems to me, an appropriate goal for public policy here is not to preserve newspapers... Paul: Absolutely. No question. Julius: But to preserve news. I know you weren't saying anything different, but it's important because sometimes it's not clear. Thinking about what the FCC can do in all these different fronts to encourage successful multi platform efforts is a big part of it. Two points on ownership, and there's a proceeding now open at the FCC, it's being actively deliberated, so I'm limited in what I can say. Paul: I wasn't asking you to comment on one case, but more the broader question. Julius: It's essential for the FCC to recognize the ways in which the world is changing and take that fully into account in reviewing our rules, including our rules around ownership. It seems to me that the agency can't ignore the efforts of the digital revolution on the provision of local news. The agency has a responsibility to ask itself, "Are there any ownership rules in place that limit newspapers," because the rules apply to newspapers and not news, "that are causing more harm than good, and what should we do about that?" I guess two points on the other side that the agency is also is keeping in mind as it reviews this. One is that a world in which there is universal broadband adoption is different from a world in which there is 70 percent broadband adoption for purposes of these issues. Because some people say, quite rightly, that people who have online access are looking at a different set of news and information sources than they were looking at before the Internet. And that's true. But it's also true if 30 percent of people aren't online, they're not looking at that full range. It seems to me that one of the benefits of pushing for greater broadband adoption quickly is not that it improves the economic model for news, as we talked about earlier, but it also affects the analysis of the agency when it comes to rules that were based in a different world. The FCC has to take that into account. I think you mentioned that diversity is also a statutory objective of the FCC and the trends in diverse ownership in the broadcasting space have been going down. Looking at that question is also part of the FCC's work as it reviews the ownership rules that are on the books. Martin: Can I just interject for a moment? Are you done, Paul? Or... Paul: Go ahead. I'll follow up after. But go ahead, Martin. Martin: No, go ahead. I want to make sure you finish your points. It would be best if... Paul: I had some questions in a couple different categories, so you should go right ahead. Martin: Great. I just wanted to reel back a bit and talk a little about the business model because your background obviously combines a very deep sense of what has to happen in order to create a business in this area, as well as the public policy implications. I think the question of free has been on a lot of people's minds from the beginning. When all of these businesses collided, some had backgrounds in free. Some didn't. But free became the ethos of the Internet. The idea, of course, was that advertising would be robust and it would make up for this notion of free. And that, clearly, has not happened. In fact, the opposite seems to be happening where very large entities, like Google and Facebook, use data, in essence, across the web to target around intermediaries. I guess my question is, can you comment at all on how you see the business model emerging in this totally open world and maybe connect that a little bit to two other things. One, the very closed model of cable, the walled garden cable model, where there is an incredibly robust news infrastructure, in some ways both local in some communities but certainly national, global. And in mobile, which has traditionally been very locked down and controlled, and is clearly the future, in some sense, of news usage. I know there's a lot there. Julius: Great questions. Let me pull out two. One is the free versus subscription, and the other is cable. On the free versus pay, the first thing I would say, and it's important to recognize this is it's not, at least I don't see it as, a regulatory issue. It is a business model issue. I certainly see what you see, which is that, for many newspapers that moved online, the decision to offer news free at the beginning has made it hard to go backwards because consumers get used to having it for free. But at the same time, we're seeing more and more experimentation now with pay models. You're certainly very familiar with the "New York Times" approach, the "Wall Street Journal." To me, I think this distinction that I tried to make before between national and local is important, and the question of, for local news entities, which is where I think the biggest problem is, not that there aren't problems nationally, but for local news entities, what does the business model look like? You have to have a mindset that's very different from many other online players. As Internet companies launch today, the denominator that they're looking at is not a local community. It's not even the American population. It's the global population. And they're running their models off of that. If you're trying to provide local news in Cincinnati or Des Moines or Charleston, West Virginia, you can't build your economic model the same way. That is a real challenge. Now, you don't need as many reporters to cover Cincinnati as you do to cover the world. I tend to be an optimist in how this will play out over time. I'm personally convinced, based on all my experience, that vibrant local news and information has real value to people in their communities, and the entities that get the product right will find that people will pay directly or indirectly for that product because it's so important to their lives. A couple of other points on this and thinking about newspapers historically and cable. The two of you have great experience in both newspapers and cable so I'm happy to be corrected. One of the things that I think has happened in the news world over time when it comes to local is that there was an artificial definition of local that came into being because of what natural distribution of newspapers were. For example, I live in Washington DC. Let me not pick a single market, but I think newspapers tend to think of their relevant local market as the broad DMA or community to which they're distributing newspapers. Paul: That was probably an economic imperative, right? The scale question and the cost of production helped them. Julius: I think that's right. I also think they benefited from limited competition. Paul: That's right. The barrier was high to get in. And a broadcast license, just to add to that, also added to this mix, which was the broadcaster had a DMA they had to cover. They couldn't segment that item. Julius: Exactly right. Broadcasters had no choice. They could only broadcast to the full DMA. And newspapers had no pressure. But I think both of those entities were actually under serving the way people actually lived. People are very interested and concerned about what's happening in their neighborhood. What's happening with crime in their neighborhood? What's happening with stores and streets? What's the mayor or city council doing that affects my neighborhood, my schools? Many people say, and I think this is probably right, that in moving online, newspapers were slow, and, I would argue, are still slow, in shifting to that, some people call it hyper local view. In some ways it's more expensive to do it, but I also would argue that that's where the real value and need is. So I'll make that point, and let me make a point about cable, Martin. The new technology of cable, you're completely right, has led to certainly an increase in nationally distributed opinion and an increase in national and international news. You can't argue with CNN. The effect on local news, I think, has been much less. There are obviously some markets where the cable company offers a local news channel and those are great. But one of the findings of our report was that, overwhelmingly, most communities don't have local cable news. Seeing the cable industry increase its commitment to local cable news channels is something that would be a positive, and then if that were done in a multi platform way would be a further positive. Martin: Can you comment on the mobile point at all? I know you've thought a lot about mobile, especially in relation to the open Internet. A comment would be helpful, just because so much of the usage is now trending in that direction. Julius: I tend to think that each of these new distribution platforms are new opportunities to reach an audience, to reach an audience more frequently, and to generate incremental revenue. Incumbents tend not to look at new distribution channels that way. They tended to look at new distribution channels as threats. This has been true historically. They're often proven to be wrong. The broadcasting industry historically opposed the introduction of cable television in the United States, because they were worried, and understandably if you put yourself in their shoes, that cable would be a threat to the economic health of local broadcasters. As it turned out, cable was one of the best things to happen to local broadcasters that were providing content of real value, because, through retransmission consent fees, it creates a new revenue line for broadcasters. So your answer about mobile is I fundamentally look at mobile in that way. It's a new way to reach an audience. It's a way to reach an audience with much much greater frequency. People are looking at their mobile device much more frequently than they're looking at their PC and more frequently than they're looking at their TV. Obviously there's a tremendous challenge around business models. I'm not saying it's easy and I'm not saying that it's inevitable that people will unlock that value, but I would bet that that would happen. We've seen over the course of American business history, when it comes to news, information, content and different distribution channels, is that there are opportunities for innovation not only on the technology side but on the business model side. And that they relate to each other because the nature of the content itself shifts from platform to platform. In my view, the entrepreneurs, whether they're new start ups or traditional entities, that say, "Alright, mobile. Everyone's checking their mobile devices all the time. What does that mean for how we provide news and information to them, and what can that mean for economic models that make sense?" I believe that will be unlocked and the entities that unlock that will generate a tremendous amount of value and that it will be a boost to the whole ecosystem and the provision of news and information. I fundamentally believe that having people with more access to information, looking at different screens more often, will lead to the rise of business models that fully take advantage of that opportunity and ultimately provide the revenue and the resources to support reporting operations. Transitions and disruptions are hard. Martin: Just a last point before I pass it back to Paul. Sitting here up in Cambridge, the Boston Globe and Boston.com have been trying to get the hyper local news idea done for years. It's been something that we focused on five, six, seven years, maybe even a decade ago. Just the economics are just very, very tough. The willingness to pay is, let's just say, not high. And the advertising economics are tough. I hope that you're right. I hope that the entrepreneurial community can solve this issue, but so far it's been a tough go. Julius: I totally recognize that. It could be a tough go for a long time, and it's part of the reason why we have to look at other creative ideas like non profits, like various incentives or removing regulations that could be helpful. But I would make the following point, and I make it to you, Martin, because I think we had this conversation six, seven, eight years ago. You'll remember that the company I used to work for owned a business called CitySearch. Martin: Yes. Julius: CitySearch was one of the early businesses that said, "Well, local businesses, local advertisers are moving online. Consumers are really interested in local information about restaurants, etc. We're going to jump in there and take advantage of those trends and create a successful business." And year after year, CitySearch did not quite achieve what logic told us it should, because consumers wanted the local information and small businesses ought to want to reach consumers through that channel. It turned out that the thesis was completely right. The effort was a little bit early. Over time, others developed different business models that really brought together local merchants and local customers in what is now a very thriving space. I'll give you one other example because I think these things all relate to each other. I remember a point in time when John Malone, Paul, you'll remember this because you were in the industry at the time, this is probably 20 years ago, and John Malone talked about a 500 channel cable universe. Martin: Remember it well. Julius: And people thought, "That's crazy. That will never happen. There's no model for that. The technology won't provide for that. It's crazy." And then one year went by, two years went by, and three years went by and four years went by and five, and the 500 channel universe didn't come. And everyone said, "Malone, totally wrong. This world is never going to come." And people went on and did other things. Then we all woke up one day, and we had 800 channels [laughs] in our home. I think that from trend to changing behavior of consumers and merchants sometimes takes a little bit longer than we think. I think it's probably a historical pattern that people give up hope often just at the moment when the magic will happen. Are we at that moment in local news and information right now? I'm not really arguing that. We may be one, two, three, four, five, six years away. But, I do think these basic trends of people value local news and information, they're consulting their digital devices more and more frequently, that that will result in an economic model that supports the provision to people of news and information that they find valuable. Paul: Let me just ask, maybe, one last question. Julius: Paul, I think I just have a few more minutes, if that's OK. Paul: I'm trying to watch the clock and be mindful of that. You've been generous with your time. We really appreciate it. Let me try to weave this back together because a lot of what you described and we know existed in the past that provided the news and information came as a packaged bundle. I think, as you really almost implied there, some of the reporting, especially the inefficient kind, the accountability journalism, got a subsidy from the advertising package that came bundled together. That hasn't happened in online. Online is the great dis aggregator. Even in news, it takes from brand name to home page to section to story to Tweet, which isn't even often a full sentence. A lot of what we've seen in local information models that are working today, say around food and restaurants, work, but they don't link to accountability journalism. I just want to make sure that I'm following you that I think you would agree that that part of the puzzle's not been figured out. That has to happen and that path is really unclear. Julius: I completely agree that it hasn't happened and that the challenges are very significant. But I would also argue that there's tremendous value in local accountability journalism. People really want to get local accountability journalism about their communities, about things that really matter to their lives. My hope is that innovators in this realm will continue to mine it. I don't know if they'll be existing companies that figure it out or whether they'll be start ups, but I don't think we're talking about trying to figure out a business model to give people broccoli that they don't want. I believe that people really want local accountability journalism because they care about their home, they care about their kids, they care about their lives and they want to be engaged citizens. Someone will figure out how to provide that and build a business model around it. Paul: I think that's a great place to stop. And we will hope that happens, and probably for all these communities, the sooner the better. Martin: Thanks so much. Really appreciate it. Julius: Good luck with your project. This is just wonderful that you're doing this, and I'm happy to try to help. ...
VIDEO: YES

Dan Gillmor
BIO: YES: My life has been in media — music, newspapers, o...
TRANSCRIPT: John: That's how you became a journalist? Dan: Yeah. John: It's not an unusual case. An unusual path, but not an odd path. Dan: Anyway, when reviews turned into features, I started doing freelance pieces for the regular newspapers, not the alt weekly, although I stayed doing that one. When I finished school, I got a call from the editor of a little weekly newspaper in Middlebury, Vermont, who said, "Our reporter, singular, Is leaving. We wondered if you'd be interested in talking to us?" This is David Moats, who ended up winning Pulitzer, in editorial writing for a Vermont newspaper some years later. At the end of the first week he said, "You know, you're going to be really good at this if you want to. I'll teach you everything I can teach you. But you really got to care about it, or I'll be really pissed." I found that I loved it. That's really how I got... John: ...how you got going. Dan: You do everything at a weekly. This was a place that would let me do anything I wanted within reason, in other words some assignments. I could do big features on people coming through to talk at the college, or whatever. It was very good experience. Then I went to a daily in Montpelier, in Vermont, the State Capitol, and talked my way into being a stringer for the Boston Globe and the New York Times. I called the guy, just cold-called the Times, because I had a story idea. Basically, his response was, "Who the hell are you?" This was in the days when the Times vetted its stringers very carefully, very carefully. He became someone, who over the years became a very good friend. I ended up working for him in Kansas City, which he invited me to join when he went to run the paper there from the Times. I did a bouncing around a bit, not too much bounce, five years in Kansas City, interrupted by a fellowship at Michigan, the Knight Fellowship which became the Knight-Wallace Then the Detroit Free Press recruited me as they tended to do from the Michigan fellowships. I went there and spent about five and a half years. Then the San Jose Mercury News, recruited me from the Free Press and that was pretty much the key moment. John: I think you have done some early data journalism at the Free Press. Did the San Jose Mercury recruit you specifically for tech or was it just general assignment? Dan: It had little to do with that. Starting in the late '70s, I owned a personal computer. John: Your first one was what? Dan: My first one was a Radio Shack. John: TRS-80? Dan: Yeah. I had an early Apple. I had Commodore. I really was very into that stuff. Going back, I had actually taken programming in high school. John: Basic? Dan: No, actually, FORTRAN. This was before Basic, really. I know Basic existed, but it was very much unused at that point. Maybe it didn’t. I don't remember exactly. John: Yeah, it was FORTRAN and basic. Dan: But FORTRAN, in those days, it was doing a keyboard with a tape that you uploaded into a mainframe at a university. You found out that you had a bug 24 hours later. It's a very different kind of thing. I learned pretty quickly that I was not a good programmer. I was competent, but I didn't have that thing. The ones who were good read ahead and solved a problem that the guy gave us that was do-able in about five lines. All but one guy took at least that long because he hadn't used the thing that would do it for until the next week. Someone had read right ahead and said, “that’s easy." I realized that at point, I wasn't going to be a good programmer, though I have a brother who's an exceptional fine programmer and has started and sold several companies over the years. Anyway, I thought computers were amazing. The minute I saw a personal computers coming along, I thought that's something I got to have. In 1982 or 1983 -- I don't remember what year exactly -- I bought an Osborne that was then called a portable computer. It became later called a luggable computer. You could actually carry and close up into a case with a five inch screen. I used it to file stories to the Globe and the Times. I had access to a Teleram, the terminal people used but I couldn't really use it for the freelance stuff. It was for the newspaper. But I actually was able to get the tech people at both papers…They were overjoyed. The editors were overjoyed because this cut out so much. John: It didn't have to go to a telegram room. They didn't have to... Right? Dan: Well, they didn't have to dictate. Dictation was not much fun. Actually, in Vermont, it was my territory for these major papers. I learned the trick at freelancing for especially the Times... That the stories the Times wanted were ones that utterly confirmed the stereotype that people in New York had about Vermont or utterly shattered it, nothing in-between. Reality wasn't that interesting. I say that a little bit facetiously but not too much. John: No, they wanted to change thinking. Dan: It was, "Oh, that's not Vermont. They're a great story. Oh, that's so cute." Vermont was kind of a pet. "Aren't you cute?" Dan: I went to The Daily and worked several years there. Again, I got very lucky because the editor there --and this was a family-owned thing... John: In Montpelier. Dan: Montpelier and Rutland they owned the two papers there. The family, called the Mitchell family, which really cared, they making a lot of money, but they really loved journalism. They had a staff that was way outsized for the size of the paper. The editor -- another case where along the way I've had editors who’ve said, "There's something going on here." -- this guy gave me the most coveted job at the paper which was after a year of the stuff I hated, like the little town city council and stuff. Dan: He basically gave me the job, which was to do anything I wanted. I got to just roam widely, and it was huge fun. John: When you landed in San Jose, did you have to eat your beans there, too, as a starter? Dan: No, they hired me. I'll make this short. Over the years I stayed interested in tech. When Bill Gates came to Kansas City, I insisted on covering that, things along the way. In Detroit I had many mismatched jobs, that I was a bit of a fish out of water at that paper for a lot of reasons. Finally I maneuvered my way into being a tech journalist and writing a once-a-week column from the business desk. It took a lot of maneuvering to get into it, and that was the thing. I did good stuff. I was doing some semi-investigative things. I was using my own computer. Well, at The Free Press, like everyone else doing what we called "computer-assisted journalism," I was buying my own computers becausethey wouldn't do that. I worked with people at other Knight-Ridder papers, which was completely against the rules. We collaborated on some projects. I got access to the mainframe at the newspaper, which had then gone into a joint operating agreement with The Detroit News. I was by then writing about tech and having a very good time. Of course, the minute I'm happy -- after five years I finally get happy with what I'm doing in Detroit --The Mercury News comes calling also violating the Knight-Ridder rules, which you didn't poach from one Knight-Ridder newspaper to another without permission. They had a good Silicon-Valley attitude, which was to say, "Mm-hmm yeah, permission. We'll talk first and see how it goes." What they wanted me to do was to come out, and there was a weekly section called Computing. They hadn't had a real editor for a couple of years. It had fallen on pretty hard times. It was a sad little section full of advertising but not a good section. The job they offered me was to come fix it to be the editor of that and I had a freelance budget, no staff of reporters but a lot of freelancers I could hire. I would write a once-a-week column. And it was a great thing. John: What not to like. Dan: This was 1994 and I arrived a few months after Netscape had been incorporated though they hadn't launched their beta browser. It was just an extraordinarily good piece of timing. That turned into… I was doing more writing, I'd sub for other editors on the business desk. I'm doing a great variety of stuff. The Valley was going through an enormous boom starting around then. In '96 I would guess, we had been adding a lot of staff, and an editor came to me and said, "Listen. It's time. You have to make a choice about where you're going to head -- either full-time editing, which we love the way you do it." I was thinking, "If I'm going to just go into editing." I had probably turned 40 at that point, not a great time to start up an editing ladder, and I wasn't even sure I wanted to run the thing. And they said, "Or something we think you'd enjoy more, which is go full-time on the column." I gave that a millisecond thought. Of course, did the column and just got a tremendous ride out of that. John: To great acclaim . Now it's interesting. You always had this nascent interest in it. Did it ever hit a point where you said, "There's an epiphany. This is much bigger than I thought"? Dan: Yeah, actually there were little ones along the way. When I was finishing college, I had a little apartment in Burlington, Vermont. I bought a Perkin-Elmer terminal, a dumb terminal, and a 300-Baud modem and talked my way into the University mainframe into the Political Science department because I had observed they had a Daisy wheel printer. I could do my papers on that, and professors actually in those days gave better grades to better-looking papers in terms of physical. They just did. It's human nature. I was also doing work with SPSS, the statistical programming outlet that all Social Sciences used, along with SAS. That was an epiphany like, "Oh. This really worked better. This is a good system." I guess the big one, and I wrote about it in a book in 2004. This would have been around 1984 or '85, I'm guessing. I had just moved to Kansas City I think at that point. Having been invited there by Tom Stites, who had been in charge of stringers at the New York Times, and who had become a friend. He said, "Why don't you work for a real newspaper?" It was great. I didn't know what would happen but it was a fascinating time. I was on a CompuServe forum. I had been on the thing called The Source, which was a predecessor pretty early, and on bulletin boards. I got very deep in the bulletin board systems. There was a thing called FidoNet, where people would write messages. They'd get stored and then forwarded. Early, very, very useful system. The CompuServe stuff was a thing that people signed on from lots of places. I got some software that would let me sign-on and do stuff, sign-off and do things. I was doing most of the reading and writing offline because they charged by the minute. And it got expensive quickly. I was on a forum for people, it was a word processing forum. I think I would have called them, whether they were forums or not. People like James Fallows, I think were online. I had met Jim online, before I ever saw him in person. This was in the '80's. He was an avid computer guy. In the word processing collection of people was a subgroup of people, who used a word processing program called "XyWrite." John: Yes. I remember XyWrite. Dan: Which was the thing that became Atex. XyWrite was and remains the best word processor in history, I still think. If I could use it... John: You don't use it anymore, right. Dan: I actually have it running in a virtual machine on my computer though. It doesn't work too well. I can't figure out a way to... I'm still playing with it. John: Playing with it, yes. Dan: XyWrite had this internal programming language that would let you do anything, really complicated macro programs and things. It was amazing what you could do with XyWrite to automate anything. Essentially, what we'd now call "scripting language." I had a problem I was trying to solve. The epiphany happened when I put a note on the forum saying, "Here's what I want to do. I think it will work, but it looks sloppy," and 24 hours later, checked back on. There were three or four replies from around the U.S. and one from Australia. That was the epiphany of the power of the network. That was the moment I totally got that something new was going on here. By God, I had to be part of it! John: Can you remember when as a reporter, you first put your story up on a bulletin board before you put it in the paper? Dan: Well, in Detroit I did something before the web, before the graphical web. There was a thing called "Gopher," which was a menu system where you click and go to other... I created a journalism resource as "Gopher." That as one learns to do at traditional organizations like newspapers, I didn't tell anybody until after it was finished. Like investigative pieces I wanted to do, you'd report at least half of it before you told anyone. Otherwise, you'd never get permission. Everyone thought, "This was really bizarre and interesting." No one had a clue what to make of it. I registered a domain name for the Free Press in like '92 or '93. They ended up using something else later on, Freep.com. It wasn't until I got to San Jose that there was clarity about this is important and scary and all those things. I remember, I think the paper put some things online before the story ran in the paper, before I did. I'm not sure about that. I know exactly the time, I remember it happening for me, when it caused a very, in our little world of tech, a fairly big stir. I don't remember the year. I had already started a blog. I started the blog in 1999. Several years after that, I got a tip that Google was buying Blogger. I called up Ev Williams, who was the co-founder of Blogger. His basic reaction was, "Oh, shit! We weren't ready to say anything about this." We made a deal that I would break the story with good quotes from him and thoughtful stuff in my blog on a Saturday night and It would appear inside the "A" section. This wasn't considered big enough for the front. It would be inside the one section that was live, that hadn't been pre-printed, that and sports. On a Saturday night, and Ev, he was out on a panel in Los Angeles that evening. We had kind of prearranged it. He knew this was coming. I posted it on the blog. He posts somewhere, I think on his blog, "Oh, crap! I guess I better talk about this." There was a little bit of theater going on. He didn't say he wouldn't talk to anybody else but he didn't until Monday. So for 36 hours, the only place you could get any real information about this was in my blog. The traffic just went through the roof! It validated blogging as a journalistic forum, which was my main goal. That was really my purpose in arranging it that way. The Merc to its credit, the Mercury News, said, "Hell, yes! Let's give this a try. This sounds like fun." John: Well, look, you are generally acknowledged as being in the forefront of creating a blog and blogging as a journalistic exercise. It's interesting that this was sort of an outgrowth of that network realization that you had in XyWrite in getting it fixed. That there are other people out there who want to, and can't contribute. There's power in that, in mining that. How did you feel about that transition in the audience? Because you grew up with an audience. Once-in-awhile a letter would come across. Dan: Keep in mind, in playing music, when you're playing live. Actually, the smaller the venue, the more you're with an audience than presenting. I love feedback. That was always fun. John: That was always the kick in live music. Dan: Well, the music was the key, but the feedback really mattered. I think I had some recognition there. I figured out almost immediately once I got to San Jose, where I had my email address at the bottom of the column, before anybody else was doing it as I recall. I started hearing from people. Here's the thing. I was writing about tech in the place where people were inventing this stuff. They were not at all shy about telling me when I got it wrong, or when they thought I got it right, or when I missed the nuance. Very rapidly, I mean really quickly, I came to the realization of something that's become a personal cliche, which was that my readers knew a lot more than I did. That wasn't scary, but a grand opportunity to do better work. The blog just expanded that, but basic, plain old email was the start. John: One of the things that we've lived through is the ascendancy, and this may be overstated but I'll argue this, bthe ascendancy of the individual writer of the institution, that it used to be that you were subsumed into a larger institution. I think with blogging with the network effect, it becomes the individual. Now there's almost a premium in standing apart from the institution. Dan There may have become one, but it wasn't new. John: True. Dan: Columnists and commentators always had that. John: Right. That's true. Dan: I had the good fortune to get to do that in a place where it was a perfect fit. The Mercury News was absolutely fine that I was not being a cheerleader, which made a big difference. I love this stuff, but that doesn't make me a cheerleader for things that companies and governments do. It's a better fit that way. The sports columnists have always been the people... John: Correct, correct. The sports columnist, the occasional business columnist, but... Dan: Now I think you're seeing it partly because the facts are becoming commodities. The amount of time and money people chasing scoops that are interesting for 10 seconds I find bizarre. I had the advantage and also a disadvantage at The Merc, we were very rarely the leakee of choice of breaking news. Very rarely, because they wanted The Times or The Journal. Invariably, not always but almost quite consistently, I'd get a call the morning something had appeared in The Journal or The Times saying, "Wouldn't you like to write about it?" I would say, "Well, obviously you didn't care if we do or not." That made it more important for me to actually say something that would stand a different test that would make people think a little bit. Nothing against The Journal or The Times on that, but it was a system that worked against us even though we at the time were read by everybody in the Valley. We got our share of little scoops, rarely big ones, but once in a while someone would drop something on us that was fun. We were visiting Oracle one day and Larry Ellison -- this was when Apple was at its nadir, really, really going through terrible times in the '90s and I knew Larry and Steve Jobs were buddies, at one point I said, “So, what do you think about Apple?" He said, "I think I might buy it." I was with two or three other Mercury News people. I think we all went, "Oh." Dan: He did a Cheshire-cat grin. He says, "We all know what just happened. How long are you going to stay here?" When we went back, I wrote up a piece saying that Larry Ellison is thinking of getting a group together to buy Apple. It was a page- one thing, but little things like that happened very rarely. Again, I was in this incredibly fortunate sport. The Mercury News gave me absolutely freedom, and it was at a time when that paper was printing money at a just prodigious rate. It was so far and away the financial engine of Knight Ridder. It was ridiculous how much money. On most days an employment classified ad section that big and three times as big on Sunday. One of the things Knight Ridder did was, I'm not sure who the editors were at the time -- I think it was Jerry Ceppos -- went to them and said, "We've got to go big on tech." Tony Ridder said, "Go for it." We did the most amazing expansion. It's a lot more fun being part of a place that's growing. They paid me a lot of money. I essentially had an unlimited travel budget. Not officially, but if I needed to go somewhere, it was like, "Fly coach, but go." I ran around the world. It was incredible. The number-one spectator sport in Silicon Valley is technology, so I was the sports columnist in a certain way. John: Yes, you were. You were. Now I can trace it back to Monster and some of the things that came in and ate a part classified ads and that revenue stream. Did you ever perceive it as being an existential threat to that business? Dan: Oh, hell yeah. I remember in the late '90s I bought something on Craig's List and took it to the classified ad people and said, "I think we're screwed." They said, "Oh, don't worry about it." In 1993 I gave a talk at a journalism conference of some kind. I was already talking about the Internet at that point. I was still at the Free Press, but I had become the guy who goes to conferences and talks about the Internet to journalists although there were people on the Internet in journalism before me, primarily John Markoff and a guy at The Houston Chronicle. I was early but certainly nowhere near first. John beat everybody to that one. I talked about this browser thing I had seen and had a little video of the thing that was going on at the University of Illinois and talking about the Internet. The head of R&D for Knight Ridder, a woman named Jenny Fielder, was there. Grabbed me after this and said, "We've got to talk." This is '93 I believe. Keep in mind. She said, "OK, two questions. How big an opportunity is this for us and how big a threat?" She asked exactly the right questions, exactly, so she was smarter than anybody at Knight Ridder because I wasn't thinking that far ahead. In the '80s I had already started to get a sense because on a CompuServe, or maybe it was some online forum, where journalist were hanging out. I'm trying to remember exactly who it was. It was a well-known feature journalist who put up a note that just knocked me over. He said, "One of these days we're going find out what people actually want to read, because of what we're doing here." That was an uh-oh moment. This browser thing, go for these other things I'm doing. Then the business side stuff, when they dismissed my Craig's List thing as irrelevant, come on. It was obvious in the '90s that this thing was going to implode. Just obvious. John: With AOL, Time Warner, another of those milestones? W Dan: Well, starting around '98 I was saying in my column, "This is a bubble. Tech is a bubble. It's going to end very badly and very ugly. Don't blame me." It was a not a well-received message in Silicon Valley, but again the paper was saying, "That's his job" when they got complaints, and they got a lot. I think the Time/AOL thing was the last gasp. It was insane, and it was right around then that a major magazine devoted to technology and an incredibly big profitable magazine tried to get me to come and run it. John: This would be one of the Ziff-Davis ones or... Dan: I can't say which. John: OK. Dan: It was one of the major ones. I talked a lot with them. I basically went and they were putting out this fat thing every month. I said, "This is great, and you're screwed. You've got to change a lot." Then when it got down to, "Should I do it or not" and I was already making what I considered an absurd amount of money, but they were going to double the absurdity. I asked myself a really serious question. "OK, do I believe what I've been writing, that they were in a bubble? If I really believe that, then principle job I'm going to have sometime soon is deciding who to fire. Is that a job I really want?" I put that to the CEO of the company. I said, "Not only do I think I don't want that job. What worries me is I might be good at it." Meanwhile I'm having a lot of fun. He said, "I can't argue with your logic because you're probably right." It's no longer in print. I was pretty sure then. This was early 2000 I think, just as the thing was peaking. John: It's a remarkable personal bullet dodged in choice made. Do you think there was something in journalism, in the news business, that prevented us from iterating fast enough or becoming beta or innovating or... Dan: A classic problem that monopolies have. A monopoly's a lot of fun if you're the monopolist, but when you actually get competition and if you're reporting to Wall Street, if you can't tell them a transition story that they buy... John: Tomorrow will be different from today Dan: ...they will torpedo your stuff. Then the wheels come off. This is what Tony and the people running Knight Ridder had to contend with. You can argue the original sin was going public. You can argue all kinds of things, but it's what it was. You can't find many monopolies that have made the transition. I don't see how it could happen. The Mercury News, just the employment classifieds, were a low 9- figure business, something over $100 million just before the bubble burst, like in '99. Within several years it went to a low eight- figure business, so something in the 10 or 15 million. I don't have the exact number. You can find that. You can't cut your way out of that. You can't grow your way out of that. You're screwed. If Wall Street's expecting that and you can't tell them a tale of wonder that they will buy and no one in newspaper has been creative enough to do that. In 1999 I remember it well. Newspaper editors met in San Francisco, and Andy was on stage basically saying, "You're screwed. You're where we were in the 1980s. You have maybe five years. He was more pessimistic than he should have been, but he was right. His timing was a little bit off. I don't see a way for newspaper monopolies, which had a good run, but it's life. John: It's past. Something that goes with your path in that epiphany in the arc of your career, that at one point in the '90s, at one point in the '80s, reporters like you, columnists like you, as you said The Times and The Journal benefitted more from getting the leaks, that you were a key part to all the tech companies. Do you think reporters are in any way a key part of how the technology companies view their future or have the reporters been disintermediated almost by the (social) networks? Dan: Not completely. In the startup world in particular there is an incredible amount of jockeying to get noticed by the tech blogs like TechCrunch, less now than used to though actually they've gotten good again. Startups in bubbles, and we're in another bubble not the same kind as last time, but it's very frothy. Getting noticed is key to get funding although some of the stuff that's getting funded today is pretty ridiculous. That's always true. That's one of the things you value about Silicon Valley, is that things that sound absurd can get funded if there's a reason to believe. It's certainly, I would guess, a different imperative on the part of the tech industry. People who could better answer that than me would be the people in the PR world. John: Correct. That's true. Dan: People like Richard Edelman and others who've been very, very astute about changes in their own business would probably have good insight, more than I would. Again, I haven't been really a tech journalist for a decade. I still dabble with writing pieces here and there, but I don't focus on that. John: One of the interesting things you've said recently in your columns and on your blogs is that you're still optimistic about journalism. You don't think the craft is going to go away. Dan: When I say “about journalism”, I'm optimistic about the potential for a society to get timely useful information from any number of places that they and others have sorted out and that is going to be filling one of the roles that journalists have played. I think some journalists will be involved in that but not the only ones. The transition we're going to go through and that's already started is going to be really messy and quite unpleasant for a lot of people. It already is unpleasant. I feel terrible for people I know who've been caught in this thing. I'm not particularly forward-seeing on things, but I do remember looking around the newsroom in 1994 or so and thinking, "I think we are auto workers and with very little understanding about what's about to roll over us." I certainly didn't know what it would be exactly. I just had the sense of "This is freaky. We're way too comfortable." I think that part of it was just having looked at how it happens in the technology world where no one can get too comfortable for long. I'm optimistic, but I'm not downplaying the problems that we're facing. John: One of the things you've said in the past is what you said about sorting things out, that it is going to demand a new rigor on the part of readers. Dan: The last couple years this is what my focus academically has been teaching some online courses. It's not public yet, so I trust this will announced by the time you use it but we just got some funding to MOOC a massive open online course on media and news literacy to offer it to anybody. It'll be based in a significant way on my last book, so I'm pretty optimistic that we can make a little dent here. There are two parts to this. One is better information, but I'm a big, big believer that we need better audiences, too. That supply, we've got that pretty well-covered. Some things are going to go missing and already are going missing on the supply side, but demand has been insufficiently addressed. That's been a big part of what I'm working on. John: Because the demand almost gets addressed in the marketplace, the business news, but other types of news are not addressed. Dan: Things that generate advertising are doing rather well business, technology, politics. You can name some niches. Things that are not part of that ecosystem are having more trouble. Sports is doing quite well. Things with a passionate audience can be still monetized. We're still working on business models and there are going to be a number of different ways. We haven't gone very far down the road yet, so I'm waiting to see. John: One of the things you've also in your recent writings mentioned that's critical to the future is coming to grips with the issue of privacy. One could look back and say, look, one of those other things eroding the news business has been your audience can be recreated anywhere. Because nobody has any privacy, I don't have to advertise on "New York Times" to reach that New York Times audience. I can find it by other means. You're obviously concerned about privacy. What's that intersection with journalism? Dan: It's a limited one. Going back to that comment from the '80s that a guy made, "We're going to know what people want to read," that turned into "We're going to know who they are, what they do, how much money they make, what their personal lives are all about." That was not necessary. The Internet model that Bruce Schneier, a great security expert and writer, has said that surveillance is the business model of the Internet. There's quite a lot of truth to that. News organizations are surveilling like crazy when they can. I put up a blog post the other day showing the number of trackers The Wall Street Journal launches. We pay for that. It would be polite of them to not do that once we've already paid, but I block it. This is an arms race. Everything I do to block surveillance I consider improper is being countered by businesses and clobbered by governments. We have a lot of rethinking of norms and law to go before this is going to be right. Journalists who think that surveillance of their audiences is a proper business model, I'd like them to rethink that. But the audiences have been trained over the last half-century that news is essentially free, that someone else is going to pay for it. This is one of the things that really annoys me about newspaper people saying, "God, look at what we did. We gave it away for free online. We never did that before." That's absolute horseshit. The cost of the newspaper subscription or at the newsstand was a tiny fraction of the cost of the business. We've been all but giving it away for about 50 years or more. When newspapers make this whiny remark...People in the papers say, "We're so stupid." No, you were stupid 50 years ago, but it worked. You had a business model that worked because you were a monopoly. It was completely based on aggregating eyeballs and selling them to advertisers. I don't know. Some people I know, and who I respect, think that we're never going to be able to sell news. I'm not sure yet. I think the more niche-oriented the topic is the more likelihood there may be to achieve a small but vital audience that joins with you to make a better product and who want to be supportive. It may well be that the best business model for news over time is, for communities certainly, may well be not-for-profit or cooperative, which hardly anyone has explored. The accidental monopoly that worked so well for 40 or 50 years is over, so now what? I don't want to decide today that no one will ever pay. I'm not sure of that. John: OK, one last question. You've lived through 30 years as a journalist, this roiling marketplace, this transition, this evolution. Do you see another 30 years until equilibrium? Do you see another 50 years until equilibrium? Do you see equilibrium ever being arrived at? Dan: I'm not nearly smart enough to put a time on it, but I see a different kind of equilibrium arriving. This is my hope, and I'll tell you what worries me, that we could end up with the wrong kind of equilibrium. The democratization of media is leading us, if we get this right, into an enormously diverse ecosystem of information, media, and journalism. John: By diversity do you mean splintered or what do you mean? Dan: I mean diverse. I'm thinking of it and I have been for a long time in the context of the physical ecosystem, the environment. An example that worked rather well I think, which is people who look at biological diversity and agricultural diversity and who understand what we're doing in the United States. If you look at the bulk of agriculture in America, it's highly, highly concentrated, very much mono-culture crop-growing, incredibly efficient, profitable and dangerous because people in biology and other things like this will tell you that a mono- culture is extremely, extremely vulnerable. We've had mono-cultural or close to it media journalism for a long time. Well, what happens if you have diversity in the ecosystem? Again, the scientists will tell you, and I trust them on this, that a diverse ecosystem biologically is as an ecosystem much more stable, that the equilibrium is there. Now for the individual species it's pretty tough because they're competing. Some of them are going to disappear, and some new ones are going to appear. This is classic Darwinian stuff, but the diversity overall creates a more stable system. That's what I'm thinking could come in journalism and media, that the overall ecosystem will be enormously solid, productive, fruitful, much less efficient individually because there'll be tons of experiments and lots of failures. The cost of trying stuff is so low that the law of big numbers says that even if the failure rate is 95 percent or 99 percent, if the number trying new things is high enough, you still have enough successes to really get something done. That's my vote. I think we're better off as a society if we get to that even though it's going to be a lot harder for the people who don't make it into that coveted ladder that you and I got on and got very lucky with. Now the things that can go wrong on that start with the re- centralization of tech and communications that is going on right now and that I think could end up with an equilibrium of domination of information by a tiny, tiny group of companies working in alliances with government that will make the media consolidation that people worried about in the 1990s look tame. That worries me a lot and network neutrality is key to this, a whole bunch of things. This is part of what I'm working on for a new book. John Geddes: Let's talk a bit about Silicon Valley and what changed, what it is now. You just started talking about big cultures working together, centralization. How has the ecosystem here changed in a way, in covering it, that strikes you as singular? Dan Gillmor: A lot of what's happened has moved from hardware to software. That's not brand new, but it's more profound now than it was, more pronounced. I'm not sure if it's Marc Andreessen or his partner who said, "Software is eating the world." This is really true. The transition that's going on has been pretty remarkable but also completely predictable, because Moore's law and its corollaries simply haven't stopped. More and more of everything is getting brains added to it, memory added to it and is now being connected to digital networks. Networking started getting bigger in the '80s and '90s. Now, it's exploded into something more like a global brain. It's, again, everything up for grabs. There are plenty of things that I find pretty terrible about this place, but things that I admire are, among others, the ability of this place to keep reinventing and to be out at the edge of things that are happening. But the factors that make Silicon Valley what it is have not completely changed. You have great research universities, Berkeley and Stanford, that actively encourage entrepreneurship from faculty and students. These are superb schools, two of the best in the world. You have the enormous pool of capital that still is here in the Bay Area. If you want to start a company, you can make two or three phone calls and have all of the pieces in place, from personnel to everything. Boom. Just really simple. Companies can be built from off-the-shelf parts, in a sense, quickly. There's a shortage of engineers, but that's always been true too. The appreciation of risk is higher here than almost anywhere in the world. Sometimes, it goes off the rails. I don't recommend failure. Having done it, it's not fun. But people who learn a lot from failure tend to go on and do other things. Until the earthquake that we all know is coming, this is a really nice place to live. Look out the window, it's pretty nice. John: It is. Dan: These are factors that almost nowhere else in the world can match. One of the things I'm most pleased to see is that some of the Valley, better parts of the Valley culture are... John: Replicating. Dan: ...replicating elsewhere. I think almost everything that's interesting in media is going on in New York right now, in start- ups. Just about everything. Very little here that's that interesting. I think that's a good thing. The other cities around the world, people are developing start-up cultures. The big companies all take incredibly seriously that no matter how big they become, they may be at risk. But they also go to excess. There is a tendency toward monopoly in technology... Dan: ...that may be greater than in other things. Just as it was important for the anti-trust competition policy to put some speed- bumps in front of Microsoft, I think it's just as important that they be more active than they've been in looking at companies like Google, Facebook, Amazon and a few others. Maybe Facebook, in particular. I think they're heading toward monopoly status on a scale we've never seen. The Valley also likes to think it's very libertarian, until it needs a favor. People here have always been hypocritical about that. That's all right. Everyone's hypocritical. John: How effective a job do you think journalism has done in covering this? Because one could argue we too often look at the micro things, the individual, and not look at the ecology writ large. Dan: I wish there had been more of the latter, but there are people around who have been pretty reliably doing it for a long time. Steven Levy is a good example. That's his goal with his new project, with "Medium." He's actually even going to have me do some things for him, so I'm looking forward to that. There have been people who have done it, but a lot of tech journalism is lazy. But, then again, a lot of journalism is lazy. Certainly, I don't think any journalism compares in laziness and predictability to political journalism, which offends me, and a great deal of business journalism, which is more about access to powerful people than about doing the job. I hope that that's going to change more than it has. Tech has some of that. A lot of what we're seeing in the last few years has been one-hundredth of a turn of the screw, as opposed to a quarter of the turn of the screw that used to be the dominating thing. But that has a lot to do with the business model of tech blogs. You've got to pump out tons of stories every day. You're not going to go and do the hard ones. You just don't have time. John: That's the thing. Now, the riddle is, if you have a quota of tweets, a quota of posts, a quota of...It's that challenge. Dan: Nick Denton, who I hope you're going to talk to for this, because Nick is pivotal in this. I have some issues with the "Gawker" style, but Nick also built something that he then has expanded into actual deeper stuff. I wait to see how things mature before I call them irredeemably awful. The ones I tend to respect more are the ones that say, "Well, now that we have traction, can we do something that won't embarrass us?" But that may be the old-school journalist talking, because it may not matter to the people who are reading it. John: No, it may not. No more. Dan: But Silicon Valley is no longer just here. It's more of an expression than a place. John: Yeah, that's true. OK. Wonderful. Thank you, Dan. Thank you. ...
VIDEO: YES

Richard Gingras
BIO: YES: Richard Gingras is senior director of news and soc...
TRANSCRIPT: Martin Nisenholtz: April 1st, 2013. We're here at Google with Richard Gingras. Why don't I start? Richard, you go back about as far as anyone in the world of consumer interactive media, digital journalism. Talk to us about the very early teletext and videotex era. What, from your perspective happened, and what was the learning at that point? You might want to also mix that up with your background a little bit just so we get a sense of the context. Richard Gingras: Sure. At the time this was 1979. Before that, I had been working for Public Broadcasting. PBS in Washington. I had, in some fashion, come under the wing of Hartford Gunn, who was the founder of PBS. I'm not sure they used the term at the time, but he was really a true technologist. Hartford, who is considered the father of public broadcasting, had really developed it from almost nothing, had built the network from almost nothing. Was always, in spite of PBS's lack of financial capabilities, managed to hornswoggle the best, latest gear from whatever manufacturers out there would play with him. Sony was among them. He was always on the edge, which frankly was a very important shift in my own thinking about media. I was a young guy out of college. This was all profoundly interesting to me. Hartford, after HBO, was the first to use satellite networking for the delivery of television programs. We built a satellite network for PBS. I worked on that with him, as well. The progression of use of technology was always something on his mind, whether it was the latest low light cameras, even though they weighed 400 pounds, or satellite networking, or, as it turned out, broadcast teletext. I, at that point, had moved west to California to pursue, at KCET, the public television station there, the use of new technology in expanding the realm and role of public broadcasting. How could public television stations take advantage of additional cable channels, so on and so forth. With that, and with Hartford's stimulus from Washington, we built a project looking at broadcast teletext. At that time, in context, broadcast teletext was quite popular and already well grounded in Europe, particularly in the United Kingdom, and just starting to develop in some of the other countries, but CEEFAX, the British system, had been in place for several years. In the United States, at that point, it was looking at the various systems that could be used for this, and there were various manufacturers. At Hartford's urging, Public Broadcasting, as represented by KCET in Los Angeles, joined together with NBC and CBS to explore these technologies and do a test. We ended up working with the French version of the technology, a system called ANTIOPE, and in late 1979, early 1980, launched the trial in Los Angeles. This was the first effort. We had also done other technical experiments that the FCC wanted us to do, just for them to help understand how would the use of the vertical interval of the television signal impact, for instance, the proper reception of the television signal on standard TVs, all of this stuff. We eventually mounted the trial. I had managed to raise money from the Arthur Vining Davis Foundation to do it. We created three services to be tested in several hundred households in the Los Angeles area, so we put all that together. Not surprisingly, KCET's service was focused more on what we thought was useful news and information. The commercial services did some of that but were also focusing on potential ad related products, as well. I, with a small band, basically, put together this, in a sense, interactive news magazine that you could take and control with a special television set that had this new capability built in. With a remote control, I could select from any of 100 screens of content. Whether it be the latest news or the latest sports scores. Which given in context, was obviously quite revolutionary. We don't think of it now. In fact, I recall, several years ago, mentioning this to some young engineers at Google here, who looked at me like, "So what's the big deal?" What they didn't recognize was, at that time, for instance, if you wanted the score of the baseball game between the Yankees and the Red Sox at 11:30 at night, you had no place to go. You could maybe listen to the radio and when they got around to the news cycle, you'd get it. But there was no on demand means. I used to call the sports desk at the local newspaper. The grumpy old guy would answer. I'd say, "Did the Red Sox win?" He'd say, "Five to four." Which is the easiest way for him to deal with the call besides just hanging up. They wanted nothing to do with it, but nonetheless. So we built these services and they were quite effective. The PBS one in particular was quite effective and quite popular. John: Can I back up just one second? Richard: Sure. John: You had come to this from school. What was your training? Richard: I was an English major in college who studied, also, filmmaking on the side. I went to Boston College. I did some documentary films. I joined PBS as the assistant to the assistant to the head of programming, who was a guy named Sam Holt, at the time. John: So you were not a technologist? Richard: I was not a technologist. I was just a guy interested in media who ended up in that classic role of the day, whatever role you could get into, in the mail room, as it were. Or as the assistant to the assistant to the Vice President of Programming. Get into the business. What you did, what I did, was since my job filing correspondence, was read everything that came through Sam Holt's office. That's how I understood what was going on. Martin: Returning to tele text for just a minute, it fails. Obviously, there's a window where this is happening. But for whatever reason, probably having to do with the fact that the British license their TV sets, the US market is... Richard: In my recollection, it failed for the following reasons. Because from a market trial perspective, it was very successful. Our test users loved the product. But this was 1980. We had three competing standards. There was a French system, there was a Canadian system and there was a British system, all competing. Clearly, the set manufacturers did not want to launch with three different systems. This again, was in the earlier era of American telecommunications technology. Where if there were issues like this, then the FCC would step in and help form a standard. But they had, in the late seventies and eighties, begun to drift away from that. Frankly, in 1980, when Reagan was elected, a big push on his part was deregulation. So the FCC further stepped back from taking any role in setting of standards. They, with regard to broadcast tele text, said, "We won't set a standard. We're going to leave it up to the industry to sort this out. Let the marketplace decide." The consumer electronics association stepped in to try to sort out a standard, but could not do so either. John: So you had Knight Ridder. Martin: Videotex. Richard: Knight Ridder, on the videotex side. Some other companies on the videotex side. But particularly with broadcasting, it was important to have a standard. Because manufacturer's are saying, "What do I add to the set? Which one do I pick?" Interestingly, at that time, important point to recall, we were just in the final throes of the battle between VHS and Beta. Where Betamax, by Sony, was frankly the better quality standard, the better quality system at this point in time. But lost in the marketplace. Really got their hat handed to them, very expensive. Because in introducing new technology like that, you have to forward price to some degree. They did. They lost a lot of money. So the manufacturers were far less inclined to take the risk of saying, "Let's go forward with three standards and see which ones win." That was going to happen. Basically, it fell apart. Not based on market demand, but based on the fact that the set manufacturers just could not see their way through the lack of a technical standard, weren't willing to take the risk of forward pricing the technology to see which would win, and it basically all collapsed. Martin: My recollection, Richard, is that particularly on the industry side CBS, NBC, and then to John's earlier point, the video text trials, these things all basically went away in the early '80s, early to mid '80s, and I think industry said, "Well, this doesn't work. We don't have to worry about this anymore." What happened after your tele tex days, what did you then pick up? There were big company, in your case the government, but big company efforts, there was no entrepreneurialism around this. Richard: No there was no entrepreneurialism around it. Basically, that was the end of that chapter, frustrating as it was. We could see the promise. We were doing things in schools with it, and we noticed a tremendous amount of potential to this technology, but clearly it wasn't going to go anywhere, which was unfortunate. I interestingly did go off into an entrepreneurial area, but it was a sidetrack. Again, we had identified that the television signal could be used for data delivery. I went off and joined a small company that wanted to use vertical blanking intervals for the delivery of data in various forms, for business uses, and also for some location media purposes. The company had a product, which I developed called Silent Radio, which was basically electronic displays that you would put in places like banks, so people could be amused while waiting in line. Same thing, news, some ads, so on and so forth, in electronic displays. I went around the country, interestingly, at that time, and signed up contracts with 50 television stations and 50 markets to distribute data. That's what I went off and did during this period of time. John: Like any English major would. Richard: Like any English major would. By that time, I had gotten whatever this bug was relating to the use of technology to do interesting things. I don't know how I knew how to even think about it frankly. It's not one of those things where I can recall thinking this out and saying, "Oh, plastics. This is going to be big someday." [laughs] It just seemed interesting to continue to make these progressions in one form or another. Martin: What year are you in now? Richard: This part would have been in the early 1980s, '82, '83. Then the McIntosh came into play, launched in 1984. A few years later, I'm trying to remember the exact dates, '85, '86 or so, Bill, I'm forgetting his name, at Apple introduced HyperCard, Bill Atkinson, HyperCard. HyperCard was this very simple programmatic language that allowed one to create, in a sense, simple information data bases, shared information data bases, and so on, which was really intriguing and caught my fancy. When that happened, I at the time was still working for this data distribution company called Cybernetic Data Products, but was really caught by this new stuff. It had basically begun to hit the market. People were beginning to release software packages based on HyperCard, so I thought, "Why not?" One weekend I crafted a prototype of a HyperCard based travel information product, which ended up being called City to City. I took this product and I get in contact with Activision, which was a leading software developer of the day, and I said, "I have a travel product for HyperCard and thought you might be interested in distributing it." The truth is, I had put in about 10 hours of work, had one city that I had glommed together some data, everything was a proof. Sure enough, they said, "No, we'd be delighted to meet with you. I met with them, and they said, "It looks really great. Can you be ready to ship this in three months?" I hadn't done squat. I didn't know quite what I was doing, but of course I said, "Yes." I finished that product over the course of the next few months. We launched it in January at Macworld. John: January of what year? Richard: This would have been January of 19, I'd have to go back and check, but it's probably '86, '87, there about. It was interesting. Of course, there really wasn't much of a market for travel products on computers, given the fact that there were no laptops. It was a dumb idea, except for the fact that there had been other products out there, and I just sensed there would be some interest in it, and so we did it. That then led, and feel free to cut me off here, that work with HyperCard led Apple to get a hold of me. They thought it was an interesting product. They said, "We're trying to figure out how to get the Mac into major companies. What we think would work is if we can show how the use of the Mac makes it much easier for executives to use computers in the workplace. Would you design a prototype approach to this,?" And so I did. It was something called Executive Workstation, which was just a very graphical user experience for a group executive office system, calendaring information from various news sources and so on. This again was a prototype, and I had no real clue what I was doing. I put it together and it worked. It was flashy from a marketing perspective, and Apple loved it. Then again, they took me and we went, the first client for it was Pacific Bell, we went to Pacific Bell here up in Pleasanton, and they liked the product a lot, the Executive Suite. They said, "Great. We love it." Of course, I then had to build it. Again not... Martin: Now you're working for Apple? Richard: Now it was a private company, I had started a company called Media Works, Apple basically funded us. They said, "Here's the money. Go forward and build it." So I built this product, this group calendaring system, again not a trained software developer by any means, but I figured it out. If anyone looked at the code who's any expert in this area, they would have giggled, but none the less, it worked. This group calendaring, it was a front end to the IBM PROFS email system. I even did initial News agenting software. We would often do, Citi Corp had this service called Global Report, it was an early Bloomberg competitor, that I did a front end to. Martin: Let's fast forward a little Richard. I want to get to the Salon work. You then go to @Home, is that correct? Richard: Yes. Media Works, the recession hit in the early '90s. It was very hard to sell these systems into major corporations, particularly when the recession hit, so I wound down that company. Then I was first hired by Symantec, Peter Norton Computing. It was a lag. I ended up going to work for Peter Norton and doing the Norton Desktop for Windows. Basically, how do you make Windows, which was the pre graphical user interface, it was basically DOS in the very early version of Windows, and make it more like the Mac? I did that for about two years, and then Apple came back to me, because they were interested in building an initial online service called, "eWorld." The consumer online space had just begun. CompuServe was out there. I think CompuServe had a couple of hundred thousand subscribers at that time. AOL had licensed a platform from Apple. Apple had an internal mail system called, "AppleLink," and they had created a consumer version called, "AppleLink Personal Edition," which Steve Case, they decided not to go forward with that, licensed that platform, and it was with that platform that he built AOL. And then Apple decided, "Well, maybe we should get into this space again." We went back to Steve Case, licensed it back from Steve on a deal that would have made him very comfortable if Apple had become the dominant consumer online service, because he would still get paid a per hour rate for anything that come over the network, which was great for him. And we took warrants for six percent of AOL in doing so and built eWorld, which was the first of the more graphical online services. It was basically access to third party information services, all of which had to be custom built for the service, because there was not Internet at that time. Martin: It's a walled garden. Richard: It was a walled garden with a lot of community capabilities. We had chat rooms and large chat events, and so on, and so forth. It was very community oriented. It had a very graphical community oriented metaphor that we built upon that. But the interesting thing there with eWorld at that time, we had actually built it for Windows and Mac, and were about to launch. We were getting ready for launch. I recall it was in the spring. We were launching a few months later, and Michael Spindler, then CEO at Apple said, "I don't want you to launch it for Windows. I want you to launch it only for Mac. We want this to be special for Mac users." And I remember that meeting to this day, because it was incredibly deflating, because I realized that we were effectively toast, right? So we launched the product. It did quite well given that it was Mac only. It had 125,000 users in the first years. John: It was like three percent market share, or something like that? Richard: Precisely. Exactly. You know, if we would have had Windows we would have had a million users, right, but we did not. So it was a classic unfortunate misstep on Apple's part. And so in the end Apple's financial difficulties got worse. This was in the nadir of Apple, and so they decided they had to shut the service down. They couldn't afford it, and we sold it all to AOL so AOL took all the assets and all of our design motifs and used that for the next version of AOL. Again, when we launched, AOL had 225,000 subscribers so this was very early on. So we sold that to AOL, and then about that time Will Hearst reached out and folks at @Home, and I joined @Home. This was January 1996. So at that time in late '95, the consumer Internet started to happen. I think CompuServe had just opened up, as it were, a portal to the Internet, and at eWorld we were just beginning to do same for eWorld when we decided to shut the company down. And @Home was obviously the larger vision of saying, "Obviously the Internet is going to be the consumer experience. How can we provide broadband capability?" So I joined @Home as the... Martin: And @Home is a JV between Excite and...? Richard: No, at that time @Home was effectively founded by, it was a startup put together by Kleiner Perkins, specifically John Doerr, and TCI, specifically, oh good lord, what his name, John Malone. It was a fascinating board, John Malone, John Doerr, and the heads of other cable companies, just because this was designed to be a venture that was largely owned by the cable companies themselves. You could think of this as Hulu for broadband 1996 with the idea of using the cable infrastructure for broadband, with the idea of @Home putting together a consumer experience, a broadband portal experience, to help consumers get the full value over what broadband was intended to be. It was founded in late 1995. We launched the service in the fall of 1996 in a number of communities. The merger with Excite came two years later in an effort to broaden the portal business of @Home, which, frankly, served to create more friction with the cable operators. Because the cable operators, their real desire here was, "How do we get into this new opportunity of broadband Internet delivery?" They were far less interested in the notion of creating some aggregate consumer brand, singular consumer brand, that would be across the cable industry. That was against their interest even though the name of the company was Comcast@Home, Cox@Home. But all of the cable companies went and looked at that and said, "Well, that's diluting our brands and our marketplaces. We really don't want anything to do with that." Martin: So typical consortium problems in the same way the newspaper industry had them with CareerBuilder and other attempts to come together, local regional players into a national... Richard: Absolutely. Classic. And, you know, I think, frankly, if @Home would have stuck to its core infrastructure premise and promise of, "Here's the best technology to provide broadband capabilities," it might still exist today though as an infrastructure supporting institution for cable and not beyond that. Who knows? But certainly, as it sought to become a consumer brand that was perceived to be competitive to the cable brand, then that was quite challenging, and the frictions at the board level and at the @Home cable partner level were pretty intense. John: That was '96 so you had RoadRunner at... Richard: Time Warner was the one cable company that was outside of @Home. @Home had basically pulled together all of the other major companies, but Time Warner had stayed out and went their own route with the RoadRunner effort. Martin: But it goes public, and you must have benefited from that to some extent. Richard: Oh, absolutely. It went public. I mean this was an extraordinary experience for me, and obviously a significant wealth building experience for me. No regrets. It was deeply unfortunate that it was clear that it was not likely to have legs given the friction. Martin: Right. The reason I bring up the wealth creation, Richard, is not to focus on money at all, but to say I think that gave you the wherewithal to begin to think about investing in Salon, which is where I think you really first met journalism head on, right? Richard: Yes and no. It certainly gave me the wherewithal, but the first funding of Salon is a slightly different story. That actually happened when I was still at Apple. Yes, I was still at Apple. We were winding things up at Apple. The Internet was... John: What year are we? Richard: Again, this was the fall of 1995. John: OK. Richard: So we could see the Internet start to blossom, and I remember sitting around those days at Apple. Things were clearly coming apart at Apple, but we sat around there, the bunch of us. This was a very talented bunch of people at Apple at that time. You know it was very early stage. Jonathan Rosenberg, who was head of product here at Google for years and years and years, very close friend of mine, worked for me at Apple, worked for me at @Home. Reid Hoffman was a junior product manager in my organization at Apple. People who went off to found PayPal, they're just smart, capable people. Someone else who went off and was part of Danger with Andy Rubin. And we recognized that the next step was going to be broadband delivery so many of us went off into that era. So we knew the Internet was going to happen. I, at that time, had been contacted by Chris Gaither, I believe it was, and he said he had heard of some folks at the San Francisco Examiner, who were interested in starting an online only magazine, and they were looking for help in getting that started. So I said, "Fine, I'll talk to them." And this was David Talbot, Mignon Khargie, Scott Rosenberg, the early team, they were all at the time at the Examiner. And they came and met with me at Apple, and they said they wanted to start this magazine called, "Salon." They had some mockups for it. And I, "Well, that's really interesting," and, frankly, I think Apple should be interested in this, if not only as simply a marketing expression, right? Let's get behind new brands and products that are forming here. And so but I had no money to invest in this, and there were no vehicles that Apple could do that, particularly given the company's financial state. But, given the company's chaotic state, I had a marketing budget that had not been expended. So I said, "Look, I'm just going to do a marketing contract with you." So the original $75,000 that went into Salon was basically leftover marketing money from Apple that I put in their hands along with every computer I could sneak out the back door. That was the founding of Salon. So as I'm always careful to say, I wasn't the seed investor. I arranged the seed financing, but in truth these were unspent marketing dollars that frankly if the... Martin: So did Apple technically then own Salon? Richard: They technically owned, it wasn't a capitalized deal at that point. It was a loan, which then got converted when Hambrecht and Quist came in and did the first formal investment in Salon. But when I came and I said, "I'll consider doing this, I figured out how to do it. I brought them back in, and I said, "Here's what I can do. I can give you $75,000," and they knew that decision was coming, and they said, "That's great. We quit our jobs yesterday." And I remember I went like, "Well, like wait a second. This is only $75,000. This does not go very far." But, nonetheless, they quit their jobs and that was the start of Salon. And I ended up working closely with them as an adviser just to sort of help them think it through, but, yeah. Martin: OK, you got through the @Home experience. Is there anything you take away from that experience from a journalism perspective, or is it you're advising Salon, you're at @Home? John: I want to ask it in a slightly different way, as well, while you're answering, because we're going to talk to Kinsley later in the week about Slate and Salon. These were, for a brief moment they were the promise, and now we know what we didn't know coming in here is that Microsoft started Slate and Apple started Salon through the back door. I never knew it. So you have these two fairly significant, hardware software manufacturers deciding to go into the journalism business for online delivery. Why didn't it work? Richard: There are lots of pieces to that. I will say that along the way, even, back to the early, broadcast teletext days, and it's interesting, because we still have these conversations today, what was clear to me in the days of broadcast teletext, was that these different media forms, did indeed require a very different approach to thinking about the use of the media form itself. What we did with broadcast teletext was very, very brief rewrites of stuff. This was being read off your screen, from 8 to 10 feet away. It was a very different form factor, in terms of how one went about this stuff. Frankly, I had those debates with the folks at Salon, at the beginning, "Are you really thinking differently about the media form?" They really weren't. Obviously, Salon is still around. Martin: As is Slate. Richard: As is Slate. But, the audiences were comparatively small. How many people? Even, as late as 1996, we can go back and check, my guess is that the total online population at that point was, probably, not that much more than a million people. This was very tiny audiences. The opportunity to make near term, significant revenues off of a content product in that realm was a tricky one, to say the least. @Home, there too, we began to look at how would this change the technology realm? How would this change the media form? I saw that as part of our role there, was to say, "Part of our role here is really, to showcase what could be different." The fact that we could use video, when no one else could use video, outside of broadband. We did this thing when Clinton was deposed around the Monica Lewinsky case. As part of that, they released, one day, the videotapes of his deposition. David Wehr was doing some work for us at @Home, at the time. I said, "Let's play with that." We went, and we took all of that video. Very quickly, in 24 hours, cut it into pieces, cataloged it, indexed it, and put it up on @Home such that you could not only see the deposition, but go through the indexes, and find him talking about the blue dress, or whatever it was. It was intriguing to play around with the media form in different ways to understand how it could be used. But, these are still, very early periods. John: In search. Richard: Yes. All of these things were in their very nascent state. Salon, at this stage was, again, "Let's do interesting things with the medium, but connecting the dots between real revenue potential, at that time." Their bottom line was very, very hard. It was still, very much, about the promise. John: Slow delivery. Richard: Comparatively, slow delivery. If you didn't have broadband, obviously, delivery was very slow. But, it was all about the promise. Salon was able to continue to raise some money based on that promise. Indeed, in 1999, went public themselves, which gives you a sense of what kind of a bubble had, indeed, been forming, around that point. Martin: I want to quickly get to your work with Google, because, we have about 20 minutes left, and I want to make sure we get a lot of that. But, one of the things that's very interesting about your background, Richard, is that you're an English major from Boston College, but you transplant out here. Can you comment on why you think, the culture here, all of the very major technology so called superstacks evolved out here, although Jeffrey Bezos kind of drove out here. What's going on here that just didn't take place on the East Coast? In particular, does that matter to journalism, in your view? Is the technology superseding the content at some level? We'll get to Google in a moment, but, I'm coming to it through a backdoor in a way. Richard: Why out here on the West Coast? I think, it was simply time and circumstance. Among the circumstances were, KCET was, obviously, in Los Angeles. I moved to the Bay Area to work for Apple, in 1994. Silicon Valley, and, "The Tech Boom," this was still, very early stages. But, with the formation of the Internet, a couple of things came together. One was, you had this critical mass of very capable people who were here. For instance, as Apple went through its throes, all of a sudden, there were all these folks at Apple, very talented folks, who were clearly starting to depart what was clearly seen as a sinking ship. I mentioned some of the names. The Reed Hoffmans of the world, the Jonathan Rosenbergs of the world, and so on, were coming out of that company looking for things to do. It was clear that the Internet was going to change a lot. It was going to cause change to all sectors. We knew that. It didn't take rocket science to figure that out. We didn't know exactly how it was going to play, but, we knew that a lot of stuff was going to happen. You had, of course, at that time, the commensurate formation and growth of the much larger venture capital community. You had the capital, you had available talent, and you had this obvious landscape of opportunity with the Internet. Martin: That contrasts with the kind of single company, walled garden approaches of the early 1980s. Richard: That's right. John: Also, the central enabling technology, which was the PC, and the Apple, the MAC, were getting a lot more powerful. That business was still in growth mode at that time. Richard: Absolutely. Martin: But, in the early 1980s that was not a foregone conclusion. As Richard said, all you needed to do to get tele text and video text services was put a relatively low cost device... John: Right. But, the time that he's talking about with the venture capitalists forming, people are starting to leave Apple, now everybody in the country is starting to get computers in their homes. Martin: Yes. There was infrastructure. John: It's not just that you can see that the Internet works, you can see that everybody's going to be on it. Richard: Definitely, as the '90s began to play out, basically, the consumer ended up having a whole lot more reason to want to buy a computer in the first place. Over the course of the '80s, these were, still, comparatively rare. They grew nicely, but, it wasn't really considered a consumer device. It was largely an office device. John: I came through here, about that time, and interviewed everybody, including Steve, sitting over in the next building, wringing his hands, and watching Apple. All anybody talked about, really, in those days, was email. They said, "Everybody's going to have email," and instant messaging was about to come on. But email was still considered the reason why you had to have all this stuff. Richard: Yeah. Even then, in the '80s, that was comparatively slight, because email systems really did not come into play in the consumer domain until you had services like CompuServe. You had it within the company, but you didn't have it in the consumer realm. Desktop publishing was one of the first big steps for the MAC, anyway. The fact that you could use this for things like newsletters, printed newsletters, not electronic newsletters. Martin: You somehow find your way to Google, let's fast forward a little bit, how does that happen? Richard: Post @Home, I went into a period of "semi retirement." I wasn't sure what to do. I did some investments on the side, I worked with some other small companies that we evolved and developed, and then, I also founded one called Goodmail Systems, which was about certified email. That was my one sidetrack from more media oriented ventures. But I was fascinated with the notion of how you build trust environments in the Internet. Goodmail was a five year struggle, and, eventually, it was four more years than I ever intended to spend in the email business, and I decided to move beyond that. About that same time, folks at Google, specifically Jonathan, said, "Why don't you come spend some time here? We're interested in trying to figure out out where the world of television is going, where the world of news is going. You've got very relevant experience. Come in, and join us." John: What year is this? Richard: This was in 2007. I worked with Eric, and Jonathan, and other members of the senior team, looking at television, which ended up evolving into Google TV, then looking at the news space. The big question on Eric's mind was, "As the world of journalism evolves, what could Google do to effectively influence that evolution?" Those are the kinds of questions that we were looking at. Martin: You came to see us at The New York Times, at a certain point in time. But, nothing really evolved out of that. What is your perspective on that? We'll ask Eric the same question, but I'd like to get your perspective on what happened. It seemed to have so much promise, when it first started, this venture between the journalistic side and the tech side. You had the engineering, we had the content. Richard: I think, in a sense, what happened, on our own end, it was this interesting, intellectual exploration of how does the world of media change, and how might one properly influence that? I hope this doesn't get inordinately complex. But, I tend to think that a lot of us, when we approach a situation like that, that's chaotic, we want to bring organization to it. We want to bring simplicity to it. Part of our thinking was, "What could Google do to bring together a platform that would help this stuff form in right ways?" There was a lot of goodness in that. John: What do you mean by, "proper," and "right ways," and "goodness"? Richard: There was a general recognition of, clearly, this was a more open world. Old business models are clearly deteriorating and will not survive. That was quite clear. New models of advertising were evolving. New models of information presentation, and production, and sourcing were evolving. How might one give this structure? One part of the thought process was, "Could one develop a platform that made it easier for independent journalists to produce their own efforts, and group together with others to produce their own efforts?" Martin: A "Wikipedia," model, in a sense. Richard: A "Wikipedia" model from an infrastructure perspective that would let, in a sense, independent voices and brands form on top of that. It wasn't ever intended to be an umbrella brand. There was a lot of goodness in it. We recognized that there were a lot of things that we could do, from an advertising perspective, or from an advertising platform perspective. Some of that stuff, obviously, did fuel Google's efforts in the advertising platform sense, and to some extent, in our work with search. But, from a publishing platform perspective, we didn't move forward with that. It was the general belief, on some folks' parts, that a, did Google want to get into the business of being a publishing platform versus a much, in a sense, higher level search infrastructure? Did we want to get into the platform business, and might it not be too early to get into any of this stuff, given the rapid changes of technology, and other platforms? Blogging platforms were evolving, and so on, and so forth. For a variety of those reasons, it was decided not to go forward with the publishing platform effort. But certainly, it did continue to inform some of Google's other efforts that related to publishing, such as, modernization. John: What about YouTube? You said that you were involved in the television strategies, as well. Richard: Well, what we were really looking at on the television side was "What was the future of the television set." Google has always been quite concerned about the hegemony, for instance, that exists between distribution players, and hardware devices. The control of cable over the distribution infrastructure, for instance. The control of carriers in device lock ins in the cellular world. The notion, really, with Google TV was, "How could we enable the full flowering of IP for video, and in a sense, to some extent, bypass the control points of the cable guys?" Thus the notion of saying, "Should there be an operating system for the TV that basically, says, 'Connect this TV to the Internet, and you've got the world of the Internet before you?'" Which, would be a hard thing for the cable guys to control. Martin: Richard, you're now in charge of Google. You head up Google News now? Richard: No. I was an adviser. I didn't have any operating role. I acted simply as an adviser to Eric, to Jonathan, to Marissa. I worked closely with the Google News team, closely with the forming of the Google TV team. As part of those responsibilities with Eric, is where he said, "Spend time with, The New York Times, and other players. Try to understand more of what we can do there." Martin: You're now employed, right? Richard: But, then I left. We didn't do that platform I was looking to do, which was understandable and fine. But, then, at that time, Betsy Hambrecht reached out from Salon, and said, "Can you help us out?" I decided to do some advising for them, and that ended up fueling that. At this point, I had decided that figuring out what was going to happen with news was really, really interesting to me. When I started working with Salon, I went, "Maybe I should actually do this." I decided to join Salon, and run Salon, to, as much as anything, get my hands dirty trying to figure out, can you make these businesses work? What is hard? What can you try to do, and not to do? Martin: What did you learn? Richard: I learned a couple of things. I learned, for instance, that editorial cultures are very, very slow to change. It was fascinating, because, as you know, you've heard me speak about this before, I feel like we need to rethink everything, every part of the model. Including, for instance, the approach to the form. Not that I had a specific recipe for what the new form should be, but that old forms don't necessarily work. Here we are in a world of status updates, and bullet points, and we're still largely doing 2,500 word articles at Salon, and I looked at the data, and that wasn't working. Here's Salon, a digital only company since its founding, still hadn't really broken out of the box of doing what was largely long form journalism. That to me was a problem. It was very hard, virtually impossible, to change, because it's funny, when I joined, I said, "We really need to rethink everything," and everyone said, "Great." But, when you get down to them, and you say, "What are your thoughts about how you progress with your efforts to cover what Glenn Greenwald covers?" It was a very hard slog. That was one was, it's interesting how quick cultural thinking can get deeply set in concrete and resist change, at a time when change has to be continuous and ongoing. That was one. The second was, how hard it was to make money as a news product. The New York Times, obviously, knows this very well. Tiffanys is very comfortable advertising in the front section of The New York Times, and still does in the print edition. Online, there's no reason for them to do that. They have so many other ways to find their audiences. Same thing with Salon. It's very hard to get Lexus, for instance to buy ad space against your hard news coverage. We decided to, expand our areas of soft coverage, because we figured there was more money there. "Let's do food. Let's do fashion. Let's do style," and so on and so forth. John: Pestilence, plague, war, doesn't appeal to everybody. Richard: The way the ad models work today, is a quest for accurate demographics, and, more importantly, relevance. How do you get them as close as possible to that point of intent where they're going to make a product decision, a purchase decision? My considering a high end Tiffany watch makes perfect sense if I'm browsing content or areas that are offering luxury products. I'm in the mode to buy stuff. Not necessarily when I'm reading about the latest goings on in the Clinton Administration. It does not really work for the advertiser, nearly as well. We started these soft sections. But, there, too, what I found was, yes, that makes sense, but there's a tremendous amount of competition there as well. Because, what we have seen with the evolution of the Internet is the tremendous propagation of niche oriented products. John: Paid search. Richard: Paid search, which, actually, helps those niche oriented products. It helps the formulation of these niche audiences against very strong commercial opportunities. What I found was that, basically, the challenge that having an umbrella product with lots of sections, may be nice in the old realm of media. But, in the new realm of media, what you've got to recognize is that food section of yours is competing head to head with 20 products in the marketplace that are focusing just on food. Martin: But Richard, isn't that what the Huffington Post has done reasonably successfully? I mean, they have 70 sections now. They have 50 or 60 million uniques. Part of that is AOL, but I mean, they seem to have done what you were trying to do at Salon. What's the difference between their presumed success... Richard: And I think that's really the interesting question, is presumed success, because what they have done and what one can do is they have basically sort of skimmed the very high level stuff and done it very, very cheaply with an aggregation model. So they're able to get a lot of traffic and build a lot of uniques. It's not clear how successful that model is, really, for generating significant amounts of revenue. I think that question is very open. Even at AOL, it's very open. And I don't know the exact numbers, but... John: Also, the cost structure versus the revenue if it's profitable. Richard: Right. How HuffPo does, if you look down into their model and say how really are they doing with financial services advertisers versus other dedicated financial service products in the market, I expect we'd find the same thing. I'm not saying that model can't work. I think it's open to question as to how profitable it can be, and open to question as to how many of those kinds of vehicles can actually get away with that kind of model. John: You said something a minute ago. What really drove you back to Salon was your curiosity about where is news going? How is news going to work? Where is the news going? How is the news going to work? Richard: As I've frequently said, I'm very optimistic about the future of news. I'm extraordinarily optimistic about the future of news, but it's going to be a very, very different landscape. The reason I'm optimistic is because we have these huge open systems. The simple fact that in effect, we put a printing press in everyone's hands. That's a hugely powerful thing. You've got a lot more people participating in the dialogue than ever before. Doesn't mean that it's all good content. It's not. Obviously not. Still wheat to chaff ratios. But a lot of it is very good. You've got a very open system. You also have opportunities, but it does require, as I said, us, when we look at the future of journalism, to rethink all the models, to rethink what is the right way to build a news product in this realm. How do you build audience in this realm? What are the right uses of the media form? What are the right uses of computational journalism? I think computational journalism has extraordinary potential that has not really been fully explored. Martin: That's Google News? Richard: No, I don't mean computational journalism in that sense. I mean data driven journalism. John: Data driven journalism, discovering things through analyzing, discovering news by analyzing data? Richard: Yes, and doing it, frankly, not just in an ad hoc fashion but... John: Systematically. Richard: ...systematically. The example I often use, and I'll touch on it here quickly. It's an example of both how it can work and how adopting these techniques is not easy, necessarily, for existing media organizations. This is, like, 2006. The Washington Post did a classic thing, spotlight section, 30,000 words over 3 days on the state of the D.C. schools, right? At the same time, they happened to have a young intern there by the name of Adrian Holvarty. He went off and founded Everyblock.com, and he built a website off of the work of the reporters that said, "Here are all the D.C. schools and here's all the data we gathered," such that you could go into each school and find out what the average test scores were, find out about the state of the facilities, what crime reports had been filed. Everything they could find there, very powerful tool. You could go to the school that your kids were in and get that information. John: So that's partly the answer to those who say that the decline of small market, middle market investigative journalism will leave the world open to corruption. Your answer is there's a new way to find these things, and it's data driven. My answer to it is, it seems to me, in spite of the evidence that there's none of this investigative reporting being committed, it seems to me that it's harder than it's ever been for people to get away with anything. Richard: I think there's truth in that. John: What can you get away with? Richard: When I look at that, and to finish my point about the computational journalism with that state of the D.C. schools, my whole point about that is that is actually something that could have been ongoing. That product died. That system that he built died after several months. They didn't update it. Interestingly, in that regard, I thought it, a, would have been comparatively low cost to update it and it actually had marketing value and ad value because I knew what school you visited. I knew you had kids in school, right? It gave me a lot of interesting data about that audience. John: Who would invest in a business like that? Richard: My point is, if you're a journalism entity in this new realm, then you should look at those models. I think we have not fully explored the notion of, literally, the computational journalist, the guy who's on your staff who isn't being assisted by someone over there who's an engineer, but who, at heart, is a computer scientist and a journalist. John: Nate Silver is an example of somebody who built a data driven model that somebody who had a distribution system bought into it, and you'll see that replicated. Richard: Right. John: The difference is he's also a bit of an artist and a journalist and a politico. Richard: Right. I think there are these new forums that we have not yet evolved that have tremendous potential, in that case for investigative journalism. We have the benefit of this being a far lower cost medium to play in than ever before. You have more organizations playing it. One other point I make is that I think it'll be a very rich journalistic medium. Yes, we have a whole lot more evolution to go in terms of the creation of the forms. I think we're also going to have to be more comfortable with a more chaotic journalistic environment because we have gone from the realm where there are a few dominant properties to a realm where there are all kinds of sources of information, some of them pure journalistic models as we knew of them. Others might have more advocacy, which doesn't mean that they don't necessarily do good stuff. John: This gets a little bit into your speech, and some of the things you...What are some of the other... Martin: We only have a minute left, unfortunately, so you want to do a quick summary? Richard: Again, I do think, for generalistic purposes, this is an extraordinary time. I do think it's an opportunity for a renaissance in the exploration of new journalistic forms. We have so many more capabilities available to ourselves. We have it available at very, very low cost. The opportunities for exploration are many and varied. I do think, however, that traditional media entities, that disruption is fierce, and for most of them is not something that they're going to come out of it in a successful way. It's the usual, classic rules of disruption. They can't eat their own young. They can't think out of the models that they're already in. The Dallas Morning Herald should not think of itself as The Dallas Morning Herald going forward. They should look at that new ecosystem and say, "What do we do in that ecosystem in terms of local culture and style content that might add value to our audience? Do they pay for it or not? Political content, do they pay for it or not? What's our sports product in an aggressive sports market where we know we have great audience? Might not that be free? Might not that be a different brand? What shopping services and sights do we build or acquire as part of a stable of media properties that replace that singular brand that existed before?" Those are very hard decisions and hard paths to follow. It's not that folks won't find success, but, I think, as we have seen in other periods of disruption, it will not likely be the old brands and the old media entities that succeed in this new realm. If the old media entities do succeed in this new realm, it will be as much to do with acquisition as it will to do with transformation of existing properties. ...
VIDEO: YES

Donald Graham
BIO: YES: Donald Edward Graham (born April 22, 1945) is chie...
TRANSCRIPT: Martin: Here we are, on April 4th, 2013. Paul Sagan, John Huey, Martin Nisenhotlz at The Washington Post, interviewing Don Graham. Why don't we go back a ways, Don. I don't know whether you had much interaction or did very much here. But The Post, well before the web came about, was invested in a company called Legislate. Don: Yeah, 1982. Martin: One of the things that we've found is that newspaper companies, including The New York Times, DOW Jones, had these very early B2B investments. Can you talk about Legislate? Don: I will. But since Huey's here, I have to tell you my initial story that I'll forget to tell you otherwise. Martin knows very well, the other two of you know pretty well, a guy named Alan Spoon, who now lives up in Boston, near you. John: We interviewed him, about two weeks ago. Don: That's great. Alan was, I don't know, a 1970 71 graduate of MIT, physics major. He went to Harvard Business School and MIT Law School or the other way around. Maybe Harvard Law School and MIT Business School, all by the age of 23. He came to The Post from BCG, where he'd been the youngest partner in the history of BCG. He and I talked some about the world wide web, when it first comes into being. But he's the one who's on it, who has a PC, who is looking at it. One day we're having breakfast and he says, "Come on over to my office and I'll demo the world wide web for you." He typed in the URL for Discover. No, what was the Time Inc.? Martin: Pathfinder. Don: He typed in the URL for Pathfinder, which was the Time Inc. portal. John: Which Paul was running. Paul: Which Walter and I were running. Don: What happened was, we sat there. He said, "Bill Casey spends the most time on the Internet of everybody here at The Post. Reads it with a book in his hand." We sat there for about 10 minutes and the damn thing didn't load. But that's my first memory of the world wide web. Even so long ago Huey wasn't there. John: No, I was there. Don: I thought you were at The Journal John: I was at Time by the time. Don: 94 95? John: Yeah, I went to Fortune in 88. But the expression, "Watching paint dry," came up often in those days, when you were downloading anything. Paul: There was no broadband. Don: I think we had a 9600 baud modem. We thought we were hot stuff. That's a great place to start, Martin. It does remind you how long ago the people running newspaper companies were interested in the digital transmission of information. Kay Graham, then our CEO and our CEO until 1991 and a career newspaper person, spent the whole of 1981 recruiting a chief operating office for The Washington Post Company. And was really happy when she hired a guy named Dick Simmons, who you remember. I don't think he knew either of the two of you. Dick was recruited. One reason that Kay liked Dick was that Dick was the Vice Chairman of Dun and Bradstreet. He'd been the CEO of Moody's, among other earlier jobs. Dun and Bradstreet, the purveyor of credit reports. We used them constantly. Every business in the country. They had put their credit reporting online. They'd stop sending out paper. They transmitted computer to computer. They knew a ton about the electronic transmission of information in 1981. Literally, the first thing Dick did was to hire Alan Spoon as our VP of planning and whatnot. Alan and I just hit it off. He came in as corporate. But he and I, these two young Turks at the time, we started having breakfast every week talking about the future, talking about where the Post was going to put its money, mostly. Legislate was one of the first things that came up. It had been started by an entrepreneur from Texas named Kurt Grove. Alan told you the story. It was a "Spoon acquisition." Alan found it, or somebody brought it to him, but he immediately saw the significant potential for the Washington Post Company. It was a mainframe database of everything, of yesterday's "Congressional Record," "Congressional Hearing Record," and "The Federal Register." The customer might be the Embassy of Nigeria looking to see if they were mentioned. So, the customers were corporations, lobbyists, lawyers. Legislate kept taking in other government texts. It did pretty well for a while, made a little money for a while, and then drowned in the Internet. When Newt Gingrich opened the record of the House to the public, it just didn't have a business anymore. Martin: Which was an interesting first lesson, in a way. Don: Yeah, it was one of a constant number of lessons. Warren Buffet was our lead director. Actually, or in reality, through the 80s, there was a significant amount of time when in he was on the board of CapCities because he bought 20 percent of their company. But in effect, he was always our lead director. Kay had a business meeting where the concept of lead directors, and a new one was discussed and said, "Well, I have a lead director who is not a director." [laughter] Don: The reason I brought that up was World Book. He bought, among other things, the World Book Encyclopedia, which is toast. Martin: Many of the newspaper companies during that era were investing in consumer online services called videotex and teletext services, Knight Ridder, Times Mirror, and others. You guys, at least according to Alan, decided to stay away from those services. Don: We kicked the tires and did not invest. Martin: Do you remember why? Don: I do. Martin: His recollection was he didn't think it was a very compelling consumer product. Don: He didn't like the product. It had, from everything we could learn, very little take up among, there was an experiment in Britain, as I recall... Martin: Well, Ceefax and Prestel were the two British services. The environment there is very different because people license TVs, so the TV set manufactures had more of an incentive to build them in. Don: We owned then, and still own now, Channel 10 in Miami, so we had a few people who lived in the market. We had no inside information from Knight Ridder. But what we heard from people was that the people in Coral Cables just weren't buying it much and weren't using it much. Martin: So, now these videotex services fail and the nascent online services come along, and one of them is here. Don: Right. Martin: Did you have any interaction with America Online? Don: We had tons. Martin: Can you talk about that? Don: We had Alan and we had your friend, Ralph Turkowitz, who was... Martin: That's a missing interview. Don: Ralph is now a very successful VC in this area working at, I believe, ABS. Paul: Yeah. I have his contact info. Don: Alan and Ralph knew Steve and Ted Leonsis very well. They knew Steve, early days when AOL was a struggling third. I remember we took one trip to Columbus, I can't remember who I took it with, to look at Compuserve and talk to the H&R Block people. Compuserve had a very sensible model, which is business customers and business information. AOL was always viewed as a struggling third. I, myself, was a very late adopter. Alan was so engaged personally in PCs, I didn't think I could add anything. I was a late PC adopter, and I can't remember the year, but when I became a user, I immediately became a heavy user through AOL. AOL was my first email address. It was everybody's growing up experience, including accessing the Internet. They were the logical partner for us to try to do things with electronically, but they had a dually high sense of their own worth. It was very hard. You had people bidding to make a deal and it was hard to make a deal, and it should have been hard to make a deal. John: Don, you've always been involved from early on in strategic issues. Can you recall sort of the arch of your awakening to the web and the balance of when you first saw it as opportunity and when you first saw it as a threat? Was it simultaneous or did it come sequentially? Clearly it was both. Just the arc of how you came to realize just the nature of the threat. Don: As I say, as Martin's good question led us back to, somebody told me there was a 1946 issue of maybe Fortune with a cover story on the year 1950. And the cover photograph was a newspaper coming out of a wallscreen. This was an idea that had been talked about for years and its appeal. The idea of digital transfer of information to the home was obvious, and AOL was the first ratification that it was going to happen. John: It was like the personal helicopter, except it actually happened. Don: AOL, people disproportionately spent their time on chat rooms. They spent their time, certainly, on email, but it made it obvious that this was going to be a mass medium and that it posed both threats and opportunities. Alan and I were united in feeling, "We don't want to just treat this as a threat. We don't want to play defense. We want to see this as a big opportunity." And we had Ralph. We were kicking tires on a lot of investments, start ups. And we had great luck in the early days. Ralph was a very good judge of teams and judge of founders. Martin: So it was Ralph who founded Digital Ink? Because that was the first incarnation of WPNI. Don: What happened was, failing to do a deal for a Post presence on AOL, and I wasn't part of that. I think Alan handled that personally, I don't remember any of the history there. But failing to make a deal with AOL, wanting to experiment, wanting to try delivering the Post and see what happened, we started a paid site. Paul: It was AT&T originally. Don: Exactly. Good for you. There's a historian. If you remember, Jim Mansi, the Lotus guy went next to AT&T and started something called Interchange, which was a really good idea. Which was a network without any content. An AT&T quality, consumer network for anybody that wanted to put up their own site. We put up a Post site. I can't remember, we didn't charge the same as home delivery, but we charged meaningfully. And, my memory is we had 30,000 subs in 1994 or whatever it was. We were rolling. Martin: That's about what Alan reported, so I think your memories are... Don: We were very proud of ourselves. And I made one really good decision in the process. I was the publisher of the Post and every Tuesday we met around a long table with all the business executives of the Washington Post. Over here's the circulation person, the advertising person, the production person. And I thought to myself, "If the head of our digital effort becomes one more person sitting around this table, it is not going to work." And we had Alan. So I said, "Alan, you and I both believe this is an opportunity, not a threat. We're not just going up here to protect the classified ads," although that was very much on our minds. "You take charge of this. Let's take it outside the Post and you run it. The Washington Post has one weapon, which is you. You're the most sophisticated guy in the media business." Alan and Ralph, Ralph had been the head of IT at the Post but had moved up to corporate and was working with Alan on corporate IT, but also investments and projects we might undertake. Ralph was a hell of a lot of help to Legislate. We were tinkering on a whole lot of fronts. We were early, highly successful investors in cellular technology. We owned the cellular franchise in Miami and we shares of the cellular franchise in Boston and Washington and a couple of other markets. We made over $200 million after tax in that business. That was one hundred percent Spoon and was very hard to do. In 1991, one of the worst stories, Alan and I just still moan about this, we won, briefly. The FCC decided they would bring digital to cellular, and they would ask companies to do technology experiments in how it might work and one of our partners in the original D.C. cellular business collaborated with us on a technology experiment, and we won. One of three winners. We were rewarded a free franchise for the Washington Baltimore market, unanimously by the FCC. Unfortunately for us, none of the other two franchises went to an RBOC, so the RBOCs went to somebody on John Dingell's staff. They made one call to the FCC, and one meeting later, the FCC reversed themselves and took our franchise away. John: Welcome to Washington. Paul: Ouch. John: You mentioned classified and your focus on that. Can you just talk a little bit about what you saw and how it played out? The big question that everyone seems to ask themselves is could the newspaper industry have done anything differently, and what would it have been? Don: Oh, yeah. He knows and I know. We sat successively on the boards of three companies, one of which is still in existence. One called New Century Network, which consisted of the very smart representatives of eight or nine companies, each probably the smartest person within that company, sitting around a table, I think all eight of them under the impression that they were going to run the business or that their ideas were so much better than anybody else's that they should prevail. Then they would go back, and they'd review the plans with the CEOs being asked to put up all kinds of money to fund these investments, and the CEO would say, "I don't want to do this. I want to do that," or "Is this guy running the place any good? Let's put in this better person I know." The poor people. We saw the potential of a merged news site, and I think, in retrospect, what we should have done was leave you guys out. I don't think that would have made much of a difference, but... John: "You guys" meaning The New York Times. Don: The Times had a different set of aspirations than everybody did. Martin: Yeah, well The Times had by then taken its paper national. John: Yeah, and you had less dependence on classified than all the metro dailies. Don: There were three initiatives. There was New Century Network, which was about news. There was... Martin: CareerPath. Don: Yeah. I blocked it. I repressed the name for a moment. CareerPath, which was the biggest miss of all, which you couldn't go wrong with, which was nationwide classified advertising, nationwide help wanted advertising. Then there was Classified Ventures, which was founded by us to be our representative in automobiles and real estate, and which we had good success with Cars.com. Martin: And CareerBuilder, which we shouldn't forget, because that came on the heels of CareerPath. Donald: That was the evolution out of CareerPath. Martin: That's right, but it succeeded. Don: With Tribune and Gannett and one other, maybe Times Mirror, said, "It isn't going to work with nine of us. Let's do this with three of us." Martin: And it did work. Don: It worked, but all of those went wrong for different reasons. In the case of New Century Network, we had a very good joint idea, which was, "Let's put up a news site that's better than anybody else's news site." We just flat hired the wrong person to run it. I can't even remember the guy's name. Instead of taking the content from all these newspapers and hiring a team and saying, "OK. You're just swimming in content and you could probably get the newspapers to produce more stuff uniquely for you," nobody was thinking about updating or whatnot, but you could have been much better than Yahoo News or AOL News. Paul: But you couldn't get it done. Don: We didn't get it done. John: Was part of it a failure to recognize who your real competitors were? You were still living in a world where you thought of yourselves as competing with each other for advertising dollars and hegemony in the news business. Don: The metro newspapers never really competed with each other. Sorry, there were companies that did compete with each other in certain markets, and that was always a hang up. John: But did you effectively cooperate with each other? Don: No. But the reasons were not competition. It was stupidity. John: Or ego or pride. Don: There was one. In retrospect, the smartest guy in the room was Charlie Brumback of the Tribune Company, who was the guy who had bought five percent of AOL for nothing when Case came to him and said, "We want one strategic investor," and Charlie was smart enough to make the investment, and he was smart enough to stick with it, and then they were smart enough to hedge it. Martin: Then they bought Times Mirror, which was not too smart. [laughs] Don: But long before Times Mirror, they invested in many other digital start ups, of which the only one which is still around is Peapod. They didn't lose money compared to the money they made in AOL. But Charlie, having now some acquaintance in the tech world, brought in Vinod Khosla, who then was a partner at Kleiner Perkins. Did you and Alan go over this story? John: No. Don: Vinod had a plan. Charlie's plan was let Vinod own 20 percent of NCN and let him run it, let him hire the CEO and whatnot. I was a skeptic, and I later wrote Charlie and said, "I think you were right, but I know I was wrong." I thought these companies are in the news. The thing about a VC buying in, was that the VC was going to have to get out, and I'm sophisticated... Paul: In the end, that didn't work and he went and did Excite@Home. Don: Vinod did lots of things, and some of them worked and some of them didn't. He's still doing lots of things. But having Vinod in the room would have been sensational for us. John: You were hitting on something there. You almost finished the sentence that said, "But we were in the news business." If you look at the news business and you go back all the way to that experiment in Coral Gables that you referenced, one of the things that they told us they learned in Coral Gables was that people liked the system OK, they just weren't particularly interested in the news on the system. They liked other things, interactive, what were some of the...? Martin: They like communicating, which is what Steve nailed. John: Games and communicating and community. They didn't really like the news business. So, as we look at the history of when the news business collided with digital technology, one of the things that we've come to realize, which is pretty obvious, is that the news business was always part of another business. You had this aggregation in your newspaper where you gave us classified, stock quotes, sports scores. The Web and social media has had a real fragmenting effect, which brings us to today and the news business. Your company is a legendary purveyor of high quality, verified news, serious news information, politics, economics, international. What is the future of that business, and where do we go from here? Don: I'm old enough that I know a different story of The Washington Post than you do. The story everybody knows about us starts with Watergate, or about that time. I was born in 1945, and the Post was the third newspaper in a four newspaper town. I was a little kid, but I was quite interested in the conversation around our dining room table, which was about comics, which was about sports writers. The day that saw to it that The Washington Post would survive for the next 60 years was March 17, 1954, when the Post bought the other morning paper in Washington, the Washington Times Herald, which was losing even more money than we were. Newspapers had bought other newspapers in a market, and in general, the combined paper lost quite a lot of circulation. For some reason, in this case, that didn't happen. They added so much that my dad, believing that we wouldn't add that much circulation, had not bought the presses of the Times Herald, and they had to double back and say, "We changed our mind." People used to tell me stories about how they threw bundles of newspapers out of the third floor windows at the Post because they just couldn't find a way to get them into the trucks, they needed so many papers. The Times Herald had been the New York News or the New York Post of Washington. It was a blue collar paper, heavy on crime. It had the largest circulation, but the least advertising, in Washington, and a crazy combination of this, in our minds, sell the high quality paper with this blue collar paper, produce something that covered the hell out of all of it. We had more comics than any paper in the United States. We had a fabulous sports page. John: So you were the original high low. Don: Yeah. We had way more penetration of the market than any other paper in the country, in our size. Newspapers weren't just the high brow... John: But that's my point. That other stuff was subsidizing. You were able to afford to produce that news because you had such penetration in those markets. Don: Something happened after 1954, John, that's very important to the backstage of this story. Everybody has to remember that newspaper circulation was going down in the United States. It wasn't quite going down at The Washington Post, but it would have. Before there was an Internet, before there was an AOL, the circulation of newspapers was going down. John: And afternoon papers were folding. Don: Yeah, but the circulation of the surviving papers was going down. After all that happened, most dailies' newspaper circulations were going down in the early 1990s. I think the diminishment of competition and the fact that an interesting thing happened, I know, at this place, and I think at every place. I came to work on the news staff where a couple of the principal beats, I think including the White House, were covered by people who never went to college. Eddie Folliard, our White House reporter for 30 or 40 years, was not a college graduate. I know Al Lewis, who covered the police department of the Post for 50 years, and who starts the Watergate story, never went to college and never wrote a line that appeared in The Washington Post. He always called the rewrite man. No one else did. We got better and better educated, our staffs. Washington, which is a fabulously educated market, has 40 percent college graduates, but the Post newsroom is 100 percent college graduates. We stopped being as interested, all of us, including me, in the comics, the horse racing, which used to be a big deal. John: Annenberg did pretty well with that. Donald: Yes he did. The popular side of newspapers was de emphasized with the years, and that had something to do with the fact that others saw the appeal. For example, games on the Internet. And newspapers, the number one best seller in the United States in the year 1922 or 1923, the year it came out, was The New York Times Crossword Puzzle Book, when crossword puzzles were first invented. Martin: I want to connect the dots here because what you've said really resonates with another interview we did, which was with Jonah Peretti. You're on the board of Facebook and Jonah's business is built, in large part, on the social distribution of news and information. Someone, speaking about Jonah, said his great insight was high low. In other words, you could go to Buzzfeed and you can look at the 25 most interesting pictures of animals at the same time as he's now beginning to cover the more "serious" stuff. He's doing it in a way that pushes this content through distribution channels in a much more modern context than traditional journalism organizations have ever done. Just looking at the percentage of traffic coming from social sources. Don: The other thing Jonah illustrates, he personally is a very good illustration of it, or Mark Zuckerberg illustrates, is those guys are first rate technologists. Alan and I and you had a lot of the right ideas in 1995. We knew this was a new business, we knew it presented opportunities as well as threat. We wanted to really crank and become good at the delivery. What I think we did not understand was that we needed somebody like Mark or Jonah who you couldn't have hired. Martin: Let me chase down that because this has been a theme. One of the things that Eric Schmitt basically said, the most compelling thing he said, was, "These institutions don't have engineers." I'm paraphrasing now. John: He said their big failing is they don't have any engineering culture. He said, "I'm not saying engineers need to run the companies, but they don't have a way of understanding or appreciating the importance of engineers." Don: He is right. You can point to a lot of things and say, "That was our central failure." To me, that is one of our central failures. We actually probably should have understood this better than anyone. If you go back and read Kate Graham's book... Martin: That was a great book. Don: ...she comes to work at the Washington Post in 1963 and you walked in the door at that point and there was no question what the central issue was. The central issue was they couldn't get the paper out. We were so hamstrung by labor problems and technology problems that four nights a week we were more than an hour late in getting the paper in the trucks to get it to the customers with a newspaper that if it's 20 minutes late it's useless because the customer's gone. Part of the book that has to do with the Post, the first third of it has to do with solving that problem. How we could have not understood that this is a different business, that you're competing with AOL. John: How much of that was the Innovator's Dilemma? You have a huge legacy business that's very profitable and you have to look at the cannibalization of your business. Don: I wish I had that as my excuse. Alan was probably the third person to read "The Innovator's Dilemma". He gobbled up this stuff and he was talking about it the minute it came out. Martin: It was Russ Lewis's Bible in the mid '90s. John: Maybe "The Innovator's Dilemma," maybe understanding it, everyone understands it intellectually, but maybe it's a disease that isn't totally curable. Don: It's funny. I just listened to Christensen give a talk about another business. The theory of "The Innovator's Dilemma", is it's so hard for the company because you have to lose money or eat into your own profitability. We were willing to do that. We are uniquely structured so we didn't give a damn what we made for any given quarter or any year. That remains the strength of the place is, as a business, the Washington Post Company can be genuinely, no kidding, long term minded. If somebody said to me there's a way out for newspapers but you're going to have to lose $100 million a year to get there four to five years from now I would sign up for it in a minute. John: Spoon made that point about you specifically. He said we were different in that we had a guy that... Don: It was Kay who set up the structure but I'll take the credit. We really did lose a lot. We put a lot of money into the online college at Kaplan, Classified Ventures, God help us, CareerPath, and Legislate, other tech investments, some of which worked out very well. To Alan's enormous credit, going back to Classified for a minute and showing how focused we were just on keeping the Classified business we had. Alan and I returned from a CareerPath board meeting that you must have been at and he said, "Don, this is not going to work. They are never going to get a good product to market in time and we have to look elsewhere." Ralph found... Martin: Junglee. Don: Junglee, which had come to us as a threat but listened to Ralph and Alan and decided that they would be way better off partnering with us. They built our online help wanted system and we got into the field three years before the other newspapers did, to our enormous benefit. It's sort of a joke but we're still number one in online help wanted business in Washington. The joke is there isn't very much. John: The truth is, we haven't found very many stupid people going around interviewing these things. Don: Yes you have. You've found plenty of people who weren't smart enough, including me. John: We found shockingly deep understanding and vision a long time ago. At Knight Ridder, which was the first one to go in the end, they were involved in all kind of visionary things. The Tribune that you mentioned, yourself. Dow Jones had a lot of things going on electronically. Paul: But outgunned by the tech world and culturally not in the same place. John: One of our timeline metaphors is below the line is the tide and it rushes and above it are swimmers. A few swimmers manage to swim with the tide but, ultimately, you know. My question is could this really have been much different from how it is today or not? That's the big question we're really trying to answer. Don: I think Alan and I would give you the same answer. Your metaphor is a very good one and there was a very strong tide running in the other direction. I think it could have and should have been different, but I think it would have called for a very considerable imagination. You would have had to look at AOL and say the lesson of this is not the uses it's being put to. The lesson of this is that it is being built by a kind of people we do not have in these walls and we'd better go get some. Gates, at that time, was going to everybody's editorial board and saying good technology people won't go to work for people like you. Good technology people want to come to work for Microsoft. He was wrong. Good technology people like to work on hard problems and news quickly became a very famous hard problem. Yahoo News, in its day, was a very considerable feat of building. We would have had to recruit, we would have had to pay like hell, and we would have had to be extraordinarily astute. There was a start up culture in Washington. AOL spawned a ton of little start ups and any of them would have been thrilled to have [indecipherable 39:02] . John: MCI was here with a lot of technical... Don Graham: That was different. That was Telcom type people. MCI did not spawn a start up culture, AOL did. Tim O'Shaugnessey, my son in law, who runs Living Social, and his three Georgetown classmates were AOL alums who saw the opportunity when Facebook opened its API and started another company that turned quickly, as the phrase is pivoted, and turned into Living Social. Tim is not the only start up investor in Washington but Tim is the definition of what we should have hired. Paul: I just want to talk about, because you touched on one of those tides and that was Yahoo News and Reuters together, who weren't constrained by consortia problems or business model problems, and the other, of course, was Cragislist who had no interest in the classified business. As he said, I just wanted my friends to trade couches in San Francisco. Talk a little bit more about Yahoo and Reuters and about Craigslist as a tide. Don: I'm very proud. We were one of two votes against selling the AP to Yahoo and AOL in whatever it was, 1995 or '96. It just seemed to me colossally stupid at the time. Paul: Did it matter because Reuters was going to sell anyway? Don: Reuters was owned by the British publishers and it might have gone a different direction. Paul: They didn't care about this market the same way. John: The retail market. Don: Yeah, but Yahoo is available where their papers are sold. It was self interested for Reuters and it was self interested for the people at the AP itself to want to sell to Yahoo and AOL. John: Actually, we interviewed the Reuters guy who did the deal and, as the truth is, as he revealed, he was an investor in Yahoo, not he personally but his division of Reuters was an investor in Yahoo and they were trying to help kick start Yahoo. Martin: Which is the same point Mike Moritz made. John: They brought not just money to the venture, they brought content. By the way, just on a parochial note, I would like to observe that Henry Luce was also someone who understood the high/low. While he trafficked on the prestige of Time and Fortune all those years, he was mostly dining out on the profits from Life. Don: And eventually People. John: Life became people because when Life closed the same people who ran it started People. Don: You're exactly right. Martin: Don, fast forwarding just a little bit because in addition to trying to figure out the past I think part of why we're doing this is to try to look forward. One of the things that the technologists and the new media folks, the new journalism folks, continue to say over and over again is, "The traditional players still haven't fully faced the fact that they have completely oversized cost structures, that technology and the whole nature of the way information flows in society and around the world has changed dramatically and yet the journalism institutions haven't really caught up with that notion." We heard a very compelling set of stories from the traditional side making the argument that journalism is expensive and it's expensive for a reason and that mostly what the technologists and the new journalism people do is aggregate other people's work. Can you comment on that, particularly thinking about it from the perspective of running one of these places that has hundreds of journalists to pay? What do you think? Don: I think one of the other big dumb things we did in the early days is we started out as an aggregater. We had a deal with the Encyclopedia Britannica to do footnotes to all the stories in the Post so you could read the background on any given story. If there still was an Encyclopedia Britannica, that would be good today. We started out doing the obvious and it just struck me, it struck everybody. Think about Washington for a minute. I'm, among other things, the former sports editor of the Washington Post so I knew very well a lot of people read about the Redskins and now we've got a baseball team and a basketball team and whatnot, but a hell of a lot of people here went to Michigan or went to UCLA. We always got calls in the sports department saying you ought to cover the Big 10 more, there's so many graduates. What an opportunity that was. I thought of that with NCN. If you could just link from the Post sports page to whichever Detroit paper had better Michigan coverage you'd make a lot of people happy. We fell victim, not at the Alan Spoon level, but at the level of people who are measuring traffic. Why would you want to send the click to somebody else? The answer to that is, by now, very well known. Mark Zuckerberg doesn't have a problem with that and we shouldn't have either. One of the questions that faces places like the Times and the Post, but I want to come back to local newspapers broadly, is is there any kind of a plus to a news organization in having really high quality reporting and editing? I'm pretty sure the answer to that is yes, but we have not figured out. One thing that we did, saying we wouldn't, understanding that it was a mistake, was we now probably have a website that's 60 percent newspaper articles and 40 percent other. In 1995, we had one that was 99 percent newspaper articles and 1 percent other. We all read a big experiment conclusively proving that reading newspaper articles is not the highest and best use of the web. Now the question is, "Can the reporting resources of a place like this be put to the real service of readers?" Mark started Facebook thinking about students at Harvard, not thinking about Facebook and not thinking there's a vision I have. The first Facebook page was like a blank slate. It was just a place to put up a tiny bit of information about yourself and see information about others and it evolved. He started thinking about users and the users told him, by their behavior, the data told him, how people were using it. They told him every square inch of the home page what was being used and what wasn't and he took away the stuff that wasn't being used and added stuff and tried it and tried AB testing and then ABC testing and so on. They still, today, can tell you. That's why the birthdays keep moving around. They keep looking at better ways to tell you which of your friends have birthdays today and which one draws more clicks and which one gets people to send more messages to their friends on their birthday. The best work in the Post and the Times is still in the format of newspaper stories. This morning, my computer is sitting there, the print newspaper came to the door. I read the print newspaper. I have every morning of my life. I have habituated and I have personalized the Washington Post. I read it in the correct manner from the sports section out. I know exactly where the stories are that I like. I don't go to the movies much so I don't read as much movie reviews. My kids, that would be one of the first things they read. I don't watch as much TV as my kids do so I don't read as much about television programs or what's on TV. I read a little more about district politics, I read a little more about national politics, international affairs, than the average person does. I tailor the paper accordingly. At the website, I'm a stranger. Every time I come back, it's the same presentation for all of us and that was another big mistake. We have to present the best of what we have to offer in a way, in a format, that readers like to use. The only way we'll do it is having people like you and, in our case, people like [indecipherable 48:26] , who is the most valuable player at the Washington Post. Shailesh, who is the VP of technology at the Post, I would say as a peer of Marty Baron. He and Baron will create the Post digital content in the future jointly. He is as respected among those that know him in the newsroom. Nobody knows how respected Marty Baron is. Shailesh is, in his own world, is that good. He makes things happen. He's decisive. He's got a great team around him. The two of them are creating the most impressive site. Martin: You said you wanted to come in on local. Don: Yeah, let me go back to local. The most important thing that's happened in the United States newspaper industry in the last year is that Warren Buffet's bought 80 papers. John: I was getting ready to ask you that very question. Don: If he'll see you, you ought to go talk to him or you ought to talk to Terry Kroger who is running the papers for him. John: In his latest annual report, there's a pretty good explanation. Don: Couldn't be clearer. John: With the help of an elderly journalist I know at a large business magazine, I got some history of things that he said about the newspaper business over the years, which is all online, by the way. I didn't know that. Don: You talk to Carol, you'll learn a lot. John: I learned a lot. Martin: Why is that the most important thing? Don Graham: Because I think Warren has defined a local business model that is going to work. If it works in Omaha and Buffalo and Richmond. Warren writes in that annual report, If a paper doesn't make money and isn't on a path to make money and nobody thinks it can make money we'll close it," and he did close one paper that he bought among the several papers he bought with Media General. There was one he thought didn't have an obvious profitable future and they closed it. He believes that he will be making money in Omaha, Buffalo, Richmond, Tulsa, Greensboro, long enough into the future that it'll make money for Berkshire Hathaway, it'll be returning profits, and that his view of digital is included in there. John: It's the monopoly franchise concept. Don: Well, it's... John: It works in Little Rock. It works in Charleston. It works in all those markets you mentioned. Why isn't it working for the Newhouses, Mobil, New Orleans? I mean, those are relatively small towns. Don: Well, Steve is pursuing a different strategy, and I don't know that. John: And we did talk to Steve, so... Don: I respect the Newhouses immensely. John: Well, they were heroic in New Orleans after the... Don: Yeah, unbelievable. But I have not talked over with them the decision to go to three days a week. I don't know why they did that. Warren would say that doesn't fit his model of the way things are going. Martin: Don, we need to cover two more things. One is Kaplan and the other is your recent pay model. Let's start with Kaplan. One of the other themes that we've talked a lot about with a lot of people is the subsidy model, which is to say a Bloomberg, a David Bradley at the Atlantic. However you want to describe the subsidy. By the way, David is not pursuing that model at all. In fact, he doesn't like it. He's pursuing a profitability model, just to be clear. For the record I wanted to say that. Don: That is a great guy. One of the best owners who's come into the business in years. Martin: The point is that some people simply believe that these institutions cannot be profitable over time, putting Warren Buffett aside for the moment, in the local space. You have that in this company. In other words, Kaplan is a big, rich education company that can subsidize the Washington Post. But I take it from your body language and the way you're looking at me, you just totally don't believe that that's a viable way forward. I'd just like to know why. Don: Bloomberg is different. Bloomberg's business is selling Bloomberg terminals to financial institutions and financial investors around the world. When they went into the business, they were competing with John's old company, Dow Jones, and they were competing with Reuters. Both those organizations not only provided tons of data, they provided stories. When General Motors released its quarterly earnings, somebody quick filed a story on what the earnings were, how they compared to what anybody expected, and so on. Bloomberg had to sprout a news division, and did. It isn't where Bloomberg makes its money, but it was regarded by Mike as a necessary part. You know more about this than I do. John: It's a strategic fit regardless of how you allocate costs and profits. If the core data business were threatened, I suspect the news business wouldn't be quite so generous. Martin: Robust. John: Robust, sure. [laughs] But it's a linked model. They're not two entirely disparate businesses. You can sell people who want proprietary data, you can sell them the news also. You can argue that getting the news a minute earlier is valuable to a trader, which is their primary audience. Which is unlike Kaplan and The Post. They're two different kinds of businesses. Don: The Post Company, not The Post newspaper, has been diversified for years. We stayed in the TV business. We stayed in the cable business. Those are both bigger than Kaplan in profitability in 2012. The education business has a big profitable worldwide long term future. Whether Kaplan will is up to Kaplan. I think it will. You certainly could argue, in retrospect, that we were fortunate we didn't spend the '70s, '80s, and '90s buying other newspapers. You could certainly argue in retrospect, both these things are things having Warren on the board, we didn't incur tons of debt. We sailed into the financial crisis with only $400 million in debt. By our very bad luck, it came due in February 2009. That was a squirmy couple months. We did refinance, so we have more cash and securities on our balance sheet than debt by a considerable amount. Our problems are not financial. Our problems are not the performance of our other businesses. Although you could say, if we were a $20 billion market cap business instead of a $4 billion market cap business, we'd be doing better. Martin: You want The Post to be a growth oriented, profitable... Don: Everybody... Martin: I don't want to put in your mouth, but... Don: I was born in 1945. I grew up around the dinner table with people who were publishing an unprofitable Washington Post. It was no fun. They had the same people who ultimately were hailed worldwide as great journalists, but they couldn't do a damn thing because they weren't making any money. Martin: Talk about the pay model. I would characterize you as one of the hold outs, in terms of pay models, Don: The pay model... Martin: Can you explain that? Don: Sure. The pay model will work for The Washington Post. It won't work nearly as well as it will for The New York Times, for the simple reason that The Times distributes nationally and therefore can offer every reader in the United States, the choice of being a print subscriber, which in turn makes the online package free or heavily subsidized. The Wall Street Journal can do the same thing. The Financial Times can do the same thing, because they have nationwide distribution models and very wealthy customers. The Post's distribution model is more like The Boston Globe at Martin's old company or other metro newspapers. But we are unusual in that we have very heavy penetration in Washington of the print paper, and very heavy readership around the country, of the website. So we will forgo a certain amount of national advertising. If our traffic were to fall as much as The Times' have, it would be bad for us. But the results at The Post will be pretty good. The Boston Globe, after a little less time on the pay model then The Times, has 28 or 29,000 people paying for content. The Times has hundreds of thousands. The Post will be in between. But I don't think the most optimistic people at the post would differ that we'll be somewhat closer to The Globe than to The Times. Our aspirations are quite a bit higher than that for ultimate pay readership. But it looks like it could make a very big difference at The Times because the scale of opportunity is there. It should be a plus for The Post if we execute it right. I think we will execute it right, thanks to people I've talked about. Steve Hills and Katharine Weymouth have really thought this through. They are not doing it the way everybody else did. They're doing it in a way that's well suited to us. It will be successful but I don't think it will be a huge difference maker. John: We have a lot of disruptors that we look at and talk about. You have one in your own backyard that is high profile, Politico. What do you make of that? How disruptive are they? Are they significant? Don: I admire Robert Allbritton and Jim Vandehei, John Harris, for the moxie to start it and make it successful. Jim and John really deserve the credit for a good editorial product. It does not make a big difference to The Post in either readership or advertising. It is selling one focused kind of advertising, where Roll Call and The Hill have been their principle competitors. John: So it's sort of a B2B? Don: They're selling corporate and advocacy advertising. That's their business. They've done very well at it, but I wouldn't say it's made a big difference at The Post. It's made a big difference to The Post's political reporters. The New York Times doesn't make a big difference to The Post, day in and day out. But obviously, every national and international reporter is reading The Times and saying, "How are we doing against them?" And our political staff feels the same way about Politico. But nobody's making an either/or choice about subscribing to one or the other. John: And all these disruptors affect the labor force. Because they hire away from all of us, from everything. Just like Huffington Post. Don: Yeah. There's only 24 hours a day and we all only have two eyes. Martin: The attention economy, as Chris Cox at Facebook said. Don: There's two things that newspapers have going for them. If you go back to Addison and Steel or whatever your definition is of the beginnings of journalism in English, the dominant news sources had a lot of time spent and a lot of repetition. If Addison and Steel were publishing once a week or twice a week, a hell of a lot of people read them every time they came out. With The Washington Post or The New York Times newspapers, a lot of people read and read those, six or seven days a week. You can do that on the Internet. 42 percent of the United States audience of Facebook, and The United States audience of Facebook is 140 million plus, is on the site six or seven days a week. But even papers as good as The Times and The Post do not have people coming there that often and staying that long. I described, I was at my living room reading the print paper. I would guess I average between half an hour and 45 minutes, probably closer to 45 minutes, reading the paper in a given day. Except for people like me, on a trip, reading one out of town, we do not have people on the Internet site, consuming that much. That's another question we didn't get. The other question we didn't solve, at the beginning, was making the ads work in both media. The print ad in The Post or The Times or The Boston Globe or The Philadelphia Inquirer, still drives the shopper into Macy's. I guarantee you the print ad in The Post does, with its, again, still very broad penetration of upscale people in Washington. Retailers know that if they put an ad in The Post to sell shirts or shoes or mattresses, they will sell more. They know how many they sold the day before the ad ran, they know how many they sold the ad ran, and the next day. The ad pays for itself. We were expanding the reach of the advertiser by adding the website. But we did not put nearly as much attention into advertising creativity as we did to news creativity. And none of us has... Martin: Well, that's interesting. That's another thing that Jonah Peretti said that he's doing. He's putting the advertising creativity at the same level as the news creativity. Don: Yeah. Another guy who's doing it is Tim Armstrong at AOL, who is the former head of display advertising at Google, Sheryl Sandberg's peer, when she was running AdWords and AdSense. When Otis Chandler became the publisher of the LA Times in 1962, he later told me that the first department he addressed, he tried to modernize, was advertising art. He wanted good looking advertising to run in the LA Times and to produce better results for advertisers. Martin: Well, on that note. Don: Well, I wore you out, did I? Paul: It's great. Martin: It was great. Yeah, thank you. Don: Thank you. ...
VIDEO: YES

David Graves
BIO: YES: David Graves is CEO of Reinventing Media, a consul...
TRANSCRIPT: Paul Sagan: All right. Good morning. It is March 5, 2013. We are in Cambridge, Massachusetts with David Graves. Thanks for coming. David Graves: You're welcome. Paul: We're looking at the collision of news and digital technology, focused a lot on the period of the Web, so 15 to 20 years ago, but with a broader path, really 40 years back to the early days. David: Unfortunately, I can almost cover that period. Paul: That'd be OK, but why don't we start with a five minute resume, just with where you came into the picture and the places you've played and then we'll get to the other things. David: If I can remember back that far. Actually, my first ever paying job was as a newspaper photographer. Paul: You don't have to go back that far. David: The Danbury News Times, which became a Dow Jones newspaper. That was only in high school, though. Actually, my first real industry job was here in Boston at WBZ, doing news and various things for the morning show and producing talk shows and so forth and eventually becoming assistant program manager. Moved on to KDKA in Pittsburgh for a couple of years, Chicago, WIND, did a headquarter stint. This was all with a company called Westinghouse Broadcasting, Group W, which, in and of itself, is an interesting story in the broadcasting business. It is now called CBS, since Westinghouse bought CBS and changed its name in a reverse way to CBS. Went back and forth, ended up doing some work out in our production company in the West Coast and got into television doing syndication, game shows, and talk shows. At that point, "John Davidson" was our talk show. We tried to start a show called "This Evening," which was an expansion of our half hour local syndicated show, "Evening Magazine," into a national show. Nancy Glass was the host. It didn't succeed, but we also did "Teenage Mutant Ninja Turtles," which was an incredible success. I spent most of my time on the Turtle side because that was where the money was. Paul: That may have been the end of journalism. David: I have one picture of myself, somewhere, walking down the Croissette in Cannes with a Turtle. Paul: That's probably the one we want for the "Time" article. David: If I can find that one. That was a great picture. I can't remember whether it was Michelangelo or who it was. So, I did that. Then I made the first of my many mistakes and started a company called AdValue Media Technologies which was about the time, I think, I met you, Martin which was funded by Westinghouse and Cambridge Technology Partners, if you remember that company here in Boston. Its goal was to clean up the back room of the television business by connecting electronically the computers at the TV station with the computers at the advertising agencies. We had tremendous support from the advertising agencies. Y&R and McCann were really strongly pushing this because they had a huge receivables problem, and so did the TV stations, actually. We tried to do that, but we ran into the rep firms who absolutely...I remember the guy who ran TeleRep telling me, "Dave, you have to understand. The television business is about creating discrepancies and cleaning them up. We sell 'vaguely.'" We didn't succeed, but my company got bought by Reuters. I switched over and left that division and ended up in Reuters media, and spent the next seven years at a very good company. A lot of great journalists, and ended up running Reuters media globally, which was a wire service and a television service, and a picture service and new media. During that period at Reuters, which we can get into, we created most of the products that online sites were using. We had by far the majority of them because AP was still conflicted by the newspapers not wanting them to jump into the new media space, and so they couldn't sell to people like Yahoo. Paul: But they did eventually. David: Eventually. Paul: It didn't take too long, I don't think. David: It took them a while to come up with a plan. That's a more detailed history, if you're interested in it, of what happened with AP. Paul: We could come back to that, but I think the Reuters taking wires and making it consumer available through Yahoo is one of the most important events. David: It was, and it really happened. Just to finish off, I ended up at the end of the century going to work for Yahoo as head of media, so I was the first head of media for Yahoo. They had tried to get me to work there much earlier, and I couldn't make the west coast swing because of my wife and family being on the east coast. I ended up commuting for a couple years, which wasn't really very good, so I stopped doing that. Then the rest of it is not really media, so there's no point. I did video, PermissionTV, which was a video technology company and not that significant, except for the fact that we ran through 18 million bucks in a startup. At Reuters, just as I was getting there they did an investment in a little... Paul: What year was this? David: This would have been '93? It's funny how vague you are about when you even went to work for places, but somewhere around there. We had just reached agreement. I think I hadn't funded, but had reached agreement to fund, put a couple million dollars into a little company called Yahoo, pre IPO. As a concession for us doing this really risky investment, they agreed that Reuters would have exclusive rights to provide content to Yahoo for five years, in terms of what content we had. If Yahoo wanted a news product or a financial news product, they had to come first to Reuters and say, "Do you have this?" Then if we didn't, then they could go buy it from someone else. We of course, every time they came and asked for something, if we didn't have it we figured out how to make it. "Oh, yeah, we have that." It was like Staples. "Sure, we've got that." Not everything, but we created things that we didn't have before. US sports, and a lot of other things like that. Basically, Reuters started off and we were very successful in terms of page views, but not money. Because the Yahoo deal was a rev share. Which I later learned, when I went to Yahoo was... The way you do rev shares is you do rev shares until there's actually rev, and then you change it to a license. Sorry, Martin, since you were one of those who would have suffered from that particular strategy. So we sold these online reports, which were 10 stories, that updated themselves. It was a kludgy, black tape system, but it worked. We had our normal wire stories and then an online editor would pick 10 of then and put them in order. Then we would send out a file with the code numbers of those 10 stories, called a link file. When that hit Yahoo, Yahoo would rearrange the story on its front page and its news pages, according to our link file. So if we put in a new lead story, a big important story, it instantly, within seconds, became the lead story on Yahoo. Paul: This is a very important development. Because I'll ask the question not to bias the answer, try not to bias the answer. The web is uniquely tuned toward that kind of currency. No? David: Absolutely. You couldn't have a situation where there was a major story and you went half an hour or more without it showing up on the web. Paul: But the newspapers, when they came onto the web, took their 24 hour cycle or many of them did and just put it on the web. David: That's where we get to the AP story. Just a brief aside. When AP finally could see it was a potential market for them that they were not getting into, they hated the fact that Reuters was all over Excite and Lycos and InfoSeek, everybody. We had the only product in town. John: Everybody except AOL? David: No, we had AOL before there was the Internet. But they also had AP. AP did sell to AOL, because that was the days before the newspapers had woken up and realized they shouldn't be selling to AOL. Because it was a walled garden. John: You were, in effect, programming the news? David: Totally. There were only two news employees at Yahoo. One was a producer and one was a feed handler, a technician guy. John: Explain the business rationale for Reuters doing this on a rev share. What was your strategy in doing this? David: The strategy was that Yahoo didn't have any money. We did own part of it. We wanted to see more value. But it was really more, Yahoo did all their deals that way for content. Paul: Was there any discussion, ever, of charging for this content? Yahoo was free from the outset. They created, with you, this news service. Do you ever recall a conversation where Yahoo said, "Maybe we should charge for this?" David: Not specifically for news. Let me digress back to the AP thing just to close that out. So AP finally got into it. But AP was taking their radio news reports that they were already producing and they were sending those out as their online reports. Well if, God forbid, somebody was assassinated at 31 past the hour, anybody using the AP reports wouldn't have it for another half hour, until the next radio news report came out. When this stopped was... Paul: The radio wire was really wire light? David: Yeah. It was a story for five minute, rip and read newscast. That's what they were using for their online report. What happened is, I went to Yahoo and AP immediately came in and asked for a big meeting saying, "Why aren't you using more of our copy?" I explained it to them. I was the first person to ever explain it to, I think it was Ted Savage, or something like that. I said, "Because your stuff is a half an hour out of date." He turns to his head of digital and says, "Is that true?" Paul: Do you remember who that head of digital was? David: I don't remember. Maybe that was Savage and the person I was talking to was above Savage. I can't remember. John: You had a pretty robust financial report at that time. David: That's a whole other story about what we did there. Talk about cannibalizing. It caused a lot of controversy inside of Reuters. Anyway, what happened is AP said, "I want you to go to sit with them and figure out how to do this." They changed their system so that they were contemporary. But that wasn't until 2000, 2001. So up until that point AP had a very inferior product, from an online point of view. They still had this half hour lag until then. I'm sorry. I digressed. John: I was just saying you had a very robust financial report at that time, because you were already competing with Dow Jones. David: We were competing with Dow Jones and Bloomberg. John: So Yahoo got all that? David: Yahoo got more than many people at Reuters wanted them to get. We had a news service that went to the financial trading rooms that cost something like $1000, $1200 per seat, per month. We took a tremendous amount of that content and made it available through Yahoo Finance. In such a way that there were stories in Reuters, which were true, of people walking into trading rooms at Goldman Sachs and seeing a bunch of people with one Bloomberg terminal, one Reuters terminal, maybe a Dow Jones terminal and a whole room full of people looking at Yahoo, doing their trading. Which, inside of Reuters, we were not the good guys. Paul: I want to return to this notion of willingness to pay. David: Oh, I'm sorry. Yeah. Paul: I'm hopefully going to get to somebody at Yahoo, at some point, to talk about this as well. But Yahoo today is, I believe, the largest online news service in the world. It has been for many years. David: It's almost always been number one. Paul: Correct. So clearly the consumer was voting to say, "I like the most updated news" from the outset. You were a part of that. I'm just wondering the consumer says, "I like this product." But Yahoo is saying, "Great, we're going to make it free." I assume, to get advertising? David: Let's take it in stages. For the first part of the Internet, your stock valuation was driven by your audience size. Because nobody was making any rational decisions about what things were worth, based on income or revenue or even [indecipherable 13:37] . So for some number of years and you could probably talk to Sue (Decker) or somebody like that, or anybody who was doing analyst work all you cared about was how many millions of people were clicking on Yahoo in a given month. John: And the growth of that number. You were riding the growth curve. No matter how big it was. David: 50,000 a day kept getting added. So Yahoo wasn't going to do anything that was going to interfere with the metric that was driving their stock, which at that point, was audience. Certainly any kind of pay situation would have interfered with that thing. By the end of the century we were starting to focus on [indecipherable 14:17] . At one point I proposed, actually... We had a lot of flack from people about various things, internally, at Yahoo. At one point I said how many banners there were. People complained about that. I said, "Why don't we offer a version of Yahoo for a buck a month that has no banners. Let them put their money where their mouth is." Here's what I was told. Yahoo's media audience like almost every media audience, but more extreme than most was skewed towards heavy users. 10 percent of our users did 90 percent of our clicks at one point. The person who explained this to me said, "If any significant portion of them decides to opt for the one dollar, it will take so many page views out of our ad inventory." Because you lose one person who's doing 500, 1000 pages a month, it doesn't take many of those people to reduce... Martin: That was a large part of why the Times went metered, rather than walled. David: Right. Martin: The dollar is a money loser. David: Yeah. That was their fear, that it would take out so many people out of the ad inventory. If you think about it, if you really were trying to please the advertiser, which I'm not sure anybody even still is today. But there's a whole reach and frequency thing. Light users are really hard to reach enough times to make an effect. They may see one banner. One banner doesn't do anything for you. You have to see something a number of times. Like a TV commercial. It's well established in the ad industry, a metric which nobody can agree on, as to how many times you have to see something before you take action. It would really have put us in an unfavorable position, in terms of reach and frequency. Light users who maybe came in once a month would see an ad once. So there were a number of reasons that were unfavorable, that we never charged. John: Basically, at Yahoo, you're saying that was never getting any traction. But what about at Reuters? When did this issue of, "Hey, we're not..." David: Immediately. New media steadfastly held them off. John: So you had divided interests at Reuters? You had people who had invested... David: You remember, the company's really a financial news company. Their biggest businesses were foreign currency trading. Media's a small part of that. But we happened to have a CEO at the time who was a great guy, who was a former journalist. So he had a lot of sympathy and interest. Paul: Who was that? David: Now I'm blanking on his name. We'll have to look that up. An Englishman, of course. Paul: You described a place where you had the minimum innovator's dilemma. You had a little bit of cannibalization, but the least amount. Because the newspapers couldn't do it. AP couldn't do it and Reuters could do it. David: And Reuters didn't have any real US revenue. Didn't have any US retail revenue. We had 20, 30 newspapers who were rich enough to have both wire services. We had NBC was our biggest partner. We sold all the TV companies at the time. CNN was a big customer, obviously. Paul: But mostly to keep AP "honest," probably. David: Probably. And also for people who cared something about world coverage. If you were international you really wanted to have both Reuters and maybe Agence France Press. They balance out AP's US perspective. AP would still put out stories, those days they would use the term, "abroad." Which didn't sit well with international audiences. "What do you mean, abroad?" Which to them meant, "Not in the US." Paul: Did you try to understand the audiences' reaction to effectively free wires for the first time? Because readers got conditioned by what happened on Yahoo? Was there any understanding of that? Did you track that in any way or did it just happen? David: I would say it just more happened. We had nothing to lose, at that point. It was a chance for Reuters to expand. We did end up generating substantial revenues, globally, with the online news reports. Because our strategy for sales was called "Yahoo envy." We would create a product, put it on Yahoo and immediately someone would call us from Excite saying, "How come we don't have that?" Martin: Dave, in a funny way, I recall... David: And we charged them. Martin: ...that you were, in a sense, the anti dot com boom. What happened is, you were actually making money. Which was a very unusual thing in that era. However, you didn't have a consumer facing brand. You didn't have Reuters.com yet. So everybody was saying, "They're idiotic. They may be making a few shekels over here with Yahoo, but they're sacrificing their ability to go directly to the consumer." Eventually, Reuters did go directly to the consumer, through Reuters.com. When did that happen? David: That happened more after I left. It would have been 2002 ish. I helped them build that site. There was a continual debate... Martin: But it's never really become a very big site. David: No, and we never thought it would. John: It has the same conflict that Bloomberg has. They're under pressure not to break news that comes up that's proprietary on the data. And their newspaper clients are also jealous what they distribute. David: Yeah, but the newspaper clients aren't really relevant. Outside the US, maybe. But not in the US. Martin: I think this is a key question. John: But I tried to do a deal with Reuters and the newspaper clients ended up being the people who blocked it. Just because...I don't know. David: I'm surprised. We did the deal with Dow Jones where we put our archives together. Martin: This is a hypothetical and I don't love these kinds of questions, but I'll ask you to go down this road for just a moment. Had you not taken the quick money from Yahoo and built Reuters.com in 1993 or 1994, could it have become Yahoo Finance? Or didn't you have the culture inside of Reuters to do that? David: The answer to the first one is, who knows? There are those who wanted to do that. In fact, I was more in that camp. Because I came from the retail world. I was in broadcasting. I was consumer facing. But remember, Reuters was a wholesale operation in the media business. Nobody in the media business was retail. They'd always sold their pictures to newspapers and magazines. They'd sold their wire services to newspapers. Their television was uplinks and reporters. We sent raw footage that NBC and others, NHK, edited into pieces with their own reporters in front of it. So media was geared toward wholesale. So they were most comfortable with the wholesale approach, even to new media. Martin: That's where I sense a bit of the innovator's dilemma is. To think that they couldn't view themselves...well, that's not quite the innovator's dilemma. Paul: It's reverse. It's what freed you, I think at Reuters, to go do these deals no one else would. Because you never saw yourself as a retailer. Or Reuters didn't. David: Right. We didn't see us as competing against ourselves. Martin: But in a funny way, they became the Craigslist of news. Only in the sense that Craigslist gave away classifieds. These guys are now, for pennies, giving away news. And it's just the kind of news people want online. Because it's current, quick and... John: As I recall, Yahoo did something that Reuters wouldn't likely have done. Correct me if I'm wrong, but Yahoo quickly began building all these user tools, where a retail customer could go on Yahoo, you have the news. You have the data. But then you could design your portfolio. They were the first people to do that. Martin: They were the best at that. But that's why I asked whether Reuters had the culture to develop software in exactly the way you just described. This is a key point that you've just made. David: We were used to building terminals. That was the expertise, to compete with Bloomberg. Not websites. John: You guys put insider trading...you could call up your stock. You could see who was selling. David: There was a key guy who engineered this at Yahoo, from a product point of view. I was the person on the Reuters side, running interference. Guy named John Briggs. John really was Yahoo News. He's the one who thought of all these clever things. Paul: When did you go to Yahoo? David: In the end of 99. Paul: So everything was established at that point? David: Pretty much. The only thing that I had some influence on was moving us toward personalization more aggressively. Paul: But My Yahoo already existed? David: My Yahoo was run by the engineering group. I had continual battles with them. Because I didn't control it completely. But an astonishing fact was, very few people personalized their news. Very few people took the time to change the My Yahoo page from whatever it was when they started it. I realized that, in order for that to work, what you had to do was give them 30 My Yahoo's. Are you a sports person who also likes, blah blah. It was, make the customization almost pre formatted. They never did it. It didn't really become a factor. Paul: So it wasn't even that people could get all the wires and they'd spend some time customizing their news. It was simply you could get commodity headlines? David: Yeah. You could get what you needed. Paul: What you wanted in a simple format. David: And have confidence that they were the latest news. Paul: And it was free. David: And it was free. Once it started being free, getting someone to pay for it was more difficult. To look for higher value...we did go into a mode, in 2001, when Terry Semel got there, where they wanted to find pay things. [indecipherable 24:54] . For instance, that's when we introduced a pay service for Yahoo Fantasy Sports. In a minute we had 35,000 people paying us 30 bucks a month. We had a free service, but then there was a better service. That's the way a lot of companies, particularly Yahoo, tried to introduce pay elements. By putting something that cost, that was better on top of something that was free. That's still a model that... Paul: That was the first freemium, at scale? David: Yeah. Paul: Get a big audience with a free taste, up sell. But in terms of the change in the news business, it really happened 93... David: Yeah, in that area. Paul: When was the first wire license and when would it have gone online? David: It would have been Yahoo and it would have been 93, 94. Martin: Yahoo was founded in 94, I think. Dave: No, I think it was before it. They were up as a search. Remember, Yahoo was not a search engine. Yahoo was a directory with a bunch of editors. 300 people serving the web. I'll have to check my employment dates. I was working at Reuters when Mozilla came out. So they couldn't have been up with the news before that. It could have been 94. Martin: It was. Paul: That would be key. So even by 98, 99, by the whole bubble frenzy, this was all set. David: Oh yeah. Paul: Let's talk about the proprietary services that came before and were really pushed out. David: There was, of course, AOL. Paul: And Prodigy and CompuServe, too. David: Prodigy, CompuServe, Delphi. Remember Fox's first foray into... Martin: [inaudible 26:36] 's company. David: Right. That's about it, of any significance. Paul: How do you think about placing them in the changing of consumer behavior? Because people paid for dial up and communication, email. The news came free. Especially when they went to the all you can eat model. There was no question of how long... Dave: Yeah. AOL never charged for news, per se. They just charged for access. Paul: Did you license to them too? David: Sure. Paul: And AP licensed to them. So some of this habit was set. David: AP and Reuters both licensed to AOL from well before I got there. Martin: Did you license to CNN? David: Yes. Martin: OK. So there's also that. CNN has come online. Certainly prior to 95 percent of the newspapers. They've come online with a free service, also very updated, also with Reuters news. David: They canceled Reuters at one point. Martin: OK. But I think CNN quickly became second to Yahoo as the largest. And then, of course, MSNBC came up. You were licensing to them as well? David: Of course. We made a proposal to Microsoft to run MSN News. They'd built this cool newsroom in Seattle and we were going to staff it. Then they did the deal with NBC. John: CNN had offered Dow Jones and Bill Dunn, back in 1980, the right to be responsible for the whole financial...before the FNN thing. They would have ended up being partners. But Dow Jones turned them down. They said they didn't partner. Martin: We spoke to Roger Fidler yesterday, who was at Knight Ridder. He wasn't part of Mercury Center. But Mercury Center, if you'll recall, was the first newspaper news service. One was AOL and then they pushed... David: San Jose Mercury News. Martin: It actually started as a paid service, believe. At something like $4.95 a month. They abandoned that after about 18 months. I assume that part of that must have been from pressure coming from guys like Yahoo, CNN all going free. But we'll clarify that with Tony Ritter when we talk to him. But that's also happening in this time frame. David: I would take the position that news has always been free. No one's ever paid for the news. My position has been that people paid for classified, the weekly supermarket ads that showed you what the specials are. They paid for car listings when they wanted to sell or buy a car. They paid for real estate ads, to see their own house for sale or to buy a house. These are all these things they paid for. And there was a habit. They paid for the fact that there was a piece of physical paper that someone had to get to them for those things. But there's no way to unravel the two. Obviously, people enjoyed getting the news and they read it. In terms of the economics of the newspaper business, as we always understood it, as I understood it, something like 80 percent of the profits of American newspapers came from those other things. Only 20 percent of it came from profitable news, if that. In other words, if you could eliminate the entire news cost, newspapers would have been much more profitable on their classifieds and their display ads. John: In fact, the traditional percentage of expenditure by American newspapers, even the quality newspapers, the percentage that they spend on editorial product is much lower than people think it is. Dow Jones, at its height, was spending less than five percent of the budget. I don't know what The New York Times number is. But it's low, relative to printing, paper... David: And they'd probably be the highest of anybody. John: ...sales. It's low. Fidler made the same point you made, yesterday in a different way. He said, when they put up the first online product I thought this was very interesting they were all excited about it as a news product. It wasn't online. We're not talking the Internet. We're talking TeleText. Martin: Oh, way back in video text. John: When they first did Viewtron, people really liked to do things on Viewtron. But the news was not... Martin: They'd liked to send email. John: They liked to send email and play games. Martin: And the auction. Which was the precursor to eBay. David: That's what it is. Newspapers were eBay. They were jobs. They were Craigslist. They were all those things. The news came along for free. Paul: Marry TV into that. Broadcast was free for people. Cable was a little bit this other model pay for something, but probably not news. Do you have a thesis on how that played into people's psychology as it went to the Web too? David: First of all, the television experience on the Web. It can be really good today, but for most of the period of time, certainly in the '90s, it was a bad experience both because of the mistakes made and the people doing it. This is where my PermissionTV side comes out. Even today, many services not something like Hulu, which is really well done are either too small or too big. Meaning, the people who do the technology allow you to make a window this big which many people find not really like television, but it's high quality because it's small or you hit a button and go full screen and it pixilates. It looks terrible. I don't know what the percentage is, because, obviously, bandwidth keeps increasing, but the fact is that for all of the '90s, you had a choice between a small good picture or a large bad picture. It didn't really feel much like television to someone trying to watch it. That helped television to some extent. The other thing about television is that it's basically radio. We did a study at Westinghouse in...God, it had to have been in the '80s sometime, when we were thinking of buying this really expensive weather software it rained, snowed, and did all sorts of cool things in Philadelphia. We hired this company that was one of the companies that goes into the house and actually watches what people do, to do the research. What they found out is that most people watching the early news were women who were making dinner, listening to it on a black and white television this big and listening to the soundtrack. Which is when the mandate at Westinghouse went out saying all our anchors have to sound like radio guys, because not that many people were really paying that close attention to it. I don't know if that's relevant, but television had certain built in protections against being cannibalized by the Internet, certainly through the '90s. [inaudible] When Google came along and then bought YouTube, it seems to me, Google didn't do anything to print news that Yahoo hadn't already done. They just did things to Yahoo with their news. They attracted more advertising. David: Their news was never about... [inaudible] It was aggregated. David: Yeah. They never say themselves as a content company. They keep denying they're a content company. Everybody keeps trying to say, "You are a content company." They still pretty much aren't, although YouTube is paying for some content to be created. They didn't want to ever get into that battle where they saw Yahoo starting to pay for news. Yahoo pays seven figures to the news companies for the raw materials. They don't do rev shares anymore. John: And they pay for their own original content [inaudible 34:30] . David: Of which there isn't that much of it. Paul: Less and less, I'd say. David: If you remember, there was a guy named Lloyd Braun, who eventually had my job at Yahoo after I left. Maybe there was one guy in the middle. Paul: They all left. David: Lloyd engaged on an aggressive path of doing things. Paul: Santa Monica. David: First of all, he tried to move all of Yahoo to Santa Monica and duplicated a lot of functions in both places. He had some aggressive ideas and got together with Mark Burnett. They signed this one big deal with Mark Burnett that was, I forget, about a $10 million deal. At which point the stock analyst landed on Terry and said, "Wait a minute. Do you guys want to have the stock ratio multiple of a media company? Are you a media company, and you're going to have the same kind of ratio of EBITDA to stock price as like CBS?" At which point Terry said, "[sound effect]." That deal was killed in two weeks, and it wasn't that long after that... John: Now, last week his old partner, Lloyd's old partner Susan Lyne was hired as the head of AOL brand. David: I know. I saw that. John: Here comes a content person. Paul: I want to go back to something John raised before, because it's a really critical issue with respect to where the value was created early on, and that is this notion of adding functionality to the content. There are really two roles here. One is content creation, which is what Reuters did. The other is software development, which is what Yahoo did. What it seems to me Yahoo managed to achieve with Yahoo Finance in particular was they get this content from you, which is after all very, very costly to create... David: And invaluable. Paul: For not a whole lot of money, and then they overlay their engineering talent over that and create something that builds to a massive audience very, very quickly. David: Don't forget the stock quotes, too. We weren't doing just US stock quotes. We had stock quotes from each exchange. I'd get calls in the middle of the night from our Reuters person in Hong Kong saying, "You've got the Hong Kong prices up in real time. What the hell are you doing?" Paul: Where I'm going here, Dave, is it seems to me that whether it was newspapers, broadcasters, cable providers, anyone in traditional media could do the expensive stuff. They could create the content, but they didn't mostly have the DNA to create the software. David: Well, you remember the New Century Network? Paul: Yes. Well, that was an attempt to create national scale across the newspaper industry. I'm actually going somewhere else, which is software development. David: Right. Well, I thought that was part of their mandate as well, is to build the stuff for this company. Paul: Maybe it was, but I guess the question I'm asking is could or did you see in any of the partners that you sold to on the media side any kind of software creation capability? In other words, was anyone at that period of time making an attempt to compete with Yahoo on its own terms? David: I didn't think of it as a software issue, I thought of it more as a business issue. In other words, things like deciding that only the newspaper would go up the way it was when it was printed was not a software problem. That was a business decision that we're not going to update it every minute, or we're not going to... Paul: That was. That's on the content side. What I'm saying is that Yahoo overlaid a great deal of functionality. David: Some functionality. But I will tell you that most people got their news from going to the Yahoo front page and seeing the headlines. Finance is different. Yahoo Finance clearly made its reputation on... Paul: That's what I'm focused on. David: Bloomberg was totally against the Internet at that point. I remember him telling me how much he was against the Internet. Paul: When you say "against," do you mean that he didn't take it seriously? David: He didn't want Bloomberg terminals being cannibalized by going on the Internet. He thought what Reuters was doing was stupid, with Yahoo Finance. John: There are still people at Bloomberg who have that position today. David: I'm sure. And there are people at Reuters who have pulled back. There's a lot less Reuters financial content on Yahoo today than there was when I was there. In other words, we had to create the technology to filter out the stuff that was high value to traders, or delay it, so it wasn't tradable. John: The other thing that was going on at that time, that we forget about, we want to forget about, is that in addition to the boom of the Internet, and partly because of the boom of the Internet, everybody in America at that time thought they were a trader. Yahoo had created a platform where everybody was a day trader. People quit their jobs and became day traders trading Internet stocks. David: That's true. I don't know how many it was. But I'm sure it was a lot. Paul: That worked until March, 2001. John: Yeah. And it never came back. Martin: But getting back to Finance for a moment, there were a number of traditional media brands out there. Whether it was Wall Street Journal... CNBC, a brand we talked about before, perfectly positioned to be the Yahoo Finance of TV, could never quite figure that out. We're just trying to understand why, Dave. We're trying to understand why an upstart that started in 1994 takes over the financial news business within five years. CNBC, The Wall Street Journal and others have relative to the audience size, de minims audiences online. David: I think it's three things. One is, there were some really clever people at Yahoo, including this guy, John Briggs. And there's another guy who now lives in Spain I'm trying to remember his name who thought of a lot of these things and just went out and did them. Like the things you see on Yahoo Finance. Two, they were first. Which is a really big advantage. Not only were they first, but they were really good and they had good information. They had the stock quotes. You could buy real time. You could do this. Certainly, you could get all the same stuff that someone was trading on at Goldman Sachs. You could get either immediately or shortly thereafter on Yahoo. If you weren't doing the kind of trades that needed seconds which is a particular kind of trader most people's trading is less frenzied than that. Martin: I think, fundamentally... David: It worked. Martin: ...it worked, because they understood the guts, the format, the clay of the web. Whereas the other guys didn't. David: They built a lot of clever applications, by people who had a sense of what a financial user online would want. Technicians can be hired by anybody. Any of those other companies could have looked at Yahoo and completely duplicated what they did. Martin: But they didn't. David: That seems like a business decision, more than a technology decision. I'm not sure. That's a good question. John: At money.com, which back then, remember when people used to think a great URL was worth something? Martin: I think it still is. David: It still is. There's a guy in Hong Kong who owns them all and they're all $5000. John: We had one called money.com. That one, theoretically, should have been a good one. Martin: Good at finance. Paul: But it was programmed like a magazine. John: It was programmed like a magazine. We set out to try to copy Yahoo. We hooked up with Intuit or Quicken. We looked at all that. This would have been, I don't know, 97, 98. I'm like you. I can't... David: Yeah. It's hard to pin down the exact... John: Some people can sit here and be like... David: I should have saved all my calendars. John: ...on August 10th, 1992 we made the decision. I have no idea, but somewhere in there... Paul: It was at least 98. John: It was, like, '98, we put forth a proposal that said, "This is what it will take top catch up with Yahoo and compete in that way. It'll cost about $80 million to get the traffic and all that." Of course, they said. "Forget it." David: It was half owned by Hearst, too, right? John: No, not money. Paul: SmartMoney. David: Oh, SmartMoney, right. John: SmartMoney. We were the competitors. We were the 800 pound gorilla. The compromise position in the end was we ended up merging with CNN.com into CNNMoney, which was the tail of CNNfn when the network died. There were a lot of networks that died back then that ended up becoming dot coms. CNNSI was a network that died and became a dot com. CNNfn became CNNMoney. Once we had that scale, they were able to invest in some of the functionality that Yahoo had, but Yahoo was so far ahead of everybody. David: I spent my life in radio, either being the number one station, like at BEZ or KDKA, or in Chicago chasing WGN. What you find is, consumer habits are really hard to change. Even if you offer even a slightly better service than what they've been doing for some period of time, it's really hard to get people to change their habits. People talk to me even today about starting a website and blah blah blah. I say people look at seven websites. You look at your websites in a given week, you look at the one that comes up as your start page if you have a start page, which most people do, and you look at maybe a newspaper you look at the "New York Times," in my case. Once in a while, I think of looking at the "Wall Street Journal." Less so since... John: But you have to pay for... David: Well, I pay for it. I pay for the "Times." I get the paper version of the "Times." Paul: Thank you very much. David: You're welcome. I do that primarily because... John: [inaudible 44:49] to deliver it. David: I did that for you more than anything. Somebody has a sports fantasy site. And that's it! Paul: You're actually describing this goes back to TV and... David: And radio. Paul: On TV there are 500 channels, and people have eight. David: And you have three radio channels. You have your news, information, and traffic channel, you have your primary music channel, and you have the music station you listen to when there's a commercial on your other station. Martin: I think there's a huge difference here. The difference is this. The software, whether it's mobile Web, whatever it is, allows for the aggregation of all these sources. While it's true that you may only have one news source, that one news source may be aggregating 3,000 news sources. David: Oh, yeah. Martin: You're correct in saying that Yahoo began as a directory and not as a search engine. That's absolutely true. But what it seems to me has evolved since Yahoo is the notion of general aggregation in news. Therefore, a lot of people get their news not from a primary source like the "Wall Street Journal" but from a source like Clipboard or a source like...whatever it might be. Well, Google News, obviously. David: Some people get their...Wheeler claims to get his news from Twitter. Martin: That's a great example of a highly aggregated social news service. The technology issue I think we have today is that the source is becoming relatively less important to people than the aggregated overlay to many sources. You're correct in saying that personalization never took over, but the question is whether Twitter is a kind of personalization. David: It is. Martin: It's a kind of social personalization. David: We experimented with Reuters very early on. We got this guy actually from Harvard who was a physics professor or somebody. Came to us with this product. It took our online reports I don't know why we didn't follow through with this; I guess because we didn't have a retail mentality and it showed you an equal sampling of all of our online reports international, national, sports, business on a page. As you read it, it kept track of what headlines you clicked on. It slowly expended the sections that you clicked on more frequently and diminished the ones you didn't click on. Over time it would have grown into something that more accurately reflected your interests. Maybe you'd see six headlines of international news if you were commonly clicking on international stories or whatever it was. That was a form of personalization I still haven't seen anybody do really well. People talk about Amazon. "You bought this. You should buy this." Amazon thing is still not that great, to be honest with you. I buy everything at Amazon. ...
VIDEO: YES

Rob Grimshaw
BIO: YES: In his role as managing director of FT.com, Rob Gr...
TRANSCRIPT: Martin Nisenholtz: We're here at the offices of the "Financial Times," with Rob Grimshaw, on, I think it's the 18th of April. Rob Grimshaw: It is, indeed, the 18th, yeah. Martin: 18th, here in New York. Martin Nisenholtz interviewing Rob. Rob, let's just start with a very simple background question. I want to start with a caveat, actually. I apologize. This project is pretty much contained to US companies. The reason we're interviewing someone from the "FT" is because the "FT" has had the most material effect on the business model today, with its pioneering of the metered model. The "Times" took that model. Many other newspapers, hundreds of other newspapers, now have taken it. That's the caveat, for those of you who think I'm discriminating against every other newspaper in England and around the world. [laughter] Martin: I know you're a global paper, or a global information company. [laughter] Martin: I apologize for the provincial reference. In any event, tell us when you personally first became involved in digital journalism. How did you meet this field? Rob: I've worked at the "Financial Times" for 14, 15 years now, and got involved in digital around about 2004, 2005. Actually, I've come up through the commercial side of the business. The moment when I really hit the journalistic side of things, and all the issues around the business models, and the structure of the whole operation was when I took over as managing director of ft.com, which is going back to 2008 now. I had previously been involved in putting together the digital strategy for the organization, which went through a big review around about 2006, when John Ridding, our current CEO, came into his position. Martin: Take us through, if you can, you may not be able to go back much before 2004, the "FT's" history here. You were free. You were paid. You've gone through a bunch of different iterations. Can you do that? Rob: Yeah, absolutely. The "FT" was very early to the Web. Pearson, our parent company, backed us very heavily to go into online. We had a website operating, I think, from 1995, and a small team of pioneers around that. From about, 1998 onwards, Pearson pumped in a lot of investment into that business. It was set up in independent offices. It had its own editorial team, separate technology. I think we approached it in a way that many publishers did at that stage. There was a lot of exuberance around it. It was the dot com boom, and people were very excited about the whole thing. Martin: Was it a free site at that time? Rob: At that point, it was a free site. I have to say, I think, in the early stages, free was the only way that people knew how to do it. Just from a technical point of view, a free website is the path of least resistance. All you need is a CMS and an ad server and, hey, you're in business. The other element within this was, I think that the leadership at the "FT," and I think at publishers across the market as a whole, simply didn't really understand some of the long term strategic implications of this stuff. They understood that they needed to be involved in the Web, but I don't think anybody had really thought through how was this going to play out, and at the time, it was a really pretty small part of the business. They were presented with a proposition that said, "The quickest, easiest, simplest way to do this is a free website, and we'll make the money through advertising." That ticked the boxes, so that's the way everybody went. I don't think there was a point where the whole industry sat down and decided, they compared all the models and advertising was the way to go. As I say, it simply was the path of least resistance. The "FT," had a reassessment on this, around about 2001, when the dot com bubble started bursting. At that point, we had noticed that there were some issues for us as an organization with the advertising model. The fact was we were struggling to get scale. We were coming up against the reality that we were a niche publisher, producing content that only appealed to a very narrow segment of the marketplace. That was inherent to who we were. We weren't going to be able to escape those confines. The notion that we might compete with the portals and the general news providers in terms of volume looked like a fancy. That was the first point at which the "FT" really started to think about Web business models. The conclusion that came out of that process was that we should sell subscriptions. I think it was May, 2001, we actually put in our first subscription model. At the time, it was very controversial. I think only "The Wall Street Journal" had done anything similar at that point. We really were going off in a unique and different direction, but there were the core of people in the business who were convinced it was absolutely right. What transpired from that experiment was a short period of very rapid growth in subscriptions, where everyone got very excited, and then it plateaued, and nobody had any idea for how to grow the business beyond that. Martin: There was very limited advertising inventory as a result of that, as well? Rob: Yeah. Absolutely. It was a very simple paywall. Some stuff was behind it. Some stuff was out in front of it. The decision about which articles went where was entirely subjective. Nobody really knew how to make those decisions in the right way. In the background, Web advertising was booming at that point. It was growing 20, 30, 40 percent a year. Eventually, and actually after a relatively short period of time, everyone came to the conclusion that fiddling around with this subscription stuff was just too much trouble, and we should be chasing the advertising ball like everybody else. We left the subs system in there, but it was kind of pushed into the background. The paywalls were so far into the background that most users of the site never saw them. Really, for the next five years up until 2006, the site was run as an advertising proposition really, where the objective was to get volume, to get ads. In line with the zeitgeist at that point as well, there was a big focus on cost reduction on the digital side, integration. Really, the only big thing that happened with ft.com through that period was, actually, quite farsighted, integration on the editorial side. We did a lot of work to create a single publishing and content creation platform that all the journalists used. At the very least, through that period we did manage to establish this notion that there was not such a thing as a digital journalist or a print journalist. We just had a pool of content which could be published through different channels. Commercially, the business ossified through that period. Now 2006, as I mentioned earlier, was the next major breakpoint, when John Ridding came into the CEO's position and reviewed the strategy for the whole organization. At that point it was very clear that what was being done digitally was simply not enough, given the strategic direction of the whole industry. We needed to put more weight behind it. The result of that review was a big spurt of investment into the digital side, a rebalancing of the business, as it were. My immediate predecessor, Ien Cheng, took over as the MD of ft.com and started to build up the digital team. As part of that process, we had a review of the business model. That's where the metered model started to emerge. Martin: How did it emerge? Rob: Here's the irony, which I need to now confess to. Ien conceived of the model, originally, as a way to maintain the focus on advertising, because he was very skeptical about the sub side of the business and whether we could really scale it to any size. The advertising market was still growing, so he was trying to balance these two things. He had a lot of pressure from John to say, "Look, we've got to look at the sub sides. It's got to be a big part of the business." But on the other hand, Ien saw the growth coming from advertising, so he was trying to come up with a way to balance those two things. Martin: He came up with that. Rob: After that, came the metered model, whereby you could have these flexible barriers on the site, which could be positioned in such a way to actually balance these two things. If you had a lot of money coming from the advertising side, you could dial up the traffic by pushing back the barriers. Whereas, if you were making more from the subscription side, then you could push the barriers in, and up that. It was a very smart insight and a very smart idea which, subsequently, has been enormous benefit to the organization. But there is that sweet irony in the heart of it which is that, from Ien's perspective, he was doing it because he thought the advertising was going to be the thing that drove the business. Ien moved on, actually, to Google, and then, subsequently, to Bloomberg. It was around, June, 2008 when he left, quite unexpectedly at the time, and I got put in the hot seat. I had been running advertising at that point for several years. Martin: You must have been fairly bullish on advertising, too. But you knew the reality. Rob: Exactly. Exactly. I knew the darker corners of the advertising market, and had a closer view of where it was going. I was never as bullish as Ien on the advertising side. I saw major problems emerging. We just didn't have enough inventory to really scale it. We pushed the yields very heavily, and we were quite proud of what we'd done in that regard. We'd been very aggressive on the pricing on advertising. We'd invested a lot in targeting technology. Even with all that, it was still proving difficult to get the rate of growth that we wanted. I started off exploring the subscription side much more at that point, and realized that we had a big opportunity there, if we did some of the right things. The subscription business that I found at that point was a very neglected operation. It had all the bits and pieces there, but we had no one really in the organization who had any expertise with it, and a lot of the stuff had been neglected. It was all stuff that had been put in, in 2001, and no one had really done anything with it since. When you started looking at what might happen if you optimized all of this, and pushed the yields and bring the barriers in, then the sums were quite attractive. Martin: What were the barriers at that point? Rob: You hit the subscription barrier at 30 pages, 30 articles a month. Registration was at 10 articles a month. Anonymous users could get up to 10 articles free. Actually, we now know a lot more about the security issues around counting articles on cookies and things like that. The reality there was that if you were using a number of different browsers and deleting cookies and things, you could have as much as you liked. It was a very loose subscription model. After some consultation with John, and looking at some of the sums, we started bringing the barriers in. The effects were, actually, pretty amazing. We were aggressive with what we were doing, because we did a series of things in tandem. We pulled the barriers in. We also pushed the prices, I mean we were selling a digital subscription for $99 a year. Over the three years subsequently, we more than trebled that. We were also optimizing all the systems in the background. We were trying to get all this technology, which had not been touched for five or six years, to actually work properly, and deal with some of the issues like subscribers getting lost in payment processes, or people having their subscriptions canceled because their credit card billing had failed. Basic stuff, which if you are a retailer would just be the normal day to day stuff you do, but if you're a publisher, you've got no idea about, because we'd never been there before. Martin: Refresh my memory, did you guys at that time work with Google to limit the number of articles you could get from search? I think you have side doors. Tell us where the side doors are at this point or how that evolved. Rob: That piece was part of a general fight that we had to take on with the Web world as a whole. Because when we said, "We're really going to put the emphasis on subscriptions and go for this," there were an awful lot of people who came forward and said, "You're nuts." Quite a lot of people in the industry. Quite a lot of commentators. Many of the big features of the Web landscape were set up for a free contact world, Google being one of them. Martin: The main one. Rob: Yeah. Absolutely. Their rules were really very Draconian. Essentially, if you had a paid proposition, you disappeared out of search. That was it. Put it behind a barrier, Google's not interested. That had a very powerful impact on the market, because if you disappear off search, you kind of disappear off the Web. I mean, Google has a monopoly on these things. This is the reality. I'm trying to remember exactly at what point it was. I think it was 2009, we really got into this, because we'd been pulling in the barriers and increasingly noticing this disjoint where what we said about our access model was not matched by the reality, because anyone who came from Google could get it free of charge through what was called First Click Free. First Click Free, basically, meant that if you came from a search result from Google, you got the whole article, and then if you clicked further, you would go into our access model. We did something very, I guess, English, and old fashioned. We wrote a letter to Google, to Eric Schmidt and said, "Look, we think this is jolly unfair," essentially. That's what it came down to. Much to our surprise, Google actually responded. We had thought of them at that point as being a very monolithic organization. But they proved to be actually much more amenable and friendly to deal with than Apple subsequently did, when we got into engagements with them around tablets and smartphones. They moved. We had a number of discussions with them, particularly, with some of their top search engineers. The result that came out of it was this compromise with a cap on First Click Free, which said that First Click Free would still endure, and, in fact, we still use it today. It provides a lot of sampling for us, which is a key part of our subscription model. But, if people try to abuse it, then we have the right to put in a barrier and say, "No. So much, and no further." Actually, that compromise endures to this day. It has given us the latitude that we need to be able to develop the subs model in the context of the wider marketplace. Now, I think Google, actually, are very flexible on this stuff. Martin: How have you applied that to Facebook and Twitter? Rob: With Facebook and Twitter, actually, we had the opportunity to manage it from early stages. The approach we took and continue to take is, actually, if you come from Facebook, you come from Twitter, you go straight into our access model. The first thing you see is a barrier, and if you want the content you've got to register, you've got to subscribe. I have various members of my team, who on a regular basis come to my desk, and say, "Oh my gosh, we're losing so much traffic from the barriers." That's how we make our money. That's how we develop our business. Martin: The other side is that you're losing a sampling opportunity. How do you think about that? Rob: I'm relatively sanguine about that. The reality is sampling is important, but we're not sure of sampling. On a monthly basis, typically, 13, 14 million people will come to ft.com. That's more than enough that we need to provide a sampling experience and get on that tranche of fresh customers in through the registration process and, ultimately, on into subscription. Martin: I'm sorry, we took a little digression on the side doors. Let's bring it up to 2009, again. You were talking about the 30 articles for free, and now you've brought it in. Rob: Yeah. We brought it in, and we pretty rapidly, over a couple of years, got to the point where we had a model which looked more like 10 articles a month for registration. Beyond that, you have to subscribe, so subscription barrier at 10. We had a period where the registration barrier was at three articles, anonymous users could get three articles, and then we brought that down to zero. That was the thing which got rid of the back doors with the cookies and using different browsers and stuff. In fact, actually, it was a big deal in terms of driving the growth further. I use a lot of comparisons with the retail world. The conclusion that I came to is that there's no such thing as perfect security in any business. [phone rings] Rob: Excuse me. Let me turn that off. If people want to game the system, there will always be a way to do it if people are determined enough. The same is true in shops. If you want the perfectly secure retail store, then it looks like Fort Knox and that's not an attractive proposition. You've just got to get it to the point where people appreciate that, actually, this is an environment where you should buy things, and that if you don't play by the rules there is some consequence, some security or whatever, around it. I think that's the stage that we managed to get to around about 2010. [phone rings] Rob: Excuse me. Let's get rid of that completely. Turn it down. Having got there, I haven't really worried too much about the kind of access and security sides of things. There are still back doors and ways in but they're so obscure that actually not many people do it. [phone rings] Rob: I really must apologize for this. This will all go on the oral history record, I'm sure. Martin: You've captured the smartphone era of 2013 forever. Rob: Absolutely. Martin: 10 years from now when students and scholars are looking at this they'll be saying, "What crude technology." Rob: They'll have it built into their brains or something, by then. [laughter] Rob: It will be of the period. The technical sides had been taken care of at that point. Really, the big thing that we were then focused on is the cultural element. I had come to appreciate that, actually, the big challenge with the business was not really a technological one, it was a cultural one. It was about getting the team to think about the business in the right way. In product terms, that was about being innovative, and entrepreneurial, and collaborative in what we did. In the marketing space, it was about taking on the values and outlook of a retail operation, because what we had there was a direct retail Internet business. We didn't initially realize it. We didn't think of ourselves as a direct Internet retailer in the early stages. We thought of ourselves as a publisher that happened to be selling subscriptions. At some point, that light bulb came on and I started thinking, "Hang on a moment. We've got to do the same things as Amazon." Martin: What does that mean for a publisher? Rob: It's a really big deal. Publishers, historically, have tended to operate through third parties. We're rooted originally in the UK marketplace, which is dominated by wholesalers and retailers in the media world. You sell your newspapers to a wholesaler, who sells it to a retailer, who then gives it to a customer. We had no idea who our customers were. We never talked to them. It was something that somebody else had to worry about. Now, we found ourselves in this world where, actually, we were in direct contact with our customers whether we liked it or not. If there was a problem with the site, or subscriptions, or whatever, they called us. The first manifestation of that was having to develop a customer service team. It sounds pathetic in some ways but, actually, the "FT" didn't have a customer service team before the advent of ft.com. We didn't need one. You have that sort of practical challenge. Beyond that, there was the business challenge of how do we make this business work effectively? To make it work effectively, we had to appreciate that we were a direct retailer, and that this interface with the customer was now the focus of our business, and we really had to get it right. We had to learn how to be a retailer. The realization was that just because you open a shop doesn't mean you're a great retailer. You have to learn how to do it. Martin: Just to be clear, you're not talking about a retailer in the context of, say, "The Telegraph," selling CDs, and other things like that. You're talking about selling subscriptions in a more creative way. Rob: Yes. Yeah. Martin: OK. I just wanted to make sure. Rob: Absolutely. I'll give you some examples of revelatory moments, as it were. One of the early things that we did was get optimization software onto the site, so we could do what was called multivariate testing, test a number of different page designs against each other to see which one's more effective. We did an initial test where we changed the design of the barrier page, so it's the first thing people see as they go into the acquisition funnel. After six weeks of testing, we doubled the number of people who were buying a subscription. This was just by changing design on the first stage of a three step process, and keeping the price and the package exactly the same. That was, as I say, a kind of moment of revelation that said maybe there are some things here we don't know. By learning them, we might make this business much more successful. That led to an approach which really involved looking at every single stage of the buying process, the billing and operations behind it, all the places where we touched the customer, and trying to optimize all those things. In parallel, bringing in some of the tools and technologies that the retail world used, and also some people who had expertise in using them. Bit by bit, as we did all those things, it had an impact on the development of the business, and it created this accelerating growth rate in our digital subscription revenues. By the time we were into the back end of 2010, we were on a very rapid growth path with the subscriptions. We could see a very bright future emerging in what had been at the start, somewhat, of a leap of faith. Myself and John were convinced that we could do this, but many people in the organization and in the market beyond simply didn't see it. It was now emerging. Martin: How much is the "FT," sui generis? In other words, because of its size and its profile in the marketplace, how much of it is just unique? Do you have a thought about that? Rob: It's an interesting debate. I think we do have some unique advantages. We are very niche. I think we have a very clear position in the marketplace and a relatively defendable position in the marketplace. I think we, probably, have an easier job of carving out our position in the marketplace than, say, a general news publisher because there's just more competition for that space. However, what I've seen over time is an evolution of this discussion. When we first came out and said that we're doing this, and this is going to be the focus of a Web business, everyone said that there's no way you'll ever be able to do it. Nobody can do subs online. Forget about it. When we were successful, the argument changed to, "You can do it, but nobody else could do it. A general news publisher could never do that." Then, "The New York Times" comes out and does it. The argument changes, again, to, "The 'FT' and 'The New York Times' can do it, but they're quality publishers, so they can do it but nobody else could ever do it." Now, you've got what, 1,000 publishers across the States, 1,000 titles across the States that are charging? Martin: That begs the following question. Where are you today? Just explain your economics sitting here in April 2013, and then we'll triangulate that with where some of the others might be. Rob: If you look at the "FT," as a whole, about 35 percent of our revenues come from digital now, which is something that we feel, is a real achievement. Our thinking is that we need to get to about 50 percent digital revenues, in order to be secure in the long term, to guarantee the future of the brand. But, we can see that on the horizon. We know what steps we need to take to get there. There is also another key aspect that we look at, and that's the balance between advertising revenues and content revenues. In those terms, it's about 50 50 now. This year we expect over 50 percent of the revenue for the organization to come from content as opposed to ads. Just to give you an illustration of how massive a shift that is, 2001 over 80 percent of the revenue for the "FT," came from print advertising. It's a huge transformation. If you look at the digital business right now, ft.com, last year, made more than 50 percent of its revenues from subscriptions. I should add that that's not because our digital advertising crashed when we put in a subs model. In fact, our digital advertising revenues have increased every single year since we went big on digital subs from 2008 onwards. That has, in fact, been a virtuous relationship between the two things, where the deeper our insight into the audience gets, the more advertisers are prepared to pay for it, and that has driven growth over that period. We remain very, very bullish about the content business, about people's willingness to subscribe, about our ability to charge similar prices for subscriptions online to the prices we charge for print. We think the content is fundamentally of the same value, and the audience seems to agree. We think there's massive potential in it. The future is a business which probably makes 75 to 80 percent of its revenues from content, and the majority of that is in the digital space. We'll still be publishing a newspaper in 10 years' time, but it will be small. Martin: Getting to a point that you raised before about advertising, I think, interestingly, part of what everyone is now concerned about is advertising. That is, even as the subs model has taken off at places like the "FT," "The New York Times," the advertising side, in print and online, seems to be troubled. Can you explain why you think that is, whether it is troubled? You don't have talk about the "FT" in a forward looking way, but just in terms of the industry in general, why you think it's troubled and whether you think there's any light at the end of the tunnel there. Because, if there isn't any advertising, then that's also problematic, right? Rob: Absolutely. It's a big issue for the whole industry, because you don't want to make your money from one source. We like to make money from advertising. It's a great business. But, the outlook is very cloudy. My thinking on this has evolved over time. I started off thinking that the "FT" would have trouble making a lot of money from digital advertising. I eventually came to the conclusion that, actually, the whole industry is going to have trouble making money from digital advertising. The concern at the heart of this is about real estate, basically. To make money from advertising, you've got to have the space to sell. Now, because we talk about inventory in millions and billions, we always think that we've got a lot. But, my analysis of the marketplace is that, actually, publishers have a tiny fraction of the available inventory. Facebook pulls a trillion page views a month. Even an organization like Yahoo pulls 100 billion page views a month. These are absolutely massive numbers. That makes Facebook 1,500 times bigger in inventory terms than a publisher like "The New York Times." The difference in scale is monumental. It's a gap which is almost unimaginably big. The notion that either, a publisher individually, or publishers collectively are going to jump that gap is fancy. It's just not going to happen. The reality is that publishers have a tiny fraction of the marketplace to work with. I reckon, based on the numbers I've seen, about one and a half percent of the total inventory available on the Web is on news publisher websites. That's all news publishers, traditional, Internet based, new startups, whatever. It's just not very much to build a business on. It makes publishers minnows within this marketplace. That's the reason why, as the Internet advertising marketplace has grown, publisher revenues have stagnated. They're just not competitive players within that space. It isn't all doom and gloom, because I think there are still reasons why marketers would want to be on publisher websites. I think if you sit down with any marketing director, they would say that actually, environment matters, context is important, and if you've got a great brand, then you want it to be seen in the right place. News publishers have a very strong relationship with their audience. There's an emotional connection there. Advertisers can ride on the back of that. But that sell cannot be about volume. I think that's the direction that most publishers have gone, and they've gone a long way down that track. To be successful over the next few years, they have to track back and actually focus on quality and targeting. They have to be able to show that their audience is completely unique, and they can take advertisers to it in a totally different way. Martin: Do you have "FT" inventory on exchanges and networks? Rob: We, traditionally, have never gone down that road. Up until, a year and a half ago, we had never used an exchange or a network of any kind. It's always been direct sale, and that was an important part of the yield management policy. We have now started dabbling with a private exchange using programmatic style buys, and we think that the controls have evolved to the point where we can actually manage that and it won't undermine our core sell. But that's small at the moment, and we'll only develop it very carefully over time. But the focus with the "FT's" sell has always been about more and better targeting, better than anything else in the marketplace. Giving our sales team something unique that they can take out to agencies, and say, "Look, you have to be on FT.com, because if you're not, you don't get this. And nobody else has this." Even with all that, I still think that we need to evolve our business further. The big thing, which is on my mind at the moment, is whether we need to change our approach to risk within advertising. What I'm talking about there is that publishers in general have taken a very risk free approach to the advertising business. Essentially, we'll take your copy. We'll put it in front of the audience, and that's the end of our involvement. If it works, great. If it doesn't, well, too bad. We're still taking the full price for the space and we're off. I don't think that plays in a world where there is so much inventory available, and so much choice for advertisers, and some of it's so cheap. I think that in order for publishers to be successful over the coming years, they may have to actually get much more involved with their advertising clients' business, and actually say, "Look. We're going to partner with you on this. "You want to sell computers? OK, that's our problem too. And we're going to be the experts in getting response from our audience. Do you know what? We won't get paid unless you get paid. If we ship those computers, then we'll take the upside together with you. If we don't, then we both won't." Martin: That's what Google does, in its own way. Rob: Yeah, absolutely. Yeah. Martin: Certainly, the AdSense part of the business. Rob: Yeah, for sure. It's another big, wrenching change for the industry. But I think in order to sustain any growth in the advertising market, there has to be a different approach. If all we're about is volume, then we'll just get steamrollered. The volume of inventory is almost unimaginable out there. Martin: Just shifting gears for a little bit, you mentioned Apple before, and you mentioned intermediaries. One of the things that has been characteristic of the "FT," as well, is this notion of creating, let's just say direct to consumer experiences on the Web. Can you talk about why you haven't wandered into the app world in a way that most publishers have? Rob: Yeah. I think the key reason why we took a different approach from everybody else was that we had more to lose. When Apple came out with their iTunes billing models and subscription models, then we already had a mature business that was generating a lot of revenue. We looked at Apple's policies and rules through that lens. When they were talking about taking 30 percent of each subscription sold on an ongoing basis, and when they were talking about being between us and the customer, we looked at that as, "Oh my God. Someone's coming to take a chunk of our existing business and to get in the way of a relationship with our marketplace that we've already developed." We thought, "Well, how does this make sense? Why would we pay somebody else 30 percent to use their billing platform when we've already got our own? We've invested in it. Martin: They would say that they're a marketing machine as well as a billing platform. Rob: That can be true in some senses. But I think the interest of Apple, and the interest of individual publishers or app developers are not aligned. Apple, if you look at the way they handle the App Store, Apple is constantly focused on the new. It's what you see promoted all the time. The latest thing, the newest thing. I think that's because that's what sells. If you've got a new app out, that's great. Apple will put you on the front of the iTunes store. You'll get loads of downloads. It's fantastic. But six months on, or a year on, when you want to renew those subscriptions and you want to get new audience, Apple's not interested because they're onto the latest thing, the next thing. Frankly, if that thing cannibalizes your business, Apple doesn't mind because they still get their 30 percent slice of the cake. They don't mind which app it's coming from, so long as they get it. Whilst upfront, Apple and publishers can walk hand in hand and it seems like everything's rosy. As you get deeper and deeper into this process of trying to build a subscription business, what you find is that they've gone one direction and you've gone the other. You're on your own. You're floating around in this enormous App Store environment where there's half a million plus apps, and the search tools are terrible. All the marketing levers are in the hands of Apple. All you can do, basically, is link to the front door of the store. [laughs] It's crazy. I think those are things that we were perhaps clearer on upfront than a lot of other people in the marketplace, simply because we had this existing business to look at and understand the implications. We thought that what they were offering was so poor that actually whatever the alternative was, however difficult it was, it had to be better. That led to us rolling the dice on HTML 5 and a Web app. Martin: That's interesting, because a very significant percentage of the mobile user's time is spent in the app environment, so you've pushed against a real trend here. How do you feel about that going forward? As the world becomes more mobile, is that a sustainable position? Rob: So far, it seems to be. Our traffic has increased by over 70 percent since we left the App Store. In fact, we found the promotional tools which work, traditionally, on the Web are very effective in promoting an app as well. To us, it seems that actually the users are not conscious of whether they're using an app or not. The app style delivery on the device clearly works very well. But users don't care whether it's a native app or a Web app, as long as the experience is the same, they're not bothered. The fact that they have to go to a website to get the "FT" app rather than go to the App Store, doesn't seem to faze people, so long as you explain the process. The biggest emotion that we get back from readers is that they love the application. They think it's a great way to read the "FT." I think the world is coming our way. The apps were a necessary phase when the browser technology couldn't support some of the experiences that people wanted to create on these devices. But that's not the case anymore. HTML 5 has come a long way. Most apps now are written in HTML 5, with just a light native wrapper. Bit by bit, they're starting to leak out. People are experimenting more and more with app like experiences in the browser. A lot of mainstream websites now, if you go and look at them on tablets, have more app like elements to them because they can. At some point, the distinction is going to disappear. I feel like we're on the right side of history there. Certainly, we haven't suffered any commercial disadvantage. In fact, arguably, we've had massive benefit from it. Martin: Last question. This is a history, but if I could ask you to look forward, not as some kind of seer or predictor, but in terms of news and maybe more particularly the "FT," what are you seeing in the next phase? Is it more ecommerce? Rob: I think there are, potentially, massive changes still to come. There are big spaces that publishers have not explored fully yet. Ecommerce is, certainly, one of them. We're not dogmatic about the subs model. What we've always said to the market, as a whole, is not, "You've got to do subs," but, "You've got to do something different. Advertisers aren't going to pay the bills. Experiment, explore." Why not ecommerce? I was talking recently to the guys at "The Dallas Morning News," where they've effectively set up an in house advertising agency. They're doing creative and creating content for their advertising customers. It's a great model. It's working really well for them. Why not do this stuff? I think outside of that, there is a lot of change in areas that we might not expect yet, because if you think about it, there are still a lot of things about the publishing industry, which are pretty much as they were 15, 20 years back. You look at the way most publishers produce their articles. They're still, roughly, the same length and the same style as they would be if they're in the pages of a newspaper. Not much has really changed with that. Why do you need that paragraph or two of context in the middle of the article in a world where you can link out to Wikipedia, or 100 other reference articles to tell you what's going on with the story? There's also this core thing about publishing, where publishers are intimately linked to their own platform or publication. That affects all sorts of aspects of the business. The fact is, at the moment, for us, or pretty much every other publisher, we can't make money unless someone comes to our site, or comes to our newspaper. That's whether it's from advertising, or subscription, or whatever. Is there a reason why that needs to be the case in the web world? Certainly, there's no technical limitation here. We could create the entire "FT" reading experience on another platform. In fact, we could re create the advertising experience, and the subscription experience to go with it, as well. Martin: Wouldn't that just create another intermediary? You could do that on Flipboard today, for example. Rob: I don't know. But if I look forward in terms of how our subscription proposition is going to evolve, I think we have to acknowledge the reality that actually people like to spend a lot of their lives in the social space, or on these social aggregation platforms. I think that's an irresistible force. If you can't get the audience to come to you, then you have to go to the audience. I can imagine a time where our proposition to subscribers is, "You've paid for it. You read it where you want." Our job is to do the plumbing in the background, to make sure that you get the perfect interactive experience on Flipboard on Facebook, on LinkedIn, or whatever it is. It could be hundreds, could be thousands of different options. Then, actually, we've kind of liberated ourselves from our own platform, and the "FT," becomes a proposition that just goes everywhere with you. I think, actually, that would be a huge revolution, in terms of how publishers think about themselves and how they deliver their news to their audience. ...
VIDEO: YES

John Harris
BIO: YES: John F. Harris is an American political journalist...
TRANSCRIPT: Peter Hamby: Go back to The Post days. Was there a crystallizing moment for you guys when you realized that the digital space had a real future for both your careers and news in general? Was there some founding moment? Jim VandeHei: Harris? John Harris: No, there wasn't a light switch that went off. Anytime, starting from the late '90s onward, people became more and more aware of how the web was going to influence the future of all journalists. I became increasingly struck, over in The Post, that how much of impact that our stories had been moved into a digital space, but how much of our professional work lives, our daily routines, our mental habits, were still grounded on the once every day the paper comes out rhythm. I grew, over time, increasingly distressed by that, because it seemed to me a real disconnect between where our audience was and where our effort was. But that wasn't a light switch moment, that was something that happened over time. Jim: Yeah, I remember back then The Post was actually two physically different companies. One was a digital company on this side of the river, the other was the newspaper company in DC. Nobody was going from the newspaper over to digital. This is mid 2006, when almost nobody's going online, and for us it was never like, "Oh my god, The Post is sinking, we've got to get out of here. We've got some brilliant prophecy, that we know what the future is," it was more a conversation about, "We've got this really cool idea, we're looking at what's happening on cable, what's happening on the Internet, and the opportunity where journalists who have their own brand can really make a mark." That was really the evolution of Politico, was saying, "What if we just got six or eight of us together, started a company, we know we're going to break news, we know we'll get on TV, we know we can get people to pay attention. Let's see if that could actually be the germ of a company." Peter: But did you have an idea that you took to your superiors at The Post? Jim: It evolved from that. Peter: So what was that idea? Jim: It was essentially an evolution of what we've just described. It was that we had an idea that, once we went and talked to people who were much smarter than we were, and had money that we certainly didn't have any access to, about the economics of this. Could you create a website that was built around just being really interesting, breaking news, driving a conversation, day to day? Could you build a business model around that? I think with each conversation we had, many of them with friends of John's from over the years, everyone was like, "Yes, yes, yes, yes." John: What we believed then, and still believe, is that the digital space rewards niche publications that can really organize themselves editorially, organize themselves in terms of a business model around a single subject, or at least a single set of closely related subjects. That's really hard for the general interest news organization. We wanted to be a specialized site, with reports reflecting that specialization. In other words not generals, but people who really knew politics, and knew government well. We talked about building that kind of space within The Post as kind of a site within a site, as one idea. Simultaneously with that, we had an offer to try to build that site from scratch. Peter: From outside? John: From outside. Peter: What happened when you talked to the folks at The Post, when you took this argument to them, or the idea? What was their reaction? What were the conversations like? John: There were a lot of people at The Post at that time, and I think that's still true of the people over at The Post, who are thinking very hard and very seriously, conscientiously, about these questions. They were intrigued and enthusiastic to try different ideas. There was certainly a possibility that we would have stayed at The Post and tried to go with this site within a site strategy. In the end, it ended up being more attractive, and I think more successful than it could have been by starting from scratch rather than trying to build within an existing brand and an existing institution. Jim: An existing institution would have strangled the idea. The reason I think it worked is we were able to move so quickly and not have any of the baggage of being a legacy institution. Nothing against The Post. It was just a big newspaper that was getting the bulk of its money from the newspaper. The idea that suddenly they were going to give us the freedom to really build something in isolation, I think they wanted to do that, and I think in retrospect it would have been really hard for them to do that. Peter: You used the word baggage. What else do you see as baggage from a legacy? Jim: It's what's killing newspapers. The baggage that I described is just the fact that they went through years and years and years, a generation of profitability, and they were newspapers. They were used to putting on a physical newspaper, and that creates rhythms, that creates demands, that creates a certain type of reporter. Obviously when you say, "You've got to change that." You've got to move quicker, you've got to be on digital, you've got to have people who maybe are mediocre reporters or they're solid reporters, but they're not household names, and you suddenly look at a media culture that's certainly rewarding people that were doing distinctive work or were household names. People that can get on TV, people that can break news, people that can write stories that are going to get clicked around. That's a tough transition to make. It's tough to do from scratch. Just really tough. It's tough for any big institution to change quickly. It's the reason reinventing government is hard, it's the reason that restructuring a corporation is difficult. You get habits ingrained into a company that are very difficult to undo. Peter: How confident were you that this digital venture would work? Did you have metrics and numbers to back this up or were you just flying blind? [laughs] John: [laughs] No, we had an intuition and a hunch. It wasn't just blind hunches. It was hunches based on what we were seeing all around us. It's not like 2006, early 2007 was so long ago. By that time, there were already plenty of examples that we were seeing of reporters and sites that were outside the traditional establishment of journalism having lots of success, lots of impact, doing lots of creative work. We could see that. The relative position of places like The New York Times, the Wall Street Journal, or the Washington Post, which used to be unchallenged, unchallenged superiority, unchallenged ability to set the agenda, that relative position was rapidly diminishing. Lots of places were competing for attention, for impact, for being the most important story of the day. Abundant evidence. We took that evidence, and it made us believe that, if we got the right roster of people with the right focus, that they could have impact. That was the intuition or the hunch. But at the time we started, the time Robert Albritton gave us the green light and a budget to go out and try this, it wasn't in our mind or in his so sharp that we knew exactly how we were going to measure success, exactly what success would looks like in our traffic, or revenue, or anything else. We had a high degree of confidence that we had a good idea, and we had a fairly high degree of confidence that, if that idea was good, that we were the right people to make it work. But beyond that, we were operating on a hunch. Peter: Moneywise, how long did it take you to find your sea legs? Were you making money quickly? John: It's been a while ago now, but these were long early months, when we were a new brand in Washington and digital revenue market was still pretty young. Those early months were very slow. The ad market is really pretty made up, at least then, I think maybe it's changed, it was made up of very conservative people, who themselves were products of institutions and products of old habits and old ways of thinking. That first year, 2007, we felt like we were having immediate impact. Almost from day one we were breaking news. We were getting quoted. We were seeing the news product be successful. I think there was a lag time of maybe six months or so before we started to see the revenue come in. A lot of that early revenue did come in our paper. It was only about a year after that, that we really saw the digital revenue start to come to us in a big way. It seems to me now that the ad market has caught up. They're no longer so stained. In fact, people are always looking for the new thing, puts a burden on us to keep innovating. Peter: How much of your revenue is from the subscription product versus the newspaper, versus digital ad revenue? Jim: If you go back to even three or four years ago, almost all of our money, 80 percent, was coming from the newspaper. Now it's a much more diversified company. We get more from digital than we get from the newspaper on the advertising side. We've added subscriptions, high end subscriptions, not like The New York Times, doing a broad based subscription at this point. We're just doing high end subscriptions for political insiders and that's been very successful. If you look at, almost everybody is doing the same thing now. They're just doing different variants of it. To be a successful media company you have to have, essentially, four or five different revenue streams. You have to have subscriptions. You have to have print ads. You have to have digital ads. You have to have mobile ads. Almost everyone has events now. You've got to hope that the totality of those revenue streams is big enough to fund a profitable company. I think that's the big test for everyone. As John was saying earlier, the idea of niche publications, if I were an investor and I was going to place my bet on companies, I'd be placing it on companies that have real focus and real expertise, and therefore command the attention of an important audience every day of the year. Folks like us, or the Financial Times, or the Wall Street Journal, or AllThingsD, I just think it's a lot easier to build a business model around that than it is around a traditional newspaper, either a small newspaper or a national newspaper, that is of general interest. Those are the ones that are going to have a tough time. Peter: Do you think of yourselves as a national brand or distinctly Washington brand? Jim: We care most about being a Washington brand but undoubtedly we're a national brand. Our traffic is what, 88 percent now outside of Washington, DC. John: Some months between 5 and 10 percent coming from abroad. Peter: How big is the newsroom now compared to when you started? John: It's a lot bigger. We started as an organization as a whole with about 60 people, of which probably 40 people were in some capacity or other in the newsroom reporters, web producers, editors. Now we're a company of 250 plus of which probably about 180 or so are newsroom based. Peter: During the last presidential race, how many reporters did you have? You were paying to send reporters out on the road and travel the country. A lot of news organizations weren't. Do you have any idea of how many reporters you sent out or how much money you spent on the election last year? John: I know how much money we spent. That's a knowable fact. We had a core group of probably 8 to 10 people owning our coverage and then we had people making different cameo appearances, probably 20 or 30. Peter: Can you talk about the norms and values of this newsroom compared to The Post? That seems to be your main point of reference. When you're hiring here, what do you want from a reporter that's different from what The Post might want, and how does the newsroom operate? There are all sorts of legendary stories about you guys really pushing your reporters very hard and... Jim: That's Harris. Peter: ...like to break news. John: I don't really consider The Post our main point of reference. It's one point of reference but it's not... Peter: It's not your competition. John: ...obviously it's where our experience is. We're a niche publication that will thrive on its ability to attract people who are singly obsessive about that subject matter, who know it better, who care more about it, who are more energetic in pursuit of the big stories. That's the definition of a niche publication, is to have people who are singularly focused rather than general interest folks. Our best people have that. Our most ambitious people come in wanting to be that for themselves. Actually we don't really push people that hard because the reality is that our most successful people here are self motivated. Jim: I don't think that they do. I mean most newsrooms probably want. I think we've figured out, it took us a long time to figure out what type of personality works here. Like finding people who want to own their beat, who have a unique ability to break news or to write better than other people. That stuff matters and we tend to try to pay a premium if that's what it takes to have those people working for us. There's just no market for mediocrity so the pressure is on us to produce really good journalism. Not everybody can produce really good journalism. I think if you had to list the top 20 reporters in town, I'd say we have more than half of them. I think that's a pretty good achievement if you think about Congress, politics, and the White House. Those people are that's gold. We're trying to tell people stuff they don't know. We're trying to inform people and make them smarter. Peter: Can you talk about the advantages of being a start up, editorially or more financially, does it make you more nimble? Jim: It does if you don't screw it up. In the beginning it certainly makes you more nimble because you have no legacy, which could either be you make good decisions and build a culture that works, or you can make a bunch of bad decisions and build it as just a dysfunctional start up as you would have a dysfunctional older institution. I think one of the smartest things that we did is early on, we're not CEOs, we're not businessmen, we're journalists by training, but we went out and we found people in business, ether CEOs or media executives and asked them, "How do you set up a good company? What works? What doesn't work? What are the things we should be doing?" By no means I think we had good instincts in retrospect but there's a lot of stuff that it took us a long time to figure out. How to be good managers. How to be good leaders. What is the appropriate balance of trying to demand the best out of people but not wearing them into the ground? That process to us has probably been one of the most exciting parts of this job, is just learning, building new muscles that we didn't have. That's all we did. We were journalists and then we had to become leaders. That's just a different world. Peter: What do you think your most disruptive impacts have been in the media landscape in our current media ecosystem? What's been your big picture impact do you think? Have you changed the kind of content that people want that other news organizations are not delivering? John: Yes. I do think that the people who care most about a subject have a demand for immediacy. They have a demand for sophistication. They have a demand for volume. They want to know what's going on. They don't have a casual interest in stuff, they have intense interest in this stuff. I think that was the opening that we had, that was a lot of political coverage and a lot of government coverage. There wasn't a lot of coverage that was giving the kind of intensive focus that we were both in the moment and with a high degree of knowledge and context and sophistication behind that coverage. I think that's changed the audience's expectations. Jim: One of John's obsessions early on was this idea of getting rid of a lot of the journalistic conventions, the "voice of God." The truth is we still say it to this day why in the hell is it that there's such a huge gap between how interesting reporters are, either in email or at a bar, than what they are when you actually read them? I think we have successfully narrowed that. We've taken these people who are fascinating minds. We have some of the most curious, intellectual minds around, and I think we get more of it. We force more of that in front of our readers, because readers, they don't need the "voice of God." They don't always need the background. They like to have fun with journalism. They like to be informed. They like to be entertained. They like to be challenged. I think we've been very successful at that. I don't know that that's necessarily a disruption, because I don't know that others are doing that much of it. The disruption John described...if speed was not in this market, we brought speed to it. But now everybody does speed, so that's not sufficient. John: It's not like we were disruptive, but there are people who are disrupting us. Twitter is a great example. They've taken some of the role that used to be occupied by blogs and made them less relevant. Peter: Also, I feel like in the last...like in 2008, you guys broke a ton of news and then you were sort of a go to news breaking site. Then Twitter kind of happened in between and took some of that space, right? [crosstalk 18:48] Peter: You guys still broke the news... John: The routine news that you get just by virtue of being there and posting first, basically there is no way to win that competition. Twitter will always be there first. It's not always the competition that most interests me, I think, is really the one that we focus on, is the publication. There's no way that Twitter's going to break the Herman Cain story. Twitter can be fast, but it has a hard time being really smart and I think we can do that. Peter: Do you view yourselves as competitors with The New York Times and the Washington Post and the Wall Street Journal? Are you waking up every morning trying to beat them on stories? John: Sure. Them and lots of other people, too. The way the media universe has changed, everybody's a potential competitor. It might be CNN one moment. It might be Huffington Post one moment. It might be the Washington Post one moment. Yeah, I feel like that. Every day the game is to have the most interesting story on politics or on Washington anywhere. Some days you win that competition, some days you won't, but we'll judge ourselves by we win it more often than others. I feel sure that they, in their political coverage, will view us as competitors. We're going to certainly view them as serious competitors whom we respect. Peter: That gets to my earlier question about disruption. I talked to Stuart Stevens yesterday for a separate project I'm doing and he was complaining about The New York Times coverage, the cycle. He was saying this in a sort of derisive way, but he was like, they only cover a process and personalities, and they were trying to keep up with Politico, and they were trying to be Politico when they should have been New York Times. I have a hypothesis that a lot of news organizations are now trying to do the peel back the curtain thing and they didn't used to do that. I think that's partially due to what you guys have been doing. Do you disagree? John: Might be. It might be. I think everybody's trying to...if you were The New York Times 10 years ago, what you wrote, just because you were The New York Times mattered. You set the agenda. That's not true anymore. If they write a boring story, it's a boring story that nobody's going to read or pay attention to. It does up the ante for quality journalism. What breaks through? That's it. If you can break news, it breaks through. If you can offer a sharp analysis, that breaks through. If you can do an investigative piece that other people don't have, that breaks through. It's the companies that produced a lot of news that has now commoditized that have the hardest time adapting. I think a lot of the big institutions essentially did produce a lot of commoditized journalism that now is irrelevant because everybody has it, and if you're interested in it, you're getting it on Twitter or Facebook in tiny little bites and you're looking for something else. When you talk about disruption, you have to remember that. Disruption's a baby. We're only in the beginning of it. If you think about new media, the thing exploded in late 2006, early 2007, we're just in the early stages of that. Nobody knows how this plays out. You went through the web disruption, which we just went through. Now you're going to go through the pay model disruption of who will pay for what, which we don't know. Times is having some success. Others not so much success in that area. Then by the time people figure both those out, 50 percent of all consumption of media is going to be done on something this size, which has massive ramifications for how long a story can be. How you present your journalism. That's going to be a hell of a disruption. Disruptions...it's not like they're over. We're just sifting through to figure out what worked and what didn't work. It's constant. Peter: What are you finding that people are paying for in the politics space? Jim: Remember, ours is unique in that we're not The New York Times doing a metered system at this point. What we're doing is we have set up a series of verticals that are essentially Politicos little mini POLITICOs for different sectors of the economy health care, energy. People in this town will pay for information that's essential to them doing their job. There's no doubt. We've proven that with our POLITICO Pro and we're going to continue to expand that because I think we're very good at producing the type of journalism that this city needs to function. Now that's much different than the broader based journalism that we're doing that's for the country, for the world. That's different than that. At some point, we're going to test, I'm sure, a pay model for all of our content, like everyone else, but we don't know how that plays out. Just beginning that experiment. Peter: Have you guys seen any other organizations apply your model in an interesting way or successful way to completely different sectors. Verticals like sports, business, Silicon Valley or whatever. John: Sure. [crosstalk 23:37] Peter: ...they look to you and they're like, Oh, those guys are doing something pretty cool. John: AllThingsD, Business Insider, Foreign Policy. Jim: ESPN is one of the world's biggest brands. John: But we copied them, right? [crosstalk] Jim: ...a bit longer than we did. Peter: The last thing I want to ask you is video. Last year, you guys implemented a web show during the campaign, which got a lot of insider attention. It got a lot of buzz. I emailed in a couple times. Jim: I remember that. I might have mentioned you once or twice. Peter: Yeah, thanks. You're shooting all kinds of video content here. Jim: Correct. Peter: You've got a full time professional video staff. Why? Why video online? John: One, because I think it's one of the buckets of experimentation and I would say that video, for all of us by the way, is total experimentation right now. Nobody, the best that I can tell, has cracked the code on how you do video outside of being a cable network online where you make money. We all think there's the potential, because there's this massive audience for it, if you can do it right. For us, it's all about experiment, experiment. If it works, it works. If it doesn't, move on. What works? Those shows work because there is a huge audience online in moments, in big days, a primary, an election, State of the Union. What we have found, it's really hard to get a live audience — probably impossible to get a live audience — outside of a big day, so you try to move away on the days where you don't have a big event to something that is on demand, where you can slice it and dice it. Make sure you're putting video matching up with stories that are similar to it, because most people are reading something, might be interested in also watching something about it. I think that's a place where we put a lot of emphasis on. Or we've also started to experiment a lot with just shorter shows. The attention span online, you're not getting people to sit down for 30 minutes. Period. Five, yeah. Peter: Are you seeing a lot of engagement with your video content online? John: We do, but again, it depends. Certainly the shows that we're doing, we're seeing that we can start to build an audience for, and certainly video that is topical to the story, you can get a good audience for. The stuff that we've certainly struggled with I think everyone's struggling with is just trying to do a show every day that's longer than five minutes and think that you're going to get a loyal audience. That's a challenge and a lot of people are experimenting with it. ...
VIDEO: YES

Will Hearst
BIO: YES: William Randolph Hearst III (born June 18, 1949) b...
TRANSCRIPT: John Huey: It is April 23rd at the Shorenstein Center at Harvard's Kennedy School. I'm John Huey speaking with Will Hearst about his decades long experience in media, new media, old media. Will, we'll get to all your qualifications in the course of the interview, but we usually start by asking people what was your first time? When did you realize that digital technology or technology was going to collide with news and change everything about the way... Will Hearst: This is like a deposition. John: Yes, exactly. Will: Is your real name... [laughs] John: When did you realize you had a challenge and an opportunity in front of you? Will: That's a good question. I came out of college in the early '70s and went to work in San Francisco at the newspaper that my grandfather had first taken over when he came west. He had been born in the west and educated in the east. Then he was expelled, I think the term in that era was rusticated, from Harvard for pranks so he came back west. I believe his father said to him, "OK, it's time to work, now." He said, "Well, I have this idea. I've been studying Joseph Pulitzer and "The New York World," and I have an idea how to run a newspaper." His father had won a newspaper in a poker game. In that era, if you wanted to become a U.S. Senator, you had to become elected by the state legislature. His father thought it would be useful to own a newspaper if you were going to run for the Senate. He had won his Senate seat so he had no further use for the newspaper. His son said, "No, I think it's an interesting business in its own right." His father's view was, "It's not really a business, but if you want to horse around with it for a while, OK. Then you have to come to work." Of course, my grandfather was able to make some traction with the newspaper. I came to San Francisco, following in some of those footsteps, and went to work in the newsroom. I think I was one of the last people to come into a newsroom with linotype machines and casting type in metal. I remember being very impressed by people who would work out in the composing room. In those days, because your story was submitted in paper and the person who edited it wrote on paper, it was approximate how big the hole was for your story. The legendary idea of writing the inverted pyramid, was you might be a little long or a little short. Now, if you're a little long, there's a man in the composing room, and it typically was a man, who read upside down and backwards and see that you were long. He needed to be able to lift out one or two lines from the bottom of the chase to fit your story into the hole. If it wasn't exactly right, even then, or if it was a little short, then he had a table of shorts and he would drop one of those in. So newspapers, in that era, had shorts at the bottom of the column. That was the era in which I arrived in the newsroom. John: So you started at ground zero? Will: No, I started at the end of ground zero, at the last 30 seconds of ground zero. The publisher of the paper and the general manager had the idea then, that we could eliminate some jobs here. The notion was that we couldn't go to an all electronic newsroom. What we might do is we might have people write their stories on a special Selectric Typewriter with a particular ball. Then it would be scanned. John: Right, you had to mark the paper with... Will: Right. John: ...blue pens and black pens. Will: Exactly. The whole business notion was to eliminate some of the composing room people. John: But they didn't do anything in the front end? They didn't touch the front end? Will: No, very little in the front end. They weren't entirely successful in eliminating the back end. Now, there were newspapers in Florida, small papers, not big papers. "The New York Times" abjured all this whole thing. Even "The Examiner," in that era, was a labor saving experiment. You still had this vast armada of people with upside down and backwards reading skills and editing skills. You could see that there was a merger in the horizon of Internet...Well, it wasn't called Internet, but computer technology and typesetting. In the arc of this whole change, there were people who later came to see that the people in the composing room that ran those linotype machines, were not simple automatons setting type. That they had judgment as to where to break a line. They would throw a line away and set the line again. It took a long time for us to realize there was a lot of human judgment and skill. It wasn't until, maybe, 10 or 15 years later that the computer typesetting was good enough to substitute for a really good typesetter. Anyway, Larry Kramer, who is now the editor of "USA Today"... John: We interviewed him extensively. [laughter] In fact, it's one of the best interviews we had. Will: We were sent out, Larry and I, to go investigate this whole cold type phenomenon. I had been very lucky in high school to be involved with time sharing computers. It was obvious, even then, that you wouldn't have to eliminate one or two. You could eliminate 10 or 12 steps, everything from stereotyping, engraving, typesetting and compositing except for the press itself. [crosstalk] John: ...just for context here, for people who don't know it, you were a math major. Will: I was a math major, right. John: Harvard graduate, with computer experience. You weren't just some cavalier. You were not Orson Welles. You were an educated man with some technological skills. Will: [laughs] I did not see myself as a technologist or a professional mathematician. My family's craft in business...My father's view was, "What are you doing up there in college anyway? There's a job here. We have something for you to do. How many more minutes do we need to wait until you go to work?" It was a backwards inference that these... John: It turned out to be a good set of...Point of view now... Will: It turned out to be a very good set of skills. It seemed to me very unthreatening to the craft of journalism that you could eliminate all of these intermediate craft skills and still practice journalism. The first wave of this revolution, that you are writing about and researching, was really about eliminating factory level skills, but with no change to journalism. The changes to journalism came in the second Internet revolution that took place in the '95, '96 time frame. I'm talking about the '75 to '85 time frame. John: Just the computerization of the manufacturing process and nothing more? Will: Exactly. Yes, it wasn't perceived to make any change to journalism and news gathering. It was a change to the means of production. It was a Marxian change. With no change... [laughs] John: It was a pretty bad system as I recall, too, for a while? Will: I look back on it now a little bit differently. I realize, however inefficient it was, there were tremendous craft skills embedded in this thing. We did a project in the 1987 time frame. We went back and looked at the newspapers of the 1887 time frame. What I came to realize was that the more awkward and difficult the craft dimension, the greater the creativity. As you eliminated all of this inefficiency, you also eliminated an awful lot of skill, craft and judgment. Those old newspapers that did everything on hot metal with engraving, not even photography, had wonderful layouts, wonderful typography, wonderful illustrations. As you modernized everything, you squished out an awful lot of skills. One might argue that was a harbinger of what happened later. John: It certainly happened in magazines, as well? Will: Yes. The history of magazines is an interesting separate story with a bit of a time delay from newspapers. The magazine changes are still taking place. Whatever the revolution is, it's still in progress in magazines. John: Let's get to that later. Because you are the chairman of the board of a company that publishes a lot of magazines... Will: [laughs] Magazines, newspapers and broadcasting. John: We can do it all. We've computerized the newsroom. Not the newsroom but the... [crosstalk] Will: Right. The means of production, I think, was the first change. John: At the same time, you're in San Francisco which is not like being...You're sort of at the white hot center of where a lot of this... Will: It turned out to be the white hot center. Then the next major bell that rang was we had a strike at the newspaper in 1994 and '95. Bill Joy from Sun Microsystems had come down to the newspaper. We were, like a lot of other people, in the middle of this, "We should do something electronically," because it became apparent that the reporters were... John: What year is this? Will: 1994, '95, I would say. John: People were already online with AOL? Will: Microsoft existed. Apple Corporation existed, but the Internet really didn't exist. John: AOL was up and running? Will: AOL was just barely up and...I remember getting a call from Frank Caufield, who was the Kleiner Perkins partner who had invested in AOL, and said, "Could I talk to you about newspapers cooperating with AOL?" My reaction was, "Well, Frank, we've got teletext. We've got PLP. We've got the Source. We got CompuServe. We've got all these people wanting to find some way to take the newspaper content and put it online. What's special about AOL? Other than the fact that you and I are friends, what is special?" John: Now, was Hearst, were you doing any business with those? Will: No. John: You were just publishing a newspaper? Will: We had a few little groups of people studying what was called electronic publishing which is a little bit like [laughs] ...I have the picture in my mind of the first people in aviation talking to the railroad czars and saying, "We have this notion that you could fly... John: Flying trains? Will: Yes, and their reaction was, "A flying locomotive? I don't get it." John: [laughs] Will: We were in the era of electronic publishing, which was... John: "The San Jose Mercury News," down the road from you, was involved in all... [crosstalk] Will: They had their own policies. There were a number of different newspaper companies that had different approaches. The thing that I remember that was kind of a shift was when Bill Joy and a few people came down to "The Examiner" and said, "You know, all of these systems require that you mold your content into their system. For AOL, you have this system. For the Source, CompuServe, you have this system. For PLP, AT&T, had a big project to do electronic publishing. You have all these other systems, but there's sort of HTML thing where you just have one system. If you do that, then you're automatically compliant with all these others." We thought that was interesting. I think the strike, like a crisis of any kind, forced us to walk across this chasm before we were ready to make a decision about which of the different systems was the right thing to do. We saw that if we put our content in this other format, then we could rapidly disseminate it. That was when we realized, wow, you really could eliminate all of the production steps, including the paper and the printing. We did a study, and I was talking about this earlier today, where a bunch of newspapers anonymously contributed their P&L structure to a newspaper industry, I think it was the Midland Newspaper Study. I may have the name wrong. The point was, you went in there. You couldn't see it was "The Examiner" or "The Bakersfield Californian," which paper it was. All the newspapers went in there and you could get an x ray, a CAT scan, of the structure, the economic, the business structure of newspapers. What I remembered learning was, "Wow, the newspapers that have the most expensive newsrooms spend about 12 percent of the total revenue of the business on the newsroom. And the most economical, stingy newspapers spend about 8 percent." Between 8 and 12, and largely clustered around 10, was the percentage of revenue that went to the newsroom. We thought to ourselves, "Wow, if you could get rid of that 90 percent, that other 85 to 90 percent of cost structure, you could preserve the newsroom pretty much as is." This could not be a threat. This could be a wonderful opportunity. John: You saw it, immediately, as an opportunity for eliminating distribution, manufacturing, postage? Will: I did. Right. I realized that the Examiner, in that era, spent and inordinate amount of money on gasoline. Between the trucks, the teamsters, the repair of the trucks and the gasoline, we were spending a ton of money. Not a lot of it was going to the columnists, [laughs] the reporters and the travel budget of the newsroom. A lot of it was going to these structural costs. Even as late as that time period, I thought, "Well, this could be a very good thing. We could get rid of a lot of structure and cost that doesn't relate to the thing that we most care about doing. So what if we don't do that anymore? Maybe we should get rid of the paper altogether." Several things intervened. One was the overall revenue of the newspaper industry collapsed so 10 percent of a big number is still larger than 10 percent of a small number. When the revenue itself collapsed, the newsroom also had to adjust, even in this ideal 10 percent model. I think more recently, I've been thinking about other issues that have to do with where do people really spend their time? The younger generation of my children don't spend time with print and news the way my generation did. Therefore, the intermediation of Google, Apple and others has really disrupted the whole business model in ways that did not seem necessary to me in this simple 10 percent analysis that I'm talking about. That's still going on today. John: When do you first realize, like many people in the industry saw, this as a great opportunity for eliminating a lot of PP and D... Will: Yes, all the stuff we didn't want to do. John: It wasn't particularly glamorous or useful. When did you first, when did the light bulb go off and where you went, "Oh, this isn't just an opportunity, this is a threat to the whole medium?" Will: You know, this part of the story is hard to unscramble the egg because I don't know the magazine industry quite as well. In the newspaper industry, one of the initial reactions was, "Oh, well, this is all about audience. We should not charge for anything that we do. We should give away what we do for free. We're in competition with Google, and whoever gets the most audience wins." And so we went into this in a very naive... John: Before Google, even, you were in competition with Yahoo and AOL. Will: Yahoo was first. John: Everyone was chasing traffic... Will: Right. I'm trying to think. There was a company that we...Oh, gosh. Jim Bellows went to work for the company that folded. It was one of Yahoo's early competitors. I can't think of their name, but if you... This is how quickly life changes. John: I'm sure they come up numerous times, and there were all these search engines. There was Lycos and... Will: Yes. John: ...there was Yahoo. There was AOL. There was Prodigy, CompuServe. Will: There's one I'm trying to think of, but it's not coming to mind. But anyway, they ended up merging into the @Home combine of companies. John: Excite? Will: Yes, Excite. Jim Bellows went to work for Excite. He showed them, "Look. It's not enough just to have all this information. You also could have headlines. You also could have writing. You could also have some content. So in that pre Google era, Excite and Yahoo were the big ticket items. John: Were you investing in that? When did you first... Will: Well, Kleiner Perkins invested in Excite. John: When you were there? Will: Yes. John: And you joined Kleiner Perkins around '95? Will: '95. John: So tell us a little bit about that. You're a newspaper editor... [crosstalk] Will: I had known Steve Jobs and Bill Gates. I had been very interested in their success and a big believer in the power of computer technology. I wasn't thinking of computers so much as an information technology, but just as a cool technology. John: So this was an unrelated...This was a... Will: I knew them. I had covered them. I had interviewed them. I had done their thing that Walter has done more recently. I had profiled them and written about them as a new phenomenon in the business world. I hadn't seen it as directly related to what I was doing. The personal computer, I think the Apple II was '84, '85. John: The Mac came out... Will: The Mac came out later, '87, '86, that time frame. John: Well, anyway, the PC was '81. Will: Yes. John: The Mac was '83 or 4 I think... [crosstalk] Will: OK. All right. '84 sounds about right. John: Yes, about '84 and that was the beginning of self publishing. Will: Desktop publishing. John: No one saw that at the time, but that's what... Will: Well, desktop publishing's first appearance was a great labor saving and cost saving opportunity for newspapers who were real publishers so... John: Now you come in and put the front end into it... Will: Right, exactly. John: ...which does make a lot more sense than that scanning. [laughter] Will: Yes. It was an intermediate step, scanning. It wasn't until later that it became apparent that these were real...There were a lot of people doing customized news services. Somebody's going to write an anthropology of this whole thing because there were a lot of false starts. John: Yeah. We have a lot of that in... Will: Yeah, I'm sure you probably do. John: We've gone back to a lot of people in these digilabs. There's a guy... Will: Negroponte, Lycos, all these guys. John: There's a guy, who in 1995 for Knight Ridder, made a video of himself holding up something explaining how it's going to work. It is the, by God, iPad. I mean he's [laughs] got it there, and it actually exists but... Will: This is one of the things that happens in technology, is that people come up with pretty good early airplanes that don't quite fly as well as the Wright brothers. John Sculley had a kind of... John: Oh, the Newton? Will: ...Newton device that was a pre Blackberry. John Doerr, my partner at Kleiner Perkins, was interviewed for the better part of a decade. The negative question was, "Well, what about Dynabook?" That didn't work. That was kind of [laughs] a laptop computer because he had invested in Compaq which was this suitcase computer. Then he had the idea for this black and white thing that was even flatter, smaller and Alan Kay inspired. It had flopped so there was a lot of probing questions like, "Well, that was kind of a disaster." Many of these things came out early and didn't work. John: You saw a lot of them, and you were interested in computers? Will: We all saw a lot of them. We all saw a lot of them. John: But your move to Kleiner Perkins didn't have much to do with your hat as a media executive. It was more your interest in technology? Will: Well, I came to the conclusion in the '95 time frame, maybe, in retrospect it's more clear, that I had missed the first generation of the computer revolution, the personal computer. I remember interviewing for a story in "The Examiner" the computer club of Palo Alto. At that time computers had switches and lights on the front. The guy was telling me, "Well, there are these two guys, Jobs and Wozniak, that have a computer that doesn't have any lights and switches on the front. In fact, it goes directly to a monitor. I remember asking as my interview question, "Well, that's not going to work because no one's going to know what the computer's doing if you can't see the lights and the switches on front." [laughter] Will: I was like, "No one's going to get that to work." The guy said, "Well, they don't think that you need to see that." John: [laughs] Will: I took the story back to the news room, and the editor told me. I said, "This is a phenomenon. I'm not saying it's good. I'm not saying it's bad. I'm just saying it's happening." He said, "Well, a phenomenon. I don't know. I mean ham radio's a phenomenon. Go back and fill...What do people want to do with computers? I can't run the story as a technology story. Go back. What are the applications?" I went back to Albrecht to the People's Computer Club in Palo Alto. I said, "My editor wants to know what are people going to do?" He said, "Well, it's unclear, but there's two things that I think are emerging as uses of the computer. One is filing recipes and the other is writing your own Fortran programs." So I put [laughs] in the story, filing [laughs] recipes. There was no word processing, no Internet, no teletyping, no communications, no graphics. [laughs] John: Well, just as a historical... Will: I was able to get the story to print [laughs] on filing recipes and writing your own Fortran programs. John: Well, just as a historical note, you now own the largest online [laughs] trove of recipes in the world. [laughter] John: So don't laugh. Will: So don't laugh. John: I think you paid a lot of money for it? Will: Hey, you know? It's better to be lucky than smart. John: Those are expensive recipes, and you own them all. Will: That was the level of sophistication, the level of analysis. I mean, the idea of communications...I remember a guy who had been my college roommate, here at school, saying the computer was going to be a communications device. I thought that was like a... John: Now who was that? Will: A fellow named John Moussouris, who was my college roommate. John: He saw that in college? Will: No, he saw that fairly early. He founded MicroUnity and MIPS so what time frame would that be? That would be pretty much the '95, '96 time frame. It had become apparent that the computer was more than a computing device, but it was still very nascent that there was a communications future or a media future in computers. Remember Telex? John: Oh, yes. Will: I got into a lot of trouble at "The Los Angeles Herald Examiner" for sending a telex to India because I realized it was a lot like typing. [laughs] I remember the editor saying, "Some idiot has sent $180 of communications to India. Who the hell is that?" I was going, "Oh, Shit. That might be me." John: [laughs] Oh, that's right. I forgot. Bellows worked for the "Herald Examiner"... Will: Yes, he did. John: ...which was a Hearst paper and... Will: Yes, it was. John: ...then he was at Excite. Will: Yes, he was. Right. John: That had something to do with how you got to Excite? Will: In fact, we had already invested in Excite. We missed the... John: "We" meaning... Will: We, Kleiner Perkins. We had missed the opportunity to invest in Yahoo. Vinod had asked me to call Jerry Yang and say, "We're interested. We'd like to invest." His view was, "We've already got our deal. It's too late." We invested... John: Mike Moritz, who we interviewed, was one of the first in their... Will: Sequoia, I guess, was in there. Then we did Excite. Then when Excite got started, one of the first things Vinod asked me to do was... John: Tell me why the idea of Excite was in your mind? Will: It was a search engine. In the beginning Yahoo was considered to be a Dewey Decimal catalog... John: It was a list. Will: ...of the Internet. John: Giant list. Will: Excite was more of an algorithmically driven site. Now... John: Excite was just Google that didn't quite get there? Will: Well, one of the mistakes that I think we made at Excite, and the people that were there might take great exception to this theory...This is my story, my interview. I think one of the things that we thought of was that Yahoo was an intermediate editor. A curatorial layer that would parse the Internet into a gigantic Dewey Decimal course catalog. Excite was much more algorithmic. Then some of us had the idea of, "Well, we could make money if we charge people to be listed higher in Excite." I remember thinking, "Wow, this could be the equivalent of "The New York Times" saying you can get a better review for your movie if you're an advertiser than if you're not." That would then not be a movie review. It would be a paid listing. This did help catapult Excite to catch up with Yahoo from a business proposition, but it polluted it. I remember first meeting Larry and Sergey. They had a violent opposition to this idea, that the algorithm ought to truly present what you are searching for and not what someone had paid for you to see. John: What happened there? Will: Well, Google did well, [laughs] and Excite merged with @Home. John: They changed their model along the way, Google, I'd say, right? Will: It took a very long time for Google to have that right hand column that is the paid listing, the Yellow Pages listing, as opposed to the pure algorithmic listing. In a way, their resistance...I remember going to a meeting and saying, "Well, the Yellow Pages charges you more for 18 point type than for 14 point type. Why don't you guys consider those kinds of models?" They looked at me like some heathen, some old media fossil with yet another bastardized idea to pollute the purity of the... John: So the purity paid off? Will: So the purity paid off. John: Excite merges with @Home and... Will: Yes, that was an era when everybody thought, "I'd love to be AOL." If you could merge distribution and content together, you could win. @Home, which had distribution on the backs of the cable companies, and Excite, which still had this great second place but almost first place, they were the Avis to Yahoo's herds. You'd have content and distribution together. AOL has decided not to go into distribution. They'd give away free discs. They'd ride on top of this open distribution of dial up. Then we might sneak ahead of them. John: Then around '98 I guess Google forms, right? Did you invest in Google? Will: We did. Kleiner Perkins invested in Google. John Doerr was the lead partner there. I met with Larry and Sergey several times. They had very strong ideas about what they were doing. They had actually very deep technological ideas about how to do the algorithm. I mean they had really very clever ideas about how to do that. John: Well, and it paid off? Will: Well, it meant that you could type in the most random query to Google and very quickly get a reference to a web page. One of the geniuses of the early days of Google, and maybe those guys would disagree, was that they didn't host any websites. When video came to the Internet it became a bit of a problem because Google had to host video for them to be able to search video, but they didn't have to host any websites to find websites. You just got a pointer. Google had the most outbound pointers of anybody on the Internet and they had the most traffic. Whereas, Pathfinder, when I first talked to Paul and Walter, was like, "We're not going to have any outbound links." Everything on Pathfinder would point to something else on Pathfinder. Some of us were thinking is that really the right model or is that the old media model where you don't want to send traffic to your competitors? Whereas, Google sends all of their traffic to their competitors, every bit of their traffic. John: They completely reversed the idea of... [crosstalk] Will: They turned it upside down. The more outbound links you have, the more people go to you first. That was very clever. John: Just to finish two points here. As I expected, you've touched on this subject so many different ways. Will: [laughs] John: The best way to tell is just to tell your story. You were talking to Pathfinder about what? Will: We went to talk to Pathfinder because when we started @Home we thought what are the most important websites and who could we partner with? How could we aggregate not only the traffic but the major website locations? John: This would have been a partnership? Will: Of course, Time Warner, which owned all the Time Warner Cable systems, also owned Pathfinder. Their view was if we're going to be part of this At Home coalition of broadband, then our Pathfinder, our jewel in the crown, website should be one of the most important destinations. There was a big fascination. John Malone had this fascination and many other people did, which is what's the front page of the Internet? How do I get to be on the front page of the Internet? John: It's almost like who owns the Internet? Walter said, people kept asking him... Will: Yes. It was very much a, what would you call it? A grocery store model. Which magazines are at the checkout station? What's the front page of the Internet? How do I get my content on the front page? John: My contention is that that was all influenced by AOL and the early dominance of AOL. Everybody learned to think about this thing. Will: Right. If you weren't on the front page of AOL you were down in the basement of the Internet. John: Yes. Everybody learned to think about it that way and then they replicated it until, as you say, Google came along and turned the whole thing... Will: I remember Ted Leonsis coming into a meeting with one of the Kleiner Perkins company and saying, "Your financing is our revenue. That's our model." John: [laughs] Explain. Will: What he meant was the money that you got from your investors to launch your web property, you needed to devote that money to AOL so that we can give you the traffic to reward your investors. Your investors' money is our revenue. We own your capital. If you don't pay us, you're nothing. It was a Don Corleone kind of proposition. John: We not only have a great interview with Ted, but more people recalling things that Ted said to them during these... Will: [laughs] Ted is a very colorful person of that era. He probably has some memorable quotes. John: Oh, he does. Will: Some of which he might even regret. John: @Home, it was different from Excite, right? Will: Yes, started completely separately. John: @Home was a cable television? Will: At Home was broadband Internet content. @Home's core view was we don't know what people are going to want to do with their Internet. We are not devoted to front page control of your portal. John: You were invested in this? Will: We were broadband. John: You were invested in this? Will: I was, and I was the CEO of @Home for a while. John: It was a broadband distribution? Will: It was a high speed Internet. It was an attempt to go around the side of dial up AOL with a completely different speed experience that would permit broadband, video, rich media, all this kind of stuff. John: You sold it through cable? Will: The cable companies were both the infrastructure partners and the owner partners. We had this scheme of letting them own part of it and we would ride on their infrastructure. John: You were the media end of it? Will: We were the rented entrepreneurs to go make this thing happened because we understood technology and that didn't. John: That was you and...? Will: Milo Medin, John Doerr and a bunch of people that believed that the Internet was a better model than, what were they called? John: They were called wall gardens? Will: Yes, they were wall gardens. John: Proprietary? Will: The notion was they were all trying to drive traffic to themselves. Our thought was, "We don't really care where the traffic goes. We're sort of a Switzerland." John: What happens to it? Will: @Home worked very well, the technology worked very well and then the cable companies thought, "Why did we need all these entrepreneurs and venture capital people? Without our infrastructure this thing wouldn't exist." When it came time to renew all those structures, Tom Jermoluk became the president. He then did the Excite thing to create this AOL clone of content plus distribution, but he didn't really own the distribution. The technology really didn't own the distribution. The cable companies owned the distribution so they wanted to own the whole damn thing. [crosstalk] John: ...that's when Road Runner... Will: I tell people today, @Home is now called Comcast. John: [laughs] Will: Who has gone out, meanwhile, and bought content by buying NBC Universal. This movie just keeps rolling around again. John: Right. Time Warner gets rid of its distribution. Will: Time Warner got rid of it which I'm not sure that's the greatest decision of Time Warner's, but, on the other hand, it probably made money from the stock market dimension of the proposition because you could get a pure play. In fact, I wouldn't be surprised if Comcast in 10 years broke itself up into the NBC and the distribution. John: I try not to do this on these things, but every now and then, we lapse into our own editorial points... [crosstalk] Will: [laughs] John: You could argue the point that Comcast bought NBC for the same reason that Time Warner disposed of the cable system. Will: Well, I would say, couldn't you argue that Comcast bought NBC for the same reason Time Warner bought AOL, in the belief that if you put everything under one roof, you'd be stronger? John: Yes, or maybe lack of belief in the long term future of the proprietary distribution model? Will: Of the pure distribution. Meanwhile, Time Warner bought AOL to get into the all vertical integration. Then disgorged the cable company which was the jewel in the crown of Time Warner with respect to the Internet. John: Now, we're getting into painful history. Will: [laughs] John: Let's get back to Hearst. All this time, you're in Kleiner Perkins, but now you are in the media business? Will: I was publisher from '84 to '94, and then at Kleiner Perkins from '94 onwards until the mid 2000's. John: Now, you're the chairman of the Hearst Corporation? Will: Let's see. How did that work? John: You were always on the board? Will: I was on the board since infancy. I was on the board at a very young age when people really shouldn't be on boards, but it was a family business. John: Your name was on the door? Will: [laughs] Well, my grandfather's name. When I went to work for Jann Wenner, John Miller, who was then the president of the Hearst company, said, "You can't be on the board of one media company and working for another media company." He said, "You've got to get off the board of the Hearst company." When I went back to work for Hearst, when Jim Bells was there, I was admitted back to the board. Then when I went to work for Kleiner Perkins, the conclusion of the Hearst board was, "Venture capital has no conflict with media so, therefore, you can stay on the board." John: Oh. Then you're back and now you're... Will: [laughs] Whereas, in fact, you could argue that Jann Wenner was a smaller conflict to the Hearst company. Be that as it may. John: Was no threat at all. This gets to one of the big questions we talked about. Will: My point is, I was on the board of the Hearst company all the time I was at Kleiner Perkins, and I would go to the Hearst board meetings. I think John Doerr, to give him credit, thought this is a good thing. John was always a believer that, within reason, no conflict, no interest, or that how could I have a conflict? I'm on both sides of the deal. With all due respect for the irony, John's view was if you have good insight into this business and this business is useful, its insights are useful to the venture capital business, and we are partners. I don't see that as a conflict, I see that as an advantage. John: This actually puts you at the fulcrum of one of the big questions that we've asked everyone. You've already talked about the paid versus free. Everybody seems to agree that you had to give it away to get to the scale and then it turns on you. Will: I think, I have a reasonably good record of not being attracted to the scale equation on behalf of the traditional newspaper companies. I have more of a Hearstean view and a Michael Porter view that businesses are not measured by scale, they're measured by profits. If you're giving away the thing that is valuable and it is, therefore, profitless, you can't possibly be doing good business. John: It's like we'll make up for the lack of profit by increasing the volume? Will: Exactly. It's like a joke. John: Was that an original sin? Will: I think that was an error. I'll phrase it as a newspaper story when newspapers were not really clear about what their business was and what their future was going to be. I tell people today, I give a talk and I said, "Listen, suppose I were to offer to you, as a business proposition, I'm going to give you a brochure and here's the proposition. It is the most profitable saddle and tack shop in the state of Vermont. It's extremely well run. It is dominant over all of its competitors. It's been profitable every year for the last 20. What would you pay me for it?" A lot of people would say [laughs] , "That sounds fascinating, but I have no interest in horseback or riding. It doesn't move the needle. I'm not interested in it. I get it, it's a good business, I just don't want it." I think this is something the newspaper industry has had a very difficult time dealing with. What has changed in the media equation is the mass media equation. Newspapers in 2013 are not mass media anymore. "The Economist" can survive. "The New York Times" can survive. Newsletters can survive, even have circulation revenue. The idea that the mass market is a newspaper market or even a publishing market, I think, is in great danger. If you're very happy to be in this business because you love horses, or you love newspapers, or you love journalism or you love reporting, there's no reason why you should be particularly upset any more than the poetry department is in danger of going out of business at Harvard University. It's just not the mainframe anymore. John: Hearst has some interest, now, in the whole local and hyperlocal market. Can you talk about that for just a minute? That fits in with what you just said, right? Will: I think you can be successful as a journalist. I think you can be successful in print. I think you can be successful in online journalism, but you may not have the scale that a Google has or that other businesses have. That world, there is like a cultural shift. John: That's not available to you? Will: I just think there is a cultural shift. I can't tell you that it's good or bad. Frankly, I think it's more bad than good that people have substituted. I think the great invention of Roger Ailes was that opinion and theater outsell news gathering. If you look at the media landscape today, we can go back and double check because I have some exceptions I would be willing to point out. We're not in a news business anymore. We're in an opinion and theater business. If you look at MSNBC, Fox, blogs and a lot of what passes for news, it's not really news in the sense that you have professional news gatherers who are fired if they spell your name wrong, if they report the crowd as 10,000 when it's really 1,000 or 100. That business has become an antique antiquarian business. John: Your instinct is that that's a bad thing? Will: My instinct is that's a bad thing. Could be because I believe in a slightly...I'm hesitant to give this talk. The reception I get is like John McCain coming to the Google conference. It's like, "See if he needs help getting into his chair." I do think there are people who agree with me, but it is becoming [laughs] a kind of revengist movement of a small group of people. We're old. My kids are not old and they just don't share the view that a lot is being lost. I think something is being lost. I think if you cover Nairobi from London it's not the same as covering Nairobi from Nairobi or covering Israel from London.. John: Anything from your basement? Will: Exactly. It just isn't the same. If it seems the same, fine, but you're not getting the same product. John: Let me go back to the question that came up when we were talking about your role at Kleiner Perkins. If you look at this whole history over the last 20 years or so you see repeatedly that the people who develop the platforms, the engineers, the algorithmic, these are the businesses where all the value has been created. You have a lot of people, Eric Schmidt for one of them, said to us one of the big failings of the publishing industry was that it never really valued the engineer. Will: I agree with Eric on that. John: Negroponte said the same thing. Will: I agree thoroughly. There was a long stretch of time when some of us were telling the traditional media companies look back on your own recent history. There was a time when the people that were in the art department were not considered very valuable. Then when Al Neuharth and "USA Today" came in, all of a sudden, the guy from the art department that did the charts and the graphs got to sit in at the news meeting. Those people were taken seriously as part of the senior council, but you've never brought the engineers into that meeting. They were always replaceable, hireable, outsourceable, unimportant people. The modern media value proposition is being made out of technology and so the people that do that aren't even in the meeting. They don't even get to vote. That was a big thing. This is an old story of the history of business where different skills and people that possess different skills are not part of the decision making team, and then gradually, their contribution is lost to the enterprise. This is something that happened. This is what has happened in the media business. It's partly a story not of technology, it's a story of human beings. I used to tell my friends at the Hearst company the person who runs "The Examiner" now, "The Chronicle" in San Francisco, shouldn't be a newspaper publisher, it should be a P and L executive. It should be somebody that says, "This part of our business is growing, we're pushing capital into it. This part of our business is not growing, we're pulling capital out of it." Jack Welsh understood that you could be in a variety of businesses all at the same time and some of them were getting the grace of capital investment and some of them were being harvested. You had to be horribly neutral about that to be the great CEO of General Electric. That's what we needed in San Francisco. We needed somebody who could comfortably extract capital from one side of the business and deploy investment capital in another part. I agree with Nick and with Eric. You needed to celebrate engineering as a creative craft, as a journalistic, creative profession like photography, like illustration, like editing. These skills don't grow on trees. John: In addition to that other side, just the classic innovator's dilemma that the legacy media business just had too much profit at stake... [crosstalk] Will: Yes. That's always a problem. The negative arbitrage of advertising is, probably, what the story of the media business' adjustment will be all about. In other words, you couldn't get the digital dollar for the analogue. The digital dime for the analogue dollar was a bad trade and we did not adjust to that quickly enough. John: When you sit here now, here you are, you're chairman of the Hearst Corp and you're still an investor. Go through newspapers. Where do they go from here? Will: I think newspapers have to change their scale. They still have a very important social function. The skill set that comes out of real reporting...I have this fantasy of creating a media enterprise called the Anti Government Report because my lifetime in journalism has convinced me that there is a certain corruption of power and absolute power. There needs to be a kind of fantastically anti establishment media of some kind. I don't think the Internet is doing it. I don't think print is doing it or television is doing it. John: "Mother Jones" has hit a few nails on the head. Will: I've written checks to "The Nation," not because I share their politics, but because I share their desire to discomfort the comfortable. I keep telling Katrina when the Democrats are in power you have to attack the Democrats, when Republicans are in power you have to attack them. I'm not paying to attack the Republicans, I'm paying to attack the corridors of power that so quickly calcify. That lesson, I think, endures. John: Newspapers will stay in print? Will: I remember talking to Paul Kagan years ago. I interviewed him and I said, "Paul, who's going to win, the telephone companies or the cable companies?" His answer to me was, "Wrong question. Media forms do not really go out of business very often. If they did, when television came in, which is radio plus photography, radio should have disappeared. Media businesses stop growing and new media forms become the rapidly growing form, but they don't really go out of business. Radio became car radio and talk radio." If I have to put a bet down tonight, my bet would be there will be print on paper publishing in 20, 30 years. But it will be more like "The Economist." It will be more of a... John: Smaller scale? Man: ...elite, but maybe highly skilled sort of business. One of the things that I notice is that there is a terrific quality and excellence in what I call non fiction writing, like people who write books. Non fiction book writing is in a renaissance. Between what McCullough has done and the guy that did "Jefferson"... John: Meacham. Will: Meacham has done, what Scott Berg has done, and what John McPhee is doing. John: And Walter? Will: Yeah, and Walter's book on Jobs is a wonderful example of traditional journalism digging, getting multiple points of view, taking a detached journalistic attitude toward your subject. This is really great stuff. It's not extinct, but it's a bit of a niche. It's not on the front page of Google. It's a refined taste. John: So, magazines. You're a big magazine publisher? Will: I like magazines, and international publishing is very different than domestic publishing. There are parts of the world that have not had the Internet penetration and where the existence of a liberal, free media in the sense of free to comment media is still quite exciting. Larry Kramer convinced me, in a conversation I had with him, that business publishing in China was a kind of 1849 Gold Rush of economic opportunity because of the view that business in China is not really political. It's business, so there's a much wider permission for people to be entrepreneurial in business than they would have been if they were doing "The Nation" in China. John: We had a hard time getting "Time" into China and not as hard a time getting "Fortune" into China? Will: [laughs] Yeah, and you could do a rehash of "Business 2.0," one of these slightly hacky Internet business journals, in China. You'd probably be welcomed onto the dais. I think international publishing is different. Print on paper will last for a very long time. John: And what is the digital future of all these media... Will: Digital is a very good distribution medium. What concerns me, what worries me is whether or not the sort of craft skills of journalism are not valued very highly in the mass market of digital media. In the Twitter verse, immediacy matters a lot and crowd sourcing matters a lot, but there's really very little depth and journalism in those spaces. It's just propelled in a different direction. I remember talking to Jeff Yang who was a very good venture capitalist. We were talking about, this is a long winded story, bear with me, about companies like Cisco that made routers and other companies that made network management software that interfaced with these routers. I remember saying to Jeff, "This network management software is really where the smarts are, and therefore, that's where the money should be." Jeff said, "Well, you have to understand there's a difference between value and difficulty, and perceived value. And people won't pay for something they feel should be automatic. There's money in Cisco, but there's not much money in network management software, even though that may be more difficult and complex." It made me aware that there are moments in business where value is not perceived to be in a place and you can't make a lot of money doing that. In some other place, value is [inaudible 54:52] . Right now, there's value in the phone companies. I think Verizon is an interesting player because people feel there's a bit of a gatekeeping power there, much like the old AOL. It's uncertain whether these new Internet startup companies that offer something...Twitter is still trying to find what its business model is. There are companies that have fabulous traffic but don't have a lot of revenue. My partner [inaudible 55:21] used to say, "If you give me enough traffic, I'll go make revenue. Just give me gobs of traffic and I'll make revenue." That has been kind of the de facto model that caused trouble for the newspapers. John: There are a couple of big ones out there now that would fall into that category, right? Big ones. Will: I think it's an interesting theory, but it doesn't seem to be a slam dunk. It's not a theory that a Warren Buffett would immediately cleave to, "Show me enough traffic." The more traditional Michael Porter view is "I'm not really interested in traffic. I'm interested in where is the profit moment? Where do you make something that you can charge more than it costs you to make it? Where is that?" John: Which a Google can show you. Will: It took a while for Google to get there. Their initial business was gobs of traffic and not a lot of revenue. John: Right. Some of their followers are further down that chain, right? Will: Everybody feels that [inaudible 56:20] is right. "If you give me enough traffic, I'll go find the revenue." John: That's still what drives the valuation? Will: It drives the stock market valuation. I'm not sure it drives...What does Warren Buffet say? "In the short run, the market is a voting machine. In the long run, it's a weighing machine." [laughs] I was chewing on a lot of stuff about the French Revolution. Too soon to tell. For some of these businesses, it just isn't clear yet what is enduring and what is fascinating and worth some media attention, but not necessarily a great investment. There's always a difference between a great company and a great investment. John: You seem to me like you're very intellectually engaged in the media business and pretty happy to be in it. Pretty enthusiastic. Am I reading that wrong? Will: No, I remember when I was publisher, I had a moment where I thought to myself, "We put these things out in news racks. What would happen if, on a particular Thursday, nobody needed to read the newspaper?" I understand why people need food, air, water, razor blades, tooth paste. I understand why they need to have those things. Why do they need to have a newspaper. I thought to myself, "There's really no reason." Then I had a second thought, "Actually, they do. There's something about the upper primates that requires them to find out what the hell is going on. What are other people doing?" It really is very close to a need. That's the part of the media business that I really like. There is this need to find out, "What are smart people doing? How is that guy making money? What's going on over there? How could I make my life better? How could I make my wife happier?" There is this equation of knowledge, seeking knowledge that is almost the same as the need for food, toothpaste and razor blades." That's the part of the media business I like. then there's this intellectual puzzle of, where does the value collect? Is it in traffic? Is it in journalism? Is it in devices? It's amazing to me that people will pay a different amount of money for music on a CD than they will pay for the music as bits. It's amazing to me that people will pay for a print advertisement differently than they will pay for 10 times the traffic. I don't think people are fools. I don't think of it as like, "They're nuts." It's an anthropology problem. I think of it as a problem. "Will, try to figure out why they will do that." Because they obviously are doing it. ...
VIDEO: YES

Arianna Huffington
BIO: YES: Arianna Huffington (formerly Stassinopoulos; born ...
TRANSCRIPT: John Huey: Could you just begin by telling us when the light came on and when you realized that the Internet was going to change you and your life? Also, when it was going to change. When you decided to turn it into, I guess you would call it journalism, and then when you realized it was going to change journalism. Arianna Huffington: I've always been a writer. Ever since I left college and before, I wrote my first book at 23. My whole life was revolved around writing, books, articles. I never worked for a newspaper, but I always wrote for newspapers, for magazines, in England where I started my writing and journalistic career. That was in the '70s. I came down from.... John: What kind of things would you write? For what newspapers? Arianna: I would be writing about politics, culture, everything from the London Times to Punch, and always writing books at the same time. Again, my books ranged from big cultural issues, like the changing role of women to biographies of Maria Callas and Pablo Picasso, too, to books on politics, including my latest, "Third World America." All these years, I continue to write, speak, and communicate. As soon as I began to see what was happening online, which was really in the mid '90s... John: What first got your attention online? Do you remember? Arianna: I don't remember the first thing that got my attention. But what fascinated me was the engagement, the fact that writers who are no longer just writing and leaving the scene, but staying there to engage with the readers, and that the readers had a voice. Whether it was in chat rooms or forums or the early versions of what was happening online, something new was happening. John: Where were you at the time and doing what? Arianna: At the time, I had just moved from Washington to Los Angeles after my divorce, I had moved with my two daughters. That was 1997. I had this syndicated column which started in '96. I created a website, my own website, called "Arianna Online," and engaged with my readers. My columns would go up, they would comment, I would comment back. John: Were you thinking about it entrepreneurially at the time? Arianna: No. I was just thinking of it as an extension of my journalism. I was writing two columns a week, and I wanted to begin to communicate with my readers. Not just read it in the newspaper. In the LA Times, or any of the other papers where my column was syndicated. John: You liked the fact that it talked back? Arianna: Yes. I liked the fact that it talked back, exactly. Also, I began to see how many of the people that I admired, were not going to do that. They were not going to go online. John: Like? Arianna: Like Arthur Schlesinger, I remember talking to him and thinking, "Here's a great historian. A lot is happening right now, that I'd love to know what he's thinking in real time." It's not going to happen, because he's writing a book, which turned out to be his last book, and he's not going to start a blog, or go online. It's not just a different generation, a different mindset, a different sensibility. I remember, in fact, when we decided to launch the Huffington Post, the first person I invited to blog was Arthur. I remember calling him, and asking him, and he said, "What's a blog?" I tried to explain, and he said, "Let me take you to lunch, and you can tell me about it." I remember we went to lunch at the Century Club, which was very ironic, that Arthur, Alexandra, and I at the Century Club. We were probably the youngest people there. [laughs] He's now dead, and I'm no spring chicken, and I explained to him. He talked really guarded, and he said to me, "I barely use a computer." He said, "But I can fax you my blogs." [laughter] Paul Sagan: Perfect. Arianna: That's what happened. I remember when I told that story somewhere, and some blog in Silicon Valley said, "If it's not on MT [Moveable Type], it's not a blog." I said, "No. If it's sent by carrier pigeon, it's a blog." A blog is somebody's thoughts in real time, in a conversational way, and that's exactly what he did. John: He would send it to you, and you would type it in, or have somebody type it in? Arianna: Yeah. John: Then you would... Arianna: Post it. John: That's funny. Arianna: I remember his first one. When George Bush, who was then President, gave a speech that referenced the Yalta Agreement, and Arthur had been heavily involved in it, so my fax machine, I was in LA at the time still, the fax machine was near my desk, and I picked up Arthur's blog challenging Bush's interpretation of the Yalta Agreement. He loved it, because it took him like 15 minutes to put it down. It was like a little interruption from his real work, which was his book. The same thing happened with Norman Mailer, and people like that whom I reached out to, to bring into the online conversation. John: You started collecting big thinkers that you admired, and luring them into your orbit of the blogosphere? Arianna: Of the online conversation. That was one of my motivations behind launching the Huffington Post, was the conversation that was moving online. Some of the most important voices of our time, were not going to be going online, unless it was made real easy for them. John: Your vision was more like a salon? Arianna: It was more like impacting the conversation that was happening nationally. John: You're going along, and you have your blog, and you have these participants. Arianna: No, no. Arthur, and Norman, they were not participants on my blog. They were participants in the Huffington Post. John: This is after you started? Arianna: Yes. That was after we started. John: When did you start the Huffington Post? Arianna: '05, May, '05. Everything I'm saying, my outreach to important and interesting voices, was not for my blog. Paul: You had, adjusting the time sequence, more than 5 years then, almost 10 years of your own blogging? Arianna: I would say, five, or six years...It was not called blogging as much at the time, but it really was, yes. Paul: A website. Arianna: It was a website with a forum and a chat room. Campaigns, I remember when Harry Shearer and I started a campaign called Partnership for a "Poll Free America." We thought polling was taking over the political discourse. John: How'd that work out? Arianna: It was actually great. We did, we had... John: In terms of doing away with polls? Arianna: We totally failed in that. But it was a great response from the public. Actually, one part that succeeded, not because of us, because of technology, was we had asked people to hang up on pollsters. We thought that the one thing, we could not dry up the demand for polls, but we could dry up the supply of polling information. John: There's the disruptor. Now, you're disrupting. Arianna: Yeah, but I was invited to speak at a polling conference. John: Before you started Huffington Post, which was in '05, you had what kind of audience, size wise? Not for your books, but online. As an individual, what kind of audience were you dealing with? Arianna: I absolutely had no metrics, that's another thing that changed. John: Was it substantial, or was it just a...? Arianna: I wouldn't say it was substantial, no. It was... John: Mostly people you knew, or...? Arianna: No, it was people who read my column, because at the bottom of my column would be the website. I had asked my... Paul: See it on print... Arianna: Yes, exactly. Or I would be on television.... [Interruption.] John: ... Because the story of "The Huffington Post" founding has been told a lot and pretty well told. But let's back up anyway. You're going along and blog technology is on the scene now. Are you looking at other bloggers before you launched the post? Just tell us how this happened. Arianna: How it happened is that I was introduced by Tom Freston to Kenny Lerer, who was also very interested in what was happening online from the point of view of changing minds, affecting the national conversation. He was doing at the time in terms of gun control. He had setup an online movement around gun control. We met, and started talking about doing something online together that would combine where we thought the media was going and our own interests. That's why what we decided we wanted to combine was my interest in having a collective blog, a big collective blog with both well known voices and new voices. Anybody who had something interesting to say or really wanted to mix it up. Also news aggregation. Basically, bringing what we considered the best of the web to our readers. John: Where were you in the process of aggregating? Were you borrowing out idea from elsewhere, or was this...Who else was aggregating at the time? Arianna: Drudge was pure aggregation, and others. John: That's right. Arianna: Drudge didn't have the blog. John: He just aggregated. Arianna: Drudge was like the first major aggregation pioneer. We combined aggregation... John: This is Drudge plus? Arianna: It was aggregation. It was Drudge plus three other elements. The collective blog, the community, because from the beginning, we made it very easy for people to comment. But the comments were pre moderated. It was again an innovation. We wanted to eliminate as much as possible the worst aspects of the Internet. John: You were setting out at this point, now you're saying...You have Kenny Lerer, and Betsy Morgan... Arianna: No, Betsy was not involved at the time. John: When did Jonah Peretti and Betsy Morgan and those people come... [crosstalk] Arianna: Kenny and I founded the company, which raised a million dollars. It was not just like a two million dollar investment. Kenny brought Jonah to work on the technology, and I brought Roy Sekoff to work with me on the editorial. Also, we brought in Andrew Breitbart, who was working with Drudge, to work with us on the aggregation, and Colin Sterling who worked with me at the time to be the first blog editor. That was the original team. Betsy didn't come until I think three years later. John: That's when it had become a bigger business. Arianna: Yes, exactly. John: I know you don't have a voice, but... Paul: It would be helpful I think to talk about how the content evolved and the audience evolved and grew, and then where the business model came from. Or if you started thinking you knew the business model, and either it worked or it changed. Arianna: Just one more thing, the fourth element was original reporting. Which we knew we wanted to make...It was part of the template. But at the beginning we didn't have the money yet, so we started with our first paid writer was Harry Shearer, who was doing a great column called "Eat the Press," which was really on the media. We knew a few things from the beginning. One was that The Huffington Post was always going to be free. There was never going to be a subscription model. Therefore, it had to be advertising sustained. But the first year, we didn't even try to sell advertising because we didn't have the scale. As soon as we had the scale, then we started selling advertising and doing a lot of innovations around advertising. Again, always keeping the Chinese Wall between content and advertising, but we had sponsor generated blogs clearly marked as sponsor generated blogs. Then the more interesting innovation that we've actually taken to the next level here was content platforms for brands around their causes. Like Johnson & Johnson sponsoring an entire section on their cause, which is global maternal health. You go to The Huffington Post because it's been renewed now and it says, "Global Motherhood, Sponsored by Johnson & Johnson." This was a way to monetize what we're doing at a higher level. John: Once you start monetizing it and a good percentage of HuffPo in the early days and even today is built around aggregation of other people's content, and you've become very controversial at this point. Because you're making money off their content and issues of fair use and all that [inaudible 06:40] . Arianna: Only by people who didn't understand the model. John: Defend the model. Let's say I'm the New York Times and I write a story, and you run a large chunk of it... Arianna: We never did. That's the point. John: Which is either you linked out to it... Arianna: Yes, I think that the whole essence of this model is fair use. Our editors get not just the big training on fair use when they start if they're on the aggregation side of the business, and regular refreshers. But the key is fair use, and in fact we get hundreds of requests every day from the New York Times, from the Washington Post, from NPR, to link to what they're doing because it drives traffic to them. John: No, I know. We always needed to be linked, but tell me about that period. Because it got pretty hostile during that period. Arianna: I think the hostility had a lot to do with blogs, too. You may remember a lot of well known journalists making fun of blogs as something that the great unwashed did in their parent's basements. I think their hostility was about not understanding where the world was going. It was a much deeper one that just about aggregation. If you go back now and read Bill Keller on blogs, it's kind of embarrassing, given that now, you have advertising for the New York Times that assure their readers that the people they like will also be blogging for them. Not just writing columns or reported pieces, but that's where the world was at the time. Paul: We saw Andrew Sullivan yesterday, he [...] confirmed that [he] blogged in the basement in his boxers. [laughter] John: He said that's the only consistent thing. Paul: But it does imply that you stood on other shoulders, or blogging did, right? What the aggregation piece did. The old "you had to be there" for something to be aggregated. So you built on top... Arianna: Absolutely. I always made the point that I wanted The Huffington Post to be the best of the old and the best of the new. It was never rejecting great journalism. Paul: Talk about how you went from one paid writer or new content to building a new staff and how you think about that. Did the lines cross yet, and there's new than aggregation. Where do you think that path goes? Arianna: The line has definitely crossed. We now have 1,500 stories, tens of thousands of bloggers and we are at the moment in six countries, and will be in Japan, Brazil, and Germany also before the year is out. John: How many verticals? Arianna: 70 verticals. Now basically one of the changes for us was we went from one section, which was politics, news, but also culture, entertainment. We always mixed high brow and low brow. Now, we went to 70 to 80 sections, in that range, from weddings, divorce, all the lifestyle sections to culture and the arts, to black voices, Latino voices, et cetera. Basically covering everything that our readers might be interested in. But also having a very specific editorial stance. All our lifestyle sections have been brought together under the theme of less stress, more living. We are prioritizing. John: How would you describe your personal political beliefs, philosophies, in writing vis à vis the persona of The Huffington Post? Arianna: Actually, absolutely aligned. The persona of The Huffington Post is very clearly beyond left and right, is how we call it. We're not cheerleading for either party. We have been very critical of Obama for example, on drones, on Afghanistan, and not prioritizing job creation. We always look for where there are strange bedfellows, because they make our point which is that all the big issues of our time are not easily divisible into left or right. This is just a lazy... John: You actively personally oversee, direct most of the political coverage, or the tenor of the political coverage? Is that Arianna Huffington? Arianna: Yes, but I'm very aligned with our editors. There's no... John: You hired them. Arianna: Yeah, exactly. I hired them. I work with them all the time. It's not like there's any conflict. John: As Roger Ailes is to "Fox News," you are to HuffPo? Arianna: No, because I revere facts. John: That's an argument for another day, but I'm just saying this is your personal philosophy and political stance, as that thing. You confirmed that. So HuffPo... Paul: Could I ask a question? John: Go ahead. Paul: As you described it as wide and broad... [i]t sounds like you're describing a network, a content network, which a lot of people tried before blogging. Major media companies tried it online, it didn't work very well. Arguably even the portals tried it and only search worked to create both an audience loyalty and a business model. What's different about adding aggregation and blogging that seems to work? Because it seems to work differently and successfully in this model where it didn't for the first 10 or 15 years before that. Arianna: I think what worked for us is being a pure player, being only online and... Paul: Did that free you from other obligations, or did it force you to just innovate? Arianna: I think it, A, forced us to innovate constantly. We never said, "This is The Huffington Post, that's it. We'll put a bow around it and maintain it." Including today, we're always about what's the next thing we're going to be innovating on. That's why we launched "HuffPost Live," which is disrupting television which see everywhere. John: Where is that? Arianna: Downstairs, we'll take you. John: We were wondering, is that web only? Where does that air? Arianna: It's at the moment web only, but we're about to announce a cable deal. Also, it works both 12 hours a day live, but also we take the best of what we saw every day and we put it as video pieces. Short video pieces all the around the site. To your question, I think being only online meant both had to be constantly innovating, but also that we prioritized engagement. So our relationship with our readers was always at the center of what we were doing, it was not an afterthought. Even for David Wood's 10 part series on returning vets which won the Pulitzer, at the end of each of David's stories was a call for more stories from the readers. Which were then integrated in the next story and videos from the readers. That was always a big part of everything we did. Whether it was politics or how do you parent, or how do you get married with less stress. It was all integrated. Paul: Do you think the audience engagement rather than aggregation was the key difference that worked, that helped it take off? Arianna: Definitely, I think audience engagement. Also the fact that we stayed on stories. We realized that one of the things that was different about the web was that traditional media would often break an important story on the front page, or the cover of Time, and then abandon it there and move onto another story. We stayed on stories. Like our opposition to the war in Iraq. That was an obsession. We stayed on it, we developed it, we found new ways. Both new facts and new interesting views, etc. The same with Afghanistan or job creation. Then another part I think that has really helped is that we also believe it is the role of the media not just to put the spotlight on what is dysfunctional, but to put the spotlight on what is working. John: You mentioned the Pulitzer. Beyond the obvious significance of that, in that you win the highest award in journalism for your efforts, which by the way magazines are not eligible for. But somehow The Huffington Post is, which is a sticking point with some magazine editors. Arianna: I know. It should be changed. John: Yeah, well, that argument has been made and not heard. Talk about what that meant to you personally and to your staff? What does that say about what the mainstream traditional journalism community has decided about the state of blogging. It seems like a watershed event to me. Was it to you? Arianna: Yeah, it definitely was. Yes. It was a great moment. We celebrated it here in the newsroom. It was a great moment because we had invested a lot both financially and emotionally in original journalism, in long investigative series. We never saw any contradiction between doing that and also aggregating, and being a blogging platform. These are sort of three different pillars that...It will stop, don't worry. That made The Huffington Post plus engagement, which is over everything. It was a great basically testament to the fact that our original vision had reached a certain maturity and was validated. John: If nothing else, it's a good short answer to, "Are we journalists?" We won the Pulitzer Prize. Talk about AOL. AOL obviously saw a lot of value in your business, they gave you a lot of money. [interruption] John: AOL obviously saw a lot of value in your business, and in you. They not only paid you a lot of money for the business, they brought you in to run a big part of their content business. How did that change you and Huffington Post, and AOL, and how do the two brands coexist now? AOL is a pretty [big] brand in its own self, as are you. Just talk about that. Arianna: The great thing for the Huffington Post was that we actually finally had the resources to grow in multiple areas that I wanted us to grow in at the same time, instead of sequentially. Which is how we were growing at the beginning as we're making more money, we will be able to invest in more journalists or more video or in expanding abroad. With AOL being a great parent company that basically within a few months, it was clear that the best model was for us to be left alone to run The Huffington Post. Meet our objectives, stay within our budget, and then AOL would invest in the areas that we would decide were the biggest growth areas. They invested in HuffPost Live, which was a.... John: In what? I'm sorry. Arianna: HuffPost Live, you know... John: OK. Arianna: Video TV series. They invested in growing internationally, so within the first two years we were in six countries. They invested in original journalism. We were able to... John: That brings us to a really important question that we ask everyone, is the question of is there a viable model at scale for profitable news? We know it's profitable to start The Huffington Post and grow it and sell it. Is it long term scaleably profitable as a business? Arianna: Yes, absolutely. John: Shed some light on that. Are you profitable now on an operating basis? Arianna: Right now, we are not segmented in terms of P&L. John: But are you in an investment mode or a profitable mode? Arianna: I think we are in investment mode in some areas like HuffPost Live, like international, and in profit mode in other areas. I think it's both which is exactly how we can continue to innovate and grow in areas that we think are going to be even more important in the future. But I absolutely believe, and the facts are here, that advertising is moving more and more online. Especially as we're getting clear metrics of what's working and what's not working. Especially as advertisers want to engage more and more with their readers and social is becoming more important. John: But the value of digital advertising is declining. It's true that advertising dollars are growing digitally, but it's also true that Google now has almost half the dollar value of advertising. And your business is built entirely on digital advertising. Arianna: Right, although we definitely do the banner ads and the CPM measured advertising, the most profitable part of our advertising are sponsored content platforms. I mentioned... John: Johnson & Johnson. Arianna: Johnson & Johnson, we have a section with TED, in partnership with TED, where we do "TED We Can." We take the most interesting TED speeches and we go deeper over it sponsored by Chevy Volt. We have an impact section sponsored by Cisco, which actually won an advertising innovation award last week. We have an IBM section, we have a lot of sections like that which are all six figure deals. Or seven. Paul: Do you keep the editorial control? You talked about a church state, Chinese Wall model. Arianna: Yes. John: Is the editorial vague there, or is it clearly the advertiser just pays but they don't control the content? Arianna: It's clearly demarcated. If the advertiser is running the control, is running the editorials, then it's not run by us. It's clearly marked. John: So you mark it? Arianna: Yes. John: But they can buy that if they want? Arianna: If they want to create a section for their own content, but it's clearly marked it is their section and they are running it, then our editors don't touch it. It's their section. John: I have two uber questions, because we're running out of time here. One is, what do you think is the most significant lasting influence of the growth and development of The Huffington Post on the rest of the journalism industry? Arianna: The fact that The Huffington Post put together, what we put together in '05, is significant because at the time it was very disruptive. Not disruptive in what happened to newspapers, I don't think that we're responsible for the trouble newspapers had. I think... John: It's Craig's fault. Arianna: Craig's fault, and also the fact that newspapers did not recognize the importance of what was happening online early enough. Because if they had, they would have left no room for The Huffington Post to exist. They left a vacuum into which we stepped. But I think that right now there's a convergence, I think what is most interesting to me is the convergence between mainstream media doing more and more great things online, the New York Times is doing wonderful things online with infographics, with social media. The Huffington Post is doing more and more traditional journalism with investigative reporting, in multiple areas, and we just finished sending 26 reporters across America to write about the new poverty, the decline of the middle class. All those things which... John: Is this your book on steroids? This is taking each chapter... Arianna: The "Third World America" on Steroids, yeah. [laughs] John: My last question is take us five years out and tell us about Huffington Post and the journalism industry, the news industry, and you. Where is this headed? Arianna: Five years from now, we want to be in all the major countries in every major language. John: You're a global multilingual media company? Arianna: Which is amazing for journalism, because we are covering the resignation of the Pope, and the new Pope, has been an incredible demonstration of what we can do because we have a great Italian team of editors. Paul: In Italian for an Italian audience, or in English? Arianna: Entirely Italian. All our international editions except the UK and Canada are partnerships with a big media partner, like the Espresso Group in Italy, or El País in Spain, Le Monde in France... John: Are these joint ventures or licenses? Arianna: Yes, they're all joint ventures. John: Do you have one in Greece? Arianna: No, but we're working on it. John: I would think. Arianna: Yeah, they're all 50 50 joint ventures. We both choose the editorial director. All the journalists are local, and it's a completely... John: This is a partnership between AOL and... Arianna: And the local group. Paul: I have one last question. Because you've bet the farm if you will, on advertising, and we've heard people they're betting the farm the other way. Which is they don't think advertising will work and it's going to be subscription. You can see some of the mainstream has gone to the paywall, or even some of the bloggers are trying to go to a leaky paywall as they call it. Do you think both models are going to work? Arianna: Yes. Paul: Or do you think one bet's right and one's wrong? Arianna: No, I think both models will work depending on the brand. You have to make trade offs. The New York Times, actually they run great ads for subscriptions. Their trade off is they're not going to grow as fast. We were able to overtake them in unique visitors, I think partly because they are now emphasizing the paywall. There are trade offs. I think they probably made the right choice for them because it's The New York Times. People are used to paying for it. They have a very loyal audience and the people like my daughter's generation who can get around the paywall. I was telling Arthur that, "My daughter knows how to get around the paywall! What are you going to do about that?" He said, "I know. We're allowing it. There's going to be this one and a half percent that they're going to bother to get around the paywall and know how to do it." Theirs is also a leaky paywall. It doesn't start immediately, et cetera. Paul: It allows for social and for sharing. Arianna: It allows for social and social sharing, et cetera. But there are trade offs. I mean obviously our social and sharing is very, very robust because we don't have any restrictions. Also our SEO is very robust, and what we're seeing is that what is very hard for a new site to do is to become a destination site. But we've been able for example to launch new sections of The Huffington Post and make them number one. Like our Gay Voices section is the number one gay site. John: Wouldn't you say, and I shouldn't go back, this is going back, I should have asked it might earlier. But wouldn't you say one of the things that drove HuffPost's early growth was you were so good at SEO, and so much better than most of the other people in the space? Arianna: I think it was always a combination. I think that... John: But you were good at it. Arianna: We still are. We won for example election night, many terms because we're very good at SEO. But we're also very good at social and we know how to drive people to the front page, too. Because our editors are trained to do headlines that attract readers, and they want to come back three hours later to see what's the new splash. When we launched The Huffington Post splash, which is now a bit of a trademark...Yeah. Paul: Thank you. Arianna: The assumption was that's not going to work because you need to put as much as possible above the fold, as many stories as possible to get as many clicks as possible. We proved that in fact it's better to have a big splash that creates a sense of drama around the news, and then people will go further down, they'll click on the other stories. Paul: You uncluttered it. Arianna: Yeah, we uncluttered the top. John: Since this is living history and it'll be revisited, anything we haven't asked you that you'd like to talk about? Arianna: I want history to know that I interrupted this interview twice to talk to my daughter, which is my one rule that everybody here knows. [laughs] John: I think history will know that. Paul: That's a good rule. Arianna: I just want to make it clear in this world of women trying to drive our careers and parenthood, that parenthood comes first. John: Let's hope all that comes out right. Arianna: [laughs] Paul: Very good. John: Thank you very much. ...
VIDEO: YES

Walter Isaacson
BIO: YES: Walter Isaacson (born May 20, 1952) is a writer an...
TRANSCRIPT: John: OK, it's April 4th, 2013. We're in the Washington, D.C. offices of the Aspen Institute, John Huey and Paul Sagan, having a conversation with Walter Isaacson, historian, biographer, journalist and head of the Aspen Institute, and digital pioneer. Walter, we have a lot to talk with you about. But in the spirit of this project, can you re conjure for us your first time? When the light bulb went off over your head and you said, "Ah, this digital technology in journalism is going to really change the way this all works." Walter Isaacson: Yeah. It was on a New Year's Eve, after we'd come back from a party, and Phil Elmer DeWitt had been pitching a story called "Cyberspace," what's happening online, digital media. I was back of the book editor at "Time," and late that night, I went online to the Well, which is one of the early bulletin board systems that Phil had told me to go on. John: This would have been dial up? Walter: Yeah, totally dial up. It was complicated, because we didn't even have dial up modems. I had to borrow a dial up modem, it was like 2,400 baud or whatever. John: Do you have any idea what year we're talking about? Walter: I don't, but we can, for the sake of this, find out when the cover was. Because the cover was, that January, welcome to cyberspace, and we'll go online in a minute and find out when time ran it. But this was in the very early '90s, probably '91, '92. I'd noticed hundreds of people in these bulletin boards and sort of chat rooms. They weren't live chat, but it was close, talking about New Year's Eve and talking about the year, and thinking whoa, there's this whole cyber community. We ended up doing, three or four weeks later, using the people from "Mondo 2000," which was an early pre "Wired magazine" magazine about the digital age. The art directors of "Mondo 2000" doing the art director part, and we even had hypertext, which was...the web had not fully flowered. There were no mosaic browsers yet. But hypertext was still being used. And so we ran the story and some words were underlined or in red, and they would point to things in the margin that would explain it. Walter Isaacson: Welcome back, fans. John and Paul and I have figured out it was February 1993, it was called Cyberpunks. That was the introduction I got to cyberspace. After that we said, why don't we put our own magazines online, and I asked Phil. We started playing off AOL, CompuServe, and Prodigy, because, as I said, this is before Mosaic had made the web very accessible. At that magazine conference of 1993, in the Waldorf, wherever national magazine conferences are, I remember being with Louis Rossetto, who had just launched "WIRED" magazine. We said, "Why don't we put our magazines online?" We had done so with AOL. We were getting, I think, close to a million dollars by bidding AOL, CompuServe, and Prodigy off. But then Louis and I talked a year or so later and we said, "Why don't we put it directly on the Internet," as opposed to one of these online services that were walled gardens. If you put it up with AOL or CompuServe, it had to be their subscribers. They would get revenue by the fact that the longer somebody stayed online with AOL or CompuServe the more they would pay those companies, and we would get a cut of those revenues with approximately a million dollar guarantee. Then, we decided why don't we cut out the middlemen, the AOLs, the Prodigies, the CompuServes and go directly online? The thing that we had to figure out, and this was... Paul Sagan: Who would we have been at the time? Walter: It was, somehow I was doing it at "TIME Magazine" with Dick Duncan, who was a deputy managing editor, and a few people were talking about it. Every now and then we'd go up to Reg Brack, who was then the president of TIME, Inc. He would say, "Well who owns the Internet?" and things like that. But we had made these deals with AOL, Prodigy and CompuServe without much corporate knowledge or interference until it got to be about a million dollars of revenue a year, at which point they were paying attention. Then, we had to pitch to them, we can cut out these online services which wasn't a good idea, because the online services were giving us money, but it was an inevitable idea. We realized the online services were probably toast when people could get to the Internet directly as opposed to doing it by using a dialup, going to AOL. Then, you go into AOL's walled garden, and then you can go out to the Internet at large almost as if it were through a gate in the garden. I remember having a conversation, again with Louis Rossetto of "WIRED," and it was, how do we go online directly? Believe it or not back then there was no clear way to be on the Internet. There was something called FTP, which is a file transfer protocol. There was Veronica and Gopher and Archie, which had all been developed by the University of Illinois or University of Michigan. Paul: And they were just file transfer protocols. Walter: Yeah, they were file transfer protocols. Send fetch... Paul: They didn't go to a page. Walter: Yes, right, but could actually get a page or get content by having a Gopher or a send fetch, get that page, bring it down to your computer, and then you could call it up. A very static sort of thing. Paul: What was it that excited you about this? What was the promise? Why, other than the fact that it was new and really challenging and exotic, was it a journalism creation excitement or a business opportunity or both? What was it? Walter: I think what excited me from the very first time in late '92, New Year's Eve of '92, when I saw the community, is that journalism had been things that you handed down, sort of engraved on a page. You maybe got a feedback from a letter to the editor every now and then. But what this was was about community. I think we lost that community when we finally went on the Worldwide Web, which is the way when I was talking about protocols and send fetches, we all just had to be on the web, which was basically a publishing medium. But before that the Internet had been very much community based, like the Well or these chat rooms. The notion that you could put information into that context and, then, have a conversational community grow up around it seemed to me that that was going to take journalism to whole different place. That journalism was not just going to be the elite guardians of journalism handing down on pages the reporting of our time, but people putting journalism into a mix that would then create communities of discussion. That's not the way it evolved. Once, we went on the Worldwide Web the web, as beautiful as it was, was much more of a static medium and it didn't have the conversations and the chat rooms and the bulletin boards wrapped around it. Paul: A lot of it, for a long time, was just recreated print product with a few extras. Walter: Right. It was pouring old wine into a new bottle as Arthur Hochstein, our art director, said, and it was disappointing in a way. Because, as excited as we were to go on the web, something was missing and I couldn't put my finger on it. But I realized after a while that it was, even on AOL, which was not nearly as cool and it was not really as vibrant as the Worldwide Web, if you were on AOL, most of what we did was help moderate the bulletin boards around each story. Where hundreds, maybe thousands of people would be talking about the story. You'd bring in people for interviews and you would... Now, there's some of that that happens now on the web, but I suspect there's less community and conversation per eyeball on the web now than there was back in the early '90s when bulletin boards and chat rooms of CompuServe, Prodigy and AOL were at the center of what online was and the handing down of the journalism was sort of peripheral to it. Paul: It seems now that the conversation has become highly fragmented. I mean, Twitter is the conversation now. It's kind of hard to... I don't know how to compare the two. Walter: With no barriers to entry, you have a thousand bloggers and hundreds of aggregations of bloggers and then, millions of tweets per day that you could go through. It reminds me, if you want to compare it to a time, of eighty years ago when Henry Luce is saying we're bombarded with all of this shit. Why don't we have somebody help sort it out and package it for you? Maybe the pendulum will swing and we'll get back to the place where Flipboard is with Josh Quittner supposed to help you collate tweets and blogs and content that might interest you or whatever. But there's nothing... Arianna Huffington is getting close to it with the HuffPo. Paul: This thing takes off pretty soon after this point, and it turns into quite an adventure. Big corporations get involved, including the one you're working for at the time, and it leads to a larger online effort, right? Walter: Right, I think it's at the beginning of 1994, and there are memos that... Paul: This would've been pretty fast. New Year's Eve, you're only... Walter: Yeah. Basically it was early '93 when we did Cyberpunks. Then, at that point in early '94, and Paul maybe should come over to this side of the camera, but I think... Paul: Maybe. Walter: Yeah, in fact, seriously. OK... Paul: I will. Walter: But I think in early '94 we were still pretty much online with the AOLs, CompuServes and Prodigies... Paul: And bidding them off each other. Walter: Bidding them off against each other. But at a certain point Mosaic comes out of the University of Illinois. Marc Andreessen does it. Paul: I remember the meeting we saw it. Walter: It was what year, approximately? Paul: Probably '94. Walter: Right. John: I think you put it on the cover in '95. Walter: Barefoot on the cover... Paul: In '95, but it came out in '94. Walter: In early 1994, a couple of things happened. One was we got pitched by Marc Andreessen, who had created a browser that allowed you to go on the web. Paul: It was before that. Even before Netscape. We got a demo of Mosaic out of Illinois from some editor at Entertainment Weekly who had it on a computer. But I remember we had to cross the street and go to their building, and he showed us websites. They weren't [inaudible 0:01:40] and it had the little snake y looking thing. Walter: That was I think around the time I was talking to Louis Rossetto which is, there's FTP, there's Gopher, there's syntax, there's Archie, Veronica, there's this thing called the web and we had seen it. It was like, is that what we should for our magazines? Paul: Because you could have direct access to the customer. No more proprietary services, but you could have your own look and feel. Walter: Have your own look and feel. What we lost in making that transition, as I said a moment ago, is the notion that it would all be embedded in community. Because, although you could put comments up on websites, it was no longer a community service, it was a publishing medium. You and I, at that time — this is early '94 — had also been tapped by Jerry Levin, to create a service for the television that was called the Full Service Network. That was an interactive television system that Time Warner Cable was going to roll out starting in places like Orlando, but we tested it in Elmira, New York. I think. Paul: No, we tested that in Maitland, Florida. Walter: Maitland, Florida. Paul: That was the first and only market of the Full Service Network, which was fully interactive TV. What today we would call VCR functionality. Built on SGI gear, and when SGI close, that team went and started Tivo. Walter: Right. John: Went and started what? Tivo? Paul: Tivo. They invented Tivo. Walter: In other words, it was a cross between an on demand cable network and a Tivo service. You could watch any show you wanted when you wanted, on demand. It had some drawbacks, one of which was the SGI set top box. You could fry an egg on it, if I remember. It used to get really hot. Paul: It was a workstation. John: The word is out Walter that you still have one of those full service... Walter: An SGI Full Service Network, gosh, I don't know. I've got to work in the archives. John: If you do, take a photograph of it and sent it to me. Walter: I will send it. You should start an archive at Harvard. I'll send all my stuff there. We were doing that. John: That was separate from the Internet? Walter: That was totally separate from the Internet, in fact, we were the ones who tried to get their minds around the fact that this and the Internet were going to, whatever it's called. John: Jerry Levin told us that he distinctly remembers the first time he ever really heard of the World Wide Web, you showed up in his office and said, "There's this thing called the World Wide Web, and you need it." Walter: Right. That's because Paul and I were working on what was called News on Demand, which was going to be one of the many services on this television on demand thing that they were creating in Orlando. John: Just for the record, Paul, how had you come into this orbit? Paul: I was in the cable division, starting regional news channels, working in New York, starting New York One and then a series of other regional news channels. This was pre the company even owning Turner. There was no CNN and Time Warner at the time. Levin asked us to work together, to do interactive TV. The more important distraction was doing online. Walter: Right. Interactive TV was tested out in Orlando. We created a news on demand service. I can't remember what we branded it. Paul: The News Exchange. Walter: The News Exchange. Very good, Paul. Paul: TNX. Walter: Yeah, you probably have a t shirt. Paul: Probably have a t shirt that should go in the archive too. Walter: The News Exchange, that caused us to have lots of meetings with people at CBS, ABC and NBC, because we didn't own CNN. Time Warner did not own CNN at the time. To say to Howard Stringer, "Why don't you give us your news shows? We can chop them up, have it on demand." Paul, who had created New York One and knew how to create news too, you could say, "I want this story," or, "I want only sports," or, "I want to tailor my newscast." All the things that you can now do on the web, this was supposed to be done on your TV set, through a big remote control that was not a very good interface. We hired Iconic to try to do a simple interface, but it was not Steve Jobs like with an iPad or an iPhone. There was a complicated interface. It never really took off. But while we were doing it, we were getting these demonstrations, Mosaic, we were being told what the world wide web was. I had been, before Paul, putting Time Magazine on CompuServe and things like that. It occurred to us, Paul and myself, that what we were doing for television on demand, was someday going to merge with or be the same as the interactivity you would get online, or on the Internet. So, at some point, at the beginning of 1994, I think it was, we did make a pitch to Jerry Levin. I remember writing a memo to Jerry Levin, which is in the archives here, that said, "Hey, this on demand television stuff is great. But let us use a very small percentage of the money you're throwing at it and create a prototype of how you could do it on computers online. He said yes. Because we showed him how online would work. John: He refers to it, in his interview with us, as, "Yes, there was Pathfinder. That was a step child," because he was so obsessed with the full service. Walter: We created The News Exchange and then a broader thing around it, which was called Roadrunner. John: What was The News Exchange? Walter: The News Exchange was simply a chopped up video news that you could pick which stories you wanted to watch, in the order you wanted to watch them. Paul: Or you could put in a profile. Walter: Yeah. You could say, "I'm interested in sports, crime and news about Poland," and theoretically you would get the news about it. John: Where were you getting this content? Paul: We were licensing, as a test bit. We didn't pay for it, but from the big networks. CNN, CBS. Walter: This is when we were meeting with Howard Stringer, NBC. Paul: They all let us use it, because it was a walled garden. There were 5000... Walter: Then we tried to make a big deal with one of them, at which point it got so wrapped up into ABC versus Time Warner politics. Even when you turn on your cable system, will you go to the last station? We said, "We can't deal with that." So we never were able to make the big deal with any of the TV networks to use all of their content, repurpose it and do news on demand. Paul: But it was enough to see that people wanted choice. Walter: Oh yeah. We did a test of it and it was cool. Paul: You could get your or my television newscast, effectively. The other thing the system could do, you could play multi player games against your neighbors. They were Sega games. You could buy about three things. Walter: You got movies. Paul: And you could watch movies. You could watch them with what, today, would be on demand. Walter: Tivo. Paul: It would start and stop. Tivo. And fast forward. But only whatever was on the server at that end. Walter: That was being delivered, by coaxial and fiber optic cable to the home, into a big server that was basically a Sun workstation called an FPI server, right? Paul: Server at the head end, workstation in your home. John: Great vision. Great Product. Ahead of the curve of the technology. Walter: We should have it now. This advance will happen 20 years later than we tried, which at some point you will be able to go to your TV set...This is what Steve Jobs was trying to do a couple years ago, before he died. Which is create a TV set that had access to whatever you wanted to watch whenever you wanted to watch it. John: This is going on, in parallel to that you're starting to think about the magazine? Walter: As this is happening, we're saying, A, we could do this on the Internet. Maybe even we could deliver the Internet via cable, which would give you higher bandwidth. So, Paul and I created two concepts that we pitched. One was an Internet online service that would have a lot of the magazines and things. The second, which we named Roadrunner and which is still named Roadrunner, was a cable connection to the home computer. That would allow you to get broadband in the home, and which we hoped we would have the front end to it. This is not something that ended up happening. But if Time Warner gave you access to the Internet through cable, we would package it almost the way AOL created a shell for when you dialed up to the Internet. Paul: And own the home page. Walter: We'd own the home page. That's what I meant. Just like when you dial up, AOL then has your eyeballs for a while, we would have your eyeballs. So, we created two things. One was a regular narrow band service for the magazines, which we ended up calling Pathfinder. The other was a high speed one that was called Roadrunner. This was in early 1994. We pitched to Jerry Livine and others, especially this notion of having a cable powered online service that would have all the content from all of our magazines, and would help be the next generation online service. It worked pretty well. We created something called Pathfinder in 94. It was like some of the aggregators, like The Huffington Post, in a way. But it was Time Magazine, Sports Illustrated, and People. It was all on a home page. The problem was multiple. One, we didn't have enough revenue to make it into a huge online service. The second is, once people got on the web, they didn't need people to package things for them. They'd go to wherever they wanted. Paul: That's right. It was arguably the first portal. We looked at the ones that developed around search, which were really guides. We were wrong. We kept saying, "We could build a guide too." We looked at Yahoo and said, "We could do that too." Walter: There were two things that were like that. One was just search, which is what Google now is. Paul: Which was the next step. Walter: The other is what we called directory guide. Paul: We literally had people in the back room indexing websites. Walter: It came from a list called, I think, Judson List. Well before Yahoo or anything else. John: Yahoo was a list, originally. Walter: Right. But even before Yahoo was a dream, there was some kid somewhere who was blogging a little bit, but started doing, "My favorite websites." It would be sports. It would be art museums or whatever. We said, "That's how it's going to work. It's going to be a directory service. That's how you'll find things on the web. You'll go to a directory and find it." We did not think that kids at Stanford like Larry Page and Sergey Brin or Yahoo or whatever would create an ability to search the web well. Then we thought, "We can just license these search engines." We would be in control because we had the content. There was a phrase back then, that content is king. We actually believed it. In fact, at least for 10 years of the Internet, having the best algorithms and everything... Paul: Content is king. It's just we thought we would have enough of it. John: If you look at what the VCs have backed and what the big scores were, the really big scores have been more platform than content. They distribute content. But Google is a platform. Walter: They distribute content that they don't make. John: Right. As someone has pointed out, Google is not trying to get you to come to them and stay there. They just want to help you on the way to anywhere you want to go. Facebook is also a platform. If you look at the content plays, some of them have made some money. But they haven't gotten any traction or changed the world. Nevertheless, Pathfinder... I'd like you to get to speak in defense of Pathfinder a little bit here. Because Pathfinder was much maligned unfairly, in my opinion, and became the butt of some jokes. In fact, it pioneered a lot of things. I think, it was one of the first, if not the first, to run a banner ad. Paul: Probably one day before was Wired's site. But it sold banner ads first. John: Talk a little bit about some of the legacies... Walter: Let's go to the banner ads for a second. That was important. Pathfinder was good for what it was, which was a portal. It was a place you landed on if you went right to it. It would help guide you around the net, but it would also have a lot of content. Bruce Judson was on the business side, working with Paul and myself. He came up with the concept of a banner ad. We had always believed that what we were going to do was bring people into this portal. Then, when they got the content, they subscribed to it. They would pay for it, just as you paid for any other service or magazine or subscription you had. We had an elaborate scheme for charging people. Almost like The New York Times is doing now. You got a little bit for free. But then at a certain point, a pay wall hit. I remember, vividly, the day mid 1994 or so, when Bruce Judson had come up with these ads you could put on top. Yeah, Wired did it as well. But it was like the microchip being invented in two places at once. Paul: It was literally one day apart. Walter: It wasn't the hardest concept in the world, which is, "Let's put a banner ad on top of the..." John: Sony and Phillips developed the tape recorder at the same time. Walter: Right. That was a more complicated invention than the banner ad. John: It wasn't a complicated invention, but it drove a lot of the whole shape of the business for a long time. Walter: It really transformed everything. Immediately, Madison Avenue decided, "Oh my God, we've got to understand this. We have to hire a lot of young people." They would send us money. It was almost like you could look out of the Time Life Building to Madison Avenue, and watch people walking with bags of money, to dump it on our desk, or Bruce Judson's desk, to buy banner ads, because they all wanted to be in on this thing. What this does is, it taught us we shouldn't charge for content. We should just get as many eyeballs as possible. That's the way we're going to make money — by aggregating eyeballs. John: The great traffic chase. Paul: Something else went on, which was, we were still getting checks from the proprietary services. There was other revenue that came in. We gave them more content, but we gave it to them with [indecipherable 0:17:25 — Alex guess: "the chats"] . We also created a personalized version of Pathfinder, which was going to be your customized news piece, which was going to be, effectively, your sets of the stories. A bit of the lesson we learned from the full service network, which was people wanted to personalize. That was going to be a subscription service. We cut a long forgotten $5 million deal with CompuServe. CompuServe was then chasing AOL to catch up on the web. They were going to offer this free if you stayed a CompuServe subscriber. Because of that, we then didn't promote it very hard anywhere else. That turned out to be a great short term bet, because the check didn't bounce. It turned out to be a long term bad deal, because they cratered and went out of business. Walter: Right. At that point, for most of our content, we had bought onto the notion that it will be for free on the web, with banner ads. So we weren't trying to protect these online services. They were trying to get our content exclusively. We began to buy into the notion that content wants to be free. John: Somewhere along that same time is when Reuters decided to sell news to Yahoo, to give away for free. That's when Yahoo quickly became the biggest news provider. That changed the whole landscape. Everyone accept DOW Jones — and we have a long segment on why that happened differently — chased the great God of banner advertising. Life was beautiful for a short time. Walter: That was unsustainable for the long term business model. Because the number of Internet pages, servers and sites would grow exponentially, but the number of ad dollars did not grow exponentially. In fact, it shrank for a while, after the American auto companies had trouble. Paul: They moved to search. Walter: They moved to search. They moved to Google and Yahoo. The CPMs you'd get for a banner ad started plummeting. At first, it was the coolest thing in the world you could do. Then you could do it anywhere and you didn't need us. John: I want to ask a question that I think both of you are particularly qualified to speak to. Three themes have come up in all these interviews, about why legacy media had such a hard time getting through this and, indeed, ended up losing control of the narrative of this whole progress of technology. One of those themes is that legacy publishing companies never valued or understood the power of engineering. Somebody, I think Sheryl Sandberg, said one engineer is worth 10 mediocre engineers. The publishing companies, none of them really developed any semblance of an engineering culture. The other is, of course, the innovator's dilemma. We all know what that is. Basically, you've got to protect your core business, where the profit is. The third one speaks to the whole thing you were just talking about there, with the $5 million deal. They didn't really see a threat. They saw an opportunity. When they saw a chance to monetize quickly, they just took that. They were in the business of banking quarterly earnings. If you could just talk about what happened, going forward with Pathfinder, with all three of those things in light — getting corporate momentum, cultural issues, engineering, all of that. Paul: I think we did a good job for about a week, on the engineering side. We found a few people like that editor at ADW, who showed us the browser. We got convinced that a cable into the wall, to the phone company and a Mac and you were in business and you could compete. I don't think we had any appreciation — it was the same issue of not fully appreciating what was behind search, for example — of the difference between what went on in Silicon Valley and what we were doing with the publishing world, with a few people who understood the technology a little bit. Walter: I would totally agree with that. The number one thing you said, the engineering, lacking appreciation, was the biggest problem. First of all, you're in New York City, unlike in Silicon Valley. So, there are not a zillion engineers hanging out with you. And you think you can just buy engineering or rent it, or lease. We thought, "We will just lease Google or Yahoo or Magellan." You have to remember, by the way, that a lot of these engineering plays ended up totally bankrupt. I could probably list Lycos, Magellan, all these things that seemed like... Paul: Hundreds of companies that went under. Walter: Yeah, that just totally went under that had created search engines, a directory, whatever. But we thought, "There will be all sorts of companies writing algorithms for search." We didn't know Google would get it right so strongly. John: There was a period of competing search engines. Walter: We thought, "There will be many search engines and many engineers out in Silicon Valley writing them. We'll play them off against each other and say, 'If you don't license to us and give us half the revenue that comes from the search, then we'll do the licensing deal with Yahoo or Magellan or Lycos.'" Whatever it may be. John: Did either of you ever advocate for buying one of these, a Yahoo? I've heard people say...In fact, I think Mike Moritz said something about this. Walter: Yeah. I remember talking to Mike about it. I can't remember all the details. But we tried to make some deals. As I assume Ted Leonsis told you, we were thinking of buying a fledgling AOL, a decade or two before they bought Time Warner. Paul: Just one other point on the engineering. Not just that we didn't understand the differentiation of needing engineers or that you probably need to be California. Maybe arguably then you could have at least done it in Boston. But we played in Manhattan, which was not the right place. This is a little the innovator's dilemma. It was the culture of, "Good enough is where you should start," versus "It has to be perfect." Engineers throw stuff against the wall and learn from the failures. Most of the web companies have had lots of things that didn't work or they just call them beta and throw them out there. We lived in this world that was quite afraid of failure and bad publicity. One of the first things we did at some scale, we tried to charge for an event or something. It crashed. It wound up being a story in The New York Times and The Wall Street Journal. It was written about Time, Inc. and it was an embarrassment. So the next time we did one, we were told, "Just don't let it crash." That was a standard we probably couldn't meet. John: There's a third issue that comes up. There's the engineering. There's the innovator's dilemma. Then the third issue that comes up, with virtually any strong legacy media company — whether it's The Washington Post, The New York Times, Time Inc., any of them — there really was and still is, to some degree, an editorial driven culture, where editorial values and editorial power exerts an influence over the process that can be for the good, but if you're trying to innovate and start a new technology, can be problematic. I remember a lot of friction back then. I don't know if either of you do, in terms of magazine editors saying, "That's not up to our standards. That's not brand appropriate." Walter: I had to change hats a couple times. I was at Time and then went to our new media group, and then I went back to Time. When I was at Time, we used to say, "We can't let these people use The Time brand unless we approve it." We have to have Dick Duncan sitting there with committees, approving everything that will have The Time Magazine name on it. That was no way to run a fast moving business. The second issue that came like that was whether the old brands were the brands we wanted. Paul and I invented some new brands, like the Virtual Garden and I can't remember what they were. Paul: That's right. That was a home site. Walter: Even OJ Central or something. Paul: We had an OJ site during the trial. Walter: It was the question of whether a new brand like Pathfinder or an old brand like Time Daily or Time.com... Paul: Or Fortune. Walter: ...or Fortune would be the best brand to use. That came into conjunction with the greatest organizational problem that's existed since the beginning of time, since they created this country and had to have states versus national — how much power do you give to each of the entities, versus how much do you centralized power. Places like Sports Illustrated were saying, "We don't want this central group controlling sports." We were saying, "Yeah, but if you just do it, you're just going to be pouring Sports Illustrated into this digital form. We want to create a new type of sports site." Paul: One that was real time. Walter: Real time, had games and everything else. Paul: I will give you one more anecdote and then we're going to return to a one on one interview with Walter. Talk about the future. But when you went back to Time and then I was in charge, shortly thereafter, we did a story under the People brand. It was a people.com only item, covering the opening of what was going to be the new hot franchise restaurant business. It was going to be super models. They opened one in Rockefeller Center. We sent our own photographer down. We did a snarky web sensibility photo essay for people.com. I got called by a junior publisher, screaming at me, from People magazine. How could we do this? How could we do something that's out of character for the magazine? Our advertisers will be furious that their brand was associated with our brand and this snarky story about these super models opening a restaurant. I thought, "If we can't figure out how to do this story, that was not hard news, and do it in a way that I thought was in keeping with People's brand, but with a little web sensibility, we're never going to get out of the [indecipherable 0:27:59 — Alex guess: "mud"]." Walter: That leads to the great lesson, the great thing, that I think the failure was. At Pathfinder, we should have not based it and given the power to each of the brands — People, Fortune, Time. We thought, "Things like People, Fortune, Time are huge." We should have said, "We're going to create a whole new service. We're not going to base it on each of the magazines. We will create our own sports, our own news, our own snarky celebrity coverage." Then, once it's successful enough, we probably should have taken some of the brand things in. But instead we let the brands have veto power over what we could do. John: Yeah, stay there for just a minute. One of the things Jonah Peretti said in his interview, he talks about the high low. He works from a point of view that you can write about a lofty subject in a low way or a low subject in a lofty way. In some ways, Henry Luce pioneered that model. He used Time and Fortune for great prestige and made a lot of money with Life, not to subsidize it but certainly make him a lot larger, financially, than he would have been. When you look back at Pathfinder and you say, "If it had subsumed all the brands, it had all the subjects." But wasn't one of the problems that it was also built around the newspaper model, in the sense that it had a sports vertical, a business vertical. In the end, as Walter said earlier, the consumer broke out of all that. They weren't looking to one provider to give them all that. They were just looking for the information they wanted. It would have had to evolve greatly anyway. Walter: It would have, but I don't think anybody's ever yet licked the model of how do you create a great site that aggregates and helps you guide to the content you really want each day. The best you do is search on Google News or something or Yahoo News, but that's still hit and miss. John: If it makes either of you feel any better, I'll tell you that for years and years after both of you have long gone and this thing was long forgotten...I've sat through many a meeting where people would pitch an idea and many times I was supportive of it. I would say, "But I've got to tell you. You're talking about Pathfinder 2.0. This is not a new idea. I support it. It's a good idea, but it's Pathfinder 2.0. This is not a new idea. It can be done a different way." I, for one, still think the legacy of Pathfinder is more significant than it gets credit until the definitive history has, of course, hit the pages. Paul: Whoever writes the history gets to decide who gets the credit. It's good that we're writing it. John: You're writing it, that's right. One last question for the two of you is, and this doesn't speak to just Pathfinder but it speaks to the whole force of digital journalism. Walter, if one of the premises that we're working by is we have this metaphor that if you think of a line, a horizontal line. Below the horizontal line is the tide. The tide blows and gets stronger and stronger and it comes in. Above it are swimmers. Some of the swimmers are going with the tide and some of them are going against the tide. Many of them don't make it and some of them make it to the shore. When you look at the whole landscape of legacy media through this process, was there really anything that anybody could have done any differently that would have ultimately made a profound difference in the course of things? You can certainly make arguments that company A could have done this and survived longer. You can look at Knight Ridder and say Knight Ridder didn't have to die as early as it did when in fact it was a company with as much digital vision as any, more than most. Walter: More so. John: Tribune had a lot of digital vision... Walter: [indecipherable 0:32:20] John: I tell you, we have not interviewed yet...We've interviewed almost 50 people. We have not yet interviewed a stupid person or a person who didn't have a vision that makes a lot of sense and who didn't know what they were doing. One of our big questions is, ultimately, does the tide just rule the day, or...? Walter: Sometimes technological disruption disrupts, which is why it's called that. Meaning, you can't fight the tide of a new technology disrupting things. The major disruptive impact of digital technology was that it allowed people to go anywhere they wanted and for that matter to replicate content infinitely with no marginal cost. Meaning, there was no marginal cost, so content became free. To me, that was the one thing that maybe the technology forced it to happen, but if we had prevented it, life would be a lot different from most media companies, which is find some way to meter the use of content so that the people who produce the content, just like the people who produce songs that are played on the radio, get paid some royalty or some copyright compensation for having sent somebody to Baghdad and having produced a story. I don't know how we could have prevented all of that stuff being out there for free as it is now. You're starting to see the genie being smooshed in the bottle a little bit. "New York Times," "Wall Street Journal," others putting up paywalls and apps on the iPad and Android tablets being things people have to pay for. The great disruption that happened is when those who produced the content no longer got paid for producing content. That undermined the media business and I still look for ways we could have maybe made that happen differently. John: Paul, that was really the big question that above all that hung around your neck when you came into this project. You've now interviewed like 40 something people. Just a preliminary, having heard what Walter said, would you agree with that? Or where... Paul: I would. I think the dilemma is exactly as Walter said. I don't think — because we've asked everyone this idea of the original sin. Had we just been patient and not gone for free, would the world be different? I think the tide was too strong. One, I think the business pressure was way too large to have been left out. But had we been able to have a secret conference and everyone conspired to agree, I think the example of Reuters and Yahoo wouldn't have shown up at that conference and they would have set headlines for free, and search was going to still get people to sites and blogs. I don't think you could have held technology back for 20 years until today and now say we have paywalls and everybody has to stand on the outside and pay to get in. Walter: Right. I now look at a point in which I say, gee, if we set...because I know. I mean I felt the pressure. If we did not put "TIME Magazine" out there for free, Newsweek, which was hungry and scrappy, it put itself out for free and for a long time would have gotten banner ads that would have made it worth their while, even though we could see that's not a sustainable model, which is why Newsweek's no longer around as a print product. But I don't know how we could have stemmed that tide, but that is the one big, if not original sin, at least turning point that we couldn't stop when the tide turned on that. The other way to have done it. Early on, the Worldwide Web, when it was conceived by Tim Berners Lee, there was what we called requests for comments where they got to put things into the web. One of the things that Tim Berners Lee wanted was a system within the web that tracked where each piece of content came from and was able to allocate back to that piece of content a royalty for that content. That was going to be built into the protocols of the web, and thus maybe Internet service providers, anybody who created it would have had to negotiate just as the way radio stations used to have to negotiate with record companies... John: ASCAP and... Walter: Yeah, and ASCAP. That was a turning point that could have happened, but that was a technological miss when the people inventing the web did not go along with, "let's find a way to meter the content." Paul: You would've created a concept called content peering, which would have been...because it wasn't just done for royalties. It would have been done for balancing traffic. Right? Walter: Right. Paul: And you would have known where it came from, and it didn't get done. Walter: Right. [crosstalk] Paul: Because there was no way to hold people accountable in that... John: Another thing that happened that I think is not insignificant is, we're talking about all this now looking back and it all seems cool, calm, and collected and we're talking about it in a rational way. But the fact is several companies came along that started making billions and billions and billions of dollars off of this, and it was quite a heated frenzy, and it was much like a war. And in the fog of war... Walter: But wait, who was making billions and billions, besides Google? John: AOL made a lot of money. Yahoo made a lot of money. Google made a lot of money. All these platforms. eBay made a lot of money, Amazon, now. They're in different...You're getting further... Walter: But what they all have in common is all five of them, none of them produced any of the content that they made money off of. John: No. No, they didn't make the content. Nope, no content. Walter: Neither Amazon, nor Yahoo, nor eBay. John: No. That was my point earlier. That in the end...I mean you can look at a few content companies that made some money selling for this and that to [indecipherable 0:38:24 — Alex guess: "superstacks"] or whatever, but in the end, it was the platforms that made the real money. My only point is, that money really served as a powerful force to make things happen. I don't want to get deeply into this at all, but that's how AOL ends up buying Time Warner. Walter: You and I were there in China when Jerry Levin and Ted Turner and Steve Case were all there, and I was watching Jerry Yang, thinking they were going to make a deal with Yahoo. Walter Isaacson: It's been 20 years since we created Pathfinder, and every now and then I say, "If I had known then, what I know now, 20 years later, after Amazon, Google, everything else, wouldn't it have been great? We could have invented whatever the big thing was." I still, with 20 years' hindsight, am not sure how we could have done it that much more differently, other than having great kid engineers at Stanford inventing the algorithm of Google, that would have worked. There are no decisions I can point to that we made, even with 20 years' hindsight, that would have made Pathfinder into Google." Paul: As a matter of fact, I think I can envision the meeting where somebody says, "Search is really great. We can't make any money, so we need to charge for likes," and we would have had an editorial reaction which is, "Well, wait a minute. We're going to be bastardizing basically what we think is a pure response, and we never would have done it." John: By the way, it wasn't the invention of the algorithm that made all the money. It was the decision to make search driven advertising is what made all the money and what ultimately created all the disruption in the industry. When people ask me what's the biggest mistake you think Time, Inc. made, I say, "Very simple. We failed to invent search driven advertising." Walter: Right. John: And I don't think we were likely to do that because it was a disruptive threat to the entire revenue base of the company, and very few companies... Walter: I would have been happy if Paul and I could have invented that because I didn't care about being disruptive. The problem... John: The truth is, if you'd just been able to get the engineering and the tools and move forward, if you'd just have invented Yahoo you would have been fine. Walter: That's what I was going to say. If we had not been sitting there in New York, where we thought, "Inventing algorithms to do spiders and searches of the web, that will be the great key that unlocks the billions." That was the only thing that we could have done differently. Saying, "Creating all these gardening, and recipes, and cooking, and OJ, and world news stuff, that's useless. Let's find 20 of the world's greatest coders and engineers in a dorm room at Stanford, MIT or Harvard. Let's create the best search algorithm." But do remember that there were 10 or 12 other people who were creating these great search algorithms, and they all went bankrupt. Somehow, Google won the race. It's partly because they figured out advertising based on search. It's partly because their search engine crushed all of the others. Paul: And they got distribution. Walter: And they got distribution. Would we in the Time Life building have been able to invent a better search engine than these kids at Google? Probably not. But if I could have picked one thing to have done, it would have been, instead of hiring all these kids doing Pathfinder sites, let's invent a search engine that's going to be better than the other 10 out there. That would have made billions. John: But the truth is, in a legacy media business that's in the journalism business, there was no mechanism to bring together editorial, advertising and engineering interests in a way that could create... Walter: We brought together the advertising and editorial interests when Bruce Judson invented the banner ads, along with "Wired," and helped transform what a website was. It probably occurred to Paul a little bit more than me. It never occurred to me, to say, "We need to get the best engineers coming out of MIT and hire them at very large salaries." Instead, we said, "We need the advertising and edit people." Paul: That's right. That's where the money way. And the money was still pretty limited. We talked to Roger Fidler at Knight Ridder, who did the tablet. His budget, in his peak year running his lab, was a million bucks. John: There's a famous video with them demonstrating a tablet in... Walter: It looks just like the iPad. Paul sent it to me. Paul: But you cannot compete there. And even though our budget was a little more than a million, it wasn't enough to...if you look at the hundreds of millions that have gotten spent on engineering failures, we weren't likely to play in that game. Walter: Right, and if you look at all the really brilliant people who invented search engines, 95 percent of them failed. So if we had spent millions of time and money to have been one of those 95 percent inventing a search engine that failed, that wouldn't have been good either. They were not willing to take VC like risks, which is one in 20 of these will pop. Yeah. All right. With that addendum... ...
VIDEO: YES

Jeff Jarvis
BIO: YES: Jeff Jarvis (born July 15, 1954) is an American jo...
TRANSCRIPT: Martin Nisenholtz: Martin Nisenholtz here with Jeff Jarvis on March 29 at CUNY. Jeff, let's start very simply with the question of your first time. When did you first see digital intersecting with journalism? You go back a long way in journalism, well before the digital era. Jeff: Personally, I bought my first computer, an Osborne I, which now sits proudly in my office, in 1981, and got onto services like The Source and CompuServe back them. Started to use them for reporting. Then later on, I was the TV critic at TV Guide and used Usenet, where people were doing these amazing things called episode guides. If I forgot what happened in an episode of Cosby, someone had put it up online. That was a huge revelation, that people would go to that effort to do that. It was the first sense I had of collaboration. Then I went briefly to Delphi Internet, which Murdoch had bought. It was the first consumer Internet site, or service. Martin: You say you went there. You went there as an editor? Jeff: I went there as the chief of content, yes, for one horrible month. Martin: Scott Kurnit was running that, right? Jeff: Not yet, no. They were hiring a C.E.O. Murdoch had just bought it. The only way it got you to the Internet was just plain text and a blinking cursor. They weren't trying to invent a GUI like AOL or like CompuServe. It was a bloody disaster and I got out. Dubbed the bungee boss by one of my employees. Martin: Didn't Murdoch put a very senior editor into that. Jeff: Anthea Disney. Martin: So you worked for her? Jeff: No, she came later. She took the head of content job. We invested a huge amount of money in it. It was the first of many Internet failures that he's had. Martin: That was pre Internet. I think that was a proprietary service, wasn't it? Jeff: It was trying to be, but that was the moment of the Internet. While I was there was the moment that the Mosaic browser was announced. I remember sitting in an office up there, honestly not fully understanding the impact of it yet. But as soon as people showed you the browser, it took your breath away. You said, "Wow, this is simple." These things that took Gopher before and hard commands, no one was ever going to do this stuff. It broke out and broke free of the fence of CompuServe or AOL. Now, you could move anywhere. When I escaped Delphi, I went to the Newhouses at "Advance." They were debating at that moment, just that moment, whether to go with CompuServe, AOL or this new thing, the web. I certainly wasn't prescient or the only one who was arguing it, but I was one of those in favor of going to the web. October of 1994 was when the first commercial browser came out. That, I think, is when we saw the true intersection. "New York Times" was on AOL. You had other news. You had "Knight" newspapers and Knight archives on CompuServe and AOL. Martin: Mercury Center, I believe, was on AOL. Jeff: That's right. That's correct. You saw little snippets of news here and there. Prodigy. But obviously the digital age came in October of 1994, with the web. You think about it now. I always thought that was a decade past. You realize now that it's 18 years ago, almost. Which sobers us up, about how much time we've had to adjust. Martin: You go to the Newhouses in what role? Jeff: I went in, working for Jim Willse, who later took over the Star Ledger, to help just start their digital presence. Martin: In the newspaper division? Jeff: In the newspaper division, at first, and then also working in the magazine division. Briefly, occasionally with the cable division. And even got to visit the book division before they sold it. We were to start our first services. The first thing I did was create, just to learn how this web thing worked, we hired a design firm, Tom Nicholson and Associates. We created Rain or Shine. Because I said that television just gives you these weathermen going on forever and ever. All you want is the five day forecast. It was one day with the five day forecast. That was it. That was the first thing we created, just to get some sense of how this thing worked. Martin: That was rainorshine.com? Jeff: Rainorshine.com. Later sold to AccuWeather. I sold our first ad to MCI. Martin: This is now in the newspaper division. My recollection is that NJ.com was one of the first entrants there. Did you play a role in that? Jeff: Oh, yeah. I was at the heart of starting NJ.com and all the services across the company. Martin: Talk about that. Jeff: I worked for Steve Newhouse. The Newhouses are very private, very quiet. They tend to be unsung. Steve Newhouse is very much unsung as a visionary in news online. The thing that Steve taught me, more than anything else, that perhaps corrupted me as I went on, was the importance of community, the importance of providing the opportunity for the community to speak. We were one of the very first to put up forums on our site. And to revel in the fact that people would get together and talk about their kids' soccer games and wrestling matches and so on. And their towns. We started putting up news from the paper. At Advance, they decided very early on to do a complete separation. The online companies were separate companies. They were incorporated separately. They had utterly separate staff. None of the same labor arrangements. There were very strict rules about connections to the paper so that we could have this completely separate thing. If you think back then, this web thing was still an unknown. The Newhouses, at the time, had a lifetime job guarantee, a no economic layoff clause, for their non guild shops. You weren't sure you wanted those conditions to accrete to this new world, because it could go away. In '94 or '95, the industry still wondered whether this thing was really going to take off. It's hard to imagine that now. But it was an unsure path. Prodigy wasn't going to take over the world anymore. How many people were really going to come on? Were they really going to spend time getting news this way? And so on and so on. I think the earliest newspaper sites were built with that in mind, to be a little unsure. In some cases, they put up the paper. But the Newhouse family's vision, which at the time was right...It changed, but at the time was very right, was that you didn't want to just replicate the newspaper online which, as we certainly saw, was going to be the reflex of newspaper editors. PDF it. Number two, you didn't want to make the paper use online as value added for advertising and thus, take away any value from this venture online. Three, you wanted to start to create a new relationship with the public, which means that you wanted to have things like forums and chats, which is antithetical to a newsroom's attitude to the world. "We will speak to you and please be quiet." It's still true, to an extent, today. Much less so. But then it was fairly revolutionary for us to have so much interactivity on the site. That wouldn't have been possible if it had been another paper. A paper just says, "We're responsible for what we publish and we don't want these people saying stupid things." We allowed them to say whatever they wanted, smart and stupid. Martin: There were two approaches, at that point in time. I guess we're talking about '95, at this point? Jeff: '95, yeah. Martin: One was to create a brand extension of the paper, in the case of The New York Times it was The New York Times on the web. It was a direct brand extension. The other was to create a new brand. In the case of "The Boston Globe," it was Boston.com. You guys decided to create NJ.com, which was very much like Boston.com. Why? Jeff: There was much debate about that and I think there still is today, about the brand question, everywhere. But the belief was, this is something entirely new. It was going to combine multiple newspapers in some of the Newhouse markets. In Michigan, we had eight papers. In Alabama, we had three papers. So you could have a statewide service. In fact, it started as "New Jersey Online" at NJ.com. One lesson we learned, a fair amount of time in, was that your brand and your URL had to be the same. It was re branded again, to NJ.com, simply. They've stuck with that. Where the local online brands...Of course, as you know better than I do in Boston, you had this separation of the two and now, it's becoming separate in different ways. We could debate this for a long time. But a lot of newspaper companies did a lot of research to try to understand what was imbued in the newspaper brand and whether that was a benefit in a new digital world or not. You could see that yes, this was a known and trusted brand. You could also see that this is not digital. This is old fart y. This is once a day. We went with the new brands and the Newhouses. Since I've left, I've stuck with them. Martin: Yeah. At that point, you were also making a decision about how much content goes into this new brand and whether it should be a paid or free site. Talk about that discussion inside. Magazines are paid for on the newsstand and through subscriptions. So are newspapers, traditionally. So the Newhouses must have had some debate about that, in their own mind. Jeff: Again, I have to give a lot of credit to Steve Newhouse and his understanding of this world. It also helped that we had a magazine company next to the newspaper company. As I know, having worked at "Time Inc.," the economics of magazines and subscription involve a high level of marketing, subscriber acquisition cost. This idea of, "Let's just put up a pay wall and people will pay us," as The New York Times knows, as anyone knows, it's not as simple as that. It costs money to get money. The notion of subscriber acquisition costs sobered up a magazine publisher looking at online and newspapers, A. B, we had to go for scale, as The New York Times did, as you did at The New York Times. You had to get to scale before you could do anything. The meter at The New York Times would not be possible today had you not gotten to the scale you've gotten to. So scale mattered, trying to get to as many people as you could, mattered. The only revenue you could get, in those days, after Wired invented the banner was banner advertising. Then we grappled with classified. That was a very difficult decision, obviously, because of the fear of cannibalizing the very high print revenue, which of course then happened anyway. No, I don't think there was much discussion at the time about pay or not. There was discussion about the content. But Steve Newhouse, my boss, saw the opportunity to reuse content online and knew that its value diminished over time. He certainly saw the same with magazines as well. I don't want to speak for him. But he saw that and was very smart about that. That influenced him. I will say that, about the time the crash hit, we were looking at "Epicurious" at Condé Nast. Martin: You're talking about the dot com bust? Jeff: The dot com bust. Advertising had cratered. Here we had this site, Epicurious, which was wonderful. It had all the recipes from "Gourmet" and "Bon Apetit." Joan Finni and Rochelle Udelle were two brilliant editorial people who worked on those sites. We sat around for hours, trying to think of what premium product could we create on top of the site, to try to get another revenue stream? The New York Times went through it. Everyone was going through that discussion. Finally, one day, I just said, "How can you beat all the recipes of Gourmet and Bon Apetit? You can't. That's where the value is. If you're going to charge, that's what you should charge for. We should charge for the crown jewels." We looked into it, but then advertising started coming back. There was a fear that it would diminish the audience for that advertising, so they never charged. Martin: When did you move from the newspaper side over to the magazine side? It was in still the nineties, wasn't it? Jeff: After Jim Willse went to the Star Ledger. I was tied at the hip to Steve Newhouse. I officially worked for, eventually what was called Advance.net. Just two people. Steve Newhouse and me. What he did, I helped with. He worked on Condé Nast. He worked on, for a while, Random House. He worked on what later became Bright House Cable. I would help in some of those things. That was certainly in the '90s, yes. Martin: But then, as I recall, Epicurious gets formed, as the first Condé Nast online magazine. At the time, there were these so called "zines." Steven Johnson had one called "Feed." There was one called "Suck." Do you remember them? Jeff: Absolutely. In fact, I was on the board of what then gobbled those up and became Plastic.com. May it rest in peace. The head was the president of New Century Network. All these memories come flowing back. Yes, I remember the zines very well and some of the first efforts to put magazines online. Here too, the Newhouses went, counter intuitively, to create a new brand. Very controversial at the time. But Epicurious was able to envelop both Gourmet and Bon Apetit. Very difficult, in a company where the magazines competed with each other. But it was able to start a new brand that was digital. It succeeded. Martin: At Epicurious? Jeff: At Epicurious, I think it did. As time went on the magazines demanded and got stronger digital presences, under their own brands. These days, you do see pay walls for The New Yorker and such. We went through the same discussion with Style.com and with "Vogue" and "Glamour" and company. "Concierge" was the travel service, with Condé Nast traveler. Rochelle Udelle started it, by coming up with the brand of Epicurious. Martin: Do you remember, at that time, any debates, discussion, inside the company about separate versus integrated business development? In other words, I believe Condé Nast was one of the first and longest standing separate digital operations. Condé Net, it was called. I believe Sarah Chubb ran it. Jeff: Later on she did, yes. Martin: OK, so later on. But this was a very gut wrenching thing inside a lot of companies. Because the mainstream brands were losing their control. What was that like inside of Condé Nast? Jeff: Gut wrenching indeed. But the belief was the same that, if one handed over digital to print editors and publishers, they would try to replicate... Martin: The innovator's dilemma. Jeff: ...the models. Come back later. The tablet was where editors and publishers said, "Aha! What the link stole away, the tablet has given back. It's given back our control of the experience and the relationship with the brand and the business model." Not really, but that was their hope and belief. Martin: We'll get to that in a moment. Jeff: We have editors who want to create products that the link tears asunder. That alone is difficult. But all the same reasons. Are we going to do what's appropriate for digital? Will we have enough interactivity? Will we enable the people to talk, share and do things? At Epicurious, Joan Finni helped start something called "Gail's Recipe Swap." Forums. Steve Newhouse was very hard that we had to have forums going in Epicurious. At Condé Nast, there was even more resistance than at a newspaper company. But Gail's Recipe Swap was a phenomenon. People came in. They shared recipes galore. They demanded that we give them chat. They demanded that we give them a separate forum, so they could create their own content projects. It was phenomenal to see what happened. People got married. They had meet ups in Chicago. It was one of the earliest goose bump moments, of seeing what can happen if you gave the community a platform to do what it wanted to do. Martin: I get that. I suppose what I'd like to hear from you is your perspective on the kind of development that took place in that early 2000s era, of these brands versus Internet brands. You had Condé Nast Traveler. What was the Internet brand? Jeff: Concierge. Martin: Concierge is built. I'm sure you had a hand in helping to build that. Then "Trip Advisor" comes along and just completely overwhelms it in terms of size, scale, revenue, profit. Trip Advisor is a major public company. Not major public. But it's a public company today, with significant cash flow. In recipes... Jeff: All Recipes. Martin: Exactly. You've got this crown jewel of gourmet, meanwhile All Recipes comes and builds this. What is it about the native digital folks, in this arena, particularly in the magazines/vertical content arena, that just seems to overwhelm traditional brands? No matter how smart people are and the best of their intentions. A separate operation, free content, whatever it is. They just never do it. Jeff: Two answers. Let me first give you an even better example. I got involved in bridal, which was a punch line whenever I said I had to go to a bridal meeting. Condé Nast owns brides. It got "Modern Bride." It bought the last competitor. You would think it had the entire magazine world of bridal and they owned the bridal world. Along came "The Knot." The Knot became the biggest brand in bridal. That was unbelievable. But when you think about it, it's not so unbelievable because the bridal market flushes out every 18 months, completely. You're gone. You may come back later, for another wedding, but you're gone. So it became fairly easy for a brand like The Knot to come along and grab the new brides and that next generation of audience. Online enabled it... Martin: Why would that be easy? They didn't have a brand. They didn't have content. Jeff: Here's why. This paradox exists to this day. All those services you mentioned, Trip Advisor, "All Recipes," The Knot, see themselves not as content factories, but as services. I believe what's trapped us, in media, is we see ourselves as the makers of content. That traps us in a lot of problems. It traps us in the idea that our content has value and you should pay for our content because we worked hard on it. We hear that all the time. I've never seen a business model built on the word "should," but I hear it a lot in media. It goes to our editorial ego. "We made this. This is where the value is, we like this and you should pay respect to it." It's how we set up our entire operation. I don't think that's where the real value is. Content has value. It has considerable value. But it has value more as a tool to other ends. In the consumer's mind, the service has greater value to their utility and what they need. From a business perspective, if you serve someone as an individual, not as a mass, you have a better relationship with them, a more valued relationship with them. That is what Google sees clearly. That is why they are in the phone business because these things generate signals about people. This tells Google where I am, who I am, who I know, where I'm going. I gladly let it do that. So that when I go to Google Now, it tells me how long it's going to take me to get home today. I never told them where I live and where I work. That's a relationship with an individual, based on a service. Content plays a role, because content I look at tells Google yet more. But that's not the way we look at it in media. In magazines, newspaper companies and TV companies, we think we make valued content and that's where all our value is intrinsic. We're stuck there. Martin: It goes back a very long way, actually. I had this same conversation with Gordon Crovitz, about Yahoo Finance. A service around business news, not a business news content factory, to use your phrase. Jeff: Exactly. We can't get out of that. My thinking very lately has been around arguing around this idea of, perhaps we're not in the content business or should not be in the content business at all. We should rethink of ourselves as being in the service and relationship business. But we're not built for that. We are built industrially to make content at scale. It even goes to the business model. The business model of media, and it was a great myth of media, that all readers see all ads, so we charge all advertisers for all readers. That's what the net, of course, gave up. I don't know whether you were on it with me, but the horrible audit bureau of circulations net committee, where we debated for hours and hours, "What's a page view? What's an impression?" The thought was, you had to have circulation audits for online sites, because of that old media assumption. Martin: We were building a company and taking it public during the dot com, to do that. I don't remember whether you recall that. Jeff: I do. But it was a fallacious assumption. The advertiser didn't care about the total audience of the site. All the advertiser cared about was what readers saw their flight of ads. That's what they wanted audited. This notion of the value of the entire circulation was wrong. We're still built around that. Look at Comcast. Look out how advertising's built now. They go to the big sites, because you have a lot of traffic. You're not buying that whole site. You're only buying the pages and the viewers that you can afford. We're still operating on old media models, in another world. Martin: We have these so called magazine websites now. Looking back, what would you have done differently? Very good intentions, smart people, as I say. Jeff: I think Condé Nast is unique, because it had the highest end magazines, competing with few. It had more than one magazine in a category. They could have come along, had Gourmet and Bon Apetit compete with each for preeminence online, with Food Network and these new players that would have come. I don't think that would have been any better. Epicurious was a stronger effort, a stronger brand, a stronger product. It thought differently. The notion of having a complete search engine. Joan Fidi had monks literally retyping recipes out of the old magazines, bringing this value online. That was new thinking. Martin: Could it be, Jeff, that the separate operations weren't separate enough? That they didn't have the fire of entrepreneurialism deeply embedded in them? That they were still, even thought they were "separate," really just flankers of the core businesses? And couldn't get to the services world, didn't have the engineering talent, and didn't have the leadership and DNA to do that? Jeff: That's very true. When I started "Entertainment Weekly Magazine," at Time Inc., back in '90, we were seen as entrepreneurial because they moved us half a block away. That was the sum and total of the entrepreneurial spirit of the place, that we weren't in the building. The definition of entrepreneurship, in big media companies. is skewed. They don't allow for their own cannibalization. If there's one big lesson from this entire 18 year saga, it is, of course, the innovator's dilemma. We didn't allow ourselves to be disrupted sufficiently from within. Yes, I agree that perhaps they should have been more separate. But I also actually think there's a biorhythm to this. There was a point, at the end of my tenure at Advance, when I was going to come here to CUNY to teach, where I didn't quite say this literally, but I as much as said to my boss, Steve Newhouse, who I respect tremendously, "Fire me." You get fired very well at Condé Nast, so it would have been a good thing. "Go ahead and kill the division we built. Hold the print staff's responsible for the digital future. Put some digital people in charge of those things." That was too wrenching itself to do by that point. But it's kind of starting to happen. You're seeing combinations. In New Orleans, for example, it is now one operation. There is a story arc, better put, to this. If it started out as part of the print operation, it never ever could have been digital. It would have been PDF and value added and not interactive. Starting separately was very important. You're right, if they could have really started separate. However, a lot of the value they were getting was the free license or the cheap license to the content, that they were getting from the parent company, from the print publishers. Martin: Maybe that was a crutch. Jeff: In some ways, it certainly was. But the other alternative would be to compete with them, which, perhaps, is exactly what they should have done. But less likely to happen. As you go on in time, you come to a time where the separation did become a bit counter productive. If you look at John Payton at Digital First Media, Rafat Ali, founder of Paid Content, mocked Payton's choice for a company name. "Digital First? What does that mean?" Payton said, "You're right, Rafat. That's a ridiculous name if you're Paid Content or Google. You're not digital first, you just are digital. But in our world, I've got to make a legacy company digital. I've got to get them over that hump." Alan Rusbridger, at the Guardian, drew a chart of print and digital. Print coming down, digital going up. He put a green blob in the middle. He said, "We have to get over their green blob," which they're still trying to get over. We were trying to figure out that switch to become a truly digital company. If you were going to become a truly digital company at some point, you have to say that the fate of the company, as a digital enterprise, has to be on everybody's back. What the separation allowed, and I heard this happen with friends and editors I respected, who would say, "That digital stuff? That's not my job. My job is to get the paper out. My job is to sell the paper. My job is to still make the paper successful, because the paper still brings in the cash in the company." That was true. Innovator's dilemma. Until you get to the point where you push people off and say, "This is the future. This is where it's going. We have to push there faster. We are going to become a truly digital company." Some digital people are going to take over. Some print people are going to learn how to do this in new ways. Everyone is going to see digital as their fate. That's where we are today. I don't think we could have started there. Martin: Now you leave Condé Nast what year? Jeff: I leave Advance and Condé Nast, eight years ago now. Martin: So 2005? Jeff: I think it's about that time. When did you buy About.com? Martin: 2005. Jeff: Right after that. Martin: You started consulting for About. At the same time, you brought up this brand called "Buzz Machine," which was one of the first...Well not. Jeff: It wasn't one of the first blogs. The first blogs started about '99. Martin: Even before. Jeff: Oh yeah. That's right. Buzz Machine was fully a reaction to 9/11. I was in the last path train into the World Trade Center on September 11th. I'd been around blogs. The confession here is that Nick Denton, now head of Gawker, was then heading up a startup called "Moreover." I had seen it and I chased after him, begging him to allow us to invest in the company from Advance. We were also doing investments at the time, which was another way we all thought we would learn the new ways and get closer to them. I remember Denton sitting at the law firm, and said, "I have to show you something." He pulled out a laptop, hooked it all up, which of course took a long time. He showed me Blogger. "Look!" He types in something. He hits a button and there it is. I said, "BFD." I didn't get it. I didn't understand the importance of blogs. I will fully confess. He showed this to me and I said, "So you published a page." Clearly, I learned the importance of it. I hung around it. Nick got me to get the Newhouse's to invest in blogger and save it, one of the many times it needing saving. I was around blogs, but I didn't do it myself. After September 11th, I had more to say about the experience. I thought I would do it for a few weeks. I started blogging on Blogger. It took over all available life. It changed my notion of media and thus of my career. It was a critical moment, in my view, of where things go. Martin: Why? Jeff: The ding moment for me... Maybe I put too much importance on it. But Nick knew some guys in LA named Ken Lane and Matt Welch, who were earlier bloggers. He said, "Hey, my friend was at the World Trade Center, look what he wrote." They wrote something about it and linked to it, to me. I linked back to them. I remember Nick lecturing me about the permalink, that I had just linked to the top of their site. No, you link right to their post. The ding moment there was that I saw a conversation had occurred, in different places at different times. But it was a conversation. That was a lightning bolt of what the link enabled, and how the link changed the very structure of media from a product, a lecture, into a conversation. It really was a changing moment for me. I kept blogging, was allowed to keep blogging, while I was still employed. Didn't get into much trouble, and used that to teach me how media was changing. Here I was, a digital guy, I thought I was on the digital path. I wasn't nearly enough on the digital path. Blogging taught me a lot. To this day, of course, I keep on learning new ways to look at media. The biggest challenge between the students and myself, is to get them to question all the assumptions that they assume about media, because of the structure that it has held in the past. Martin: What's interesting about this, in some ways, is that you now start blogging, as an employee of Condé Nast, but, you're not evangelizing that inside? It's, certainly, not lighting up. It's not like Condé Nast had legions of bloggers, back then. Jeff: Don't forget, I was involved in two different companies. Martin: It's almost like, you went native. Jeff: A little bit. My home was in Jersey City, at Journal Square, at, "The Jersey Journal." I was on the newspaper side. That's where my office was. I was also at Condé Nast. They were very different companies, extremely different cultures. On the newspaper side, we did start blogs. It would be almost 10 years ago, now, I remember, holding a meetup in one of the Oranges of New Jersey, and Debbie Galant came. I said, "Why don't you all start blogs on NJ.com about your towns?" Debbie said, "That's a good idea, Jarvis. But, why the hell would I do it for you?" She started, "Baristanet," one of the first hyperlocal blogs. Martin: Still, in a sense, the most successful one. Jeff: I think so, in a lot of ways. Debbie, meanwhile, has gone to Montclair State, where she's running a Commons of media in New Jersey. Really, a model, for other hyperlocal bloggers. Martin: Let's just pause there, because, I'd like to talk. Why don't you think her model has really taken off across the country? Is it the peculiarities of Montclair? Jeff: I think it's the effort that goes into it. I wrote about this, recently, when another company, Carll Tucker's company, in Connecticut, ran into financial problems. It was yet another case where hyperlocal gets cooties. "Backfence," his company, others that have gone by the wayside. I think the mistake in hyperlocal is that big companies come in, and think they can scale this overnight. Patch comes along, "We can parachute 1,000 recent journalism graduates into 1,000 towns, and put a platform across that, and it will just succeed." No. The real lesson from Debbie's effort, with her partner Liz, at Baristanet, was how local they really were. They were very much part of the town. Also, how much work it took. It's no way to get rich. When we did research here, almost three years ago, at CUNY, on new business models for news, we found bloggers scattered across the country, that were bringing in, for towns, similarly sized, $200,000 to $250,000 in revenue. That's sustainable. It's sustainable for one person, for two people. But, it doesn't immediately scale to 1,000 sites. That's the problem with hyperlocal. All the efforts to scale it have been to try to have a corporation start many, many sites, all at once. I think, the truth of hyperlocal is that it's going to be dedicated, local people. They can use support. In NJ, we're working out of the NJ News Commons, trying to give them support in areas like training, technology, collaboration, distribution. Services, like, insurance. Trying to get them so that they can get more support, so that we can encourage more journalists to come in, and cover the towns that they don't cover anymore. I think, it's possible to grow hyperlocal, but it's a really hard slog. Back to the blogs. We did have blogs at Advance, at the newspaper side. Steve Newhouse was very enthusiastic about the blogs. The papers, of course, were resistant. The New York Times was very resistant. I had an amazing exchange, at the time, with Bill Keller, when New York Times versus blogs was part of the meme. I urged him to invite bloggers in for bagels. He mocked me, because I had the hubris to speak for all bloggers. It turned into a fascinating email exchange, which I can send you. There was hostility to blogs, in the early days, among newspapers. But, our separate sites were able to start them, and we did. Eventually, the newspapers came along and started on them. On the magazine side, yeah, there was some difficulty getting blogs going. I remember an editor, I don't think I'm telling a tale out of school now, it's been so many years, but, David Friend, an editor at, "Vanity Fair," said, "We're trying to get blogs going. We're hitting some walls with technology, and, this and that." I said, "Well, who do you think should blog, right off the bat?" He said, "James Wolcott." I said, "Perfect." There wasn't a more perfect blogger you could imagine than Wolcott, who would say outrageous things, and have fun doing it, and be smart about it. I said, "He has a book coming out. Why don't we just tell everybody that he's got a book blog, anyway? That fact will help him." I remember, sitting there with Wolcott, and training him how to blog. This had to be arranged, quietly, so that I could train him. He would sit there, and I'd open up the blogging platform at the time, I think it was called Movable Type. I said, "Jim, type in a headline." He'd type in a headline. "Type in your post." He'd type in a post. "Hit that button." He hit that button. I said, "Now, go look at it." The look on his face, the realization that he had just published to the world, and that entire building underneath him, disappeared. It was phenomenal to watch. I think, we saw that starting to take off. I think, there was a moment where writers with brands, Tom Friedman at, "The Times," Jim Wolcott at, Vanity Fair, and so on, and so on, and so on, saw this opportunity to have their direct connection to a public, and they enjoyed it. It wasn't just these pajamaed bloggers saying ridiculous things. It was their chance to, also, have a direct relationship with the public, and get in on the fun. I think, that started taking blogs off across the path, including, the magazines. It took awhile. But, I think newspapers were ahead. Twitter changed it even more. Where Twitter was a way to interact with an audience in a lot more ways, and more productive ways, also, to promote yourself, and do other things. I think we've gotten past this prejudice we had for this kind of interaction with the public that really was there in the early days. Martin: You just mentioned Twitter. Talk about Twitter, and what impact you think it's having on journalism. Is it a new kind of aggregation? Some people have suggested that it's a kind of post fragmentation system. Jeff: I think Twitter, as a platform, provides a great deal of things. One of the complaints we hear about is the echo chamber argument, "We don't get serendipity. The editors gave us serendipity. Editors would show us what we wouldn't otherwise see." I think Twitter provides that function greatly. Twitter, clearly, provides the function of giving us tips to, not only good stuff, but, also the latest news, and is a way to keep up. Twitter provides promotion for journalists. Twitter provides a way for journalists to do better reporting, and ask people questions, which I see smart journalists doing. The ideal journalistic view of Twitter is embodied in Andy Carvin, Strategist at National Public Radio, who, of course, tweeted the Arab Spring. He knew people in Indonesia, and Egypt, and he wrote a book, out of CUNY, full disclosure, called, "Distant Witness," that we just published. Martin: What was it called? I'm sorry. Jeff: Distant Witness. Martin: Distant Witness. Jeff: That was the first time his work ever turned into a narrative. What Andy did that I think was really important, and the way to look at Twitter is, make it very clear, these were not Twitter revolutions. These were revolutions by brave individuals. But Twitter and Facebook enabled these individuals to find each other, to know that they existed, to then, organize themselves, to inform themselves. They were very useful tools. In Tahrir Square, Twitter was, obviously, being used a great deal, but, not to publish to the world. It was being used for communication. But, in that communication, there were incredible amounts of information of value. There were also incredible amounts of disinformation. Andy came along, as a journalist, and added journalistic value to that flow. That flow that now occurred without the mediator, without media. He, first and foremost, discerned nodes and networks. He knew this person was really in Egypt, and if that person said that this person was really in Egypt, then we're going to trust that person more. A journalistic skill. He debunked rumors. He confirmed facts. He got people to help him to translate videos, or, to confirm locations in videos. He added perspective. He added cautions. If someone said, "This just happened." He said, "How do you know that? Where did you find that out?" Incredible journalistic value. The role of Twitter is that it enables a flow of information within the community. We, as journalists, should encourage it to go on. It's cheap for us. It costs us nothing for that flow to go on. But, the community then needs us to add value to that. We no longer become the creator of all content. We no longer become the gateway to all information. We instead, stand above, apart from, these flows, and these pools of data, and we add value to them. Martin: I want to touch on that now, because, I think it brings up something that you've often talked about, which is this notion of the link economy. We'll talk about that, as well as, your book, on Google, in a minute. But, I think, all of us, including, those of us at The Times felt, at a certain point in time, and, I certainly still feel this way, that having an open view of the Web was absolutely beneficial journalistically. It magnifies your voice tremendously. The business side benefit to that, obviously, is also, to use your initial word, scalability, as well as, now that there are these pay models out there as a base, as you suggested, to convert from. Because, otherwise you have to do what "The Wall Street Journal" did and build it up one person at a time, which is very expensive. The question I have, though, is that, speaking for myself, I thought that there would be a much more robust advertising ecosystem, in digital media than there is today. That may be temporary. It may just be a function of right now, as many things are in digital. But, actually, Jeff, this notion that links have value, it seems to me, has really been, from a business perspective, greatly diminished over the last two years, as, literally, Facebook is selling, I heard this a couple of weeks ago, inventory at nine cents a thousand. The link to a New York Times page, aside from its potential value as a trigger to subscribe, has gone significantly down as a result of all of this oversupply, and the science of ad tech. That's where Google comes in. Can you provide a perspective on that both from a historical perspective, as well as, a current one, in terms of your thinking? Jeff: My most retweeted bumper sticker line that I've ever said was, "Do what you do best, and link it to the rest." That was a revelation. I think it was about "The New York Times" that I wrote it, actually. The New York Times does some things magnificently well, and doesn't need to do other things right now. It's a national, and becoming an international news brand. Tragically, for New York, it's less and less a local brand. The opportunity we have across media is to specialize, which is less expensive, and, one hopes higher value. You get a better relationship. A local paper, elsewhere in this country, can link to The New York Times, and doesn't need to cover Washington, and should do a good job of covering Cincinnati. I think that's really where we need to go, and that's OK. It provides efficiency, lower cost, greater value to the reader, because The New York Times is going to do a better job than the Cincinnati paper would covering Washington, and so on. Where's the economic basis of this? This is where I started exploring the notion of the link economy. Part of the problem with going back to this idea of content is that we think the entire value of the marketplace is intrinsic in content itself. There's another creation of value which is the creation of an audience for that content, the links. You touched on another problem. We're going to come back to this notion of these two values, in one second. But, let's go off to the real problem, the word we haven't used yet, is, abundance. All of media was about controlling the scarcity. All of the media was, thus, about the ability to have pricing power. We lost that when the Internet came along. There's no shortage of inventory, as we think of advertising. Martin: Nick Denton, by the way, completely disagrees with that. I can talk to you about why, later. But, we've interviewed him, and he has a very, very different perspective on that. Jeff: Nick Denton said, back in the day, that he was trying to be Steve Newhouse, and he wanted to create as many blogs as Si had magazines. He's trying to create a scarcity again, which, I think, is possible. I think The New York Times certainly has created a scarcity. The problem is if you don't sell out, it's not really a scarcity. But, by holding the price up, you've maintained pricing power, still. But, it's a tenuous, edge of the cliff kind of effort. You know better than anyone. You can tell me. But, let me go to Google, now, for a minute. Then, we'll come back to this notion of the two values. Google didn't steal business from us in media. Google simply offered advertisers a better deal. Google came along, and if Google had acted like a scarcity controlling media company, it would have said, "Only so many people in a day search on the word, Paris. We will charge what the market will bear for the opportunity to see those people." They didn't do that. What they said instead was, "We're going to charge on the basis of performance, on clicks." Thus, Google aligned its interests with the advertisers. Google didn't manage the scarcity. Google said, "In fact, what we need is more places where people are talking about Paris, and looking for Paris, so that we can put more ads that are more relevant to people for Paris, so that the ad will perform better, because we don't get paid if it doesn't click and it doesn't perform." This is when, and I didn't get it at first, either, as with many things that you've done, Martin. I remember, at a hotel, uptown, an announcement that you, at The New York Times, would be running Google ads. Here I, a Google fan, thought you were nuts. Like I did when you bought About. I was wrong about both. Because, I thought, "Why are you bringing Google in?" I quickly saw the value of it. You got revenue you wouldn't otherwise get, from them. You got a piece of their action. Google, I understood, was creating an abundance. If it could be on The New York Times, travel pages, where the word Paris was enough, that was good for its advertisers. You protected The New York Times, such that an advertiser couldn't buy through Google instead of through you. You came up with business terms that made it work for both. What Google did, was align its interests with the advertisers, reduce the risk, or even, take on the risk for the advertisers, in this case, in the case of the early advertising, and rather than control the scarcity, it created an abundance. It offered, thus, the advertisers a better deal. Rishad Tobaccowala, our mutual friend from Publicis, says that what also happened at that time, was that because, this was an entirely new model, and, because, the big advertisers couldn't fit into it, Google got an entirely new population of advertisers, smaller advertisers, who otherwise never could afford to advertise in our big, scalable media. That allowed Google to change the rules, so that by the time the big advertisers came along, the rules had been set in an entirely different way. You now had an advertising marketplace based on abundance. Google set itself up to benefit from that. We, in media, are still pretty much built on a scarcity based model. We're also built on a model saying, "You want to be near our content, for our branding, to get to our audience, with these demographics that we have gathered," and that's where the value is for the advertiser. Still true, but becoming more tenuous as we go along, and becoming challenged now, of course, by retargeting, which says, "If I know that you've been looking for a hotel in Paris, then that's more valuable to me than knowing what climate you're looking at. I can track you around the Web with that." Martin: In a direct response context, absolutely. I think that the symmetry has gone wacky on the branding side. But, that's just putting on my old, OPA hat. I just think that the world has gone nuts. Jeff: I think, it has, too. I think that becomes the new setting. Now, we go back to the link economy for a moment. We think in the media that the entire value is in the content. I've been arguing that there's also value in the creation of the audience for that content. You've just said to me, "It has limited value, because just more audience, to an unsold out, better brand advertising mechanism, doesn't necessarily work very well." That's true. But, it's not, necessarily, because there's no values in the links, it's because, we don't, necessarily, know how to get the value out of the links. When News Corp and Axel Springer go after Google saying, "You stole my story, you stole my soul. You've taken all these people from me." Google says, "No. We sent you a billion people. A billion clicks a month. It's up to you, publishers, to find the value in that, to create the relationship, and create the value in that." That's where the disconnect is. Martin: Just for a moment, you brought up something that is quite interesting, actually, that Rupert has gone quite hard at Google, over the years, for having stolen his links, and in his mind, his content. But, it's very easy to simply remove yourself. Jeff: He did remove, "The Times of London," for awhile, and then brought it back. He did. I saw a study, two weeks ago, that looked at the market share in circulation, versus market share in Twitter links, of top media brands across half a dozen countries. The New York Times, and "The Guardian," have very high Twitter shares. The Times of London, zero, none. It's out of the conversation. Nobody links to it. Martin: Does it matter? Jeff: I think it does, because, he needs to find new customers. I think, for his writers, why do they exist? What's their reason for being there? To get ahead of the competition, to get people to answer their calls. A reporter called me, once, from, "The Daily," and I said, "I'm really busy. Frankly, you're not big enough to bother with." Martin: I'm trying to interview Rupert. I hope to get him by the end of April, to ask him these questions. But, speaking of, The Daily, let's move over to the tabloids, for just a moment. Jeff: Let me go over one more thing about the link economy, if I may. The extension of the link economy, I think, is not just that we have a marketplace for the value of links. I think the real extension of it, and I wrote a white paper about this, is that if the content can have attached to it its business model, it can now travel freely. We're still stuck in the model of making all the readers come to us. What if we go to the readers? I was about to build a demonstration project about this out of the Tow Knight Center here at CUNY, when, along out of nowhere, Debbie Galant found what I've been looking for, the embeddable article. It's a service called, Repost.Us. There are four critical things. If an article can be embeddable, like a YouTube video, four things are required. It has to travel with a brand, with the revenue, the advertising, with the analytics, so that you know what's going on, and with the links back. They built this. They built it brilliantly. Debbie and others, have used this as a basis to build a network in New Jersey. AFP and, "The Christian Science Monitor," are using them. Other big media companies are looking at them. Full disclosure is that they've asked me to advise them, because, I'm such a fan of what they're doing. It's the extension of the link economy. What it says is that if your content can travel with these things, then, fine, let it fly. In the early analysis they've had with the current clients, they found a couple of important things. One, the overlap in the audience from the creator's site to the embedder's site generally is about two percent. When someone embeds your full article, you may get 98 percent incremental audience. Second important fact. The click through rate from a complete article a complete article with headline, photos, ads, everything, just embedded on my blog, let's say is five to seven percent. Very high. What it says is, perhaps, Mr. Murdoch, is that no! Google is not stealing your soul, Google isn't putting up enough content. Your full article is your best ad. It sends a highly qualified reader who says, "I really like this article. Give me more. I know exactly what I'm going to get." When I go there, if you're smart enough to say, "Aha, this person came from someone who really read that thing in depth and wanted more. Now, I know more about them, now I can serve them better, as an individual." Very early days, but to me, that's the ultimate extension of a link economy. It's not to say that one should charge for links either way, but that, in the long run, if the New York Times, which now says to the "Huffington Post," "You're stealing our soul. You're summarizing our articles." But it's also true the Huffington Post readers want to read New York Times stuff. It's a small matter of business negotiation to actually put articles on the Huffington Post with these business conditions attached. That starts to break down the idea of the site. That causes us problems in a world of com score and measurement and brand and all kinds of other complications, but I think we have to think this way. That, if we can interact with and get to know someone and serve them with relevance, wherever they are, that's the ultimate extension of the link economy, but we're barely seeing the beginnings of it to truly understand that. We're about to embark on some research at CUNY here about that. Martin: Thank you. I want to end on this more emerging world of mobile, smartphone, tablet environment. You brought up the daily and you kind of anticipated where I was going to go. The Daily to me was a major media company's effort to create an entrepreneurial team to actually go out, and really, for the first time, not have access. They could have given them the access to the "New York Post" or maybe they did at a certain point. But in any event, the core mission was to go out and invent content for this new form factor. Basically go build it. It seems to me they did that. What was your reaction to that effort as an old magazine guy? Also, now looking at it from a very different kind of new media perspective? Jeff: It wasn't disruptive at all. The Daily was trying to recreate the world that they knew in a new world. I think it made a bunch of fundamental errors. Martin: They hired the wrong people? Jeff: No, it was the wrong assignment going in. I think the idea of let's create a content property goes back to this idea of content versus service. Let's create something that has a brand and experience that's in a closed world very difficult to link to or link from. It goes back to the idea of a packaged product. An error when the link disaggregates packaged products. Let's put a wall around it and a pay wall around it before any value is established, and before you really know what it is. No one can find it and link to it. Let me go back to this content argument because this goes to this. A paradox of content value that I've been thinking about lately, I haven't written about this yet, is that I could argue that the highest value content is information rich content. What matters to your life. If you find out that there's a storm coming, that there's a sale on... [crosstalk] Martin: You have a health problem. Jeff: Health problem, all that. That's information rich. The problem, however, is that information of course is easily commodifiable. You can't and shouldn't be able to copyright information per say, or own knowledge. The hot news doctrine be damned. If it's information, if it's knowledge, it's going to be passed around. That's how society advances is we pass around information and knowledge. It's extremely difficult to monetize what I would argue is the most valuable content. Information rich. If you go over to the other side of narrative content. Now I call this without any intent to be pejorative. It's entertainment. The New York Times avalanche piece was information poor to me. I'm scared of heights, I don't ski, I don't get near avalanches. I have absolutely no utility out of this whatsoever. The only reason for me to spend time with it is because it was entertaining. In that sense, entertainment can inform and elucidate. I'm not disparaging it in the least. What I'm saying is there are these two different camps of what we think of as content. We're stuck between the two. I haven't figured out how to right this yet. I think that we egotistically think that what we do is create wonderful narratives. Rich, wonderful narratives. Sometimes we do, but that's a lot harder. There's a lot of competition. Competition for people's time, and it has less intrinsic value. But like a movie, if it's great, if it's unique, you may well be able to charge for it. You're in the blockbuster economy now. Not everybody's ego, thinking they can write wonderful narratives, is going to get money. All these students who go out and say, "I'm going to save long form journalism"...which I think is a ridiculous way to say it. Just because it's long doesn't make it good. You have that notion of entertainment. Meanwhile, over here you have what I would call service, which is information rich. We have to look at that as a different business model. News, in theory, should be oriented toward the information side. It's giving you information you need in your life, a community needs, an individual needs. That's, don't we know now, hard to monetize. Don't we know that there are new service oriented competitors that come along. Entertainment narrative, whether that is in text or in video or in whatever form it takes, can be valuable, absolutely. But it's really hard, too, because it's highly competitive. That's where we are. We tend to think that we have both worlds. We did in the past because we controlled the press. Once you take away our power of distribution, then you're stuck with this idea of saying, "Which way do we go?" I don't think we've decided yet. The Daily comes along. It says we're going to be on a tablet. We're going to be beautiful. We're going to be like a daily magazine. We're going to be wonderful. What I've heard a lot of people say about it was, "Yeah, it actually is pretty good looking, but the content itself? Just articles." I think that it was actually stuck badly at that crux of information and entertainment. Martin: Flipboard would be a much more viable model because it's more of a service. Jeff: Kind of, but the problem is, it's still based on just content. "Let's put up a lot of content." Flipboard is the next generation of shovelware. The original generation of shovelware was we, the editors, put up our articles. We're still doing that. We didn't re think what the article is. Circa, David Cohen and Ben Huh's company, is trying to re think the article I think that's important into assets and paths, as I call it. Generally, we're in shovelware mode as individual brands. What Flipboard does is it aggregates the shovelware. You can take content from others. They just came out with a new product. You can aggregate your own, but you're still taking content and making it look pretty. You're not changing to the notion of a service. We'll see what Marissa Mayer does. Can she go to the idea of a service? I think that's where she thinks. When we presented our new business models for news at Aspen almost three years ago, Marissa was there for the Knight Commission on information for communities. She said, "You're talking, Jarvis, all this stuff about hyperlocal news. I get that. But," she said, "where I think the world really goes is to a hyperpersonal news stream." She would include in that, eMail. Not long after that, out came Priority Inbox. She would include in that every stream that comes to you in a day. Google or now Yahoo, in her view, should help you prioritize that and bring order to that. Martin: Maybe that's why Zuckerberg referred to the newsfeed as a newspaper in the latest version. Jeff: Yeah. He originally named it News Feed. I'll confess the many times that I've looked at somebody who had vision at first and pooh poohed it and was wrong. He called news stream. That's ridiculous. That's not news. Of course, it's a news man who would say that. Then I thought back to one of our earliest experiments to go back to the beginning here at NJ.com where we created a platform for community pages. Community groups to come in and start pages. There are reasons it didn't work, but at first it was enjoyable to watch. We had a template. One of the tabs in the template was news. I remember that Ms. Jones ballet school had a page. We looked at it. What was under the news? "The leotards are in." Well, to those little ballerinas, that was news. To think that we had the monopoly on defining what news is to people, what matters in their lives, is part of the hubris that we're still living with at our business. If you instead create a platform for people to share what they know, that's what the Internet's really about. ...
VIDEO: YES

Art Kern
BIO: YES: Arthur Kern is chairman of American Media, a compa...
TRANSCRIPT: Paul: It is April 8, 2013. We're in San Francisco with Art Kern. It's Paul Sagan and Martin Nisenholtz. Good to see you again. Art Kern: Good to see you guys. Paul: Maybe you could back up and just do five minutes of resume first that sets the scene, before what we came to call new media happened. You had a legitimate media background before the illegitimate new media came along. Art: As I was telling Martin, I started out as a media buyer at Grey Advertising, not knowing anything about anything in media. From there, moved into the selling side of television, first starting in Pittsburgh, Pennsylvania with Westinghouse, KDKA TV. KDKA, as you may know, as the radio station that claimed the first commercial broadcast in the U.S in broadcasting. It was the Cox Harding election returns, 1920. It had a rich heritage. That company had a very rich heritage, as you know. I moved up in sales and management positions to, ultimately manage TV stations for them, first in Baltimore and then out here in San Francisco. Now, we're in 1980. At that time, in 1980, I also started my own radio company with a friend of mine. We bought a radio station on Long Island called WALK 97.5, from the estate of Chet Huntley and three other people. One person was alive at the time. Then we built that into a commercial FM radio group, which we sold in the mid nineties. We had a couple of stations in Ann Arbor, Michigan and subsequently sold those. At about the time we sold the company was the time that I started at Yahoo. Paul: What was your first experience when you say this online thing happening? And said, "This either changes everything or at least it's really different, so I'm going to go there." Art: First, I would say that if I hadn't have been lucky enough to sell my company at that moment in time, I was paying attention to it, but I wouldn't have devoted the next chapter of my life to it. So having the time to dig into it and invest a little of what I'd earned in radio, into the Internet, gave me the chance to look into it. The very first investment I made was in a game platform company. It was called Total Entertainment Network. It's now called Pogo and is a little, tiny part of EA. But at that time, what occurred to me was, "Oh God. This is going to change everything." Of course, games looked like the perfect thing to do. Because you could connect up thousand of people in real time. Paul: That would have been '95? Art: Yes. It was actually through that, indirectly, that I came to Yahoo. Because Mike Mortiz, who was the venture capitalist who'd backed Yahoo, was looking for someone who'd had media experience. Because he saw Yahoo as much as a media company as it was a technology company. Paul: What was your first interaction with Yahoo? Art: Mike called me up and said, "I'd like you to meet these guys." I said, "What's the business?" He said, "I can't really tell you that much, other than it's a directory for this new thing, the web. You'll just have to come down and see these guys." So I drove to the Valley and met Tim Koogle, Jerry Yang and David Filo. And Jeff Mallett, actually. I came away from that meeting feeling like, "This is very different, in every respect." Something I might be able to add a little value, coming from the media side. Paul: Mostly at that point it was a human guide? Art: That's actually the thing of it. People forget that Yahoo's roots were both, but it was a human company and had human beings sorting websites. Martin: Do you remember the technology intersection? These are two Stanford students who created it, so what was the technology doing? Was it managing the humans? Art: What I remember... Paul: You said both, so one was the humans. The both, the other was... Art: Technology. Paul: ...technology. Art: Because you needed both. Yahoo started out as a list, literally, a list of Jerry and David's favorite websites. [laughs] They quickly asked their friends and it multiplied obviously geometrically. In fact, actually, by the time I got there, which was early '96, I joined the four, January of '96. They had already aggregated something on the order of 200,000 websites across 20,000 categories. The human side of it was how to categorize what was found and discovered. The discovery side of it came through spider, what you might call bot work. They had algorithms. They had to have algorithms to accomplish even that and they were well aware that this thing was going to explode astronomically. Paul: So you had this first meeting and you realized something was very different. Art: Yes. That something was first, they were extremely smart. You and I came from the broadcasting business. We thought we were smart. Had we met some of these Valley types earlier in our career, we might have had a lower opinion of ourselves and the work we were doing. Literally, as a matter of fact, Jerry and David were rocket scientists. They did some work with NASA Ames and they were PhD candidates. That's the first thing that struck me, was how smart and nimble they were. They were scientists in the sense that media people rely on emotions, judgment, and intuition, all these good human qualities. Scientists have a very objective way of sorting out problems and that was very appealing to me. Paul: Let's come back to that engineering piece a little later, because I do think that's very important in the collision of journalism and news. Art: And a collision it was. Paul: Yeah, exactly. But in that moment, so this barely a media site, it wasn't all technical and it certainly wasn't a news business at that point. Art: It didn't intend to be. There were a group. I think when I got there, there might have been 30 of these. They really weren't editors. I forget the name we used, but they were in the business of categorizing the Web. Martin: Which is an editorial function. Art: It is. Martin: A curation function. Art: A curation, exactly. If you think of it today though, you could accuse them of hubris because how could you possibly scale that up? Everybody was aware that that was going to be a central question. How do you scale that up? It had to automate fairly quickly. Nonetheless, for many, many, years, that was the question you asked, for many years that was the DNA of the company, were hundreds of these human beings. Several hundred... Paul: ...who weren't, or at least there primary job wasn't being computer scientists or engineers. Art: Not at all. Paul: They were curators or... Art: Curators. Paul: ...or a form of editors. Something happened along the way. Either the scale just got too big or the engineering side took over. It became more a tech company, but it also became a news and information business. Talk about how that happened. Art: Yeah. By the way, I should footnote this part of the discussion as saying, this question of is Yahoo a media company or is it a technology company, was both the great opportunity for Yahoo and also it's greatest milstone. By having to be both for so long, it slowed the company down in many, many, ways and we can come back to that. That was a central problem for the company. So, in any event, on the human being side no one intended for Yahoo to originate content. We were an aggregator. We saw ourselves as the place to kind of get this chaotic Wild West web thing organized for you. And, of course, over time quickly that drew in mail, which, because so much of information is contained or relayed within mail, you know, today's form are tweeting and texting and all the rest. But mail was central. I think we were the first that did this. We were copied by Google and others, which was very flattering. We created this product called, "My Yahoo," which was, again, consistent with this idea that we were trying to organize the flow of information to you, personally. So the My Yahoo service, which still exists today, I still use it. Lucky for Yahoo that the New York Times, the Wall Street Journal, and several thousand other great publications modularized their information so that you didn't even have to read a complete Wall Street Journal or New York Times. You could pick technology and op ed, and national and international, put these modules on My Yahoo, have them fed through RSS, and all of a sudden you've got the best of everything coming to you through that product. Paul: So talk about how that product came together in the first deals, because there has been in some of the current debate or thrash almost this concept that those media companies committed original sin when they gave away content for free. That's the pay wall versus no pay wall. You could almost argue that fundamental sort of unleashing of news on the Web was providing these feeds to Yahoo. Art: OK, so I can't tell you exactly how each deal unfolded. What I can say is that back then all of us, everybody, Martin, I'm sure you would agree with this, we were in a foot race, and you know journalism is always a race to get the story, get it right, hopefully, but get the story. And this race involved aggregating eyeballs which was almost like mortgage backed securities in a way. The whole idea was to get as many eyeballs as you could and worry about the implications later. So I don't think through the lens of looking back from today, that it's fair to say something bad was unleashed. I think it just was. It's what had to happen, and everybody was in the race. Everyone. Yahoo had multiple competitors in this foot race. And then, of course, the idea was to aggregate the user ship and then sell it in the form of advertising and various ways. And, of course, underneath this foot race Google came along. Yahoo had always used the best search technology under our label, because we didn't think that this was something we either needed to do, or, I should add, we were necessarily good at. Martin: Was that initially AltaVista? Art: Yes, we had whole series of them. OpenText was one. Some of the names I forget. As we took shape as portals, Excite was a big one, search became an incredible component, and you can't ignore it in this discussion, because search helped drive the outcome here. So, in looking back Google was a game changer. We knew they were the best, and we knew just as newspapers lament opening up content to us, we lament opening up that search position to them, but we had to. Martin: Actually, just to clarify, there were two phases. There was the pre RSS phase when we at, the Times, did a person to person business development deal with Yahoo... Art: Right. Martin: ...and we would give you one or two full text articles that you could run in return for the links. And we were very happy with that agreement. The other was the post [RSS], where you would just take the feed. But, I wanted to ask you a question about Yahoo Finance, because, to me, Yahoo Finance was the first really interesting software based web news product. I mean it wasn't just... Art: Right. It wasn't just aggregation, pure aggregation. Martin: Right. It was you guys had all these tools and interesting ways. And I think that set the tone for Yahoo's early development of content, and for whatever reason, and this goes back to Paul's point, the engineering piece was just lost on the traditional media companies. They could not add value to their content in the way that Yahoo was doing it, not during that era. So could you talk about Yahoo Finance? Do you remember it? Art: Yes, I remember it well. My Yahoo is one of our signature products. Yahoo Finance was as well. And we came to find out later, very interestingly through market research, that most, and I think this still exists today, though it'd very interesting to test, of the really, really, accomplished in investment banking, banking, financial services, etc. had two screens on their desks, the Bloomberg screen, which never did, by the way, get disrupted by the Web. Everybody thought it would once the floodgates opened, because free would take it over, and Bloomberg charges quite a bit for those screens, for those [indecipherable 15:49] . The two screens were the Bloomberg screen and Yahoo Finance, and why Yahoo Finance? Because it started, it was the earliest, it was the pioneer product. And it gave you a little of everything, and, again, aggregated, because that is Yahoo's DNA, but, nonetheless, simple. Some would argue that it should have progressed into being a lot deeper and lot more of proprietary product, journalist product, but that, again, we weren't good at it, and we wanted to leave that to others. But it's great that you bring it up, because it was important for us, and, amazingly, it's still doing well, but, of course, now you've got 100 other competitors. Paul: Do you remember the Reuter's deal? That in our research has come up, and David Graves, we've interviewed sat on both sides. Art: I hope he can fill in the specifics. Paul: He filled in a lot, but he talked about it first having done the deal at Reuters and then went to work at Yahoo. Art: Yes. Paul: I was wondering if you remembered that deal, not necessarily the details, but just when that happened, because it also set all the general news kind of free on the Web and in real time. Art: I do think that was a landmark deal for Yahoo. On the one hand it brought all that content, access to that content, worldwide, and by this time we were already worldwide, but we needed to be completely global, and Reuters, if nothing else, is a global news organization. And so, yeah, I think it was crucial for us. I don't know the details of it. We were happy to have it. Along the way, there were some issues about whether Reuters was happy with Yahoo, but there's a... Paul: Sounds like from his version, just to fill you in, there was a little Innovative Dilemma on their side, but his group won. There were some people there a little unhappy. Art: Internally. Paul: Internally, but they were basically, a wholesaler, unlike AP, which was prohibited for a while from cutting those kinds of deals, and so even though there was some unhappiness at Reuters they were able to cut the deal with Yahoo. Art: Well, the flip side of all this is the newspaper consortium that Yahoo ultimately ended up in a deal with, and as a director I remember saying this to many different people over different years, that Yahoo was the one web company that preserved, not just the appearance of wanting to support journalism in newspapers in particular, but the actuality of it. We wound up that deal, I don't know how much this has come up in your prior discussions. Paul: No, so you should go into a little detail. Art: Well, the person you might want to talk to who has the clearest memory of this is Hilary Schneider, who ran digital for Knight Ridder, and ultimately came to Yahoo. The unwritten story about that is that Yahoo, because of it's roots, I was thinking about this this morning on the way over, because of its roots, editorial roots in the sense that we had all those curators, it was a human, always has been, a human company. And so the human element in journalism still appealed to the company culturally. So this deal that Hilary really helped engineer was to form a real partnership with newspaper groups such that we could help them with their economics in two different ways. I think Hilary called it, "we sell, you sell." But the gist of it was that each individual newspaper and each individual community didn't have enough digital inventory to really have critical mass to go to the agencies and sell something that would make it worth their time to buy. So Yahoo had all this inventory spread, and obviously targetable, geo targetable, anywhere. So the idea was that our algorithms would allow us to add inventory to them so that they could package it, and their salespeople could sell it. And we made a commitment through Hilary, Hilary's efforts, to train the local sales staffs at these local newspapers so that they could sell Yahoo inventory with theirs, and it would all kind of work. It was a very human labor intensive, inefficient, low margin, business. It's not what Wall Street wanted. It's not what anybody wanted. Patch, I think, may be even harder for AOL. I'm not sure, as we sit here today, where that alliance stands, but there was some feedback from some of the groups, Meredith and Gannet, I think, and others, who said, "You know what? This isn't bad. It's a net positive for us." So it was Yahoo's efforts on behalf of that human culture to try its best to keep newspaper journalism alive because it already had been horribly hollowed out. Paul: Do you recall if Yahoo ever thought it had to do more as a news organization meaning, did you need to build a newsroom? Did you have to have reporters? Did you need to have a brand? Art: Always a debate. When Terry Semel came in as CEO in '01, you know, my personal warning to him was let's try not to get too much into original content, period. Martin: Well, then he hired Lloyd Braun. Paul: And went another way. Art: Went another way, and this is not a criticism of Terry. In fact, it was quite a noble effort. He understood the economic shortfalls of getting into original content, not just in journalism, but, obviously, in entertainment as well. And he also understood, in his shoes he really understood all this, was that shorter bites, shorter length stuff, which ultimately took the form of YouTube, by the way. Paul: Sometimes you can just be too early. Art: Yeah, well, he was, and the company committed a fair amount of resources to L.A., which in retrospect maybe he'd say he wouldn't. But Terry Semel was also the guy, and this is another irony. I'm glad we're doing this because I've always wanted this to go on the record. Terry Semel came to Yahoo with a fresh perspective on the Web, so much so that he was criticized in the early days for not doing his own email, that kind of stuff. But what Terry was very quietly doing was trying to asses what the whole business landscape of the Web would look like three, four, five years later. And the conclusion he reached, and it took a media guy to reach it, was that if Yahoo didn't become a principal in search, principal, not an agent, it would die. And after that, that was a seminal, or should we call it a Semel, moment in which the board realized, "This guy is right," and the insiders hadn't said that. We'd always gone along with changing engines in the car. And so after that the company committed on the order of over two billion dollars to acquire the assets of Inktomi and Altavista. We acquired tons of patents. Martin: Acquired Overture. Art: Overture, which was the... Paul: Ultimately the deal. Art: Ultimately the deal, and ultimately the pioneer that in that area that Google needed to replicate. They probably built a better version. In fact, I can safely say this now it was for sure a much, much, much better version. Martin: Well, does this go back to the point about engineering? Did Yahoo lose its way as an engineering business under the Semel leadership? Art: I would argue that it may have lost its way even earlier than that in the sense that we, again, back to this if you're two different companies, media and technology, and there's always debate about how much you want to commit to technology versus content and aggregation, you're not going to have the same focus that an algorithmic company like Google would have. Martin: Well, but this is a very... Art: This is a truly central question. Martin: Because what we've been told by some very smart people, including, I think, Mike Moritz, is that the problem that a lot of the institutional journalism companies have had is that they just don't understand and respect the engineering side. I think one person said, "You can't have innovation without engineers." Art: He's right, and in my personal view as an ex media guy, that's been my view all along that... Martin: But then you're saying you can't have both. We hear that, too. We hear from the journalism side, "Well, we're not engineers. Our DNA is to create journalism." You know you almost can't have it both ways. Either you're going to do the engineering and focus there, or you're not. Art: Well, you see, that's the same dilemma that applied to Yahoo in the early days applies to all media companies today. You cannot ignore...you must be in the technology business because your content is now being served in ways that are changing every minute, and you have to know how to serve your content. There just is no way around it. So I think that's the great lament for content companies going forward. In a way, you guys have inherited the very mantle that Yahoo is sort of attempting to shed. Marissa Mayer is doing a lot of the right things. She's getting the spirit of creating new ideas and this gets to a whole other subject about how small teams... I mean it's almost a joke when we'd hear...believe it or not, Yahoo had a lot of very smart technology people embedded in it, but frustrated, and when we'd go directly to them as directors, we could talk to them in the hallways and say, "You know, how about this new product? How big a team do you have on it?" One of the guys I remember saying to me, "You know, it's 10 people and it's too many," which, one could argue, could be Microsoft's cultural problem from the get go. Paul: You get bloat from big teams, and you get too much veto power. Art: So when you talk about technology I think you really have to be talking about the culture of how this stuff gets developed quickly, and I can't emphasize the word "quickly," enough, because time's the currency. People think it's money. It's really, in addition to brains, it's time. You have no time to do anything unless you've got really smart people in very small groups doing very smart things. And then in the case of the web culture testing, retesting, always testing, always, and constant improvement, which is a culture which is not a cultural aspect of most media companies. In fact, what we grew up with, all three of us, is you put a message out. That's why they call it broadcast. Paul: Also, the newsroom culture is about speed but without errors, and beta implies that it's not going to work. Art: That's crucial. And everything's in beta all the time, really. Paul: In tech. Art: In tech. Martin: I mean we've been using Google Hangouts. Paul: For this, and it's in beta for years. Art: [laughs] Absolutely Paul: Where a news organization, it's counter cultural. So maybe we should go back to the search question. Art: You certainly have hit the absolute center of this stuff. Paul: Well, we lived it, too. Art: Yes, you did. Paul: So we're sort of reliving it. Art: So that's why you know it. That's why you can ask about it. Paul: And the themes start emerging out of the discussions, and there's a lot of consistency. You know, we haven't met any dumb people or people who ignored what was going on. We've even met people who were visionary. They either were too early or their organizations couldn't invest enough, well the analogy would be using a swimmer and the tide so a lot of these were very strong athletes, but the tide is just so strong. Art: Exactly, which is why I don't think we can look back at the newspaper companies, the media companies, and say they were dumb and they missed it. That's not what happened. It was a collision, and the cultural, I mean I could do a thought experiment. How would I, if I were running a newspaper, change my culture enough to be deeply embedded enough in the technology to be nimble and to be competitive with companies like Twitter, who are hiring, by the way, the same people that I need to hire to innovate in the delivery of my content. Paul: So let's talk about search a little more and what happened, because it was so disruptive and technology driven, and it got married to a model that all of the originals, including Google, didn't foresee. And it didn't take some of the ad business online. It's taken most of the ad business, right, the consolidation of ad revenue into search and then into one major player. For all the fears of consolidation of other media, this is unprecedented. Art: Unprecedented. Again, going back to Terry Semel's early days. Terry foresaw that. It's simple mathematics. If you got the best algorithms, you ring most of the cost out of the aggregation business that you're in. Here's Yahoo, clunking along with all those human beings, trying to aggregate information, and here's Google, another thing that I don't think has been overstated enough. Google's architecture, the way the launched anything new, was stunning. We didn't know it quite at the time, but it didn't take us long to figure it out. They set up the company with a vision that everything we do, we can do, if press one button here in the valley, it can roll out worldwide, instantaneously. Think of what kind of architecture it would take to do that. Among other things, they had strapped together these very cheap servers by the hundreds of thousands, literally. It's the software that interconnected them that was brilliant. People forget that the architecture, you know this well, of how the data flows really matters. Again, back to the point about speed. Like Yahoo we'd have a, call it Yahoo Answers. We'd have a product developed by a small team in Taiwan or Korea. Martin: Successful product, by the way. Art: Yeah, fine. But first of all, look how long it took just to get headquarters to understand that it was successful, much less roll it out anywhere. Versus Google, who could have taken something like that and rolled it out instantaneously. I remember asking one of our engineers, "When we're doing testing, how many servers do we dedicate to that task?" Proudly, he said, "5,000." I said, "How many does Google use?" He said, "At least 100,000. Maybe 150,000." Think of an exponential curve and think about our line, versus theirs. And how long it would take for them to zoom past us. Back to search, everything that they did was architected for speed and simplicity. They made it look simple, but they had the best algorithms, by far. That meant that they would be more accurate, they'd be more timely. In making the advertising case, it's the same for the ads. They would be placed in the best context, which ultimately came to me, obviously, geo targeting, time of day and all the rest that lends itself perfectly to algorithmic analysis. Martin: I want to get back to news and information for a moment. During the web 1.0, pre dot com bust era, Yahoo was or became the king of the portals. The notion that bundles... Art: By the way, who invented the term, "portal?" Martin: I thought you did. Art: Beats me. Paul: I don't know. But it stuck for a long time. Art: It sure did. Martin: That notion of bringing everybody together in one place, which had been, by the way, the traditional media company role, moved over, to some extent, to Yahoo. Now web 2.0 comes along. The idea of going to one place disappears with Google. Because their job, paradoxically, is to get you out as fast as possible. They create this gigantic business that Paul references. Art: Stunning, wasn't it? Martin: Yeah, stunning. Paul: It is the miracle of the toll booth. If you get the toll booth in the right place, you don't care where people drive after the toll booth. Art: Exactly. Martin: Now, there's this notion that maybe there is a re aggregation taking place. Art: By the way, there are no humans taking tolls anymore on the Golden Gate bridge. Paul: It's a machine. Art: As of two weeks ago. It's all Fast Track. Paul: But you still pay. Art: You pay. Martin: [laughs] This is the employment conundrum. Art: Exactly. Martin: Anyway, is Twitter the new Yahoo? Is Twitter the new aggregation point in your mind? Art: [laughs] It's certainly an enabler. I don't know that I'd go that far. The one thing that is interesting to me in looking back is how really what's happened, the evolution from email to texting to Facebook to Twitter. If you think about what that natural line of progression is, again it's time. Twitter is instantaneous. Time and of course obviously you can blast 1,000 people just as you can with Facebook. It's time and it's coverage, but does that give you everything you need? I would hope not. Paul: Also, let me ask you if you also think it is one more thing, which is almost everything has been in the sequence we've talked about. I think for 20 years there has been an increasing fragmentation of the bundle, right? Yahoo broke it into categories and stores, Google into searches. You almost went from sites to pages to articles, almost to Tweets. They're not even full sentences, they're 140 characters. What can you express in 140 characters? Art: Exactly. Paul: The challenge for the journalist or the editor is, how do you fit in a world where people are looking for your sentence or your paragraph, not even your story section and certainly not even your brand? Art: See, my worry, I'm not 20, so I don't know how 20 year olds process this going forward or how future 20 year olds process it. There has to be an upper limit, not to mention some kind of personal evolution. My wife doesn't use Facebook anymore. She's younger than I am. She used to use it prolifically and then it became too noisy for her. I think this noise factor, this is just a personal opinion, will make a difference over time to people. It's almost like staring at the sun or taking too much radiation. You have a lifetime dose you can take in a certain part of your body. I think at some point, there may be a lifetime dose of Tweets. You wakeup one morning and say, "Oh my God, what happened to my life? How much of this is really meaningful?" Now that's not to say we're going to go back to people reading the paper the way they used to. That's just not possible. There is something that's going to change again and it's going to change again, so I don't see it as an aggregation point. We used to say, having had experience in most major old media, one of them was outdoor advertising. The hardest thing to write copy for by far was outdoor, because the average read on a billboard is less than a second. If your message doesn't come in in less than a second, it's inferior. That's why most outdoor advertising is pretty inferior, actually. The good ones really leap off the board. To the extent that we've got Tweets resembling outdoor advertising, it will be around. Martin: Some people talk about them as headlines, new forms of headline writing. In fact, some of the folks we've interviewed have said that. I guess the question in relation to the news and to Yahoo is, if Yahoo once was that point of aggregation, is there a natural new point of aggregation? Some people have postulated that that new point is Twitter, because people do like... Art: Maybe so. The best people to ask, obviously, are the people who Tweet often, early and often. Again, beware because they may not have yet reached their own personal lifetime dose. I don't know. Paul: If you think we've covered the Yahoo story, I do think we ought to cover the digitas story for five minutes. Because that was the other important piece of the new world that you really spent time in. Advertising has been pretty central even now as it some ways declined is important to the news sites. Billions of dollars shifted and you saw that happen and understood that, too. Art: Yeah. It's the underpinning for all of this, ultimately. Martin: Well, talk about Digitas, because you had mentioned Digitas as part of your background. Art Kern: Right. I went on the Digitas board ahead of Paul, but not that much. Well, we went public. Paul: So, enough? Art Kern: It was Bronner Slosberg Humphrey. Digitas was one of an emerging group of younger agencies that weren't saddled with having to think the old fashioned way about broadcasting messages and all the rest. They understood the web as a platform, they had to. Everybody in that shop had to be like Google, as you were saying Martin. The very people you need to deliver the content from conventional media have to be digitally savvy. That's a mind shift. Paul and I were talking about this earlier. A lot of people who came from our side of the fence, many of them, I saw waves of them coming into Yahoo in the early days. Many of them didn't make, because they couldn't grok the idea that the web was completely different in the way people consumed it and used it. Digitas was, presumably, loaded with people who did understand it, and whose advice the agencies and advertisers needed. David Kenney, who built it, really built it, but Michael Bronner started it. Actually, the way it worked was, there was a digital division. I forget the name of it now. This is terrible. But it was run as a smaller unit, culturally different from the larger, the roots of Digitas were direct marketing. Martin: Yeah. Because Bronner won the American Express business when I was at Ogilvy. That was a big deal. Art: There you go. And Michael's insight was that personalized, targeted messaging was the future. And what a natural fit for the web. Within the belly of the beast, this, it was run by Kathy Byron, I'm trying to think of the name of it. In any event, that little division, the question was, "Do you spin it out? This or that?" At the end of the day, Digitas was born as one integrated, digitally savvy marketing agency. David Kenny took it from there and built on everything that Michael had built. Again, a lot of the questions there. Here's what's really interesting to me. I'll just say this as an ex media buyer. When I started at Gray I made, you'll always hear this, $125 a week. My job was to buy radio and TV time for Canada Dry. I was looking at demographics and stuff. I did everything manually and in a hurry, because Gray was in a hurry in the sixties. By the time I became a director at Digitas, the media department had become as important as the creative department. Why was that? Because we had fully entered the data driven era, this digital era. And we were only beginning. This is the really interesting part. What are we going to do about big data in every aspect of our lives? Google's just a sneak peek, in a way. Because everything, from health care to insurance, everything else, is going to be driven by massive amounts of data that we don't know how to understand. Paul: I want to ask you one last question about the ad business. Art: Yeah. Sorry to get off, but that's where Digitas and many of the agencies are going to need even greater expertise. Paul: And they find that they don't have nearly enough technical expertise? Art: Precisely. Paul: That's what history would suggest. My question though, was around inventory. The world that we came out of, the pre online world, was absolutely about scarcity. The web world has turned out... Art: Those were the great old days. Paul: The great old days, when you could bundle and you knew you did really well when you had one spot left. It meant you priced perfectly. Now we're in a world of truly infinite inventory. It's having a dramatic impact on ad rates. One of the hopes for free content, which was that the market would mature and be big enough that advertising would support it, seems to have backfired. Did you see that tipping point, did you have an insight into that? Art: There was no question that the inventory was going to multiply at the same geometric rate that users were multiplying, no question. The issue always was how to, first of all, set up pricing algorithms so that you could get the absolute most out of what you had, packaging and otherwise. Yahoo's front page was the premium place to be. It still is. But, to your point, you can buy the web by the pound, literally. That's only going to continue. That's why you have these ad exchanges where inventory can be parsed and segmented and sold by the pound as a commodity. It's completely commoditized, quite a bit of it. That said, the counter trend that may be developing, and should, over time, is context. The holy grail is to get the right message to the right person at the right time in the right context. This big data world we're entering gives you a lot of context if you can master it, figure it out. The best agencies will be able to deliver on that promise in increasing ways. The inventory that gives you that, optimizes for that, may be worth a small fortune. While the bottom part of the pyramid, you're right, it's gone, it's commoditized, the top part of the pyramid may be worth a whole lot more. I say that because I think it's well underway, a lot of this. And the experimentation, the tinkering that's going on now is stuff like when you went to restore, do you get customized offers in aisle three. I mean, that's happening now, all this check in stuff. And again, back to the question, what's the upper limit of what a consumer can take? I mean, I've tried dozens of these, and most of them, I'm maybe too old to adapt to that world. ...
VIDEO: YES

Michael Kinsley
BIO: YES: Michael Kinsley (born March 9, 1951) is an America...
TRANSCRIPT: John Huey: It is April 3rd, 2013. We're in the spanking new offices of The New Republic, with Michael Kinsley. We're set to go. Michael, you're an unusual figure in the history of all this, in that you've been in every medium, you've been a pioneer in several of them, and here you are back at The New Republic, on your leather couch, with a set of books behind you. Could you start out just by telling us, when was your first time? When did the light bulb go off over your head and make you realize that the Web, the Internet, journalism, news, were all going to have a profound change on our... Michael Kinsley: Well, I can actually remember it precisely. I was having lunch with my friend Jeff Dearth, who was publisher of The New Republic at the time. John: What year would this have been? Michael: This would have been 1994, I think. He was into America Online, and through that, generally, the Internet. I asked him, "Do I have this straight? I understand that there are little shops out in Arlington that will put on the Internet as much as one issue of The New Republic. What would they charge for that?" He said some figure, $15,000. I said, "And how often could it come out?" He said, "It could come out once a week." I finally said, "You mean to tell me that we could essentially put out The New Republic as it exists now, with the one slight difference that it wouldn't be on paper. People could print it out and you can do that for one percent of what The New Republic spends doing this, and has been losing money at since 1914. He said, "Yes." I thought, "Well, there's got to be something here." Then, maybe a year later, I, like every other magazine journalist, wanted to start a magazine. In that year, things had changed. Everyone had heard of the Internet, and nobody understood it, including me. I thought, if you go to someone and say, "I want to start a magazine." They'll say, "Come back with $40 million, or something like that, and we'll start a magazine." But if you said, "I want to start an Internet magazine," they'd throw money at you. I decided I would try and do that. I approached Time magazine, among other places, and Norm Pearlstine I talked to. He ultimately offered me a job to think about what to do about the Internet. Meanwhile, Microsoft, who I'd also been talking to, offered me a job to put out a magazine, not to "think about it." It was a lot less money. There were these things called options, which I didn't really understand, but, I decided I'd rather go with a company that was ready to do it, rather than the one that wanted to think about it. It was pretty clear that, I think, that they would never have done it. Then, to back up a bit, I read around...I don't know, the summer of '95 I read in Newsweek, if you'll forgive me, John, that Steve Ballmer was eager to hire some big name journalist to get their place in the media started. I wrote him an email and said, "Am I, by any chance, a big name journalist? If so, I'd like to inquire about this." Should I keep going on this? John: Yes. Martin Nisenholtz: Please. John: You were on TV at the time, too? Michael: Yes. I was on "Crossfire" and CNN, every night. I'd had about enough of that, so I was really looking around to get out. They flew me out there, for what I thought was going to be a discussion about their backing a magazine. Turned out that there was a discussion about their employing me. Just as a side note, they had this thing called the interview loop. Other companies must have something similar. You go and you talk to one person after another. I talked to maybe half a dozen people, and the last one is called your "as appropriate," which means that they have discussed whether to hire you, while you've been going round all these interviews, and they've reached a decision. If it's appropriate, they then send in somebody nice to try and talk you into it. [laughter] Michael: If it's not appropriate, they send in another asshole like the ones you've been talking to all morning, who says, "Gosh, your three o'clock had to go catch a plane," or something, and they'd say goodbye. Well, I got the nice "as appropriate" who was a woman named Patty Stonesifer, who I'm now married to. That was one... John: So this was a very good interview? Michael: Yes. I guess I did well in the interview. Anyway, that was a totally unexpected development, and a pleasant one. Martin: You joined Microsoft to start Slate, didn't you? Michael: I went out there. It was unclear what I was going to do. John: But all of a sudden you were working in a company full of engineers, and you were a journalist, which turns out to be the forerunner to some things that were to come later. Can you think back and possibly explain what Microsoft was thinking, why they wanted to get into the media business, what their goal was? What was their interest? Michael: I think at that time, if you said the word "Internet," people freaked out. Everyone was trying to figure out what they were going to do with it and throwing a lot of money at the wall, see what stuck. Microsoft...Besides me, they hired a guy who did adventure travel, to put out an adventure travel site. They started up Expedia, which was a fantastic success after Microsoft had sold it. They started Sidewalk, which was a chain of city magazines. Martin: And MSNBC, which we're exploring as well. Michael: Yes, MSNBC. They signed some kind of contract, which became legendary. I can't remember...It had something to do with Microsoft paying an annual royalty fee to NBC. Even though it never, until very recently, took off, it was always very profitable for NBC, as I understand it. John: You're saying, I think...This would have been about the time that Gates wrote "The Road Ahead," too, right? Michael: I think so. This is a good Microsoft story, I think. When I went out there in November '95, I guess, to talk to them, and had this experience of meeting my wife, they were pushing something called Blackbird. Their belief was that the Internet or at least the Web, I guess was not going to be ultimately where things were going on. They were going to have what they call a walled garden, like AOL, and have their own language, Blackbird. Then between the time I went out there, and the time I returned, Christmastime '95, to work there. I think, there's the famous story which you, probably, remember Martin, I don't quite remember, about somebody going to Cornell, hearing a lecture, coming back and telling Bill we're on the wrong track. At any rate, they had gathered this history. They had moved that quickly on to totally embrace the web. [crosstalk] Martin: Well, they were taking on Netscape, as well. John: Yes. Michael: Yes. John: Yes, the browser wars began at that moment. [crosstalk] Martin: Yes. How did Slate get born then? I always thought you went out there to do that? Now, I learn that you didn't? John: Well, he went out there for Patty. Martin: [laughs] Michael: Yes. She was, for a while, my boss, too. Martin: Oy vey. [laughs] Michael: Yes. John: [laughs] No longer. Michael: Well, I went out the first day, and my direct boss was a guy named Russ Siegelman. Martin: Yes, I remember Russ. Michael: He later went to Kleiner Perkins. Martin: Yes, he's a physicist, I think. Michael: Yes, he's some kind of scientist, and he was Bill's special resident intellectual. He was put in charge of Slate. Then I walked in there the Monday after Christmas. He said, "Hello. Here's your office. Here's a computer. Write a memo." I wrote a memo which, I hope, is deeply [laughs] buried about what I thought... Martin: We don't have it. John: We would love to have it. Michael: If I find it, I'll... John: We're attaching such documents to the web site. Martin: Yes. Michael: I'll read it, and then I'll give it to you, maybe. Martin: [laughs] Michael: It says, it was based on the premise that how this was going to work was we were going to put out a weekly magazine. Once a week, we would post stuff for the web. We'd make it very easy to print out. [laughs] That was my vision. [laughs] It became evident that that was not a good idea. That's how it started. John: Then you started it? Michael: Yes. We started it in June of '96. That was, roughly five, six months we spent thinking about it. We quickly realized that you don't put everything up once a week. Martin: [laughs] John: Your initial fascination with this was the economics of it? Michael: Yes. John: You don't have PP and D? No postage, paper and delivery? Michael: Yes. John: You create your magazine and then you distribute it low cost? Michael: Yes. John: That's your initial... [crosstalk] Martin: It's simply a distribution channel? Michael: Yes. Martin: It's not a new medium? Michael: Yes, it was absolutely, I thought. What interested me was you could put it out cheap. I was thinking of The New Republic, although I was no longer working for it. I thought this would enable you to do that... [crosstalk] John: What were, quickly, some of the lessons you learned and some of the lessons in retrospect? Michael: [laughs] Well, let's see. At The New Republic when I was the editor, every Friday I would get from Leon Wieseltier, who's still here, a set of galleys of what was going to be in the back of that New Republic next week. He put out the literary section which didn't have to be as timely. Then I had this brainstorm [laughs] around March that you didn't have to hold the whole back of the book until it was put together. You could publish it one article at a time and maybe string it out and then people would come back more often. That was how brilliant I got. Martin: To go back to that time, we're talking about a time before smart phones, before tablets and before broadband, you're sitting at a desktop. You're looking at a PC monitor. That's not a very comfortable way to read a magazine? [laughs] Michael: I got invited to a dinner party in Seattle. All of these society ladies, they all said the same thing which is, "I love what you're putting out, but I don't like reading on the computer screen." You don't hear that anymore. Now, you hear the opposite. "I like what you're printing out, but my step daughter says she would never read it on paper because the ink gets all over her clothing." John: She can read it on her phone. Michael: Yes. John: It's been suggested to us by a number of people, Martin and I came back from Silicon Valley last night, that one of the big failings of the traditional legacy media business is it never had any real affinity for engineers. It never hired any engineers. It never broke new ground... Michael: Right. John: ...in the world that they were competing in because they didn't have engineers. You were a stranger in a strange land before. How did it feel to be a journalist in a land completely dominated by engineers? Does that work? Michael: On the one hand, there was no tension about that. On the other hand, we didn't take advantage of it the way we should have. John: It's fair to say, as a journalist, you probably didn't have that much appreciation for the possibilities of engineering? Michael: I found the engineers who worked for Slate very nice people, but just like writers, in fact, very like writers, they were spoiled rotten. You could never get what you wanted from them. They got very angry at me when I say, "Why can't we do "X"?" This was after I realized that we had to reinvent the form to some extent. We couldn't put it out and let people print it out. Martin: What did that mean, Michael? That's an interesting point. What did it mean to reinvent the form back then? Michael: At least, I felt you had to think of things that you couldn't do in a print magazine. Printing it out is not included. For example, we started something called, "Chatterbox," which was little bitty notes on things going on, imitation of The New Republic notebook. That was the beginning of blogs. I don't know if we were absolutely first, but we were certainly close. John: You were thinking interactively, really? Michael: Yes. Martin: One of the continuing themes that we have found, is this tension between writers writing directly to the public, without an intermediary, against this more traditional view that intermediaries add value, including editors adding value. Of course, which I believe to be true, others don't. What did you think about that? Michael: It struck me, one day, about two years too late, that it was very odd that the writers we trusted the most, which were the ones who worked for us, we put through a rather traditional editorial process. Yet complete loons who you didn't know at all could publish directly to your site because we had comments and stuff. That drove me crazy, and I said, "Let's..." Of course, working for Microsoft, we had lawyers, but they were pretty good about it. I said, "Let's let our writers have the same freedom that our readers have." John: This is a thing that comes up over and over, and it's interesting because it usually comes up in terms of legacy media companies, but you're bringing it up in terms of a legacy technology company, a big technology company with a lot of installed base and a lot to lose. It sounds like they're behaving pretty much like a legacy media company would. They're saying we have lawyers, we have to vet all this, whereas at a Twitter or a Facebook, it's like they cut it loose. Here it goes. Michael: It's all so ancient now. We were constantly stumbling over things related to their being engineers rather than writers, for example, our contract for writers. A Microsoft lawyer came and said you have to have a contract for writers, and we knew that. What they came up with was three different documents, each of which was many pages long and asked, among other things, for the writer to indemnify Microsoft for anything that they may publish that was a mistake. Essentially, it was the same process that they used when they were buying a subsidiary, like a company. They insisted at the beginning that we use this just to get articles. We tried to explain to them this is not how journalism functions. Microsoft was great about it in the end. They were a great place to work. John: They gave you a lot of freedom, I assume. Michael: Yes, almost total. Martin: I assume those options worked out. Michael: Well, yes. I caught the tail end of... [crosstalk] Martin: Who did you think you were competing with at the time? There was at least one other entity. Michael: Salon. Martin: Salon. Then there was Newsweek and Time, and The New Republic and The Atlantic. In your mind, who were you competing with? Michael: I thought two things. One, we're competing with Salon. They were basically the only thing on the web that was roughly similar to Slate. John: This was Coke, Pepsi, Time, Newsweek. You had a.. Michael: And Salon. On the other hand, we were competing with the fact that there's only 24 hours in a day. As the web developed and different media, it became hard to classify, say, where does a magazine end and a newspaper start? Where does a newspaper end and television start? It's all today one big mass of undigested material, but there's only 24 hours in a day. That was what I felt we were really competing with. John: You made a reference to the idea that you were a forerunner of blogging, without maybe some of the technology that enabled blogging to really take off. When you look back on Slate, do you view it as a success, a learning experience, something that ended happily for you personally, a mix? How does it all tie in? Michael: I regard it as the greatest professional experience of my life. Working at a company that had never done anything like this before was tremendous fun. For that matter, I had never worked for a big company before, except for Time by contract. That was great fun. John: Do you think there's still a place in the world for Slate and Salon today, or are you surprised? Martin: Let's continue with the history. Ultimately, it got sold to the Washington Post. Michael: Yes. Martin: How did that happen? Michael: Don Grahsm claims that I suggested it to him one day, which is very flattering. The truth is I don't remember that, but I'll take credit for it. Martin: We're talking to him tomorrow. We'll try... Michael: I'll take credit for it if he wants to give it to me. I think the Post paid about as much as Microsoft had put into it, so that was break even. My former employee and good friend Jacob Weisberg, who now has my job, claims that they're making money. Martin: Why did Microsoft lose interest? Is this just something that came and went, and they saw the Internet as something else at that point? Michael: As I said, they started Slate at a time when they were just trying everything, as everybody was. As time went on and Bill retired, I think Microsoft decided, "This is it. We're not in the magazine business, and there's really no point in our owning this. We've learned whatever we needed to learn from it." Steve Balmer was not as interested as Bill was, and they got a decent price. John: Are you a Slate reader today? Michael: Oh yeah. John: Do you kibitz? Michael: A little bit. I've been gone long enough that I think I can have a totally objective perspective. I think that Slate is remarkably good and you can see the role it's played in other publications, too. John: Now we're in the middle of an era where all forms of media that appear to be in any way traditional legacy media, including even electronic magazines, which are more like print magazines than they are like Twitter or Facebook or Tumblr or other social..., Google News even, or Aggregators. We've moved into a completely different ecosystem now. As a veteran journalist, public intellectual, and now back at The New Republic, what do you make of all this and where is it headed? What are you going to do about it? Michael: Well, who knows? One thing that's clearly happened to magazines like The New Republic is it no longer makes sense really to think of a magazine. I think the homepage has become virtually irrelevant because of Twitter and Facebook. This is how people get to your publication. People don't say, "I wonder what The New Republic has this week." People just don't think like that. What you're offering people is not a magazine, it's a collection of individual articles. People come to it not from the homepage, but from someone who recommended it on Twitter. Martin: Just to connect two things for the moment, you talked about the competition essentially being time. Some people talk about that as the "attention economy." When we were at Facebook, one of the major points that was made was the scarce resource is peoples' time. It seems to me, to follow up on what John is saying and what you're saying about the notion of the homepage, is that if all you have are these fragments of journalism collected under an umbrella like Twitter, it's very hard, for example, to do what you attempted to do at Slate, which is to, say, pay us a fee to get to this information. All the information is floating out there all the time, and you just pick up the fragments. Can you talk about, first of all, the experience of what you were thinking when you decided to charge, what you were thinking when you decided to end the charge, and fast forward today to a business model that comports with this notion of fragments that you've described? Michael: We made a terrible mistake, and it was totally my mistake. I felt very strongly that we're going to slave away to put out the best magazine we can, and then people are going to say, "Well, this is very good, but I'm not going to pay a penny for it." I thought that was unacceptable, and I was very pious about it. I said, "We're putting out something very good, and if you think so too, you ought to be willing to pay for it." That turned out to be wrong. People really liked you, but they didn't want to pay, and they didn't have to pay. The truth is, as I thought about it, much too slowly, nobody pays for content in any medium. Newspapers, what the consumer pays, doesn't even cover the cost of the newsprint, the paper. Magazines spend more to acquire you than what they offer in terms of content, and they do that because they want the advertising. The Internet is, in that way of thinking, just a new variation on an old thing. I had emphasized that we wanted to charge in what I initially wrote to Microsoft, and about a year into it, we were no longer working for Ross. We were working for a guy named Peter Neupert. John: He started drugstore.com. Michael: Yes. He was our boss for about a year, then he left the company to start drugstore.com. He said, "Look, you promised you were going to start charging, so you have to do it." He gave us an ultimatum, so we did it. We had, at the end of 11 months, 30 odd thousand people had signed up at $19 a year. They got a free umbrella for that, a $19 value. [laughter] Martin: Do you still have the umbrella? Michael: We have. There's a closet in Microsoft where there are thousands of them. That wasn't too bad, 30,000, when you think about it, but our front porch, our free part at this point, had what seemed like an enormous number. It had 400,000 uniques a month, something like that. If you did the math. If we can sell an ad to 400,000 people, that's going to be worth a lot more than getting cash from 30,000. Martin: Now fast forward to this attention economy, this fragmented world. How does it work today, in your mind? Michael: As I say, it doesn't work. That people are saying, "I wonder what's in Slate this week"? It works by word of mouth, as they used to call it. Which is, Facebook, Twitter, in a word. You can't complain about that. That's the market working. If something goes viral, then it's done you far more good than even the best home page could. John: Do you worry about the erosion of the business model around legacy media businesses? The metaphor, or the example, rather, that everyone always uses is, who's going to pay for the Baghdad Bureau? Do you see this as a problem, or do you think it will be worked out in new models? Michael: I think it will be worked out. People are always worrying about something. The Baghdad Bureau, well then on the other hand, they'll say there won't be local news. Someone is worrying that the Internet will drive away every part of the current media. There isn't anything that someone doesn't have a theory needs to be subsidized. I think it'll all work out. My friend Nick Lemann, who just retired as dean of the Journalism School, Columbia, says whenever he has these discussions and in his ten years there he's had plenty he says the one thing you're not allowed to say in these discussions is, "It'll all work out somehow," but I believe that. John: There is this paradox, that on the one hand you can say, "Well, the midmarket and metropolitan newspapers are disappearing. No one's going to be able to cover the school board. No one's going to be able to ferret out local corruption." Yet, at the same time it seems like to me, it's harder to get away with anything today than it's ever been. Michael: Hell, yeah. John: You can't get away with anything, anywhere, because something is always watching you. Everyone is a journalist. Michael: Yes. It's different from the way it was, but it's still happening. John: What about the non economic model? I hesitate to sit here in these wonderful new offices and call it a non economic model, but we did have your owner up, come and speak to us, and it's clear that he's not overly concerned with the short term economics of...Michael Bloomberg, "We're going to lose a lot of money on some media properties." You have the Atlantic model, which we don't thoroughly understand, but... Michael: He claims to be making money. John: Right. You have a social media benefactor, taking over the oldest of the money losing traditional...You pride yourself on losing money. Is this model something...and ProPublica, of course. Michael: I don't pride myself on losing money, and I don't think Chris Hughes, the current owner, does. John: No, but the tradition of the magazine, as you said, a money losing magazine since what, 1904 or something? Michael: 1914. John. '14, yeah. This was Walter Lippmann's magazine? Michael: Well, he worked there. One of the kids here asked me the other day, did I know Walter Lippmann. That was depressing. [laughter] John: Is that going to be a viable part of the scenario, everything taking care of itself and working out? Michael: Yeah. I think rich people who want to do something with their money that's good, rich people who want to do something with their money that's interesting. Chris Hughes is having a great time, with however many hundreds of millions he got out of Facebook. One of the interesting things about living out in Seattle, is seeing what people do with their money when, all of a sudden, they've got, totally unexpectedly, more than they'll ever need. A lot of them, they go on a trip around the world, then they get into breeding horses or something like that. I think, buying a magazine, and the losses must be infinitesimal compared to what some... John: A divorce. Michael: Well, a lot of people do that too. John: The wrong mistress. There are all kinds of ways to... Michael: It's really very interesting. I even thought about writing a book about, "Does money buy happiness?" because this was about as good a test of it as you could find. The answer is probably "Yes." But Chris...People who've bought magazines with the money...I guess he's the only one that I can think of. I certainly think that's, from my perspective, a very good thing for them to do. John: I just want to ask you...We're in Washington. We're seeing Don tomorrow. You've been part of this milieu for a very long time. With all the experience you had at Slate, and subsequent to that, and the TV stuff as well, if you were at The Washington Post, just pretend you were Don Graham for a moment, what would you be doing? The newspaper part of the business is not doing particularly well, as I understand it, in fact, maybe losing money now. What do you do to change that? Is that something that you can change? Or is the Kaplan model simply the future of that company? Michael: The Kaplan model...People keep saying that was what supported the Post, owning Stanley Kaplan. I was at a conference on the future of news a couple of weeks ago. There's dozens of them. A woman who was very high up in one of the major newspapers there in fact she's chairman of the board said the only solution is you have to merge with a company that's profitable, like Kaplan. Well, you don't really have to. If you own both companies it can be two companies, it can be 1,800 companies it doesn't really solve the problem, to simply associate a dollar made here with a dollar lost there. The pressure to end that dollar loss, certainly in publicly traded companies, is going to continue. John: We rarely editorialize here, but I have to editorialize on that. If that is the chairman of the board of a newspaper company who made that statement, that's pretty clear evidence of why the newspaper business is in the trouble it's in. Because that's about the most specious business thinking you can possibly imagine, that the business model is to become a remora and go out and find a profitable whale to attach yourself to. That's not business. That's some kind of... Michael: It's not a business model. John: No. Martin: One of the themes that keeps coming up again and it comes up mostly from, interestingly, either the tech folks or the new journalism folks is that the traditional places, the expenses are just running too high. They haven't figured out how to adopt the model to a much less robust revenue picture. The revenues are there. It's that they're not there at the place where they were. As somebody who's been in both worlds, can you comment on that? Michael: I never had the pleasure of being in the legacy media world when they had the drinks cart wheeling down the aisle at Time. John: When I joined there 24 years ago, everyone said, "The good old days are over." Michael: Yes. [laughs] John: "This is the end of the..." Martin: Why? They went from Chivas to Dewars? John: No, I won't go into that. I had come from a newspaper and I thought, "Wow. If the good old days are over, they must have really been something." [laughter] Michael: No, the L.A. Times did not begrudge anybody a penny. Time was famous for that sort of thing. Johnny Apple at The New York Times and his expense account as he went around the world. Conde Nast which would rent you a house or anything else. Those are all stories we'll tell our grandchildren. John: Henry Blodget had a very good line where he appeared on the Today Show and he said, "They still have someone there, fully employed, to take the lint off your jacket before you go on TV." He said, "I think they still have room to cut." [laughter] Martin: I think he said, "I think they still have a robust business model. John: Yes. [laughs] Michael: Yes. Martin: Room to cut. Yes. [laughs] John: Let me ask you a question that could well have been the opening question. Describe Michael Kinsley's media profile today? How many different ways do you disseminate? How many followers do you have? How many ways do you interact with your public? Michael: It's very few. How many have I had over the years? I've covered most of the good ones, certainly, magazines, newspapers and the Internet. At the moment, I'm writing for The New Republic in a traditional medium. Martin: You referenced Twitter as being so important. Michael: Oh. Martin: Wouldn't it be a corollary to that that you would have a million Twitter followers so that you get your work out to the public... [crosstalk] Michael: I don't do what you have to do. Martin: OK. Michael: I'm going to start. [laughter] John: Today. Michael: Yes. Every publication has...I was at Bloomberg before this. They have two people whose job it is... Martin: To take the lint off your coat? [laughter] Michael: They take the lint off your coat and post it to Twitter. [laughter] Michael: Their job is to get their writers, as soon as they finish a piece, to put it on Twitter, "Read my piece about 'X.'" I guess I'm going to start doing it. I've been very bad about it, but I think you have to. It is obnoxious. It's rude. The whole world of etiquette on the Internet is something. Martin: Yes. I made a comment at Twitter, yesterday, which John was amused by, that Twitter because of its 140 character limit, has changed the way politicians, public figures interact in public. When you reduce something to 140 characters...Not that journalists haven't done take outs and that kind of thing forever, but it's part of a normal day, now. Michael: Yes. Martin: I used the Obama line, "They didn't build that," or, "He didn't build that," whatever it was... Michael: Yes. Martin: ...as an example of something that happens time and time again where something is taken out of context, tweeted and it's not even close to being the full picture of anything. Twitter is a very positive thing in terms of getting the stuff out. It has this corrosive effect in terms of its truncating every message to such a short message. Michael: Well. Martin: No? Do you disagree with that? Michael: As I say, I can't bring myself to tweet very much, although I do it, occasionally. You could say that's the headline. what the Twitter feed is. Headlines are... Martin: Yes. Michael: ...140 characters. That would be a fairly generous headline. Martin: Yes, it would. Michael: So... [crosstalk] Martin: Henry Blodgett does. That's the way he uses Twitter. Basically, he writes headlines to his links. Michael: Yes. Martin: He's very good at that. John: I think you can make a case without being overly maudlin or sentimental that as something is gained with all this, something is lost. There is some thoughtfulness, some context, some ability to absorb more complicated ideas. If an entire generation gets "X" percentage of their information from Twitter, there's no evidence yet how many people go...If we don't know that much about how many go beyond the headlines to dig deeper into..., something very, very... Michael: Right. John: ...significant could be lost. Would you agree with that? Michael: You mentioned generational change. I'm going to tell you my favorite Internet story which is I was in a panel, [laughs] yet another one, on the future of newspapers and the Internet. A lady in the audience raised her hand and said what I had heard all over the place which is, "I like your stuff, but I don't like reading on a computer screen." I started to answer. I was interrupted by this professor who was on the panel, I don't even remember his name, who said, "Your problem will be solved actuarially." [laughter] Michael: This lady turned ashen. It has been solved actuarially. People used to say they don't like reading on a computer screen. Now, they say they don't like reading on paper. Martin: Great, anything else that you'd like to comment on for... Michael: Oh, especially, not liking to read on a computer screen. At this society ladies' party that I went to, one of them said, "The problem is not the screen. The problem is the chair." I thought that was really a good insight. What do you do when you have a good insight? If you're a journalist, you think, "That would make a great piece." I joke about this with my wife all the time. If you're a business person, you say, "That would make a great business." We had a little contest in our first issue. Splitting it down the middle, whether you go for a business, or for a story. We went for a story about businesses. We asked people to design a chair. They came up with some good ones, these furniture designers. That piece is lost. Microsoft was unable to store the first six months or so of Slate. ...
VIDEO: YES

Larry Kramer
BIO: YES: Larry Kramer is president and publisher of USA Tod...
TRANSCRIPT: Martin Nisenholtz I should say that we're with Larry Kramer on March 7th, 2013... Larry is currently publisher of "USA Today." One of the real rock solid themes here is that there's this thing that John Huey calls the "tide," which are the technologies, events and companies that are formed. Then there are the "swimmers." These are the people who are making the decisions and trying to find their way through this tide. One of the key questions is whether the tide is just so freaking powerful that no matter what decisions the swimmers would have made along the way, they would drown. Some people very strongly [believe] that that's the case. Other people believe that very critical decisions were made at a certain point in time that really, really put us in this fix. I'm going to start with "MarketWatch" in a moment, but three of those things are "free versus pay." The original sin — people like me giving away content. Second is the idea of open links, the notion that the world of professional content and journalism would just make itself available through RSS readers, which, of course, I pioneered with Dave Winer. That's the second original sin. And then the third one which I frankly had nothing to do with, was that we just weren't very aggressive with copyright. That we let folks like the "Huffington Post" abstract stuff at a level that was certainly what many people considered to be well beyond fair use. Larry Kramer: We never defined "fair use." Martin: Right. We never defined fair use, so let's start ... with a very simple question. We'll get into these three themes, but how did you arrive at Marketwatch and how did it get founded? Larry: That's a good question. I was in the newspaper industry until 1990 or so. I'd had for five years made just 35 to 40. My dream job. I was editor of the newspaper in San Francisco, the "San Francisco Examiner." Right around 1990 we hit a recession — an '89-'90 newspaper recession, real recession but hit newspapers. I got depressed, because I had spent half a year not doing journalism but doing buyouts and layoffs and all that stuff. I came to a mutual agreement with my publisher at the time, Will Hearst, that this wasn't for me anymore. The Hearst people were great to me. They basically bought me a year. It's like being granted some time from the university to think. I took the year. I actually went out to see what I wanted to do. Did I want to just get another newspaper job or whatever? I decided something was happening. I was getting a little... Martin: Did you have the Harvard MBA by then? Larry: Yes. I had my Harvard MBA. I got it for totally different reasons. I got that right out of college. I was a Syracuse undergraduate in journalism, and I applied to the Harvard Business School saying, "I have no interest in going in business. I want to cover business," and I thought this would be a cool way to do it because I'd get great sources and I'd learn about what I had to cover. They took me. It was the only place I applied, because I thought the case method was perfect for a journalist, and I wasn't really ready for reading finance books and things like that. it was a great education for me. I always had it in my background, but I used it more as a journalist. I covered business. I had great sources in the banks. Martin: At the Post. Larry: Yeah, at the Washington Post. But I had always envied some of my classmates, which were among the first who were becoming very entrepreneurial. They tracked our class from the business school very...John Kotter tracked our class, because it was the 25th anniversary after the class of '49, which was a famous class that had a bunch of corporate CEOs in it. In our class by the '90s had become...You can see more than half were entrepreneurs, had made their businesses, had built businesses as opposed to having grown in the traditional businesses. That clearly some of the entrepreneurial spirit came out of my time there and the people I knew since who were doing that. But I was really kind of flailing about, and I thought there was going to be a real movement toward electronic carriage of news and information. There was no Internet then, per se. Will Hearst had shown me some things when I was at the "Examiner." He was on DARPANET and he would... Martin: There was no browser. Larry: But no browser. It all looked the early days of CompuServe. It was just text. I had this idea about transmitting sports information to portable devices using FM sideband. The FM sideband was being used for — this is more than you want to know, I'm sure — used by a product called QuoTrek, which was a stock market. The only portable stock market device. It gave you real time stock quotes. The data was being transmitted in an FM sideband into a device, a radio receiver that displayed data. It didn't have music. Martin: It was incredibly expensive, too. Larry: It was $200 or $300 a month, $150 of which was to the exchanges for the real time data. They charge you for real time data. But it was still a couple thousand dollars a month less than having a Bloomberg terminal or a Reuters terminal or a Dow Jones Telerate terminal at the time. Individual traders were using it because it was the cheapest way to get a real time quote. You could actually get a real time quote, and the quote you got was to within seconds of real time. My partner — a very close friend of mine — worked in that business, and he was vice president of marketing for a company called Data Broadcasting Corp. That company, ironically, was part of an overall company that own among other things The Financial News Network. He had the idea that they could do more with news. Plus he had the idea that, since markets were nine to five Monday to Friday but they owned this bandwidth 24 hours a day and seven days a week and they weren't using it nights and weekends, he would look for some kind of information that could transmit on nights and weekends. That's when he came to me and he said, "Could sports be that?" I said, "Perfect." We'd use the bandwidth. We'd transmit real-time scores and data from games, which was unavailable then. We identified the displaced fan, the person who lived in another city from the teams he loved, colleges or pros, that you could not get a score unless you dialed like a 900 number and you had to pay for it. Sports Center didn't exist. ESPN was around, but they really hadn't gotten into the news game yet. It seemed like this would be cool, and I wouldn't have the exchange fees to pay. For a lot less a month, maybe $80 or something or $70, I could sell a device that had sports scores on it. His company, Data Broadcasting, invested in me doing a startup with him. He spun out. The two of us together started a startup called Data Sport. That was a company. Actually, they housed us. Besides investing in us, we used their equipment so they actually gave us a line of credit. We used their engineers on an ad hoc basis. We would pay for them to develop our version of their product, and they loved it. What they got out of it was they could put sports scores on their stock machines, and all the brokers wanted that. It was an interesting arrangement. I learned a really [laughs] valuable lesson, which goes to the pay and no pay issue. Because we didn't have a lot of money, I got "The Sporting News" to be my partner and branded it with their name on it. They agreed to market it in The Sporting News. The last thing I did was I went to Las Vegas, and I met with a guy named Michael Roxborough, who was the main odds. At the time, he was the main odds maker in Vegas. All the hotels got their opening lines from Mike, from "Roxy," his name was. I made a deal with him to put his ads on my machine and to start a process of getting the actual odds from the hotels because each hotel moved differently. Odds could be different on a game at different hotels. I decided just to put odds in there because I thought that would be cool, and it was a real-time thing. We did that. We offered the product for two months free to sign up, and then you'd have to start paying. The take on it was enormous. Thousands and thousands of people wanted free ones. When it came time to pay for it, people would come back and say, "I love it, but $80 a month or 79" or whatever it was, and we dropped the price later to 49, "It's just not there. It's too much." But there was a [laughs] hardcore person who wanted that at all costs, and it turned out basically they were bookies or heavy betters. If they had money running on it, it was the same profile as the person who would get QuoTrek. If you were trading, real-time data meant something. Martin: Like Bloomberg terminal. Larry: Right, but Bloomberg terminal was going to professionals. The QuoTrek would go to somebody who traded heavily that was not a professional. Martin: There was a calculation that someone could do. Larry: Yes. He said, "If one trade works out a little better for me, I paid for the whole month, right?" They look at it. "You're absolutely right," and the better had the same thing because what he could do is the better could see that the line was moving before his bookie in another town. If he saw that the line was moving a certain way, he'd bet that game right away with his bookie at the old number, and he'd get a better advantage because the line would continue to move later. Depending on which way you were betting, it was an advantage to bet sooner if you could bet ahead of the bookie. We were getting in all these guys calling us wanting to pay in cash. [laughs] It was like, "What's going on here?" What I realized was there are a whole lot of people who wanted that information and liked it, but there was a whole separate class of people who would pay for it. That is the definition of what happened at Financial News, too. There were a whole lot of people who would pay anything to make sure they had real-time news and financial information on those terminals. They paid $3,000 a month, $2,000 or whatever it was for Bloomberg terminal. They had to know, and they had to know right away. Then there's everybody else who had a lot of money in the markets who wanted that information. For them it's free, or they're not going to do it. There's no money in it. They're not exchanging. Later on, and I'll get to that in a second, when I got to MarketWatch, that made a big difference. We did the sports business for a couple years. We got it to break even and that company, Data Broadcasting, bought it from us, because it was worth more to them. It was an add-on to them, and it wasn't going to make it as a separate company. That worked out fine. Gave me a little bit of money, but they said to me — this was now '93, '94 — "Would you stay with us and run it and also run, help us with QuoTrek, because we're worried. We're hearing about this thing called the Internet." QuoTrek's big advantage was it had a huge barrier to entry for what they were doing. They had radio contracts with radio stations in 80 cities. They had built them over time. They had done all the stuff. For somebody to transmit real time data over an FM sideband, which was the only way available then, they couldn't do it. It would take too long to find all those stations and do all that. They had started delivering data over a vertical blanking interval, too, through a cable box. That started getting them thinking that, "Other competitors are going to be able to do this sooner, and there's this Internet thing." They said, "What could we do to differentiate ourselves?" I said, "You're in the quote business. A quote's a quote. It's a real time quote and it's going to be about price. In the end, to some set of characters, some set of customers. But if you want to differentiate yourself, there are things you can do. Give them news. Build news into it. That's your news. That isn't available somewhere else, like what Bloomberg does, like what Reuters does and Dow Jones. They have news, and that's all part of it. If you leave a Reuters terminal, you leave Reuters news, too. If you think Reuters news is valuable to you, that's a problem. Nobody else can give you Reuters news at that time." I said, "I'll start building you a news operation." I said, "But here's the deal. I think that's going to be a big business in the future." This was the giddy moment for me. I said, "I want a handshake deal. I think this is going to be a big business. I think we're going to spin it out of the business you're in, and I want to own part of that business. I want a deal. If I build this for you, I want a handshake that if I can go get a media partner, because I think advertising's going to be a part of this business for the mass media, I'll build that business for you. But I want to get some percentage of that company for me and for whatever employees I spin out into it." That was '94, '95. It was the single best decision I ever made, and I did it on a handshake. I stayed and built a business for them. They paid me. I had a good job at DBC. Then in '94, '95, I started building relationships with media companies. They were all playing with the web then or with some form of digital delivery. If you remember, "USA Today," which was one of the first online services that was a pay service, and it was a bulletin board service. Martin: I remember. Larry: I went to USA Today, coincidentally, and I said, "You guys need stock pages. If you're going to have a stock, you're going to charge people for your online service. You need a stock page that's current, not with yesterday's prices on it. I can do that for you." We had a ticker plan. Martin: Do you remember what the USA Today service was called? It was a proprietary... Larry: "USA Information Service," I think. Just USA... I still have the thing, the kickoff thing. It looked like a floppy disc in glass. Really! It ... was an ambitious attempt to sign up people to make them pay for digital delivery, to see if people would pay. They spent a lot of money on it, and it didn't really take off. It did OK, but it was first, but it was built before browsers had become big. Netscape was just coming on board, and things were starting to happen in that world. I think the early ones may have involved you having to download a disc into your, download something into your...or have a then new disc in your terminal that carried a lot of the graphics on it, so the graphics were not being broadcast. Now, it's '94, '95, and I'm going and something big is happening. A lot of people are starting to trade stocks at home and are getting very disillusioned with brokers. I'm thinking everybody's getting these IPOs. Netscape happened, a few things started to happen, and I can do that. My broker isn't getting me anything. The brokerages started coming online with discount brokerages. Schwab and eTrade and things were all popping up. A whole new community of people was coming up who wanted financial data at home and were trading stocks. It looked to me like the Internet could replicate a Bloomberg terminal pretty closely. Not everything, obviously, or a Reuters terminal at a home for much less money if you have real time. There's no way of getting around the fact that the exchanges would charge you for real time data. You'd have whatever that charge, but it was in hundreds, low hundreds, not thousands. The rest of it was on this thing, the Internet. If I could build a news service that could even approach some of what they wanted...My strategy was most of these home traders were trading a basket of stocks. The Internet stocks at the time, which were starting to get very volatile. If I started a news organization that covered the most traded stocks by volume, I would be attracting a large audience. Martin: But at the same time, you got WSJ.com now out, and they decided to charge from the outset. Larry: Yeah, but that was later that they... Martin: Was that later? Larry: Yeah, I don't think they had charged yet. Martin: TheStreet.com... Larry: Street.com was out, and they were free, but had a pay service. I think they were free in the beginning. Martin: Maybe, but Kramer was... Larry: I'll get to Jim, and what happened with Jim and I, and where he was going. There was a fair amount of free information on TheStreet.com. He did have pay stuff, but there was a fair amount of free information. They had deals with Yahoo. We actually had the fist deals with Yahoo and the big guys, and we were getting...The big player up to that point was something called "quote.com," if you remember them. Martin: I do. Larry: They aggregated some news and you could get quotes on there. 15 minute delayed quotes. We started to build this thing. I began to realize that there was this mass market of people trying to trade stocks on the Internet. That had never existed before. They likely weren't going to pay a lot of money, because for like most people, they didn't know what the value was to them. They weren't trading enough to know that it was helping them enough. They had only called their broker before. They wanted help, so I figured the way to go in was find a way to get advertising support in a free service. Then, the problem became how do you build a brand that's a trusted news brand. Even then, on the Internet, that was going to be impossible. I was looking for a media partner. CBS was in negotiations with a company called SportsLine. I knew SportsLine, because I knew Mike Levy who founded it. He was using our ads from my ads product, from DataSport. There was a feed. That was when I was making money licensing out the feed out to people. He told me that he was negotiating with some TV networks. It was actually with Fox that he was hoping to do the deal with. I extended an olive branch out to a couple of networks, and CBS came out to see me. Derrick Ricefield, if you remember, and Betsy Morgan flew out from New York to visit me. It was in early '96. While I was building this news thing for Data Broadcasting Corp...I left out a key part here. While I was building this news on the handheld device so that you got news along with the stock quotes, we were playing with the Internet kind of under the desk. We had a couple of people in the place who really liked it and were trying to do stuff. They were building sites just on their own and putting up 15-minute delayed quotes. One of the big assets we had was a stock ticker plan. We just called it DBC Online. People were coming to it because it was one of the few places you could actually get a quote for free, even though it was delayed. People started coming to that, and it started to occur to me that I could probably put some of the news up on there. All that I could put was headlines on the handheld device. But I could actually do stories, and maybe we would have a password thing where people could get a password and get the stories on the Internet. They were paying money for the quote track, and we wanted them in the same bind as Bloomberg at that point. Could we give it away for free on the Internet? We didn't know. We started to do it, and I realized that so many people came. We built a cool site. We had almost a million people in the early days of the Internet coming for stock quotes and stories. We let you click on a stock and get all the news about that stock. Martin: It's called MarketWatch now? Larry: No. It was called DBC Online. Martin: It was still called DBC on the old...? Larry: Right. There were 15 to 20 people doing it. It was in San Mateo. We decided to create a pay product which we were going to call MarketWatch which was going to have real-time quotes. That would be one of the only differences. We were using the name MarketWatch. We were trying to do this thing, and I had the meeting with CBS. I said, "Look, this thing --we've got 20 people in doing news. They're all people who you'd have working for you. They came from Reuters, AP. They're not Internet kids who are right out of college. It's all professional, and you guys have nothing online, no financial news online." Your whole financial coverage in fact was Ray Brady at the time. If you remember Ray, he was about 70 years old, and he was doing all financial coverage for CBS TV and radio. The other guy's at CNBC. [laughs] The story was becoming quite a big story in the market at the time. [laughs] I said, "This could really help you." Derrick saw it right away. He went back and talked to Andrew Heyward, and my next meeting was with Andrew Heyward. I flew to New York, and I knew this could go either way. Andrew and I are contemporaries. We didn't know each other but we had a lot of mutual friends. He had been a Harvard undergraduate when I was at the Business School. We had a lot of things in common. He knew that I'd been at the Washington Post. At that point, I was a respected editor in his mind. He said, "I don't know how you're going to react to this." Because in my days at the Washington Post if somebody came in and said, "We'll cover financial news for you," the window wouldn't have been big enough to through them out of. It's like who do you think you are. He took the exact opposite approach. He said, "No. We really need help covering business." He was totally open to the discussion. Martin: He hired Betsy, too. Larry: Yeah, that's right. She, I'm sure, was part of the reason he was being convinced that we were legit. She'd helped me, I think, by coming out and seeing what we had done. He said, "What do we need to do make this happen?" I said, "We're just going to hear your financial deal, and what I want is CBS' name. I'll pay a licensing fee for it, and want to integrate as much as I can with you in covering news." "We'd love to get on the air. I want you guys to use our name on the air. The CBS brand will cut 10 years off of my life of having to grow and probably $100 million that TheStreet.com spent building a brand, I don't have to do. I can borrow that from you. I'll give you a steady stream of news. I'll even hire TV people who will go on the air for you, and I'll let you approve them. I won't hire them unless you say they're good enough for CBS." He goes, "That's pretty interesting." [laughs] He said, "Let's do it." It was like that. The actually ironing out of the deal took a few more months. But what we did was spun out...Data Broadcasting contributed the ongoing business, which had a million in revenue, $5 million in cash to keep us operating. I had already started putting ads on the site. There were all those agencies that were popping up selling ads for multiple sites and things like that. We were using one of those. CBS contributed $50 million worth of advertising marketing chits on the CBS Network and some related CBS properties. That was valued at 20 million because they were picking when it was running. Our contribution of the ongoing business was valued at 20 million. We had a $40 million valuation the day we created the company, and 10 percent was carved out for me and the employees, which was great...in options, how we had to earn them. It took a year almost to get that deal done because Fred Reynolds was difficult to negotiate with at CBS. During that time, they did the SportsLine deal, too, so they kind of knew it. But we felt that a relationship with CBS was critical. I was willing to do some things early on. CBS insisted on a right of refusal on making us take down content if they felt it was inappropriate. A lot of people might have gotten their back up over that but I agreed. I said, "I'm using your brand. It's fair." In all that time, they never exercised it. Andrew told me that, he just basically said. "Look, it's a protection. I've got to have it." Martin: It's a nuclear button though. Larry: It is. We had a room full of brand managers who protected the CBS eye who had to clear every use of the eye with. [laughs] "Green eye, no way, that's not going to happen." We built it. What we agreed to do was to flip DBC online which that year "Barron's" had named the number one financial news website. That was our first real claim to fame which nobody had heard of. Most of the media world certainly hadn't heard of us. We flipped it overnight the day we were announcing to CBS MarketWatch. Martin: What year was that? Larry: It was October of '97. It was Halloween, October 30th in 1997. Andrew and I did the announcement at CBS in New York. It was amazing. Martin: Now, you've decided that it's free, right? Larry: Free in ad support. I had already started to build an ad team at that point. I was trying to hire Scot McLernon who was the ad director of quote.com. He kept saying, "No. I think quote.com is too good a brand." I said, "I think I can solve that problem for you." I couldn't tell him how, so he was very skeptical. Then the day we announced it, I sent him a note with just an eye in it, and he joined shortly thereafter. We were off to the races. Martin: Now, do you think, just in retrospect... Larry: By '97, we were already seeing jumps in usage from people who were...we had barely become a.... Martin: By then I'm certain that street.com was a paying site. Larry: It was. Martin: I'm certain that TheStreet.com was a paying site. Larry: It was... [crosstalk] Larry: It was, again partially, because something happened later with TheStreet.com... Martin: Yeah. Let's put TheStreet.com aside for the moment because it's... Larry: You're right, though. They were paid at that point. Martin: If WSJ.com had decided to go free like the Times did, would you have had any hope of making this work? Larry: Much less. I don't know. I really don't know if I could've made it. I thank my lucky stars for the fact that the three big news organizations were all tied up on very expensive terminals. Where even though no one had actually determined what their value was on that terminal...Bloomberg would add news but he never charged you extra for it. It just became part of the overall charge. No one actually had a value of how much was the news worth on those things. Anybody who was paying for seeing any of that information online for free would say, "Excuse me, why am I paying you $2,000 a month when your news is going on to this for free?" Martin: That may be innovative dilemma? Larry: Exactly. To me, that was the opening. The fact that I could do...I figured someday I'm going to face the same dilemma maybe but right now the door's open for me to serve a massive audience, ad supported who want this information whether or not they're smart enough to use it. That they're not professionals but...If I'm not asking them to pay me, it doesn't matter. That I can build this audience and they can get used to it. What I hoped for but didn't really count on that happened was we got good at covering the key things, the key issues of the day, and we actually became a media company. We were competitive. It's part of the mythology of great media brands...We all know how great "The New York Times" is and that the quality of staff at The New York Times is unquestioned. But if you've gone around and you stopped in any given city, in the old days when there were four or five bureaus there, you'd have just as much chance of the Baltimore Sun guy being the best guy in that town at that time. The Times guy might not be the best. Or the AP guy someplace might be better. It could happen. We all knew that. In MarketWatch, we got some people like that. We got people who on their beats, they really owned their beats. They really were good. The strategy of hiring to cover the...As we got bigger just to become more inclusive of the issues that...We hired to cover the stocks that people traded and got wider as that audience started trading wider. That worked for us. Martin: One of the other themes that has come up is that for the most part traditional media companies including the Times viewed the Internet essentially as a distribution channel for existing content. The kind of derogatory term for that is repurposing. I'm not putting a value judgment on that at all. I think it can be good and bad. But in any event you didn't have that. Talk about that. Was that an advantage or disadvantage or both? Larry: Do you mean that I owned all of my content? Martin: No, that CBS wasn't giving you a feed of [crosstalk] for television [crosstalk] repurposed onto the Internet. Larry: I didn't have the burden of having to support a different form of media at that point. I also believed in the very beginning — it's why I went to CBS — that our business would be multimedia, that the future was in multimedia news. I absolutely believed that an Internet newsroom was going to be the core to whatever those things would be. Martin: Talk about that. Larry: Immediacy. I thought you can't get faster than now. By definition, some portion of news is going to be about what just happened. Martin: The papers were still on a 24 hour cycle, for the most part. Larry: Right. Let me tell you. Let me give you a recent example of how that's still an issue for some papers, including the New York Times. A couple weeks ago, the Pope announced he was going to resign. He was going to step down. I'm dating the tape. Sorry. He announced it at seven in the morning and that morning was a Monday morning. That morning, I got online and I started watching how many people were reading that story and it was huge numbers in the morning and it tailed off as the day went on. By the night time, it was pretty much like any other story, but it had gotten a massive read. We talked about it that night and our paper the next morning came out with essentially a second day lead. It was our first coverage of that event, but the stress on the front page and the look at it was what was going to be happening because of this, what it had set in motion. For our readers, I felt even the paper they were picking up and seeing something different and something new. We worked hard to do that. The front page of the New York Times that day was written as if it was the first time you were hearing this, the way the New York Times would do it. As an editorial entity, it believes it's the first draft of history, that 500 years from now people wanting to know what it was like when the Pope quit will go to the New York Times front page and look at it. To the reader, that was a throw away story. They probably went right past what was the lead story in the print New York Times to the what does it mean stories that they had inside. They did the coverage, but the emphasis is telling. It still believes that the paper is somehow relevant in the cycle and it isn't. The news cycle has changed. Understanding that that was going to happen and believing that that was going to happen and believing that the only way to deal with it was to build from real time out...I still didn't know at the time how much video would be involved. Martin: Let's talk about that because the guys that I thought were doing it really well back then and had access to Reuters because of the Dave Graves strategy were the young finance people. Larry: They used us, too. Here's what happened with finance. Here's a good example of where they went wrong. They were fantastic in the beginning and they were the ultimate aggregator. They were one of the reasons Market Watch succeeded. Martin: Tell me about that. I didn't know that. Larry: Early on, a year into Market Watch, we were staring down an IPO. Those were the days you could IPO. A year later with seven million in income. I'm sitting there and I'm going through these S1 sessions where you're writing all the risk factors and all that. Meanwhile, I'm negotiating. I had been negotiating with Yahoo to put our headlines in Yahoo News. Yahoo Finance was already a place where most people were putting their portfolios. Everybody was watching portfolios. Yahoo was quite proud of the fact that you could go to their portfolio and see all the news about your stocks and they were really obsessed with being real time. They had the same obsession Market Watch did about being first and best with news. I said to them, why don't I give you our entire feed, you can run all the headlines you want, but if they click on the headline they come back to us? All you cared about was that portfolio page. You'll get even more people to that portfolio page. Of course, you're the best place to go for everybody's real time news. I get the second click. You don't have to pay me anything. I don't pay you anything. Sounds like a great deal. They said fantastic deal. Let's check. Those days they made decisions fast. Came back to me and said, "We're going to do it." That had happened about a month before we had started writing the S1. Martin: That's interesting. Larry: Hold on. We agreed to it. We hadn't launched it yet. We had to do the integration. They just said they would. They had to come back and give me formal agreement. There were a couple weeks between when they said they would and when they were actually going to launch it. I remember walking into the S1 writing session and we had actually launched it that day. We were up 25 percent in traffic in an hour. It was the first fire hose. I said to the bankers, "You guys aren't going to believe this but we're 25 percent larger than we were five hours ago." They go, "What are you talking about?" I said, "We just did this deal with Yahoo. It's not costing us a penny." They said, "Ugh." I'm going, "What's the matter?" They said, "We've got to pull out the risk factors. We're now at risk of losing 25 percent of our traffic in a second. They can just turn off the fire hose." They said, "Why don't you go back to them and make a long term deal?" I said, "They're not going to do a long term deal unless I pay them." They said, "You should pay them." I said, "You want me to go back to them and offer to pay them for something they just gave me for free?" They said, "If it guarantees you some period of time," and I said, "OK." I called the guys at Yahoo and they go, "You what? We just made the deal. You don't have to pay us anything." I said, "No, can you just guarantee me the two years and we'll pay you." It was a half a cent or something per click. They were puzzled. They huddled. They came back and said, "OK." It was the first deal they signed where they got paid for that access, which turned out almost destroyed them because we did it. It was great and it was great for them and for us. We had huge traffic coming from Yahoo. We even learned to change the page people got when they came from Yahoo versus if they came from our front page. The same story page was different. If they came from Yahoo we put links to our other front page stories on there. If it came from our front page, we put links to similar stories. It actually upped our Yahoo pages per visit number from 1.1 to 2, which is huge. Now, I'm in this situation where I've got the fire hose turned on, I'm paying them, and they liked us because we were really good. Our headlines were great. It was a real news organization. This was real news, reputable news. They had gotten through some problems with all the press releases and the chat board stuff that was going on. They were trying to get reputable again. Then everybody saw what had happened and they all went to them and said we really want in, we want you to have our headlines. We'll pay you, too. We'll pay you more. At some point, about a year into this, they went from caring about the customer first to caring about those deals first. They started making deals with everybody and taking cash. Even people who had no news, they were just recycling and stuff like that. Suddenly, you'd see all these things appearing and now the latest story was getting pushed down by third re-writes of the story stolen by somebody on another site. They were just taking the biggest deals they could. At one point, in the height of absurdity, because their pipe was getting so full and people were complaining all these junk stories were coming through, they decided to keep all the people who were paying them but limit the number of stories you could have on. They would set a number and it would just cut off after that number. We'd have like 200 stories go out there at the beginning of the day and the 201st story would be like the AOL/Time Warner merger and it wouldn't go through and they wouldn't get anything on it and their readers would start complaining and we'd hear about it. We're going, "What's going on?" That's how we found out they just decided to cut you back to 200 a day and they just did it across the board to everybody, which made no sense to their users. It was a terrible reader disservice, but the viewer or the user had gone from being the prime subject to the deals. That was the beginning of Yahoo being impossible to deal with and unclear of what their own mission was. Their mission clearly, prior to that, had been very focused on the user and everything they did had the user in mind. They really felt protective about the user. Nathan Richardson was there then and he had a real good sense of that. The changes that happened afterwards were really devastating to them. I think started them down a bad trail. Martin: Did you do anything with AOL at that point? They were the follower of the [inaudible 40:31] . Larry: Absolutely. We did a deal with AOL. In the beginning, I think it was similar. We didn't pay them or we paid them a little bit per click. Honestly, it wasn't very much. The deal we made was they wanted our stuff in the quote pages, again. That was where we were most valuable, in their portfolio pages. We wanted to be in their front page. They kept saying we'll do that as needed or when we see things we'll put them on the front. They wouldn't promise anything on the front pages. We'd pay for clicks or whatever that came from the portfolio page. I said, "Do you mind if, once we sign this deal, I hire somebody to stay in your offices and help you in how you use our information and work with you?" They said, "No, go ahead." I hired somebody to sit at AOL and to go from desk to desk and say, "What are you guys working on?" They'll say, "We've got a Valentine's Day special coming up." They'd say, "How would you like a Valentine's Day shopper's guide?" They'd go, "That'd be great. We'll put it on the front." He'd call us up and say, "Get me a shopper's guide for Valentine's Day by Tuesday and we'll be on the front of AOL," and we'd do it. Sure enough, hundreds of thousands of people would turn on the spigot. Most of it was stuff we cover. We weren't going to do something that was illogical to us. How to invest in holidays or how to invest in graduation in June, different things like that, what colleges to pick. They were difficult to make a deal with, any kind of deal with. They always were squeezing you and they were obnoxious about it half the time, but the deals worked in the beginning. We got out about the time they started getting into the round trip stuff where they were booking ads in one place. It looked like advertising but it wasn't. You made deals that got them advertising and we got advertising but really it was just a swap deal or something. We had a hard time with a lot of that stuff and we just said no, we don't do that. It cost us a relationship with them, but by then we had grown large enough. There's no question, though, the two things that mattered the most were we were able to morph a brand, CBS, into a new medium and succeed at it. We actually translated CBS's brand to that new medium better than I think they could have done themselves and they didn't really run us. They had lots of instincts and almost always they were wrong and we didn't have to listen to them. We were polite and we would do all these things for them, but we just said, "No, let us do it this way." Martin: This raises a key question which is there are different flavors of this. Obviously, back at that point a number of companies were breaking out separate divisions. We talked to Mike Perlis before of Forbes and he was at ZD, Ziff Davis, when they created ZD Net which was really one of the first broken out entities. Dan Rosenzweig ran it. It was run as a separate entity. We didn't follow up with New York Times. Larry: It did well. Martin: It allowed you to build the business outside of the cultural... Larry: Which had to be done. Martin: ...which had to be done, right. A lot of newspapers didn't do that. I don't think the Gannett newspapers did that. Larry: They had this in the beginning when they did the first one when they built the information services business... Martin: That was a separate company. Larry: It was a separate business. It was a division, at least. It was totally treated differently. I think the bad experience that happened there, the maybe too soon experience, kept them from doing it again for a long time. Martin: We found that in a lot of places. The video techs kept a lot of newspapers out for a very long amount of time. Larry: That's right. Martin: The cultures are not cultures that accept failure. Larry: The cultural thing is really important. When you stop and look at a successful company, any successful company, certainly successful media companies and particularly successful publicly traded companies, you find that the top management of that company basically feel that their job is to protect the empire, is to fill the moat, make sure nobody comes in and screws with this $15 billion revenue stream we have. We'll do some new things but we have a lot to protect here. We're the leader or a leader. If you add in a cost consciousness that usually comes around having to deal with quarterly earnings and things like that, you don't have a culture that rewards failure. The things that traditionally have to happen in an entrepreneurial enterprise. The trick is when you say rewarding failure in a big company they think you really mean failure and so why would I reward you? You fail, you're gone. You say it to an entrepreneur and it's like that's the first step towards success. I fail at something and I learn something and because of that, I'm going to make it the next time. It's two different ways of looking at it. I was always very impressed with ESPN, one of the companies that I think led a multi-platform life first, a successful multi-platform life first, when, despite the fact that every one of us in the industry knew that they were out of their minds, launched a phone. We all said, "Are they crazy? This is a telephone business." It was a disaster. It was the disaster we all thought it would be. That company learned so much from that disaster, they're the leader in mobile and look where mobile is today. I don't know what the percentage is for New York Times traffic but mobile is over a third of our traffic. If you count iPads and tablets, it's probably a third of our traffic and growing faster than the desktop. That's how you get there. You have to have that culture. Martin: Another theme that's out there that I'd love to hear you comment on is the theme of traditional journalistic craft and practice evolving into the digital age. It sounds to me like in the world of Market Watch you weren't really trying to, as much as you could under the circumstances, do that to represent CBS, the brand product and whatnot. In that era, there were still these very, very robust journalistic institutions and now they're much less robust. What do you think happens from here? Do you think that the entrepreneurs, in essence, win in the sense that they create the Business Insiders, the BuzzFeeds, the Gawker Medias? Larry: To the extent they serve an audience better, they do win. The core of journalism still survives, in my mind. There are a lot of subjective things about journalism that have existed forever that have just changed their degrees. As a newspaper editor in the '80s when I was the metro editor of the New York Post, if a fire occurred on a Monday in a movie theater, I'd assign two teams to it. There would be guys writing for tomorrow's paper and there'd be guys writing for the Sunday paper, the big take-out on movie theater fires. Invariably, that second group would come in on Thursday and say if you give us one more week on this thing it's going to be unbelievable and I say if I give you two months you guys are going to have a book and three months a movie and they'll all be better. Every minute I give more, it will be better, but this audience are not going to be interested in the movie theater fire after Sunday and I don't even know how interested they're going to be on Sunday. It's going to drop. It's not about you, it's about them. In our world today, that discussion is more frequently occurring around seconds and minutes than it was around days for me. What's more important to me, getting the abbreviation of Connecticut correct or getting the fact that the plant is closing in real time on the web? To the investor, there was no issue there. They wanted speed. The knowledge had to get into their head faster. That meant money. As a journalist, I'm serving an audience. They want it to be correct. Lord knows they want all the other things about journalism that we care about, that it's in the right context, that we're being fair, we're doing all the things we have to be as journalists. In their case, in the case of the financial buyers, speed mattered more. In the financial world, it's why Dow Jones wires existed in addition to the Wall Street Journal. Today, that's true of everybody. Now everybody believes they should know something right away. If you're the editor of the San Francisco Chronicle, you have to live with the fact that if I'm driving home from San Francisco to Tiburon it's as important for me to know right away that the Golden Gate Bridge is open or that my kid's little league team won at the game that ended at 4:00 as anything as part of my local scene. Martin: Does Twitter become your go-to news source then? Larry: Twitter becomes a part of your life. For alerts, perhaps it does or some Twitter-like function. I have to laugh. In the early days of Market Watch, we were obsessed with real time so I had this idea in 1997 that we would do real time alerts to people's email boxes of any breaking news story. It was revolutionary at the time. Nobody was doing it. We built it in, we said sign up, we gave people a chance to sign up, we built the sign up form. We didn't have your choice of alerts. It wasn't like your stocks or anything. It was really just us deciding something was a big enough story we'd tell you about it. Really, nobody was doing it. Maybe it was '96. It was early on. They come back. It's built. Great, let's do it. Let's ask people to sign up. We'll probably get 10,000 or 20,000, if we're lucky. Half a million people sign up in the first week, over a million before a month was done. The good news is I've got a million people who want this real time thing, but it took 45 minutes for the email to get to the million people. You set up your email system. I had the first and last. I insisted on me getting the first and last so I know. We were out there in a couple seconds to the first guy but the last guy it was literally 45. The world could have ended by the time you get this. I call in my brain trust, Jaime ... our CTO, and a couple other guys and say, "What are we going to do about this? Can't we buy this? How much will it cost us?" Nobody's got it. We're going to have to create it ourselves. What's that going to cost? Jaime says, "I'm going to have to tie up half my developers for two or three months to build something like that, but we'll figure it out if you really want me to do it. Is it that important?" I said, "Yeah." We actually did. We took a big chance, devoted a lot of our resources to building this thing, and three months later, up comes this new site which had a room full of servers. You remember what server farms looked like. We had a server farm devoted just to this. You signed up and it blasted out simultaneously from all those servers. Now, we had gotten it down to a minute and a half. It was like, "Whoa! This is tremendous!" It was huge for us. It drove tons of traffic, because people got it and they'd go to the site. We would click here for the site. It a major and again, I think it was really a major element in our success. Today, if I made that decision, I'd put it on Twitter. That's it. No cost or anything. I just have good content and get it out on Twitter. Does that change the landscape? You bet it does. Martin: The tradeoff is that Twitter becomes the aggregation point and the brand, and you're just a fragment inside of that point whereas before, you were the man. Larry: The alert goes out with Twitter and it goes out with a link. If that link comes back to you, I can't ignore the fact that speed matters in the news game. If people want speed, the fastest way I can get them something is through Twitter, if that's what they're on, or through some other thing that they allow me to get to them on. That has to be the tip of the spear. It just does. I had to build it myself 15 years ago, but I don't know. One of the good things about that is it's still about the content. You can send me all the tweets you want. If they suck, I'm going to stop using it. They have to worry about...I have a nice way of just turning you off if you're not the guy. Martin: I guess I'm not going to editorialize too much here, but I guess I just looked at it differently. I mean, I view what you did 15 years ago as an investment in a differentiating proprietary channel. Larry: Correct. Martin: Which really built advantage for you. Larry: Yes. Martin: I'm not suggesting you shouldn't do Twitter. Everybody does Twitter. I just think it's become a commodity. It's become like you do Twitter, he does Twitter, and Twitter becomes the aggregation point and... Larry: But that's like saying, "You do cable. He does cable. You put a cable TV show. He does." Martin: No. Larry: But it's still the program. Martin: Because there are infinite channels on Twitter, and cable's an oligopoly. Larry: Cable's the wrong way. You put up a website. I put up a website. Anybody can put up a website. Anybody can do a tweet. The beauty of Twitter is still it's a selective process. You as Twitter can't go to me unless I say it's OK. You can't use Twitter to get to me. But if I want you to, I can take you and I can eliminate everybody else. It's kind of like the phone. The phone's great, but it's the apps that make my phone. they're different than the apps that are on your phone. If I can only choose the apps I want, it's still about the content. It may not help you build the content business the way that helped me build mine. It was a marketing ploy for me, also, to have the fastest...Our mantra was we were first or second on every story, that you could come to us first and know. We would put up somebody else's breaking news story and link to that, that our front page would do that for you. We were both an aggregator, curator, and we provide you with news. But there was a whole category of people who only read the front page. They never clicked on any story. They just wanted to know what we thought was happening right now. It was meant to look like a front page of a newspaper, because we didn't have any other models, that it was being printed at that very moment. That was a mindset we had to create. Martin: Let's switch to the business model for just a moment in the current role [for t]he last five minutes, traditional relationship among the agency's clients and publishers seems to be breaking down somewhat. The line of exchanges and particularly Google, what happens to advertiser supported content... Where do we go from here? Larry: We're concerned about that. I think, there are multiple kinds of advertising and the kind that says if you know what you're looking for, you go to it. We're not going to play in that game as much as we did. We're not going to have classified advertising. It never actually had anything to do with the news in the paper. It was the way it was delivered. that was nice. Martin: [inaudible 56:34] today an accident of history. Larry: Correct. I do believe that a great deal of advertising, like a great deal of news, is about discovery. Maintaining the ability to discover something is really critical. It's the thing I'm working most on now to translate from print to digital. If you look at our digital models, the ability to discover something is still...We're trying to preserve that in them. The idea that you turn a page this way instead of searching for your news or that we deliver you exactly what we think you want or what you think you want. That's one thing, but our world of media is meant to inform and educate as well, not just give you exactly what you want, but give you something we think is really important for you to know. Martin: Serendipity. Larry: Serendipity. Growing up for me, the New York Times, the most interesting story was always the one I knew nothing about. "Wild Coyotes Roam Connecticut." Read that story and go, "Whoa! That's cool. I didn't know that." We tell advertisers if they look at us as a place where they're going to discover, they're going to grow, they're going to learn something they didn't already know, that means that they have to scan through us. In the process of scanning through us, you're scanning through those advertisers. We're giving them an environment on the web that...It will give them a full page. We'll give them a beautiful environment to do it in. To the extent they learn and to us, the risk there is that they don't ever want it or they don't learn how to use that the way we do. But I'm confident they will. I think advertisers are going through exactly what we're going through. How do you tell your story in this new world? I think on each device, it's going to be different. Martin: You're somewhat hopeful? Larry: I am. I think people will come to us not just because they hear we have good content, but because they like what they're [inaudible 58:22] and what they read. It's entertaining to them. A million books are published every year. 500 of them become big hits, because they're better. More people got interested in them. I think newspapers, magazines — they all come and go, but the ones that last are the ones where people are interested in reading the content. If we draw them in with the content, there still is the ability to bring them in front of other things that they don't know about, whether it's paid or not. The ownership of our audience and the mechanism by which we have a relationship with our audience — I think that's critical. Martin: Do you plan to charge for "USAToday.com?" Larry: I don't know. We may. I certainly don't rule it out. We, on our local papers we charge on all of them now, because they are essential information sources in their communities. For USA Today to be an essential in the national scope is harder, because there's a lot more sources of national information. But we hope we're building a differentiated enough product that people will want it. They'll want our attitude. They'll want our take on it. They'll want our voice. If we're comfortable in that, I think we're going to look at every revenue stream we can on every platform we can. It's quite possible we will, but I don't know when or how. We're in an evolutionary state right now between becoming a news brand instead of a newspaper brand. We're trying to — many more of our people. Almost all of our people are now writing or editing on digital, for digital first. That's a big change for their mindset, so we have to get our digital properties to the point where people understand their uniqueness as much as they understand the uniqueness of the paper. More people buy a print copy of USA Today than any other print newspaper in the country, because there's something about it they like. That's fine, but we need to translate into what that means digitally, and we're in the process of doing that. We're not there yet. ...
VIDEO: YES

Scott Kurnit
BIO: YES: Scott P. Kurnit is a serial entrepreneur and angel...
TRANSCRIPT: Martin Nisenholtz: Here we are in the offices of keep.com with Scott Kurnit on March 14th. ...You go back probably further than anyone that I know in consumer media. Scott Kurnit: Who's still alive? Nisenholtz: Maybe, no. But to Qube, can you talk about why you went there? What was the attraction? What it was? Then we'll work forward from there. Kurnit: Qube was awesome. I was in Springfield, Massachusetts as the youngest program director in the PBS system. I was introduced to Qube by John Lack. I went for an interview thinking I was interviewing for CBS Television and John was CBS Radio. I had never thought about being in radio. Whatever. Several months later, I got a call to go out to Columbus, Ohio, for Qube, this interactive cable system. I was the fourth program director in a year and a half. This was Warner Cable at the time, 1979, inventing interactive TV, and it really worked. It was 25,000 subscribers that had a box in their home that had five buttons on it and a message light. With those five buttons and a message light that responded every six seconds, you could do amazing things from game shows to George Bush coming out when he was running for president, "I will never be vice president," that was one of those great lines. And have the viewers control the programming and on game shows, win. Power Play was my favorite game show we did where you won points and then you could wager points using your message light to determine whether you were in the top 5 percent or 10 percent to get to a single winner against potentially 25,000 customers. We had hoped back then, in '79, that interactive TV was the future. Paul Sagan: It was. Kurnit: It was. It's still not here yet, interestingly. Here we are 30 plus years later, and it still hasn't arrived. It's still not nearly as sophisticated as it was back then. It worked technically. People liked it. It went down because Atari, interestingly, sister division at Warner, went from making a billion one year to losing a billion the next year, and everything that wasn't glued down was shut down. That was Qube. At that point, it was a JV with American Express, which got into it because... Nisenholtz: You were talking about QUBE having... Kurnit: QUBE was this incredible experiment, experimental television for a lot of reasons. It was, "Hey, should pay per view exist or should it be subscription?" We made the mistake. We actually went pay per view while HBO went subscription. Subscription's a better idea. A lot less friction than making a purchase decision for each program. It was a laboratory where MTV and Nickelodeon coincidentally got created. It's like, "Hey, we're in Columbus. We have this test market. Let's bring..."And we had 30 channels, which was another part of QUBE. It wasn't just interactive. Cable was 12 channels back then. How do you fill 30 channels? We picked up a bunch of cartoons from Europe. We picked up videos from Europe that were playing in music stores that nobody in the US even knew what videos were. It was a great laboratory for television, but it was created for the interactive part, which was really fascinating. Nisenholtz: Was there anything that resembled news at the interactive part or was it really... Kurnit: We did three original shows a day out of studios. It was a surprisingly interesting operation, probably two to three hours of original programming a day. One of them was called "Columbus Alive," which you would say is news or entertainment, kind of like the Today Show at night. We experimented with every format under the sun because it was a laboratory. What was interesting was, and I think interactive TV probably would have happened had we franchised QUBE to the rest of the industry. Instead, we made the decision to use it to win franchises. At the time, we won Dallas, Houston, Pittsburgh, St. Louis, Chicago because that's where I traveled every week once we started to turn those on. And then Cox competed with us with Index and Time, Inc. competed with cable, with the ATC division. Everyone had to compete with interactive TV. They had to say, it's either bad or you don't want it; you want conventional cable, because they didn't have it. In hindsight, I think, I really do, if we had actually franchised the system, the technology and the programming, we would have had interactive TV long before the Internet, because in a lot of ways, this was a precursor. Nisenholtz: You jump forward and back too much, because there's a lot to cover here. But there were a bunch of experiments that were interesting that didn't quite work, like this one for a business model the source, the VideoText stuff that was done ... by newspapers. Then, when the real change happened, the way that the user thinks of the web as interactive TV now with broadband, etc., those same companies had a hell of a hard time figuring out what to do. In some ways, and someone suggested to us, they had such bad experiences, they plowed so much money into those things, they didn't take off. They learned bad lessons. Do you think that's a theme that [inaudible 00:03:07] today? Kurnit: Yeah, there's no question. It's interesting; I had a conversation with Jerry Levin somewhere along the way when Time Warner did the full service network in Florida. Then, it was a fascinating lesson for me that corporations have no history. I said to him, you're doing full service network and you guys spent 40 million dollars, which was a lot of money. Still is a lot of money, but it was a lot of money, obviously, in 1978, '79.I happened to have, and I still do, 3 linear feet of memos. I said, Jerry, it's yours. I have it because otherwise, it would have ended up in a dumpster, but the stuff that's in there is just off the charts amazing. I just pulled out my January 1979 monthly report recently that went back to corporate. It's like six pages of unbelievable stuff we were doing. I said, "You're doing the FSN in Florida, you own this." He says, "Well, we don't need it. We're doing it again." Nisenholtz: I can tell you, having been there, it was all the way or it was nothing on it. Kurnit: Exactly. Nisenholtz: All over and added not quite 10X to the total cost. Kurnit: Right. Just reading, I think that reading through my loose leafs of memos would have said, we probably shouldn't do this, or there would have been certain shows you would have said, that's been tried, they didn't work. Or whatever. It's fascinating to me, one, that corporations don't have their own history, because it's in the people who actually walk out the door. The other thing is, and I learned this at Prodigy, is that when someone would say, "Hey, we ought to do X Y Z, because so and so," I was the new guy at Prodigy. It's like, "Well, we tried that. It didn't work." I would say the biggest one for me was when I went to the marketing guys and said..."I met this Steve Case guy. He seems really smart to me. He's like carpet bombing the world with discs." They go, "We tried that. Didn't work." I would say that was probably the biggest error in my own career, was while Case, this guy whom I think is twice as smart as I am, and experienced in the early Internet pre Internet. I said to my guys, "We should do what he does," and then we did it. Now, Prodigy had two discs, he had one. Prodigy was a horrible service, AOL was an awesome service. So there are other things that get in the way. I specifically remember grocery deliveries, so Peapod, which didn't work either, but it comes along. The guys at Prodigy go, "Doesn't work." In some ways, Web van, I guess it was. In some ways, they're right, but on the other hand, Fresh Direct's doing quite nicely right now. This stuff tends to have its time. If a company has done it before, they are just culturally unable to do it again. There's no one who's going to stand up and say, "We failed at that, but we should try it again." No one is going to ever step up, so I think that interestingly, early innovators who fail at things will never do...I think just culturally, they can't do it. The people who make up companies go "I'm not doing that." In some ways, it's interesting that full service network happened on the heels of Qube two decades early, but maybe there was enough time in there where they didn't even know. Nisenholtz: One decade earlier. Kurnit: Was it one decade earlier? It felt like a lifetime. Nisenholtz: But they both failed. They both technically worked and failed as businesses. Kurnit: Yeah, but it's interesting. Qube failed because of Atari, not because of Qube, which was what was really interesting. Interactive TV that engaged people as we were, we had show after show that was really interesting. My favorite show I've ever produced in my life probably was "Your Call Football." It was a single football game in Columbus, where the viewers called the plays. The game took four hours. The stadium got hit by lightning as a coincidence. I'd say that could never happen except in the last Super Bowl where the power went out, but the power went out. So for our little semi pro event, we got something, believe it or not, like a 60 rating across our 25,000 subscribers. It was huge because it was really interesting. When you put the power of calling the plays in the viewers' hands, they did crazy things. It's fourth and one and they throw a bomb. A coach wouldn't do that, but the viewers did. Nisenholtz: So it taught a lot of lessons about interactivity, but not online. It was not a good experience. Kurnit: No. What's interesting is we did four at Columbus in 1979. Four CompuServe subscribers got their CompuServe service over the Warner Qube cable plant. Kind of interesting, way early precursor to what would've become @Home and then would've then become all Internet delivery, or so much Internet delivery over cable. Sagan: Well, in Columbus, it became Roadrunner. Kurnit: Yes. [inaudible 00:07:50] in Columbus was four cable systems at the time. I don't know what it is now. It's probably... Sagan: Fast forward to the '90s and it was one, and it was the first...It was not the first cable modem market, which was Elmira, New York, but it was the first branded Roadrunner market. Kurnit: Instant. Interesting. Nisenholtz: Now they pull the plug on QUBE and what happens to you at that point? Kurnit: To me? Nisenholtz: Yeah. Kurnit: Before we pulled the plug, I got brought back to New York. I'm in Columbus. QUBE's the only system. We used it to win franchises. I was 25. I actually, scared to death, was in front of the Dallas City Council as one of the three presenters because QUBE was so important. We replicated QUBE's everywhere successfully. We created the QUBE network. We did shows where all seven QUBE markets got the same shows delivered via satellite, interactive, connected together. We took it to the next level, which is why it would've been fascinating to say to the industry, "You know what? Everybody join in," and we would've had networked, interactive television long time ago. What happened was the Atari situation. Drew Lewis, former Secretary of Transportation, came in to Warner Cable. Just before he came to Warner Cable, he fired the air traffic controller, so this was a guy who took no prisoners. He then brought in McKinsey, cut half the corporate staff, and reduced expenses so that anything that wasn't profitable at that time, anything that was developmental, was killed. That was the end of QUBE. Nisenholtz: Where did you end up? Kurnit: Interestingly, the part of interactive TV that we kept was pay per view. Pay per view used the cable technology of knowing what people were watching every six seconds to say, "You're watching a show. We're going to bill you $4.95." We networked pay per view, which was a business, across each of our cable systems. It then became clear, since we were doing it in six or seven systems, that if we had another three or four, it was worth putting this stuff on satellite. So I morphed over, with my team, to Showtime. Keeping all my Warner seniority, interestingly, going to the JV of Warner and Viacom. At the time "Viacom." Redstone changed the pronunciation when he bought it. We did networked pay per view. We launched viewer's choice in '83. That continues today. I'm proud that that company, which then merged with request and is now in demand, is the pay per view infrastructure for most of the cable industry. Nisenholtz: Did you morph to what we would think of as online, versus interactive TV, after that? Proprietary? Kurnit: Yes. I had interactive in my blood. We did come up with the first pay per view ordering system. We, with AT&T, had the first commercial application for ANI, automatic number identification. You could literally call a phone number, we read your number, we knew it was you, we could add it to your bill. Pretty interesting tech, pretty early. Then I got called by a recruiter to go to Prodigy. Which, I believe at the time, was the world's worst company. I think it was truly the world's worst company. The week I went to Prodigy, my boss, Tony Cox, threw Fortune Magazine across the table at me. It had the three dinosaurs of American business on the cover. I say that for a good reason. It was General Motors and Prodigy's two parents, Sears and IBM. The three dinosaurs of American business. He said, "How could you possibly go there?" I said, "Because it's the future. It's new. It's different. It's exciting." I went to Prodigy. Two months later I met Steve Case. Or a month later. He said, "How could you possibly go there?" I said, "Because you didn't call me." AOL was the better business, by far. Much more interesting. Nisenholtz: What year was this? Kurnit: It was pre web. Yeah. I went to Prodigy pre web. Hopefully the technology exists for you to edit that out, not remembering. Prodigy was not a fun experience. It was a company created out of IBM and Sears, which meant, culturally, it had the personality of its parents, competing against a scrappy startup run by Steve Case. That was an unfair competition. Sagan: What did you learn about interactivity, as we transition? Because we want to get to the web and the Internet. That was sort of a bridge, I guess, between the interactive TV and... Nisenholtz: We've got to get to MCI, first. Sagan: Yeah. But that was part of the evolution. Kurnit: MCI came after Prodigy. Sagan: Yeah. What you learned about Prodigy about the power of interactivity and what it would do to business models, news and otherwise. Then move to the MCI piece and fully to the web. Kurnit: Prodigy was not a great system. It was run on very early stuff. It was run on NAPLPS, which was this archaic system of painting images on the screen. It was very cartoonish. Nisenholtz: North American Presentation Level Protocol System. Kurnit: Good for you, Martin Nisenholtz. You and like five other people know what NAPLPS actually is. [laughs] Meanwhile, interestingly... I'm going to talk about competition, because AOL was built on top of Windows. Because of IBM losing the OS2 battle to Windows, the whole concept of Windows at Prodigy was like, "We don't do that." Prodigy was built on DOS. Disc Operating System. AOL's built on Windows. Elegant, back then. That was an interesting thing. But the easy learning's of interactivity, which we see today, is that this stuff's really engaging. We learned that content where you could comment, big deal. Content where you could easily get whatever you wanted from a big corpus, really interesting. Even advertising, which Prodigy had and AOL did not, actually worked. People would go through the add queue of probably 150 ads. They really were banner ads. They ran at the bottom of the screen. They were not annoying. They were viable. Good lessons there. The big lesson has to do with pricing. Prodigy, because of its infrastructure, which had Akamai qualities. Prodigy was a caching network that was able to cache contents in nodes all over the country. It had a significant benefit over AOL on content distribution and had parity with AOL in communications. Because there was no caching, obviously, in chat and message boards. So Prodigy's pricing was geared towards the content. That benefit of network was maybe their Achille's heel. Prodigy gave you unlimited use of content in two hours use of communication. AOL gave you five hours use of communications, which is all anybody wanted to do. That was an interesting lesson. The online systems, back then, were so efficient for chat and message boards. The other thing was, Prodigy, because it's run by IBM and Sears, literally read every post on message boards before they went live. While AOL just said, "Put it live. We'll worry about it later." So there was that issue coming up again. It's not just that corporations are slow to move because maybe they did it already, they're slow to move because of their decision making. They're slow to move because they're conservative. While AOL didn't mind someone saying, "I'm going to cut my Sears credit card in half." A company half owned by Sears would not tolerate someone saying, "I hate Sears." We've learned over time that anything goes. You publish fast, you worry later, etc. I think The New York Times still previews messages before they go live. Nisenholtz: In some areas. Kurnit: Which makes the message boards better. But it also slows you down against the Twitters and Instagrams. Nisenholtz: Talk about news in any form. Financial, sports, headlines, stuff that happened, either at Prodigy or that you observed at AOL. Kurnit: We, at Prodigy, had four divisions. One was news, news and information. We had financial services. We had stock quotes. You could buy stock on Prodigy. It was both information and transactions. We took in all the wire feeds. We actually did have a bit of a newsroom. Sagan: You had wires because you were a closed system? Was it the AP and Reuters would sell to you the way that they didn't at first? Kurnit: Correct, they would have viewed us as a newspaper. We were a closed subscription system. Fascinating thing about Prodigy that I learned, maybe even afterwards Prodigy was meant to be a free service. The only reason Prodigy had a billing system, this is really interesting, was that the original business model assumed...IBM, Sears, and CBS was originally Trintex. CBS got out early, to the point where Mel Karmizan, when we talked about him buying About.com, pre my IPO of About, I said, "You know you owned a piece of an online service once." This was where corporations have no memory, so Mel is CEO of CBS. He goes, "We did?" I go, "Yeah, like you owned a third of it." But they got out, and it was IBM and Sears. But the original model was that they would...that Sears, using this interactive system, would sell two things a month, so we need a way to track people. A billing system was a way to track people even though were not billing. Well the reality was, they sold one thing every few years, so the model was off by 24X, shit happens. Nisenholtz: You were up there in what year? Kurnit: I left to run MCI's Internet business in '95. Nisenholtz: So the webs come along, it's starting to blow up to close the walled garden model, and be open to the web. Sagan: But isn't the MCI business still a walled garden? [cross talk] Kurnit: Well before that's fascinating, one of the things we did at Prodigy, which if you talk to... Sagan: MCI and News Corp, right? Kurnit: It was MCI News Corp, but before we get there, there's an interesting sidebar, and that is we put web browser in Prodigy six months before AOL. Ted Leonsis would actually wax poetic on this, because it like shocks them and freaked them out that Prodigy came along and did this. It's interesting; it was one of those kind of basement projects. We’d gone off to see Netscape at the time, which was all of the maybe 10 people, and it was kind of intriguing. About two weeks later, one of our guys said, "Hey, take a look at what I built." He built a web browser in like two weeks, and we put it live in Prodigy. What was so interesting about the web browser in Prodigy, Prodigy's a closed service, and the web browser is completely open. In the stroke of a minute we flipped Prodigy' business model for better or worse on its head, and if you think about it, as a closed model...and one of the reasons I was brought in was to bring the cable industry to Prodigy. We had just about every cable network had a place on Prodigy. Now interestingly, we own the distribution system, so who pays for lunch is kind of my example of business model. You go talk to a cable network, they want on your new interactive system, they pay for lunch. You then open up the Internet where anybody who creates a website can get on your service, I pay for lunch. That was a transition that was very scary for Prodigy. When we went to a board meeting and said, "The web is it, we should abandon our NALPS system, because it's a generation behind AOL, and we should trump AOL by going all web," it's like, "Wait a second, that's a total flip of business model also." The answer is, "Yes it is, but that's where it's going. Kids in garages are going to make stuff that blow us away." That was not well accepted by the Board of Directors to say the least. About two weeks later I got a call by a headhunter to go run MCI's Internet business, it's like, "Sign me up." I went to run MCI's Internet business, I was hired really quickly, it was a week from start to finish and in hindsight I now know, and that's why it was so fast is they needed someone on their side of the table for what was about to be at JV with News Corp. It was not at JV when I joined, so I joined Prodigy to run its Internet business... Nisenholtz: No, MCI. Kurnit: I'm sorry, I joined MCI to run their Internet business, and two or three weeks later my pager goes off, and it's like, "We're doing this to billion dollar deal with News Corp, you're going to run this JV." I pleaded with them not to do it, interestingly. I'd been in several JVs in my life, they don't work. They work on day one, but...at the closing dinner, everything's great appetizers and by desert they're already unraveling before we even go forward. In my interview process, the guys at MCI said, "What you think of Delphi?" I go, "I don't, there's anything there." Nisenholtz: Dan Bruns’ Company. Kurnit: Dan...Exactly. Rupert had bought...News Corp. had bought Delphi, and then they ask a question about...then we talked about JVs, and I said, "Terrible idea," so Delphi, terrible idea. JV in general, bad idea, and then two weeks later after I get there, they go, "Oh, by the way, Delphi is the cornerstone of your access product, and News Corp.'s your partner." Its like, "If there was a gun..." I don't know. [laughs] Nisenholtz: Didn't News Corp. have an editor at that point; it was I think a woman... Kurnit: Well Anthea Disney. Nisenholtz: Right. Kurnit: She and I became very good friends. She is awesome. We were set up to want to kill each other, so structurally there were a bunch of issues. It was a fascinating issue, because the original construct was Anthea, who I think the world of, would be in charge of editorial and report to the board, and I'd be the publisher, and I'd report to the board. I said, "No, no, no, no, no this is a TV station, this is not a magazine." I won that battle, which was interesting, but it made for early complexity which she and I then figured out. Her editorial team built an awesome product called iGuide, building on top of the Delphi the... Nisenholtz: It was not an Internet product, it's very important, or was it? Kurnit: Oh no, it was a wide open Internet product. Kurnit: Oh no, no, no, so... Sagan: This is not...so we've transitioned from the proprietary service of Prodigy, now you're working on the web. Kurnit: Well interestingly, the proprietary service of Prodigy added a web browser, which opened up Prodigy, whether they like it or not... Sagan: Right, right, right, but they didn't want to do that. Kurnit: Still a subscription service. They were so keen to do that. Those of us who were working it, and seeing where it was going whether we like it or not said, "We have to do that, and we can take advantage of that." McKinsey had bought, by the way, been in at Prodigy for some time, and frankly I guess I can admit now that About.com, which I ended up doing two companies later was an outgrowth of what I pitched for Prodigy to do, interestingly. Towers and pebbles, channels and micro sites, which is what About.com became. At MCI it was all open web. Vint Cerf was there, Vint actually on paper reported to me, but you don't take the father of the web and constrain him much, it's like, "Vint, whatever you wanted to (do) is OK." Sagan: At this point open web content was in the service of driving access subscribers effectively? Kurnit: Yes, and what MCI meant to do with the web is, guys like Vint were there who obviously saw the web for anybody created it, and MCI looked at it and said, "Well we have all of these customers we do business with, these stores..." The first thing that they had created, even before I got there, or were starting to create was a shopping mall of all the stores. "We'll build them for you, you'll sell things, will have all these stores, we'll end up being first mover, we will be the place for shopping," and it was... I forget what we actually called it, but it was part of Internet MCI, and it was a mall, and it was quite good at that time. MCI really did, I think, early on have a good... Sagan: I remember when you came in pitched that. Kurnit: To you. [laughs] Sagan: Yeah, that timing, as an alternate partner, and it was all about shopping. Kurnit: Right, and that's because MCI had customers with phone relationships, and MCI's pitched to Murdoch was, "We have 23 million customers, you have content, the Internet is a blend of commerce, content, and communications. We bring the business customers for stores, we bring the residential customers who will pay us maybe the 9.95, 11.95 a month for service. You have content. We can create AOL on the Internet." We did a business plan, it was $500 million expense over a period of four or five years to create this, Murdoch in about 10 minutes went, "This is good, do this, go." MCI completely freaked out, they said, "That's a nickel a share. "Rupert said, "I don't understand?" It was a nickel in earnings per share, and MCI, if you now look backwards was kind of in sale mode, they ultimately sold to WorldCom, so a nickel a share to them was catastrophic. To Rupert, who didn't really care about his stock price on any given day it's like, "Yeah, I get that it takes $500 million to go build the new AOL on the Internet," and was prepared to do it. But that joint venture unraveled pretty quickly. Part of it was that IGuide was a good product; the access business that we built on top of Delphi was not so good. Frankly, all the early access businesses were a little flaky. As we handed disks out to all the MCI executives, some of them couldn't make it work. They had conflicts with Internet MCI that they already had on their machines, so even though the access product, I would say, was probably as good as anything that was out there, MCI looked at it and said, "This things not perfect, and if we're going to put this in the hands of our customers, we're going to ruin our core business." Sagan: Well so, if we come down to the innovators dilemma where, "You are what you are," theirs was, "We're a nailed up phone company, we got more nines in our service level..." Kurnit: Yeah. Sagan: "So something that might not work, or the customer has a flaky PC experience, they're going to look at it with a phone filter, and this is a disaster." Kurnit: You know you got that right, so MCI said, "We can't do this, we just can't do it." Then pretty much in the dark of night, it was a Super Bowl Sunday, I was called to Washington...about a year into the project. Interestingly that JV actually never got formed. The outside world, who was convinced that it was, but I actually got my paycheck from MCI, Anthea got her paycheck from News Corp. There was a Board of Directors of three from each of the parent companies, but the JV actually never existed legally as a JV. Because they just couldn't get it together to bring the two together, and then what happened was interestingly on a Super Bowl Sunday, I got called to Washington, told by my MCI brethren that, "Tomorrow at noon there's a press conference with Bill Gates and Bert Roberts, and were pulling out of the News Corp. JV that you're running, and were going to throw in with Microsoft, and we want you to come back and we went to run that, which will be MCI's customers running Windows 95 or Internet access." It was a fascinating moment in my career, because I said to the guys, I said, "If you have Windows 95, you get..." what I guess was called MSN in at the time, Microsoft network, or whatever it was, "...and you need it to run it, so we actually can't sell any units. You're sending our chairman in to talk with Gates tomorrow in front of the press for a product that no one can use, that no one can have." They did that press conference, the ultimately sold zero copies of that product, zero, because you couldn't sell it. So basically we blew up the would be JV of 800 people that we had between the companies. We were running a games division, we ran Kezmi which was games, MCI mail... Sagan: This is the News Corp? Kurnit: The News Corp/MCI JV had a lot of stuff in it, it was like all the ragtag y, interactive stuff of the two parents in the JV. And it was 800 people, and it's like...I think it was Valentine's Day, where it's like the big company meeting, "Guys, were not could do this anymore," kind of like Ameritech. [laughs] Sagan: Was that the same year between Super Bowl and Valentine's Day? Kurnit: Oh, it was Super Bowl and then...Yeah, so it's two weeks later we blew up the business. Yeah we blew up the business right on the heels of the Microsoft press conference, yeah. Sagan: And then that went nowhere, technically? Kurnit: Technically it was impossible deal, but MCI was always intrigued about having a relationship with Microsoft. Sagan: Talk about the user experience around News Meta 12 content, then. When you're on the open web in creating [inaudible 00:30:13] . What did people do, and how did it change their habits? Did you see any of that? Kurnit: IGuide was a guide to the Internet. We had editor's that were combing for good websites back then. There weren't that many of them, so it was actually possible to do by hand. Sagan: A little bit of Yahoo copy? Kurnit: Very much. Very much like a Yahoo. A little too heavy. The Pathfinder problem of being too beautiful, but not delivering in speed, so when Yahoo, because their pages loaded in two, to three seconds, versus Pathfinder at 30, and our stuff at 18 seconds a page, made a big difference. Anthea's background as a news person, as an editor of a range of magazines, created, I thought, a really interesting news product, and a newsroom. Coupled with the wires, and other sources that were out there. I can't recall well enough, I guess it didn't really change news consumption, back then. Our product was too thin. The likes of magazines, and television were still strong. We were not a dominant news source by any means back then. We were not a threat to conventional media, yet. Sagan: No, but you touched on one of those themes that keeps coming up, which is the, "You either are what you are, or you compete with what you think you are." You have a bunch of, effectively, magazine companies, or magazines types, or print types looking at each other, and not understanding that, somebody who doesn't know those rules, and is doing something else, like Yahoo, which was basically, go back, that page had a couple of boxes, a Visa logo, and text, and was just cleaning up audience interaction. Where these other things, which were beautiful, but not very useful. Kurnit: Well, they were beautiful. I always used to say to people that, "The reason Pathfinder was so thick, is that you printed the pages to show Jerry Levin what it looked like." "Because he probably wouldn't use it on a computer back then, you can tell me later." I was an advocate for simple, fast, versus beautiful, slow. I think that continues as we see things like Reddit, and Craigslist today. Simple, fast trumps beautiful. We also had the corporate problem that we had to serve the parents. Sagan: That's the same point, right? Nisenholtz: As Prodigy too. It seems to me, whether it's Steve Case, and Prodigy, or Jerry Yang in MCI, it's very difficult for people who get up in the morning to work for a big companies to compete, with people who don't. Who get up in the morning with a gun to their head, across the entire entrepreneurial spectrum? It's just very difficult. Kurnit: The question is. Are you doing it for the consumer, or are you doing it for some board of directors or for some sister division? Sagan: ... We can go then, post Microsoft, to all web stuff. What came after the Microsoft thing that blew up? Nisenholtz: I had asked a question of, whether you think there was any hope for large corporate parents like the Prodigy, or MCI businesses to compete with AOL, and Yahoo respectively? In other words, I'm asking a cultural issue, Kurnit. As we go further along. Kurnit: As we look at the future. Nisenholtz: Yeah. The history of the news business too. Kurnit: I think in theory yes, I think in practice it's really hard. Having been in a bunch of JV's, one of the things I actually tried to do was say to both MCI, and News corp. "Either of you guys could fire me." "Takes two of you, to get the new guy." "But I don't want to be here because, I'm MCI's guy, and they don't have the right." I saw that at Prodigy. The guy who was my boss, should have been let go, but he was CEO's guy, and it was CEO's turn. To me, I looked at that, and said, "Oh my god." "That's crazy." Because the CEO is obviously so critical. I put this forward, and they said no to it. I said, "Guys, this puts me at risk." I don't know why they said no to it. I actually wrote 10 points as to why it was a good idea. That I'd be on eggshells having to serve the mutual needs, or one guys going to say, "Out." We've seen it. The start ups trump the established guys over, and over again. I think it's possible. One of my dreams when I sold About.com to Primedia was being able to take the About culture, and I'm a culture freak, and lay it on this traditional company. I was well aware that 50 percent of the people would reject the culture that I wanted. It happened in the very first meeting, interestingly. At my company the word employee is banned, and the word consensus is banned. I walk into my first big group meeting at Primedia, and both of those words are used. You pay 20 bucks to the party fund here, at Keep, or About if you use either of those words. The big company thinks that consensus is a good thing, even though it completely slows you down. I have other issues of the word employee, in terms of indentured servant, and things like that. I think it's possible, but I think that it's only possible, and for the future, those of us who have been in those environments, who then go to start up. I think I could make a big difference, at a big company. Half the people would want to kill me, but I'd want to kill them too. I did learn at places, Prodigy is an example, where ingrained culture was a problem, and so was Primedia. I do believe that half the people, whether it's Time Inc, or New York Times, or whatever, want to take the helm, want to move into the future, are willing to take the risks, so it is possible. Maybe there is a generation of us, who have gone corporate, then start up, and can go back to corporate, and make something happen. Nisenholtz: Let's talk about, About now. You left MCI. Did you start About right after that? Kurnit: Pretty much. I consulted for Open Text, the Canadian search engine company. Which was Yahoo's original search engine, and they said, "Hey, Yahoo just went public for 700 million dollars." "They pay us a whopping million and a half dollar fee, which they're actually not paying us, because they think we're a commodity." "What would you like to do?" I wrote them the two page memo. Which had been milling in my head from Prodigy, then at MCI where I wanted to do it, and they said, "Great, we'll fund that", and got into business pretty quickly. Nisenholtz: The principles were based on your learning about how users wanted to contribute? Kurnit: Really, two things. One is, how do you create something that's really big? Very wide? That uses the power of the Internet for both distribution, and production? So is using all the power of the Internet to create something new. At the time most people thought it was not a very good idea. It's interesting that 16 years later it's alive, after five owners, and six CEO's, because of its distributed nature. At the beginning it's, "Can we make a site that's run by one person?", because as soon as you add more than one person, you get into all kinds of friction, and politics, "That can then network with others, both in terms of production, and distribution, that creates something that has an ever growing scale?" I believed that, from what we wanted to do at Prodigy. I knew that there is passion out there in the world from the Prodigy experience, originally, that's untapped. Where people don't have the chance. Whereas, a Time Inc, or New York Times it's like infrastructure, and distribution, and gate keeping, that the Internet was just much more flexible, and that we could take advantage of it. Interestingly at the time, we got most compared to Geo cities. We were very different businesses. It actually infuriated me, even though Geo cities ended up being worth twice as much as us. There are some lessons there. Although they're gone, and About is still around. That was user generated. Build a container the users generate, and fill it. That's what Twitter, and Tumbler, and Facebook, and Pintrest are. That's a great model, that's what Keep.com is, for shopping. With About, we were much more controlling than that. We found people, we recruited them, we trained them, we supervised them, but just short of employees. They were independent contractors who continue to be, which is an important part of the model, so that people had the [sense] that it was theirs, and that they had a passion for it, whether it was composite materials, or parenting. It allowed us to have 750 verticals run by people with tremendous passion, and capability without having them all in one place, which is a big deal. LookSmart was a big competitor at the time. They put everyone under one roof and that model didn't work. Our model of distributed workforce has lots going for it. Very different than the current Yahoo was the mere issue of distributed. In this case the distributed workforce is probably one of the half dozen reasons that About exists today, while so many other businesses don't. CEO turnover, or selling the company, these people are in Argentina, and Switzerland, they never saw any of that. I think that not seeing the sausage being made At corporate is actually beneficial to having been around. Use the power of the Internet, and still does, on all parts. Production and distribution. Nisenholtz: I think that's a very interesting point about the production, and distribution. I think the news industry recognized very early on, the power of distribution. The processes that go into quality news have to do with processes that, at least in some folk's opinion, kind of transcend the changes in production technology. Part of the question is, can you get a level of quality out of a new production technology, versus an existing set of processes? As an example, About.com has one person, it's a published first model, stuff is quite good, but a lot of times people make errors. It would be great if you could comment on that, because from About, came blogging, and from blogging came many other things, that presumed to compete with traditional news processes. Kurnit: It's always fascinated me. About's very efficient, but the content is B+. The New York Times is pretty inefficient, but the content is A+. The interesting thing, About is a published first model, so it's kind of like, "Ask for forgiveness, fix it along the way, train the people, so that they don't need to be edited." Whereas, at the traditional companies, you write an article, and then two, or three editors look at it. I just heard an interesting story at Time Inc, where someone has to actually submit her Instagram pictures, so she's in her closet; she sees something interesting, she then has to submit it to the social media person, which means it takes two days, for her Instagram picture to go live. That's Time Inc. Whereas; a start up [snaps fingers] would go live. Here's the trade off. How much better is that? Because it took two days, and it found itself into a queue through a corporate entity, that puts it live. They have to lose. Are they 10 percent better? They're not 90 percent better, so on the classic 80/20 rule, Time Inc, New York Times, this stuff's better, but it's not enough better, to justify the cost, and time. Whether we like it, or not. Nisenholtz: It seems to me that played out in encyclopedia. Microsoft Encarta replaced Britannica, and Wikipedia, which is kind of an About like model, in a way, replaced Encarta. Kurnit: Correct. The interesting thing is, Encarta is more accurate. I always have that little five percent fear when I'm reading Wikipedia, because I see my own posting, which is 90 percent right, so we all have that feeling. I don't think we put the genie back in the bottle. It's interesting; along the way I think I own curated Wikipedia.com. You probably told me that's a bad idea. If you can blend, if you can take something that's crowd sourced, and give it another editorial layer, to just fix that 10 percent, that's interesting to me. It's not as efficient, but...You're smiling... Nisenholtz: I don't think you ever told me... [laughs] Kurnit: Of all of my bad ideas, you hadn't heard that one? Nisenholtz: No. [laughing] Kurnit: If you take a look at the URL's I own, you'll see there's lots of curation; I'm a big believer of curation. Which is, in some ways, in conflict with the craft. That's interesting. GeoCities was worth twice what we were worth. We worth a billion seven at About, pretty good. GeoCities sold to Yahoo for four billion dollars. They had a cheaper model, and it was like, "Anything goes." A true crowd source top to bottom. Mine was somewhere in between, probably, GeoCities, and the New York Times. I think we're going to have to figure this out a little bit. I do think that a slightly better curation on Wikipedia would make a better product. It would slow it down a little bit. It's fascinating, because if we look at Wikia, which is the commercial version of Wikipedia, it's not as good as Wikipedia. Nisenholtz: Not even close. Sagan: [inaudible 00:48:44] vessel, and fill it up more. There are a lot of those, but they haven't necessarily endured. GeoCities was one, followed by MySpace... Nisenholtz: Tripod. Kurnit: Tripod, MySpace, et cetera. About, the curation has endured. Maybe it was not as popular, or valuable in a moment in time, but it's endured. In some ways you could say, Wikipedia is semi curated. It's curated by editors, et cetera. Over time it's, maybe this is controversial, there's some that would say it's now more accurate than the curated encyclopedia's. Even Britannica was not error free, and they could not correct it if you bought the 30 volumes. It was much, much slower. It's interesting. I love to think, that because we curated it, it gave sustainability to an About. I think if you take a look at some of those, MySpace, why did it go down? Well, it got bought by Newscorp, and Newscorp would be more of the reason, and their model wasn't as good as Facebook. Facebook was a communication platform. MySpace was an expression platform. Not as interesting actually, as the communication platform. GeoCities, why did it go down? Was it a bad idea, or was it bought by Yahoo? At that point Yahoo had become a corporation. Looking at Twitter, Pintrest, Instagram, Tumbler, if remaining independent, I think these platforms are pretty interesting. I would have to say that it's more, those who purchase the platforms. Kudos to the New York Times. Kudos to Primedia, they didn't kill About. Would've been a tendency to do that. Kudos to Nisenholtz, who said "About has to be in a separate place." Because had About been in the New York Times building, then people would have been in the lunchroom saying, "I think we need to edit this stuff a little more", and it would have ruined the platform. I think a lot has to do with the stewardship of ownership, versus the models. Sagan: Bring all this experience together of decades of interactivity, to sort of focus on the news journalism piece, and what your observations about what's happened. You haven't been in news directly, but you've been touching it in lots of ways, and certainly see the impact of the Internet. Bad on the business model, for sure, positive on the innovation, more stuff out there. But it seems to be halfway across the bridge and not sure it can get to another side. Kurnit: What we haven't seen happen successfully in news is professional journalism matched with crowdsourcing with proper curation, I don't think. We see on Twitter when the plane goes down on the Hudson, it's first reported, I think, on Twitter, and then the conventional news outlets pick that up. We've seen businesses like now Public and others that have tried to crowdsource into news; I'm intrigued by that space. I have a lot of respect for "the people." There's a lot more "the people" than there are the folks in the ivory towers. Part of it's in commenting. We see Huffington Post has been successful, I think, with a modified model both in terms of massive amounts of user input from commenting, and also blogging as interesting fodder. They're not the "New York Times." The question is, as we look at the likes of the "New York Times" and the "Time Magazines" as they go forward, they can't keep doing what they're doing. The model doesn't work. There's less revenue in digital than there is in the old media, and that's not an anomaly. That's real. That's going to continue, so they have to lower cost structure. How do you lower cost structure? Well, you introduce, I think, people with passion who don't do it for the money. They do it because they love it. The interesting thing about people who do it because they love it, they're actually in a lot of ways, if they're good, they're better than the person who gets up at eight o'clock in the morning and says to his wife, "Damn, I've got to go to work today." These people don't do...They'll get replaced by somebody else, because they're not doing it for the money. I think that the blend of professionalism, and passion, and curation will become, and it is becoming, the new source. I do worry about news that is just incorrect. I actually shared on...Facebook this quote written on a slate that said something about the Internet, this and that Abraham Lincoln. You never know if a quote's real or not on the Internet, and that's a problem. So how do either we the people thumb it up and down or share it appropriately to create enough of a filter so that we know that it's real? I don't think we've achieved that yet. I still think there's...There's more voices for sure, but I think that the ultimate news product is still in front of us. ...
VIDEO: YES

Ted Leonsis
BIO: YES: Theodore John Leonsis (born January 8, 1957 in Bro...
TRANSCRIPT: Martin: April 4th, 2013, Paul Sagan, John Huey, Martin Nisenholtz speaking with Ted Leonsis. It's great to be here. Paul: At the Verizon Center. Ted: Thank you. I'm very fond of everybody here. We're like cockroaches. [laughter] Ted: We've survived all the nuclear winters. [laughs] Paul: Still standing. So, maybe go back to...You and I met in the AOL days. Martin: I want to go back before then. We first met when you were at Redgate. Take us through when you first realized that some form of digital technology was...You were at Wang, maybe? When did the light bulbs go on here, Ted? Ted: In 1976, I was a student at Georgetown University, and I had to write a thesis. All Georgetown students, because of the Jesuits, have to write a thesis. I was assigned a mentor. He was a 75 year old Jesuit priest, the least technically astute person you could imagine. I had to find a subject to write about, so I went to the library to find the smallest book I could find. I was successful in finding "Old Man and the Sea." I pulled "Old Man and the Sea." It was my kind of book. The first chapter was, "It was a good day. The sun was hot. The water blue." Chapter two...So I really liked the book, and I then went back to the library to get another book by Hemingway. The second book I got was "Across the River and Into the Trees." Totally different, like 600 pages and long run on sentences and 100 page chapters. I came up with this concept that maybe Hemmingway had written "Old Man in the Sea" early in his career, when he was a journalist. He used to write for Esquire and was on the battlefields and filing reports and the like. He started to write books, and he needed some money, and he went back to what he knew best, a journalistic style of writing. I mentioned that as an idea to Father Durkin, and he said, "Why don't we use a computer?" It's 1976. There was one computer on the campus at Georgetown University, an IBM 360 mainframe computer, in the registrar's office. I participated in perhaps the first real mash up, interdisciplinary, connecting the dots. We brought in a graduate student who was a linguistics major and then the one guy on campus who could program, and we created an algorithm. I was forced to type in the first 5,000 words of articles and books throughout Hemmingway's career, and then of "Old Man and the Sea" as a control. The linguistics major created the 17 measures words per sentences, sentences per paragraph, pronoun references. We put it all into this big computer, punch cards, and what was spit out was that Hemmingway wrote "Old Man in the Sea" in the '30s and dressed it up a little bit and published it in the '50s, won the Pulitzer Prize, it was a best seller, and then a couple of years later took his own life. I remember Father Durkin saying when we had to do an oral presentation of it, he introduced it and said, "This is the first time ever where liberal arts and technology come together." I think it got published in this really arcane "Computer and the Humanities Newsletter," and that was my first introduction to computers. I remember when I read Walter Isaacson's book on Steve Jobs, they asked Steve why was Apple so successful, and he said, "Apple's where liberal arts and technology come together." I was first generation, I graduated in 1977, really first generation that knew what a computer was. I ended up fortuitously going to work for a populist tech company called Wang Laboratories in my hometown of Lowell, Massachusetts. Why it was fortuitous was Wang wasn't like IBM, selling to corporations. Dr. Wang believed that women coming into the workplace had drudgery. They were typists. He really built the first killer app for computers, which was a word processing application that freed up drudgery, and one of the first companies to create email. That was my first job out of college. In 1979, I had my whack on the side of the head because I went to the West Coast Computer Faire. There were booths selling Commodore computers and Osborne sets, and I bought an Apple II computer. It wasn't really a computer, it was a motherboard and a keyboard, and you bought a CRT. I remember paying six dollars to a guy for a manual. He had written his own instruction manual on how to put it together, and he was selling it outside the convention center in baggies like a drug dealer. "You want a manual? Six dollars." [laughter] Ted: Me and a friend put it together, and I had an Apple II. It used the CPM operating system. VisiCalc worked on it, which was a spreadsheet which everyone was buzzing about. I didn't need a spreadsheet, but it was cool to play with. Then there was a database, PFS software. So I'm struggling playing with this Apple II in my little home office. Then one day I go grocery shopping, and at the checkout line I see a TV Guide. There's a starburst on the cover of TV Guide that says "the number one best selling magazine in America." It shocked me that I wouldn't be aware of the number one best selling magazine in America. I bought it. The front of the book was interviews with television program directors and television stars, and the back of the book was a directory, what programs were on what network at what time. I remember thinking, "I can't believe this is the number one best selling magazine in America." I threw it away, and then I went in front of my Apple II to play. I honestly had this, I said, "This computer, this screen, looks like a television." And I've got these two programs, big floppy discs, next to my computer. They're called programs. TV Guide talked about programs and networks. I just came back from the computer fair, and I had met Dr. Bob Metcalf, who was at Xerox, talking about Ethernet networks. I remember saying, "I bet you this computer and a television and programs and programs and networks, and it's all going to be the same." Martin: Ted, were you aware that around that time videotext was coming along, or was that off your radar? Ted: That was a little off my radar. I was more a personal computer... Martin: Right, you came up from that side. Ted: But then I quit my job, and I started my first company. It was called LIST, the Leonsis Index to Software Technology. I literally went out and created a database of every piece of software and hardware that worked on the Apple II platform, the Commodore platform, because they all had different operating systems. Literally just as I started that work, there were rumors that IBM was going to introduce a PC in Boca Raton, Florida. So I went to Florida and I started my company in Vero Beach, Florida. Martin: Oh, is that why you were in Vero Beach, where you later became mayor. Ted: I was mayor of my town. It was a beautiful time, because IBM was going to popularize personal computing. They used Charlie Chaplin. One of the ads that they had, with Charlie Chaplin holding all of these pieces of software, we worked on. We gave them, "Here's all the programs." I met Mitch Kapor. They were introducing Lotus 1 2 3 to take on VisiCalc. I met Bill Gates, because he was working now on a new operating system. He'd bought a company and turned it into DOS. I was right there at that launch. In 1983 I had known Steve Jobs a little bit. He said, "I'm introducing the Mac. You should work with us on the Mac and do a Macintosh buyer's guide," publishing. In the first million Macs that shipped, he put one of our magazines. He paid a dollar per copy. That's how I got into the publishing business. We did one for IBM, and we did one for UNIX. I had this next generation company. It was a database company. It had a publishing arm, and then it was, "Now we need to be online. We need to let people get this information online." I think the first time I got online it was 1,200 baud. It was 1,200 baud. One of the ideas was someone should be able to download software. I did a big book publishing deal with Warner's about software, and in the back of the book we put a floppy disc so you could sample the software that we were writing about. Then I met Walter Forbes at Compu... Martin: Comp U Card. Ted: Comp U Card, because he was building an online service. Eventually I sold that company to a very large publishing company, news company, Reuters. I'm sorry, it was called Thomson, which now is Thomson Reuters. A couple of years into it, I said, "They've taken this business, traditionally print based, and I like this data business." I had started a private satellite network business where I put satellite dishes on the roof of Time Inc. and pulled the cable down and gave all the editors a TV, a VCR and a fax machine. That was the workstation. I would allow Microsoft to broadcast into all of the buildings. Then I had started this interactive shopping business based on CDs. Thomson hated the business. It looked like losses to them. So I approached them and said, "Could I buy back? I'll walk away from a couple years of my deal, and I'll take the money losers that you don't like and about 20 people." That's how I started Redgate. Redgate was started in 1986 and, honestly, I think, was the first new media company. Everything was digitized, databases. We started working with all the local telephone companies, the RBOCs. We had NYNEX and Bell South, and we were building applications for them. Apple, EDS, Dow Jones. We, as a young company, kind of got in the middle of this world, and I would see the world through the telecom guys' eyes and through the personal computer guys and the media people like Dow Jones. I just came to this, "Something big is going to happen." We wrote some white papers and made some posters. One was "New Rules, New Media." We tried to articulate what this would mean to consumers and the industry. Then it got a little darker in 1988. It was "Digitize or Die." That was the poster. We sent it to all presidents and chairmen of media companies and the like. The company's growing really, really fast, and Dow Jones wanted to acquire the company. I thought I should hire an investment bank, which I did. My investment banker was Dan Case, who was head of Hambrecht & Quist. Dan worked really closely with us and one day said, "I've got a brother who's just been named head of this little online company, and you talk about stuff the way he's talking about stuff. He's seeing the world from one vantage point, you're seeing it from another, but you're seeing something very similar. Can I introduce you?" And so I had breakfast with Steve, and over coffee he bought my company. I remember him saying, "I know a lot about your company, and my brother's been very positive, and I'd like to acquire the company." Martin: This was around '94? Ted: '93. Martin: '93. John: And this breakfast is in Vero Beach? Ted: No, this was in Boston, at a trade show. John: Oh, OK. Ted: I remember saying to Steve, "Can we kiss first? I mean, can we date?" He's like, "Want to get married?" And Steve said, "Life's too short to drink bad wine, and this is what we should do. We should merge our companies. You have 150 people. I have 250 people. I'm $40 million in revenues, you're $20 million. We'll get scale. There's not that many people out there that get it." Martin: What was the idea? Because Steve didn't like advertising at AOL. Ted: The idea was, Steve in hindsight says he bought the company for the people and for me. Martin: Oh, I see. Ted: But it was how do we take an online service, which was predominantly a B to B company. People forget that AOL started as a private network for Commodore, Q Link, and a private network for Apple, AppleLink, and one for IBM. My experience in the sponsored publishing business was similar. Steve brought all of those together, and that's how America Online was started. But it was still seen as a telecommunications oriented...You advertised in Datacom Magazine. The ads were, "If you have a computer and it has a modem, send us $5 for this disk," so you can try and see what getting online was all about. Then you'd get online, there was nothing to do. "OK, so now I have a modem." [Ted makes modem noises] [laughter] Ted: And I got online at 1,200, but what do I do? We were talking about content and interactive shopping and applications off of communications apps. By bringing all of those people, some development people and engineers, some creative people, some business development people, that was the first acquisition for AOL. A couple of months after the acquisition, Steve asked if I would move up here and become president. John: Wasn't there something about the marketing DNA that you and Steve shared? I mean you're both interested in these technology businesses, but you were marketers. Redgate, B to B, everybody knew about Redgate. I mean it was a very noisy company. You saw it all the time. Ted: Yeah, thank you. I think that grew out of my Wang experience, where I saw this little company come off as being bigger than life. We were competing with IBM at the time. I remember my first business card, Wang's tagline was "Wang, the hungrier computer company," and our business cards had a bite taken out of them. [laughter] Ted: We were all young, and it was populist. Our message was ease of use and take the drudgery out of your business day. We were the first computer company to advertise on the Super Bowl, I remember that vividly. That was 1979. We used Ridley Scott to produce a television commercial for us. At first he was saying, "Are you crazy? Why would you want to be in the Super Bowl? You should be in Computer World Magazine with a big ad, and you show your computer," We had people in our ads, and we were talking about email back then, "electronic mail" was what it was called then. That was such a precursor to the popularization of using technology. The America Online name, the promise of "let's get America online," I just clicked into. Yeah, that sounds like a higher purpose for a company. Martin: Now at around that time...We just came from the Post, and Don Graham talked about doing a deal with you guys. It never got done, really. We're now at 1993 or '4 or '95. Ted: Yep. Don Brazile was the guy. I'll never forget that whole episode, because AOL was a national service. We had to build what were called POPs, points of presence. The service reported to me, and we had to build out capability in every state and then every big city, like Miami or Orlando. When I first got on AOL, I would have to make a long distance call to Melbourne, Florida. Martin: Which was incredibly expensive. Ted: Yeah. You would pay AOL $1.35 an hour to be online. This was before. I was an AOL customer before I was acquired by the company. That was the big thing racing to build points of presence everywhere so that it wasn't a long distance call. We built that capability. We went from 1,200 baud to 9,600 baud, and now you could get a photo delivered. Now the photo was delivered... Martin: Mm hmm, it painted. Ted: [laughs] It painted. Still, the print would come up. We had our own proprietary thing called RAINMAN. It would fill up the print, and while you're reading the print, this photo would, we'd say, "magically appear." [laughter] Ted: But it would take minutes. It was truly amazing. We had the idea of, "We have this national network, but we have these local nodes. And what we should do was a create affiliates with local companies." The first company we went to was the Tribune in Chicago, and they embraced us totally. Paul: And invested. Ted: They made an investment that ended up, I think, making them about $4 billion. It was obviously their best investment, but they wanted to learn about digital. They carved out the Chicago territory, so when you logged on to AOL from Chicago, it would come up with AOL News, followed by Chicago Tribune news. Then they programmed Chicago Tribune Online. Martin: You did the same thing with the Mercury Center, right? Ted: We did the same thing with the Mercury Center. We did something with The New York Times... Martin: @times. Ted: Yep. Martin: That was different. Ted: Yep. But the Times was embracing, and then we went to The Washington Post. We just said, "It's such a natural. We're in DC, The Washington Post is in DC." At the time there were some people that thought what we were doing was easy. How hard can it be? You buy some computers, you send out some disks, you hire some editors. We never could get to the point where we would move ahead with The Washington Post. I remember Steve and I went to a meeting, and it was obvious that they couldn't make that decision. Steve asked me on the way back, we were driving back, "What's your plan B?" and I said, "They always say, 'How hard can this be? Buying computers and...'" I said, "Well, how hard can it be to do what they do? What do they do? They hire some writers, they get a photographer. Why don't we make a local media product, and try it in DC? It would at least get their attention, and we'll learn something," so we launched AOL DC. That was the precursor to Digital Cities. Martin: Paul De Benedictis. Ted: Bob Smith was actually the founder of it, a former publishing executive from Congressional Quarterly. Then we brought in Paul De Benedictis, who was like a president at Hachette, I think it was. Martin: Yes, that's right. Ted: They were the first generation of publishing people that wanted to embrace the new media. John: So you were forced into the news business. Ted: Oh, totally. John: And so now you're in the news business. Paul: Explain the national [inaudible 25:43] . You spent a lot of time on that, and that was different content and a different deal. Ted: At the time our business model was usage. You paid $10, and you got 10 hours for free. Amazing, huh? And then every hour... Paul: About a dollar an hour. Ted: Then every hour thereafter, you paid a dollar an hour. The more usage you could activate and generate, the more revenues you would get. We decided to go out to every publisher. TIME Magazine was one of our first deals. NBC, ABC, we literally went to everyone. Our deal was "digitize what you have and make it interactive." That was the first big ask. I remember, who was the editor of TIME Inc.? John: It wasn't Walt? Ted: No. Paul: Before Walt. Martin: Henry Grunwald? John: Jason McManus, Norman Pearlstine. Ted: Norm, I had a good relationship with. John: You knew him from Redgate. Ted: Yeah, from Dow Jones. John: Right. I know that. Paul: You mean the magazine or all of it? Ted: No, TIME Magazine. John: Oh, Jim Gaines. Ted: Yeah, Jim Gaines. We went to see him, and they literally would give us the magazine, the typography, we would have to digitize and put it into RAINMAN, eventually we got them to do it, but with no extra added value. You'd go to TIME, the TIME button on AOL, and it was everything you could get from the magazine. Then they would get, I think, 50 cents of every incremental hour that they generated for us. I said to him, "You could have the editors, the writers, available in chat rooms to talk about it." I remember him saying, "That sounds awful. We don't want to talk to people. What would we say? What if they're not nice?" I said, "They'll probably be nice. I'm sure there'll be a percentage that aren't nice, but you'll be with your readers. Isn't that a good thing?" [laughter] Ted: It was, "No, we have this wall in between us." Then we went to Walter Isaacson. I had another penultimate meeting where...You might have been in that meeting on Pathfinder. Were you running Pathfinder? Paul: With Walter, yeah. Ted: With Walter. John: We're going to Walter right after here. Ted: Are you? I remember that meeting. It was a real hot day, and Steve and I decided to walk. We got to TIME Inc., and we were sweating, and I said, "I know these guys. We have to look prettier." [laughter] Ted: Steve was wearing a T shirt and jeans. We went up and we spent time. You were just about to launch Pathfinder, and we made a really impassioned plea to let us carry Pathfinder. You use our backend, and we could take a disk and private label it as Pathfinder. That didn't happen. Martin: That was the beginning of the Web era, really, because... Ted: That was 1994, probably. Martin: OK, so AOL is doing really well as a proprietary online service, and now the Web comes along. What are you thinking when you first see the World Wide Web? You must have had some kind of an "oh shit" moment. Ted: Well, I had been familiar with the Web at Redgate. There were private networks being built when I was building my satellite network. EDS did it, and they first introduced me. They did a lot of government contracting, and, "Hey, there's this thing happening that maybe you don't have to broadcast. Maybe there's going to be a way to do it computer to computer. Compress your video, and be able to move it. Why give a workstation of a television? Maybe it could be a computer station?" I was introduced in 1988, '89 to this thing. But back then it really was government agency talking to government agency and a government contractor being allowed in. They could share plans and proposals. Martin: Maybe, the better question then is what would be the browser, because that really catalyzed the user side of it. Ted: Yep. We saw this thing outside...When we first put people online at AOL, it was illegal. You were not allowed to get online. We were breaking the law by getting into the cloud, basically. That's how fundamental, and Steve can give you some unbelievable stories, because he was there in 1988 when AOL, 1989. We saw this other world emerging, and we were being sneered at. Remember? "You're a walled garden. You live in the walled garden." I laugh now, because Apple's the most valuable company in the world. They're the ultimate walled garden. Facebook's doing pretty good. They're a walled garden. It's not like they're a platform that's open and anyone can develop and write on it and the like. Paul: Google and Amazon. They're all gardens. Ted: They're all gardens. We were the first walled garden, but we knew that our first value add was getting people online and building out that massive network and having server technology that could handle simultaneous usage, and then we added value atop of it. We had great email. I still use the AOL client as my email. We invented messaging, SMS and instant messaging. We had this package in the client software that was access and communications and content and community and context. But people were going to start to do stuff on their own. They wanted to dot com themselves, so we got very aggressive. We got one of the first browsers. We bought a company in Boston called BookLink. Martin: I remember that. Ted: For $45 million. It was like some code to make the browser that we could integrate into our software, so that when you put in the disk to get AOL, a browser was in it. You could get online, you could do your stuff on AOL, and then you could easily go out to the Web. Then we bought GNN, Global Network Navigator, from Tim O'Reilly. Lisa Gansky reported to me. That was the predecessor, really, to Yahoo. It was the great directory in the sky, by channel, by content partners, with links. The first "hyperlinky" thing. Then we launched AOL.com. You could go to a site, point your browser, and go to AOL.com. That was all in the '95, '96 era. Then the launch of Netscape changed everything. When Netscape launched, we knew, "OK, this is giving software away for free. We know that model." We were giving billions of dollars of software away for free. AOL was the most highly distributed piece of software in the history of the world, because you would get those disks everywhere. We were putting in a browser, but now Netscape was out, and they were giving a really high quality browsing experience away for free. That activated Microsoft, who immediately rushed into the market with IE, and then they came out with their online service, MSN. Martin: You sent a plane or a helicopter or something. Ted: I did do that. A blimp. Martin: A blimp. Right, a blimp. Ted: ...with the blimp saying, "Welcome." That was bundled into Windows 95. Now, all of a sudden, the industry was different. You had AOL. We were booming, and we had our taxonomy, software, and network. You had Netscape, which was about a thousand flowers blooming. And then you had Microsoft, which was building its online service and its content right into the operating system. All of those were trying to recruit journalists, either to work for us or to partner with us. There was an unbelievable amount of confusion in the marketplace. You'd have to work on all three tools. The Microsoft tool set, publishing platform, was different than the AOL platform, was different than HTML and what was being put out there. It became a real tough decision for partners, media companies, journalists. Whose side should they take? A lot of it became who would pay you the most money. Rights fees were created. I once had a $400 million budget to now write a check upfront. There was no longer revenue sharing. It was, "We're going to write you a check, and you'll be with us, and then we'll charge." Then came the advent and the birth of the independent ISP. Originally the cable industry was built that same way. NBC, ABC and CBS would broadcast, and if you were in Manhattan, you'd get the signal. If you were in Albany, I remember moving the antenna to get a clearer signal. Cable was born where entrepreneurs in those outcast cities would say, "I'll pay for, I'll put an antenna, and then I'll go knock on doors and say, 'I'll put a cable from that antenna into your house so you can get and watch NBC and CBS.'" The networks thought it was great. "More people will watch. We'll be able to sell more ads." Consumers didn't have a choice. They couldn't watch television. That cable industry became the biggest media business. The ISPs were doing the same thing. In Vero Beach, Florida, you would have to make a long distance call to Melbourne. Some local guys got together and bought servers and equipment and modems. They built Vero Online in 1995, and you can access the Web, and you subscribed. Thousands and thousands of ISPs bloomed. Now all of a sudden for AOL, we had to change our model. We had to go from metered pricing to $19.95 all you can eat. I remember the world saying, "That's it for AOL. You're dead." The exact opposite happened. As soon as we went to unlimited pricing, usage went...When I first started at AOL, it was seven minutes a day. Seven minutes a day. We added the audio file, "Welcome. You've got mail," not because it was cute and not because it was a marketing gimmick. It was because in our user tests, we found that someone would send an email and then would get back online three days later and forget that they'd sent the email, and they couldn't find where the mail was. They weren't trained to get online and look for mail. By telling them, "Welcome. You've got mail," it was, "Oh, I've got mail." They would look, and they would respond. It's amazing now, when you think about it that you had to tell people. They were thrilled to get mail. I hate getting online in the morning to see, "Oh my God, I've got 300 emails. What did we do?" [laughter] John: It was so popular you had a service crash, right? Ted: Yeah. The month that we went, August... Paul: It created a Pavlovian response. Ted: It did. I'll tell you something interesting that happened here with my sports teams yesterday. We've launched the Monumental Network. It's a precursor to one day being our regional sports and entertainment network. Yesterday was the trade deadline. We had our general manager, and he was going to have his press conference. We said, "We're only going to do the press conference on Monumental Network and then we'll send out the news release." I was in New York yesterday, and I'm getting all these emails and calls. "We're ready. We think we'll get 3,000, 5,000 people." We got 44,000 people, and the network went down. Everyone was bummed out. I said, "This is fantastic. 45,000 people, that's what a local cable network gets at 6:00 PM," is when our GM came on. I said, "This was my experience at AOL." You want to go to the popular restaurant. No one comes down the street and says, "Which restaurant has no people in it, that I can walk right in?" [laughter] Ted: It's like, "What's the best restaurant?" Well, the restaurant that you can't get a reservation is where you want to be. That's what happened with AOL. The message that was transmitted was, "Wow. Everyone's online, and I need to be there. I want to be where all the people are." Martin: Ted, I know you have a hard stop at two thirty. Ted: I'm fine. I have time. Paul: We should talk about, you're dealing with all these news organizations and effectively fragmenting and disaggregating their content. Even if they gave it all to you, people started looking at it by the section, by the story. To some extent, I think, they got distracted by this great distribution money they got. Ted: I think very much so. I think they got distracted by the easy way that we would get them online, and they would get a check. Paul: You made it seem as if it was really easy and really simple, without commitment of cost. Ted: That was by design, because most of the people, at the time, didn't believe in the medium. That was our hardest thing training people, and getting people to think that there was something to this, and that a reader of TIME Magazine or of a woman's oriented publication would somehow want to get it online. Where I believe that first generation of journalist/publisher fell down was that they didn't internalize that this was the birth of a whole new industry. I remember, we'd have our partner conferences, and I would plead with companies. I'd say, "Rolling Stone Magazine didn't create MTV. The New York Times didn't create CNN. Don't let that happen to you. Understand the new medium and build new properties, new brands for it. Just taking TIME Magazine and making it available online isn't taking advantage of all of the things that online is bringing." Martin: That was Greenhouse and iVillage. Ted: That forced me to say, "We need to find young people, who are growing up acclimated to being online. We know this will get faster and faster and cheaper and cheaper. Why don't we try to be like Liberty Media in the cable world, where we'll seed fund companies? We'll give them real estate and access to the tools and promotion." We launched about 40 properties. Google was one of our Greenhouse investments. I think that one turned into $8 billion. Excite was an investment. We started iVillage, Motley Fool. These were just young kids who were hanging out in our chat rooms. They were the leaders in our chat rooms. We gave them a little money, and they started companies. They helped to create the first generation of interactive technology. John: You just listed a bunch of companies there. The ones that were platforms turned into hugely successful businesses like, say, Google. Ted: And they lied. I think there's a quote, "Behind every great fortune is a great crime." It's funny because as we were building AOL, everyone always thought, "You've got an ulterior motive." Yahoo and AOL were the first companies to make Google real. We allowed AOL search to be powered by Google. I did that deal. I went on the first press tour with Sergey Brin. Sergey told me, "We're an arms dealer. We're just going to make the best algorithm and get it to anyone who wants to use it." Paul: He may have actually thought that at the time. You don't think so. Ted: I said, "I heard that with Netscape, with Marc Andreesen, 'We're never going to be in the content business, just license our software, our DLL, and we'll put it into AOL.'" I said, "How can you not be in the content business, because to get your software you go to your portal? You're getting all these people going to your portal. Let me program your portal, and I'll believe you. But if you're going to program your portal, then you've got to do what we do. You have to offer email and messaging and maps," we had bought MapQuest at the time, "and content." So they did. Netscape.com, Mike Homer, God rest his soul, that's what he was running. Paul: But Google... Ted: Google at the time had a really I thought, and boy, was I wrong different and, I thought, not going to work view of the world, at first. At the time they were all about the editorial listings, getting the best results. They hadn't broken the code yet on, "How do we make money? How do we do sponsored links?" I was spending all of my time, Netscape was spending all of its time, Microsoft was spending all of its time on, "Come to us, and we're going to keep you in this environment. We're going to move you from news to sports to weather. From mail to messaging to a chat room." I would always talk about "pathing." That was the first level of detailed metrics that I would look at. How did people move around the network? When I first saw Google, I said, "This is crazy. I come to Google, and then they push me out as fast as they can, and then they tell me... Martin: How fast it is. [laughs] Ted: "We found a million things that you're looking for in 1.3 seconds. Get out of here. We don't want you." I said, "How are they ever going to make money pushing you away?" Martin: I hear you. Ted: Then I'd see their home page, and I'd go, "Boy if I had that real estate I'd put channels and pictures and videos." Boy, was I wrong. That was really the opening of the Web and the birth of Web 2.0, that the Web would become particlized, and you could get out to all of those areas. Another thing that was happening at that same time, because of ISPs, the cable companies, who at the time saw themselves as local they were local, a cable MSO was in your neighborhood they were afraid of the local ISPs, not us, because they realized that that local ISP, could they offer video services? Would they be able to grow into offering phone services? The @Homes, were born, the Road Runner was born, to say, "You should get your TV service, plus you should get your data service." They got into the business, and because it was a thicker pipe, it was broadband. Now AOL was fighting two fronts. It was, we get people online, and people now can get broadband for $19.95. It's better and faster, and it's from your cable company. That's bad for us. We've got this Web where you could get Hotmail and Yahoo mail. Probably strategically, one of the things that killed AOL, or made it not be one of the major platforms, is that we would see we had really happy customers. They loved AOL, but they could get broadband, and we couldn't give them broadband, and we wouldn't let them take AOL with them. So everyone in the world had an AOL email address. But we were so dependent on that $19.95 a month, we would say, "If you cancel, you lose your email address." Martin: The innovator's dilemma. Ted: Yahoo and Hotmail got all of their customers from us. Someone canceled and went to Road Runner or went to Time Warner or went to one of the cable companies, and they just got a Yahoo address. That's literally what happened. They used someone else's home page. If we had just had the foresight and, frankly, the gumption to say, "Take us with you," we would have had everyone's email address. We would have dumbed down, if you will, the cable guys, because everyone would be defaulting, when they went to get their email, to our home page. Ted: So AOL, back in the day, was Google, was Facebook, was Twitter. I've spent some time with Mark at the Allen & Company Conference, and he said, "Hey, my first exposure to online was through AIM. I hacked AIM." First time we met the guys at Twitter, they said, "Look, AIM," which was really the first virally marketed network. At one point at our height we had 14 million people simultaneously using our network, and there was about 300 million people around the world with the AIM client up. That client was just open all the time. The guys at Twitter told me, "You're not mad at us?" I said, "No, why would we be? I'm so proud of what you've built." They said, "Really all we did was we took a feature of AIM, status messaging," this small little 140 character box where people would write on their status messaging, "I'm in the library, don't message me. I'm studying, but I'll meet you at the bar at 7:00." It was just bursty little publishing, and that really was what the guys at Twitter created a new platform, a new way to communicate. SMS messaging, we were the first suppliers of messaging with a little mobile client. John: So Ted, what's next? You're a pretty avid follower, and you've seen it from the beginning. You've demonstrated a lot of vision over the years. Specifically, what do you think is next? Because our project has a lot to do with what happens to the news business. It got fragmented, it got disaggregated, it got commoditized, and it's an advertising product, and... Ted: Well it's going to get even worse now with mobile, and we're all trying to wrap our heads around that issue. Because journalists, media types, you see an iPad, you see a big screen desktop computer on broadband, and you want video, you want pretty colors, you want to make a magazine, you want to make it interactive. Now the world's moving to mobile, tiny format. How do you get news onto that? I remember first going to a WAP website... John: Browser. Ted: Browser. We owned, at the time, the company that invented, it was in every keypad, so that you could text, you hit it twice and it becomes an L instead of an M. We saw early on this is an issue. Communications and messaging, nobody wanted advertising there. No one wanted news. That was a very intimate, personal way to communicate. Mobile it was, "How do we stick in, how do we create a business model here? How we get news and information here, and then serve an ad? It's this big. That's really going to be a huge next generation challenge. The other thing that happened, our first generation of social was chat rooms and message boards. John: Yeah, you were all about community. Ted: We just believed that people would spend a lot of time online. I would always say, "Content activates community." Great content activates a conversation, so that you don't just want to read that story as a utility, you want to talk about it. You want to get the links and context to go find more information. You want a video around it, and we'll start to produce these packages. Well mobile's going to break that apart. I'll tell you another interesting...I'm acting CEO right now, with another friend, of Groupon. Groupon was a phenomenon. It did $5 billion in its fourth year of business. It grew like no one's business. The founder of Groupon, Andrew Mason, reached out to me, because he thought he was building a local commerce business, and he had read about Digital Cities. He approached me, and I met him, and he said, "Would you like to invest? Would you like to go on the board?" I've watched that side of the world reinventing commerce. Almost half of all orders are in real time on a mobile phone, for Groupon. Amazing. One day, not one day, you can now go down to F Street here, and you're walking down the street, and if Legal Sea Foods has two tables that are not taken, and it's lunchtime, they can go to your IP and say, "Come on in, and soup's on us." "30% discount." Mobile will disrupt, but mobile will also create great new apps for customers and new ways to market. John: And you can read "Old Man and the Sea" while you're waiting for your shrimp, on your phone. Ted: I would say right now the biggest issue I saw early on in news gathering was generational. When we were in college, when I graduated from college, you didn't have the laptop. In 1993, I would make calls on advertising agencies, and no one had a computer. We would have to bring in, lug in, a desktop computer to show the ad agency, "This is the ad you created and where it's running on the service." Paul: In 1993? Ted: Yeah. Paul: Wow. Ted: That's a generational thing. Now the people who run agencies, when they grew up in college, they used laptops. They grew up on the net. What's happened now is this generational tilt. Now college kids, it's digital first with print beside it, where back in the day it was print with a website beside it. It was an adjunct kind of thing. My belief is that the IP, the young people that are going into these companies, need to be celebrated because they're the ones who just intrinsically will help to reinvent the companies. But I used to forecast and say, "In the digital world it's faster, better, cheaper 'til it's free, and in the physical world it's more expensive." Paper costs go up, and gas prices go up, and union prices go up, and that it was just a matter of time before the new became the mainstream, and the curated, the highly produced, would be nichey. I still subscribe to The Washington Post. I don't read The Washington Post. The Washington Post comes in the morning, but I'm in my pajamas in the morning, and I read it online, and now the online property is better than the newspaper. I should cancel my subscription. I don't out of loyalty to Don Graham, but why do I need the newspaper? The online property is better. It's updated all the time. It's got video. It's colorful. The paper comes. It's wet. It's dirty. It's from last night. If we play a game on the West Coast, there's no coverage of the games. It's like, "Are you kidding me?" I go online first thing in the morning, and I got highlights from the game. I think what we're going to see for publishing is that publishing's going to be highly curated the best of the best, the best production value. It'll be something that I value. If it's just straight news coverage and a couple of photos, I can get that anywhere for free online. If I were president of a newspaper company right now, I would tell, I would speak at the American Newspaper Association. I got booed off the stage once in Pebble Beach, because I said, "This isn't going to work. I just don't see how the math works. You're so profitable, you have so much cash, you should be buying Yahoo and AOL and cable companies. You need to repurpose..." John: Do you remember what year that was? Ted: My first speech was at Redgate in 1987. Then I went back in 1994 with AOL, and that's when I was booed off the stage. I wasn't trying to be provocative. It was how can you compete if we go from 9600 to 28,000 to 56k to broadband, and the cost is going from a dollar an hour to $19.95 to all you can eat. And you can add video, and then everyone who's in a chat room will become a blogger. There's some smart people there, and they'll have opinions, and there's going to be lots of people self publishing. How will this work? Then how will you get scale? Because the Internet is about scale and local, you can be great, but The Washington Post locally now has half a million subscribers, maybe. But their website gets tens of millions of people, because it's a global phenomenon. If you're an expat or you're interested in politics or you live internationally, you come to WashingtonPost.com. You had to be ready to able to know how to monetize. I always felt that that was a missed opportunity of not buying companies that knew about online and had people that were running online. I always used to think The New York Times... Lewis DVorkan is a great example. Lewis ran News for me at AOL, and he was fantastic. He came from the old world, Wall Street Journal and Forbes, and then he ran News. John: Newsweek. Ted: ...and Newsweek. He started a publishing venture that failed, and we helped them, at AOL. I liked him and respected him, and he ran our newsroom. Now he's back at Forbes, and his job is help to reinvent Forbes to be more of an online digital property. He's the right age, and he's doing a fine job at Forbes. Forbes is available everywhere online. It's this next generation of digital producer, digital packager, who will save newspapers if they can be saved. It might be that newspapers end up becoming charitable enterprises, that they're businesses with a double bottom line endeavor, and people of wealth, instead of building another wing at a hospital, will buy and save the local newspaper, because we do need journalism. We do need that critical third eye. We're living in this more transparent society. I remember, literally, at meetings at AOL, I would say, "We're going to run this meeting as if The New York Times' journalist is sitting right there, " because anything we say somehow gets to him, and it always comes out the wrong way, so we'd better not say or think or conceive of something that we don't want to read in the paper. That's their job, and their job is to be transparent and to show what they think we're doing and thinking. That's a very healthy and needed thing in society, to have journalists probing and researching and having sources and digging behind a story. That's what makes us a democracy. On one hand, I always wanted to beat traditional media with new media. Now I'm nervous. We need jobs, we need career paths. We need a perch for these people to work. John: If it's OK with you, that's a great place to stop. Ted: That was awesome. Thank you. ...
VIDEO: YES

Gerald M. Levin
BIO: YES: Jerry Levin is chairman and investor in StartUp He...
TRANSCRIPT: John Huey: It's February 20th, 2013 in Cambridge, Massachusetts at the Harvard Kennedy School's Shorenstein Center. Paul Sagan, Martin Nisenholtz and John Huey are having a conversation with Jerry Levin about the long, fascinating history of the intersection of digital technology and media, specifically journalism. Jerry, obviously you will have an opportunity to go back and start at any point you want but for sake of getting the conversation going, you mentioned something to me the other day about a moment you had when you were at HBO where you looked at a screen and it had to do with slow scan television. You suggested that that might have been the beginning of something that got you going in a direction digitally. Is that...? Jerry Levin: Actually, before we started HBO, I was in...It was Sterling Manhattan Cable in a little office working on the business plan. Next to my chair was an AP news wire with a camera in front of it. In the cable system at that time, that's how news was delivered to the audience. What fascinated me was I was more interested in reading what was coming off the wire. I thought this was fantastic because somebody at home can get the news just as quickly as any reporter working for any company. That was a pivotal thing for me. I didn't think it was primitive that there was a camera set up in front of a news wire. After we started HBO, I kept thinking about ways of delivering news into the home. A lot of being even a small part of Time Inc. at the time, because I was taken by Life Magazine and pictures. I asked one of the engineers at Manhattan Cable, "Is there a way you can get a news wire into the home? Let's get pictures into the home because...To see Life, to see the world." What Harry Luce said about Life. I said, "Oh, we're great. We have this technology called slow..." This is more than you'd ever need to know. John: No, no. This... Jerry: Slow scan technology. A photograph will wipe across the screen. Now, it takes a little time and people may get a little impatient but you can deliver a picture. We set it up in our office there and did a little model. I thought, "Well, it's probably going to be too difficult for people but at least they gave me the notion that..." This is all analog technology at the time. You could deliver text and you could deliver pictures. John: Do you recall what year this was? Jerry: It probably was well before CNN because I used that slow scan pilot to suggest to Time Inc. that we do a video pilot, to start a news service. So that would have been before HBO went profitable. So probably HBO turned the corner in 1977. It was somewhere around there, '76, '77. Those who had the purse strings at Time Inc. said, "No. Until you turn the corner at HBO we're not going to start this other thing. Because we're Time Magazine and SI and Fortune. We just started People. Life is going to close at that point." I said, "OK." That's when Ted came by and said...We actually used...I forget his name. We did a pilot. It was the same person that Ted hired first for CNN. I said, "You should go ahead and do it." John: Reese Schonfeld? Jerry: It was Reese Schonfeld first did a pilot for us. Yes, thank you. So that was an abiding interest in journalism. The other thing that...Shall I continue? John: Yes. Jerry: That struck me at the time. Even though we were starting an entertainment service we were very active with the Hughes Aircraft people. Because Jim Shepley was a conquistador and he originally wanted HBO to be a part of Hughes. Martin Nisenholtz: They were in the satellite business? Jerry: Yes. It was all satellites. It was going to be a four satellite service, four channels. I talked to one of the engineers. We had lunch. It was guy named Paul [inaudible 05:42] . He said something to me. He said, "The technology...I don't know when it's going to happen. But you're going to be able to duplicate the Library at Alexandria. Anybody who wants to get any information will be able to get it." I went, "Wow." John: He was painting a vision of a technology... Jerry: Without specifying a technology. John: Without knowing what it was but he had a vision that someday, technology would be able to capture all knowledge, all printed material, everything would be somewhere. That got you thinking what? Jerry: We need to do one other thing. Even though we were starting HBO, the concept of HBO, as primitive as it was if they made the [inaudible 07:42] was to give the consumer, or the reader, three Cs. Choice, convenience and control. So that I can reach in and get anything I want at any time that's on my time. So for HBO, very primitively, repeated programs. So that people could watch it. It was a revolving carousel. John: That's a thing that we're going to revisit again and again. With full service network, with digital. Jerry: Exactly. But it's origins were in the business plan of HBO. I'm not saying it was obvious, but it was certainly in my head. Plus the technology, as primitive as it was, what we were trying to do we were always going to be frustrated. Because you couldn't deliver, "I can get what I want immediately." It was still a pushing technology. We weren't alone. Qube, the idea of interactive television. John: That's in Columbus, Ohio? Jerry: Qube was in Columbus. It was Warner's...One of the reasons we were interested in Warner's in the mid to late seventies. But in the beginning of the seventies, when I first started HBO in Orlando, somebody tried to put two way...Not transformers. But along the poles themselves, amplifiers. It was the first place where there were two way amplifiers. My whole introduction to journalism and technology was all about two way. There was no talk of digital at the time, no Internet, no computers. It was taking all these pieces and seeing how you can get interactivity. That was the goal. From Qube we went, tried to do things in Queens, in any event. TeleText was part of this drive. I don't know how I was able to get authorization. I was running the video group at the time, to build a studio that would deliver journalism that was theoretically two way, but was actually one way, and was called TeleText. We got Don Sider, (Dick) Stolley was involved. We got a number of journalists involved. We created a TeleText newsroom. It was to be delivered to Orlando by satellite, into something that wasn't a cable converter box. It was a box that would take the text and put it on...Now, you could access it, because it was streaming down. It wasn't technically two way, but to the consumer, it might feel like it was two way. I thought, this is great, because we can test how much information can the consumer handle, what kind of journalism, what kind of information is...The most interesting finding was that we couldn't deliver this is my recollection enough information fast enough, deep enough, to satisfy the consumer's appetite. Rather than being, hey, we're onto something with this technology, it suggested that if ever you could find a technology that had much greater capacity that was truly two way, the consumer would be there. Martin: At the time did you see teletex as a potential threat to print, or was that not even in the back of your mind? Jerry: That's a good question. No, because I thought that the style of print, and not anticipating iPads and other things, but would always have its place. But this is now an additional way of having the consumer get direct access to news feeds and make judgments, but there'll always be a need for editorial discussion and analysis on top of that. Now whether print is going to survive is not anything I thought about in those days, but it was always supplementary, and the concept was let the consumer have access to the same feed, and then go to whatever other sources the consumer wants to go to. Martin: Now the TeleText service was in...around 1980 or '81. Jerry: Yes. Martin: By that time the PC had been invented. Apple was out there, Tandy. IBM brought its PC out in '81. And there were nascent services for the PC. CompuServe is the one that comes to mind. You must have looked at that. Why bet...was the bet on the TV cable implementation vs. the PC just a practical one because these devices were in the home and you thought you could get these decoders in? Because you weren't at that time betting on the PC. Jerry: No, PC hadn't proliferated. What we were betting on was the power of the network, that if you had an almost infinite capacity network, satellite and cable, you could deliver a stream of information, and the handset or the set top box didn't matter as much as using the network. I was very network oriented at the time. There wasn't a uniform PC. It was very slow and primitive. I wanted the speed in the network, which is the way we would think as a cable operator. John: So were you at the time thinking of set top box technology that would advance that technology? Jerry: Yeah. John: You were working with those people? Jerry: Yeah. John: Scientific Atlanta? Jerry: But it was more a consumer test. It was more can you take a journalist...and you're not writing for print. You're writing for a daily stream. And so, what does that mean? What do you provide? How do you give access to the consumer of something they've never had before? I mean they could hear the news. They could watch a newscast. It was to see if we could take journalists that's why I keep mentioning Stolley, because I was interested to see how Stolley would react. Don Sider was very good technically, but can you take a traditional print journalist and put them in a TeleText newsroom that's not a print newsroom? You're not closing an issue with printing technology. And so, I found that there was great interest on the part of the journalists. John: Stolley was running that newsroom at the time? Jerry: He was involved. Don Sider was the manager, because Stolley was doing other things, but he was definitely involved. Paul: There were several media companies that tried some versions of TeleTexting that period or trying to deliver things online, and that chapter closed unsuccessfully for the industry, I think. Was there a conclusion? Was there a group lesson? One of the things that has been suggested to us is that that's where print got way ahead and felt its hands got burned and maybe backed off and missed the next wave of... Martin: Yeah, and VideoText, actually, the Times Mirror, Gateway, the Viewtron, all that stuff was happening at the same time. Paul: Do you think they were related completely or parallel? What do you think was going on in that period? Jerry: It possibly [coughs] means that print felt pretty good, that these technologies were either so inefficient or so far in the future that we didn't need to worry about them or adapt to them. And that infused, I think, the print culture. So these were all failures. TeleText was considered a failure, and I don't know why the $25 million number sticks in my head, but it was a costly thing. Paul: That was real money back then. Jerry: Yeah. It was costly. I'm amazed that I had the authorization to do it, but the video group was the darling of Time, Inc. at the time, and there was a lot of interest, but then we basically shut it down. So when you shut something down at Time, Inc., it's a failure. It's not a success. Paul: The next thing that really happened was cable news in a sequence, right? Before online, CNN came along. Jerry: Yeah, CNN came along in 1980. John: And you were on the board of Turner at that time, right? Jerry: Yeah. John: Do you recall any transition from...you'd been dealing with the news on the print side, then the TeleText, now all news. Jerry: But also I wanted to start some video news service, which wasn't ultimately realized until New York One, until we ultimately bought CNN. And so, we had a pilot that Reese Schonfeld did, and I could not sell it to Time, Inc. Ted came by and said, "I heard you're working on something. I'm going to go ahead and do this. I said, "Go ahead and do it, because we're not going to do it, and Godspeed, because we'll support it." Martin: One of the things, one of the themes that seems to be true throughout this whole period and well into the '90s and beyond, is that large corporations, maybe because of their culture, maybe because of the point you made that it wasn't a threat, just don't seem to be able to adapt as quickly to some of the digital technologies as the entrepreneurial community that operates on a, in a funny way, slower but faster cycle. At the same time as you're shutting TeleText and Knight Ridder is shutting down VideoText, and Times Mirror is shutting down its VideoText service, Steve Case is starting up AOL or not Steve, but the quantum computing guys in the mid nineties. That must have seemed trivial at the time. Jerry: Well, it was always an issue. Well, first of all, there is an issue. A large corporation, which makes most of its money and therefore its Wall Street stock success is based on its inbred businesses. The threats seem unavailing because you're walled up in your own secure revenue generation, but it was at least clear that we wanted to start something. Pathfinder was our way of starting a service using these computers. The Full Service Network was definitely...in Queens we had tried to start an interactive two way service. The Full Service Network was designed to demonstrate that with a network and writing the right code with Silicon Graphics that you can give people the ability off of the screen, the television screen, to pick anything you want, stop it, start it, go backward, forward news, movies, whatever. Paul: Games and commerce. Jerry: And games and commerce. It pretty much had everything. Now what's interesting about it is it was considered a failure, and a lot of money was spent, and yet all of the code that was written...It was the first server that delivered digital on demand service, and the code for interactive everything really came from that system. It was a failure because it was too much too early. We knew the consumer was there, but we couldn't spread it across enough of the subscribers to make a difference. Martin: On the journalism side, though it seems to me I was struck by one of the things you said about TeleText was you really couldn't deliver as much as the audience wanted. The same thing happened in Orlando because we could only cut up a certain amount of existing TVD. Jerry: Yeah, we were limited. Martin: Yeah, and so they consumed it, and there just wasn't much more yet, right? It was... Jerry: It was the same finding. Martin: Yeah, same finding. Jerry: Because even though it was advanced technology...it's a very good point what the consumer wants everything. We're back to that library at Alexandria. I want to be able...we're now there, but I want to be able to get anything I want at any time immediately. John: But I think the seeds... Jerry: Unpredictable... Paul: ...of the issue to me go back to this point of use of the network. So to your point, a content company would look at delivering content to a user. I think what the early PC networks found particularly AOL was that user/user communication was really almost an to use your point about limits unlimited thing. I could email you back and forth all day or chat. So this notion of communication versus content I think is an interesting one. Jerry: No, that's a great point, and not to bring up a lot of conflicting history, but when we were combining with AOL, and I was asked the question what I thought the most interesting feature of AOL was, I said, "instant messaging," that the ability for people to communicate back and forth probably was a goldmine of opportunity on an unlimited basis. It is true that you needed the communications, but in all cases what you needed was the network. You needed the broadband capability so that any box, any instrument, didn't have to be so smart. You didn't have to download everything in the world, that it was all in the network. And now it's in the cloud. John: So we... Martin: We need go back... John: Yeah, I was going to back up to Pathfinder. Martin: Well, even before that, because... John: Oh, good. Yeah, you mentioned a lot of things we need to go back and fill in. Martin: If we talk about journalism as opposed to just interactivity or communications or those things, there wasn't much new journalism yet. So the dialup era, which was CompuServe, Prodigy, and AOL, was about re purposing old stuff in much the way Orlando was the about slicing and dicing. So maybe it would really be worth talking about, because Time, Inc. this was just when I entered the picture there was pretty active in putting existing stuff in a new distribution channel, but not creating new journalism. Jerry: And none of the systems...There was a eureka phenomenon that, gee, if we can take stuff that already exists and put it in a different platform, that's a double use of the same material. The adjacent argument is that there isn't a sufficient revenue stream coming from these new distributions to fund original material. Now one of the things we thought was, well, but what it can enable you to do is you never have to close a piece of journalism, that instead of having an edit point, close the issue. Put it out there you've already written it and then have the comments come in and keep the flow going. Thought that was an interesting way. This is a characterization, but I think we had to find only a certain type of journalist who was really interested and engaged in trying this. Now we definitely tried this from...First of all, we wanted all the Time, Inc. journalists to have video cameras, and that was an aspiration that never quite happened, to get away from pencil and pad. John: And that would have been roughly in 19, what? Jerry: 81. Martin: 80, the early eighties? Paul: No, no. Jerry: No, no, early nineties. John: Early nineties. Jerry: Early nineties. We actually under...Joe Quinlan , whoever else was involved, we undertook a little program. Anybody who wanted to you could come, and we'll teach...here New York One journalists are carrying a camera around and doing stories. Why can't you, if you're going to interview somebody, use that? This is my impression. It was a slow pickup on that, because you can't take a print journalist and just move them over here. John: Well, this is going to a recurring theme for the whole 40 years is that print journalists were clearly the cows that didn't want to go in the chute. They just wanted to stay in the pasture they were in. There's no question about it. It may even be true. Jerry: Less so. John: Well, there are fewer of them. So how does this...we're going to talk to Walter (Isaacson). We're going to talk to Paul. We're going to talk to a lot of people about Pathfinder, but what's your memory of that in the evolution? Jerry: It was a stepchild, but what it indicated to me was that there were certain people who were really interested. Walter. Walter was one of the first people who came to me and talked about the World Wide Web so he was already into it. Paul and everybody was doing it at New York One. There was a group that really wanted Pathfinder that we're Time, Inc. We should be number one because we've got the number one content. John: Now at the time you were talking about these videos, you were talking about them being re purposed for New York One, or...? Paul: And CNN and anywhere we could place them. John: Anywhere else. OK. Jerry: Yes. Right. Paul: We put some on PBS. Jerry: Right. Paul: Anyone with TV at that...not online. John: OK, so that's separate from Path... Paul: You couldn't do video online. John: There were no...because it was dialup. Jerry: But Walter was very important, because it was not only Pathfinder, it was...you know, he was really the lead component for the full service network, the idea that we're going to deliver on demand news, video on demand news. Now, again, you can see how we were trying to be utilitarian, because we had New York One, so we're already producing. We're trying to get some of the journalists to carry a camera around so it was to take some existing stuff and put it down here. We were a little taken by the technology, that, boy, I can start, stop, call up video. Now at the time we called it VCR functionality because that's what people did with videocassettes, but, boy, that there was no videocassette, and you could do that on your television set, just with the remote. So I think we were so intrigued by that technology that why isn't that enough? But, of course, it wasn't enough. What the consumer was saying is, "Hey, we're getting prepackaged stale news here instead of robust new material." Paul: So we gave them the convenience, not the choice yet. Jerry: I think that's right. And it shows you how hard it is to bring all these disparate technology elements together with the content when you're talking people away from their existing...you're taking the consumer away from their existing experience, and you're taking the journalists away from their existing form of communication and trying to marry them. It's a little frustrating. It just takes a little longer. John: Can you remember, if you put yourself back into time, what else was going on around you that you were interested in that other technology...This was about the same time that the Bell Atlantic thing came up. I assume that's going to be a network story. But in terms of journalism and content, what else were you looking at? You always were absorbing the competitive landscape. Jerry: We had looked at all the things, all the companies that tried these various iterations. Were we looking at AOL at the time? Certainly any of the services, not just AOL, that were delivering... Paul: Prodigy. Jerry: Yes, Prodigy. Exactly. They were delivering material, but it was more communications and no original content. Slow to develop, clunky and that's why I kept focusing on, we're looking at that, but we're looking at trying to make a full network. A network that was high capacity, that could deliver everything you want. You just need to pull it out which is, again, why TeleText was the format. You can say everything's interactive, but you're just pulling out things that are coming down the network. Paid: At that time, did you spend any time trying to figure out the equation between advertising supported content, paid content and how that was going to play out? Which becomes a major theme pretty soon, after this period. Becomes a major theme in the direction journalism takes. The issue of for free, versus paid and advertising supported. Jerry: Put aside a lesson that was coming from satellite, that everything coming through the satellite should be free. I shouldn't have to pay for it. We dealt with that. We were raised as a subscription, advertising, dual revenue source company. It seemed that if we could provide the right content with the right convenience and control, you could get a subscription. Then you could also have advertising. That was our abiding assumption. John: So you were always a proponent of the balanced model? Martin: [inaudible 34:28] TeleText. Everybody thinks banner ads were invented with the first websites. But we were running banner ads on TeleText. Jerry: You're always a product of your cultural history. We made ads. We put ads in and around material. Martin: This is very important, too. Because that's another thing that...AOL refused to do that. Which is really interesting. They just thought it was bad for the user experience. They were purely a subscription service for a very long time. It's this notion of culture determining where... John: If you look at it the point of view of the assets that you assembled, you had that mentality on one hand, which then morphed into all advertising mentality. And then you had the Turner model, which also had...It had affiliate fees, but not direct consumer fees. So when the online world developed you had several different online cultures developing in the same company. Right or not? Jerry: The cable model is not a journalistic model. It comes off of a network model. There are advertising and affiliate fees. So that was that model. I think it was helpful in our company...HBO is a subscription service with no advertising. What was helpful was the Time Inc. history and the Time journalistic model, which made a lot of sense. The online people came from a different culture entirely. It was either going to be straight subscription or free and straight advertising. To this day, there's still a struggle to find the right model. John: Here's a hypothetical question that we keep asking ourselves. We have no answer to this. Jerry: Maybe it's the wrong question. John: It might be. You can tell me. When you go back and look at the development of all this, you look at all the decisions that were made and all the coming together that you described, of trying to juggle technological development with content development...Is where we are today pretty much where we would have ended up, inevitably, no matter what, or were there things... I'm not just talking about Time Warner. I'm talking about the whole landscape. Is there another path that, had it been taken, things would be profoundly different today? In other words, is the march of this technological disruption inevitable to all the business models, or were there other ways to have ridden that technological disruption that would have ended up in a profoundly different place? Jerry: That's a good question. I think we're where we were meant to end up. The disruption was simply the notion of a network that has no central control, that can deliver near infinite capacity. And everybody tries to figure out how to make money and what to deliver over that network. That's where we've ended up. Everything pointed to that. No one owns it. It's, I think, a beautiful thing. John: You said Walter was the first person who ever brought the World Wide Web to you? Jerry: He came into my office and said, "There's something called the World Wide Web. You ought to take a look at it." John: Can you continue with that? Jerry: It showed that somebody had finally figured out a unification strategy for all these disparate ways of...Again, I'm a network oriented person. Somebody brought an agreed upon standard, so that all parties could then have access to signing on and getting something back. That there was a universal code. I thought that was transformative. Which again, was why I started to think about, to have something like that. It wasn't until AOL started to become the leader that I thought, "That's going to change every part of our business. We better get on that band wagon." We did talk to Jerry Yang at Yahoo. At first we thought we could develop all of this internally. So we had Rich Brressler and we had a digital group. You can't turn the battleship around, much as I would have liked. So we went to the next strategy, which is you acquire it. We thought, "Yahoo would make a lot of sense." Jerry Yang was not interested. I went to some...It was probably Larry Summers, who was probably Secretary of the Treasury at the time, was having a group of CEOs come in. Here I'm Time Warner. Biggest company in the country. I'm media. This other guy, Steve Case, is there. All everybody wanted to do was talk to Steve Case, wanted to hear about AOL, what's AOL doing. I thought, "Pretty interesting." So we started to talk. I thought, "Interesting." Had a very good board. Was actually making money. My assumption was, based on all this history, that you couldn't take journalism and turn it around. By this time, we had CNN. I had my ideal of a video news service. But it was all going to change and somehow was going to affect all of the businesses. We better get a part of it or it's going to disrupt or eat our lunch. A lot of this is the reason why we put AOL and Time Warner together. Paul: I'm just going to go back and then fast forward to this spot again. Because there were disruptive distribution technologies in the past. Print, movies, radio and TV. But they all accommodated each other. They didn't kill each other. Then something happened with interactivity when we got to public standard, or the web standard. It really started to not just make room at the table but really hurt the old distribution. Jerry: These were totally disruptive. For example, music.... Paul: It was this aspect of disaggregation or digitization? What was it that made it disruptive, as opposed to incremental? Jerry: Because it made the old form of distribution totally irrelevant. There was zero need. At least I can still go to a movie theater. There's some socialization. Popcorn, booze. But music, the fact that you had to buy music on a disc or listen to it on the radio. That you could get any piece of music at all, anytime, anywhere...Why do I need anything else? If I can get every...This is why it's slowly going to take the networks down. I can get online, anything I want. Paul: Same for journalism though? Jerry: Yeah. Martin: The other thing about music, just to be clear, is there was a culture of free around music, which was a copyright violation. And yet the music industry didn't recognize that it needed to change. Again, you have these cultures that just can't change. Jerry: Yeah. The music industry could have... Martin: Well, could it have? That's John's question. I think John's asking... Jerry: Could it have? Martin: Yeah. Jerry: Ultimately, I don't think so. Paul: Journalism went with free and it didn't work out well either, so far. John: Back during that period, did you think about, look at, examine the newspaper model? There were these big, powerful newspaper companies that were in a similar business you were in, but different... Jerry: No. We were going to buy Gannett in the eighties, if that's the question. Yes. I wanted that. Jim Shepley wanted it. Good thing it didn't happen. John: Just quickly can you tell me...Remind me of the Bell Atlantic story? You said, again, good thing that didn't happen. What was that about? Jerry: Ray Smith was...This was the period where everybody was trying to deliver...In his case, to convert a telephone system into a high capacity fiber optic, deliver content and get into content. John: So this was like Fios forerunner. Jerry: Right. And not just be a distribution platform. Some people in some companies just aren't oriented, acculturated to content as well as distribution. He was one example of that. But he had a powerful distribution base, which ultimately became Verizon. John: So you're a civilian now. Are you a consumer of journalism and media? Jerry: You know what's interesting? For the first time in my life, I've gotten off the grid entirely and am concentrating on more universal, spiritual things in the environment. What's interesting is, for the first time in my life, I do not read a newspaper or a magazine. It's a huge change. But somehow I know what's going on. John: [laughs] Osmosis. Jerry: It's just there. It's revealing to me. John: Do you have an iPhone? Jerry: No. My wife does. I do not have an iPhone. John: Do you have any thoughts...Since you do seem to know what's going on...You've always looked ahead, whatever you've done, right or wrong, you've always been looking ahead. Do you look ahead now and have a vision that you can share about where we're headed now, what's going to happen to journalism, delivery, media? Jerry: It's not exactly a vision. I think that economics can't sustain existing media companies. Not just the simple thing of Conde Nast moving to Southern Manhattan. They'll be out of business as they currently exist at some point in the relatively near future. Comcast, NBC can't maintain Rock Center. Time Warner can't maintain Time Warner Center. It's not just the fiscal plans are a metaphor for the institutions themselves. The elaborate infrastructure which we'll call overhead is all going to dissipate. What's gonna take its place is...I don't know. Probably a new set of majors. Could come from Google and Microsoft and Apple and Amazon. Maybe Facebook. John: The super stacks? Jerry: Yeah. And then there are these little things. A thousand flowers will bloom out here. The landscape isn't going to look anything like we used to think. Martin: For journalism, let's just explore that. I think... John: I want to ask him about The New York Times. Because we're sitting here in the Shorenstein Center, which is the veritable chapel of faith and worship of The New York Times. It is the one that's held up as the one that's kept invested in their news product and their journalism. And has found at least the start of a business where people are willing to pay them for digital content. Since you threw all the others in there, where do you think that's headed? Jerry: I can't deny my views are not worth a hell of a lot. To the extent I want any access to any major journalist...They're not going to be able to keep a posse of journalists, for any length of time, into the future. Ultimately, I'll have access on some basis to anybody who I find interesting. It isn't going to come from a traditional media company like The New York Times. They're just not going to make it. Paul: Do you think the current cable model is like the music CD then? Jerry: I do, unfortunately. I think the current cable model...Holding on to the revenue stream, and to the extent that Jeff can do it at Time Warner, holding on to how you get HBO...But eventually...We were an early developer of high definition television. On the iPad and iPhone I can get anything. The pictures are beautiful. If I can get Glee any time I want it, why do I need anything else? Martin: I am going to go down this road, because I think it's important. You obviously had a commitment to high end journalism for many years. This notion that you can get access to anyone at any time is obviously true now. The issue for journalism, I think, is that to adequately cover something like a local city hall or all the way up to the Iraq War, you need dedicated resources that require more than one person's input. Therefore you need a team. Therefore you need some form of an institution. If there's no economics around that, what happens to journalism over the medium to long term? How does that resolve itself [inaudible 50:33] in a democracy? Jerry: Coverage of local political activity is going to get done by some process of...It'll grow up spontaneously. Some people will come together and report on the most local news you could possibly we have. How to cover wars...It's going to happen, again...Today, you're right to get an analysis of what's happening in Iraq, Afghanistan and Egypt. But it's also coming from citizen journalists. There's something more authentic coming. I know you're making a good case for an infrastructure that can support coverage as we're used to having it, but instantaneous citizen journalism has to somehow be a major part of the mix. That doesn't cost anything. I don't know. Paul: I want to go back to one question. Because as we've done the reading, there's this sense, allegation, resignation of original sin. The decisions were made to make content free online, that was the big mistake. And yet, I'm not sure there was any other choice. We even made it at Time Inc. Although I don't think we thought of it. Part of it we thought of it was free. I'd be interested in your perspective. But we thought, "We've cut the costs out." Turned out there were these new digital costs we didn't quite understand, but there was other revenue, when it comes to the pure model, I think you were talking about. AOL sent big checks, CompuServe sent big checks. I don't think we thought of it as free, but there's been this stake in the ground that there was this one sin committed, and I was just wondering what you thought about that when we were in the middle of making those calls. Jerry: "Free" is a misnomer, because...First of all, it's a democratic concept. I'm entitled to get something that comes through the public distribution system, but you're always paying for something. You're paying for a phone line, you're paying for a broadband connection, you're paying for a cable line. You're paying for a DVD box. It's why, I think, advertising will always be there. Even advertising now is cutting out the middle man. It's all done by auction and machine. It's become a commodity. I don't think a major error was committed. There is this sense that I'm entitled to get things free. Just introducing pay television was tough because everybody was entitled to free over the air broadcasting. The consumer will pay for something that they want to get. John: That they can't get anywhere else. Jerry: That they can't get in that fashion and that format, yes. John: Like a world heavyweight boxing match. Jerry: For example. Martin: Or a Michael Jackson CD. That's the distinction on the music side. For the music side to go free was disastrous because there was no advertiser support in that business. That's very different than the more traditional journalism business, is that we're, at least in the newspaper, we're 80 percent supported by advertising. ...
VIDEO: YES

Steven Levy
BIO: YES: Steven Levy (born 1951) is an American journalist ...
TRANSCRIPT: John: I'm here at the offices of Medium with Steven Levy. Steven, why don't we start off by just telling me what has been the arc of your career? How did you land at Medium? Where were you before? Steven: It's sort of a long arc, like kicking a long field goal. It doesn't get too high. I went to grad school in literature. Didn't have any kind of firm plan, really, but I found out quickly that I wasn't going to be a scholar. I wouldn't go for a PhD. I got a Masters. It was at Penn State. Went there for a while and then came back to my hometown of Philadelphia. I just wanted to try being a writer. I did an internship when I was at Penn State at the local newspaper and went into the underground newspaper, the alternative newspaper in Philadelphia. I was writing stories for $10. After a few months I started writing for the magazines in Philadelphia - Philadelphia magazine and the Philadelphia Inquirer magazine. They had a magazine then. I really loved that, writing for weekly papers and magazines. I hadn't realized you had that degree of freedom writing non -fiction. You could write the narrative there and it was the day's new journalism. My main interest originally is I wanted to be a rock critic where I'd write about music. I was interested in sports and other kinds of stuff. Got a job in New Jersey. My first job was at a magazine called New Jersey Monthly, which was just starting up. The editor was a woman named Jane Amsterdam who became pretty well-known to a totally journalism obsessed person, good to work for. I met the woman who became my wife there, New Jersey. We moved together to New York City in 1980. She was writing for the Village Voice. I started writing for national magazines. At the end of 1981, maybe, someone who used to be Theresa's editor, her name is Susan Long, was working for Jane Fonda's film company. They had this scheme where they would come up with an idea for a story and pre-option it so they wouldn't have to bid against anyone else. It became movie material. They had this idea that she heard about to do a story about computer hackers, these people called computer hackers. She asked me if I was interested to do it, could I have a magazine place to do it? I had been writing for Rolling Stone. That worked out. So I got a little extra money to write my first story ever about computers - I had never touched a computer before - about computer hackers who, at the time, were basically thought of as these oddballs. There was no transgressional definition or connotation attached to the name there. They were thought as a creepy kind of loser people, addicts. When I went out to California to research the story I found something quite different. These people were really explorers. They were doing these really exciting things. They were building. Also, it was the future. I talked to a bunch of people who had been involved in the early computer industry who were very much hacker types. I felt the connection instantly to the '60s when I went to college. We were protesting the war. My sensibility was very attuned to that. I found that it was that world. Some years before I realized that it wasn't really interesting to be a rock critic anymore because all the good ideas were gone, and that really wasn't the handle to tackle the world the way it was in 1968, 1969. I was reading Rolling Stone and Crawdaddy in college. This was. You could write about anything through the lens of technology there. It was a great time to begin because on the one hand you had the trade magazines which money was going to pour in because the personal computer industry was taking off. They were moving from hobbyist writers to professional writers. They wanted to know who is a professional writer who's interested in this stuff? Then for magazines like Rolling Stone and other places that I was writing for they were interested in exploring the subject and wanted to know someone that they had a relationship with that could bring them a story to their standards. I worked both ends of that. I did a column for a magazine called Popular Computing in the early '80s and I was writing a lot of stuff for Rolling Stone. I wrote the first story about the Macintosh. I was embedded in that team a little. I wrote a story when the thing came out, spent time with Steve Jobs when the Macintosh was being readied. As I went on, I spent more and more of my time doing that. John: Excellent. Excellent. This was sort of new country. Did you ever think that it would change from that boast that technology could change the world - it was a boast, prove it - to that happening? What eureka moments did you have? Steven: I think one was the Macintosh. Right after my first story for Rolling Stone I came back and I said to my girlfriend - now my wife - "We've got to get these things there." At the time, people were debating, writers were debating. The big debate was should you get one of those things with a TV screen on your desk or should you get an electronic typewriter, which was a little less radical way to get into something where you wouldn't have to use whiteout if you made a mistake on your text, on your drafts there. I said, "We've got to go get an Apple computer" and we did. We spent a lot of money and got two Apple computers. The monitors and disc drives and a dot matrix printer which we shared. It cost an amazing amount of money and we needed training to use them. We went there. It was hard, but then I saw the Macintosh and I realized this really is moving out there. Intellectually, I always did feel that this is the way of the future, but it was hard to actually feel it in your heart that it was going to happen. I remember in the mid '90s, the early '90s particularly, after Mosaic came out and people were looking at the Internet. I was a big advocate. I saw right away this is huge. Markoff was first but not too long after that. I would go and talk to people, and I even did some consultancies. I went to the big paper chain in Minneapolis. John: "Star-Tribune" yeah. Steven: Yeah. All kinds of people there. They would bring in people like me to basically say the same thing their people in the trenches were saying. They wouldn't listen to those people. They had some people that knew what was going on, but they wouldn't listen. I showed them, here's a website. You could have a website, and people will come to you. I said, "100 million people are going to be on this." In my head I would think, 'That's a lot of people.' It was the one thing where it was an incredibly hyped thing, where the hype wasn't enough. You could not over-hype the Internet, no matter how hard you tried. Some people tried greatly, but there was no exaggeration you could make that the Internet didn't exceed later on. John: Yeah, no, absolutely. How did the consultancies, when you went out to meet companies...? Did people in the trenches...? What was the mindset of the business leaders you were consulting with? Steven: They were curious. They didn't really see this as something that would put them out of business. They were just saying, "This is something we should be interested in," and I would say, "If you're not doing this, your competitors will." It's pretty tough to envision exactly the way the thing took shape there. You could see the outlines of it. About any of your interests, there would be something there. Steven: So even though I didn't think they would find it that easily, when Alta Vista came out, people were excited. We can find stuff now but Google surprised us all with how easily you could find that. But t was very difficult just to see Google there, to immediately jump ahead to all the implications of that. Google, again, looking back, that was another one of the turning points there. Another part of the turning points is, as I got into it more in the '80s, I got actually into looking at the underlying technology of it and what was happening there, Moore's Law, the way of thinking it represented. Also the politics of it. When I did my first book, "Hackers," I was really struck by how much the issues of this age were political issues. Again, it was already tied to the '60s, and that sensibility was in Hackers. It took a number of years for people to pick up on it really. Then, one of my great delights is that people...now it's really known for that stuff, as opposed to the stories I told alone. Oddly, my second book was not about technology. It was about a true crime story I always been interested in. I was sort of hedging my bets, maybe. Thinking, should I be known only for this? Then after that, I thought, yeah, yeah, this is interesting enough. So my third book was Artificial Life, which was really about creating biological processes in the computer. I had, besides the consumer story, the business story. I'm interested in almost the science of it and the effects of computer technology on humanity. It's all tied together there. Even though if you look at my books, they sort of zig and zag within the field. I just do think it's all one piece and a lot of people ask me, "Well, when are you going to write a sequel to Hackers?" I always like, "I've been doing nothing but sequels to Hackers." John: It's fascinating that what originally attracted you to Hackers, what you mentioned, was very much a '60s sensibility. Over the course of the last 30 years, technology has almost become like banking, in the sense that the amount of wealth flowing into that. How do you trace that arc? Is that sensibility that you originally saw still extant in the technology business? Steven: The third part of Hackers was just dealing with that issue. I knew the money was going to pour in, and what happens when the hackers get rich, there? I grappled with that. I had somewhat of a more pessimistic viewpoint than I needed to. I think actually there was a nice accommodation to hackers being rich. There was a way you could still be a hacker and have that spirit and be locked into that mindset and be a billionaire. I think people like Mark Zuckerberg and Larry and Sergey at Google, they're good examples of that. John: What is the effect...? Did you feel an effect on you, on covering a cohort in industry where you're watching people get fabulously wealthy. How did you react to that? Steven: I don't know. I never really felt, oh my god, I'm missing out there. The fact is, I've been, for a journalist, pretty well compensated. The mid-'90s, after a long time freelancing, I took at job at Newsweek. I did that and I wrote books, and I have not been needy. I'm not rich. I'm not Mark Zuckerberg or even the many, many people who have 20 to 30 million dollars in wealth. I never thought I wanted to do this stuff that you would have to do to that. I'm doing what I want to do, just as those other people are lucky enough to do what they want to do and be richer than me. I feel that it's pretty good for me to be doing what I want to do and have a pretty good income. John: Yeah. Trace the arc, if you would, of what your colleagues, all the journalists, you start off as a small tribe, almost, covering this industry. Now there are masses of people covering it. How has that culture between journalists changed? Steven: You're right, in the '80s, it was a small tribe. There was this thing -- I don't know if this has come up — in New York called the Digital Deli Group, the lunch group, which was...I have mixed feelings about it. It was simply because this one guy said, "Oh my God, there's a bunch of writers in New York who cover technology. We should get them together." You could put them all at a table, at least the ones in New York. The group there, it was a relatively small band there, but you know what? I just don't think, from where I am, inside this world, it doesn't seem much different. It seems to me there has always been sort of the same relatively small group there, masses of people who also write about it, who just aren't plugged in to the echelon of coverage, which is not all that much bigger than it used to be. John: You mentioned Digital Deli. Markoff mentioned something to me, the "Justice League of America"? Steven: I know how he tells the story. It was one of these conferences in Arizona, and we met and I think maybe Kara Swisher might've been there. It was the time Kara had not built her reputation to be one of the top people, which of course she is now. The idea that we could get Markoff and Walt and me and a couple of other people who were the big names at the time there. We would have our website and we would do that. I joked it was Justice League of America and then Superman and Batman and Aqua man... ...and all that and Wonder Woman I guess. We all had this little meeting. Dan Gillmor I think was a part of it too. No one wanted to take the step, really, of doing this. We're journalists, we're not business people. We said, "Well, let's all keep it quiet." Then of course, about 10 minutes later Kara is in the bar talking to a VC. Maybe it was Jim Breyer or someone. John: Markoff said she talked to Breyer. Steven: She told the idea there. He like on a napkin wrote down something like $40 million and 25 percent and Kara looked at it and said, "That percentage is too high." I don't know which is crazier, the idea that just based on this meeting that it got this multimillion-dollar valuation or that Kara thought it wasn't enough. You know? John: What's fascinating is that in the arc since then we've seen a transition in the last 15 years where the journalists are becoming their own brands, separate from the institutions. Steven: This was something that I was talking about in the mid- '90s. I had a little slide because I was writing a column before I got to Newsweek. I was writing a column for "Macworld". Everybody would always tell me, "Oh, you're the reason I buy Macworld, Steve." "I read it just for your column." Macworld was five dollars an issue or something or even if you subscribed to it it's a couple of dollars an issue. I'm thinking well, based on that, what if I charge 25 cents to write my column? I could sell directly and I had the thing there. I'd make more per column and go direct. That's super hard to do, just to go off on your own and do that and find an audience there. People figured out and after, it really took somewhat of a collapse of the traditional business model to make that plausible and how things are itemized out. It's still a lot of work. Even when Kara and Walt did that they, basically for the first 10 years they worked for the Wall Street Journal. That's a big set of training wheels there. John: Absolutely. Does this transition … ….. becoming a brand, does it allow you to keep your distance from, that journalistic distance from what you're covering or does the access overwhelm everything else? Steven: What's the difference between being a brand working for Sports Illustrated and being a brand who's in charge of Grantland or something. If you're a brand you're a brand. If you're well-known on your own right, the issues of access are stable no matter what. The only thing that would be different is if you have partnerships and relationships business-wise with some of these places there. I've found that one thing which, it wasn't so much Newsweek, but at Wired I was constantly being called on to bring in my sources for speaking events. I never was all that happy about that because I always feel that you have a certain amount of capital with these people there. I prefer to use my capital to get stories rather than conference appearances. John: Talk a bit about the difference in the audience, too. You mentioned while writing for MacWorld people said, "I used to buy because of your column." That audience when you started out in Philadelphia used to reach you by mail once every 10 days. Now, it's more intimate... Steven: ...or not. They're not. They don't reach me at all. If you got three letters for a story in Philadelphia magazine, they’d print them. It's a lot. The relationship is different, a lot of it is noise. It's interesting. It's interesting to read Twitter and I look at the comments on it. I find that the biggest difference is when you write a book. Before the process of readers getting in touch with an author used to be every six months your publisher would send you a small bundle of the people who wrote to the publisher with a question or something like that. Now, bang, instantly you get notified. If you're like me that you put your contact on your website or whatever it's right there. That's dramatic. You could also monitor what actual readers think of your book. On Twitter and other things and they blog about it. Steven: ...which I think is great. I think by and large you get a much better picture of how your book is being received from readers speaking to their peer groups than you do from book reviewers who by and large don't do a very good jobs of reviewing books. They have all sorts of other aims in doing a book review, saying, "Here's my take of the subject." “Here's my chance to settle a score or whatever.” John: They’ll be new wave in media and on other sites and apps. You will be able to tell how many readers start and how many readers finish that story. Is that daunting, because we never knew? Steven: Yeah. I know. Well, Medium is particularly interested in that. We measure by big metric how much time people spend reading it. You could see who's actually reached the end. That's interesting. Now that I'm running this site, I'm trying not to go overboard on…. It's a fragile thing when it starts out. If I publish an essay by one of my writers, one of my contributors, and I think it's a great essay but it doesn't get a huge readership, I don't want to overreact to that. There's one in particular I published the first week. I thought it was a really wonderful essay by one of my writers and it didn't get a giant response. Then someone at Google told me "That was the greatest essay, I sent it to other people." It's kind of interesting there. John: I think you're right, you have to guard against that over-reliance on too much. Steven: It's interesting. We're sort of hard core here at Medium. We don't chase traffic. We don't do things to inorganically build up our numbers there. That makes it sort of an outlier. It's tough to make a comparison to someone who's trying every trick in the book to drive traffic there when we're trying to do things old school. By saying it'll be our content. It'll be what we do, the quality of what we do that brings people to our door. John: Esther Dyson likes to comment that she thinks that readers have to become smarter in a world of info-besity, where there's too much out there. There has to be a curve to the readers' awareness and where the reader looks for information. Do you think that is coming? is nascent? Where do you...? Steven: I think there is going to be a reaction among people., a realization that they're spending too much time getting lured to stuff, which is candy and not nourishing. I think the places like Facebook and other places, Google, are recognizing this and pondering ways to realize that it's better for everyone to have an ecosystem where quality rules, as opposed to distraction and junk. John: Junk, yeah. One of the riddles, of course, is how do you pay for quality? You're testing one model here and that still isn't known, or...? Steven: I guess we'll find out through sponsorships or whatever. I don't know. If you go to native advertising properly labeled and all, we'll see. I think the one thing we have here, and I think you almost need to have this these days, is the revenue is important but you’re advantaged if revenue isn't the only thing you bring to your company here. In Medium, the reason why these hubs like mine are good, not just in of themselves but for the whole thing, is we're going to draw readers and writers to the platform, the overall platform. The overall success of Medium is not going to depend on whether Backchannel or Cuepoint (the music hub) or any of these other things do well, but how well it is in fulfilling its mission of bringing out ideas in general, making it easier to express them there. Our success will help that larger picture. I don't think they want to lose money on us and they’d like to make money on us, but I think if we do OK and help that bigger mission, then it'll be a really good thing. John: How would you say among the journalist covering tech, was it more collegial or competitive? How would you describe the ecosystem around it? Steven: I think it was generally a collegial group, I really do. Even when we're competing for the same stuff, at least to our faces it's collegial. Everyone's nice to me, but then someone at Facebook will say, I get a lot of complaints about giving you these scoops. John: There's that. How do you think journalism writ large has done covering the last 30 years? How do you think? Steven: We've had our successes and shortcomings. By and large, you could say there are aspects of the industry which are fawning, but there's aspects that are like knee-jerk critical. Overall, I think people are informed on the issues. Everyone knows about the threat to privacy, all the stuff at the NSA, people are shocked… But you know what? People have been writing about this for years. Wired did a huge story by James Bamford about the data center in the desert that he said was going to do every single thing that Snowden later had. It just happened that here was a document, a lot of documents, which put it in black and white. Well if you go back and read that James Bamford story, you can say, "Yeah, OK, here's the proof of that, which people shrugged off when it came out there." It's difficult to filter through what could come about and what couldn't come about, in part because it is so difficult to know what's going to happen there. You're trying to catch a target with a non-linear trajectory. It's really hard. Even to go back five years, you could make some generalized predictions about directions and generalize that, but to actually know what kind of stuff is going to be popular in five years, you don't because there's going to be stuff that's enabled two years from now that you couldn't figure out there. John: Would you argue that the traditional news industry should have seen this disruption coming? Steven: Of course they should have but they were not equipped to see it. It just could not happen because of the way the business worked. Who wants to look at something that tells them that the model they're making money on is like climate change. By the time you do something about it, it's too late. They just did not understand how quickly and thoroughly things were going to change. The writing was on the wall. They didn't want to read it and they couldn't read it. How could they reconstruct that? In Newsweek I would tell anyone who would listen, "What we should do is give all our content to five people in Silicon Valley and let them invent something," but that was never going to happen. Newsweek thought it was a pioneer because they jumped on the CD-ROM bandwagon. They would do these things…there was a big fight in the mid-'90s. No one really wanted to hear what I had to say but I was griping a lot about it. We had a choice on our online thing whether we would do a website or develop on Microsoft's Blackbird. And of course they picked Microsoft because Microsoft was a good partner… And then a couple of years later, of course, they had to pull the plug on that. John: Why was that in some of the companies? Others have mentioned, too, that your voice was sometimes heard louder outside the company than within the company. Steven: No one wanted to hear what technology reporters had to say, no one. John: Why? Steven: I had a good relationship with Donnie Graham. He never sent stuff down to me and said, "What should we do, Steven?”……… I had a terrific relationship with him. John: But you are optimistic about journalism. Steven: Yeah. It's interesting. I'm optimistic and this field in particular. I lived for Newsweek and a lot of people took those buyouts or had to leave. Newsweek now, it's still a viable operation but not really Newsweek. It just has a name of Newsweek. Basically, my institution is gone. It's a shocker. Who would have thought, even when I left, I thought, "this amazing institution," would vanish. It is gone. A lot of people just did not find their footing or went into different kinds of businesses or things like that. I was lucky because the field that I write about there's this big demand out there. I've been in the Huffington Post newsroom. Giant newsroom, right? 300 people there. I've been in Business Insiders newsroom, again, desks and desks, journalists writing, working there. There's all these other brand new newsrooms that didn't exist before, that are hiring journalists today. The job might be a little different and the approach might be more demanding, but they're journalists. This field isn't dead. It's like new institutions rising there and they'll be just as sclerotic in their own sense in a few years, it's just as well. Another place will come up. John: One last question. Some people say we as journalists got too much into celebrity. We love covering Apple, we don't cover the anthropology as much as we should have. We got Hollywood-like. Steven: I don't know. I'm pretty much into anthropology. Apple, in particular, can get a little extreme but to me I would say it's not that outrageous. To me, this is, among other things, a giant cultural story. IBM is a big, important company. It makes a lot of money but it is not really a company that is co-evolutionary with the culture like Apple is. When you're covering Apple, you really are covering "The Big Story." It's like saying in newspapers...Congress. You read about Congress a lot, don't you, but when we're talking about laws and whatever, the nation's covered. You can't avoid Congress. That's a big central story. The big companies like Apple, Google, and now Facebook, they're the companies that I spend a lot of time with because they're not only important from an economic sense or a technology sense, but a cultural sense. John: Wonderful. That was great. ...
VIDEO: YES

Caroline Little
BIO: YES: Caroline Little is president and CEO of the Newspa...
TRANSCRIPT: Paul: It is April 5th and we're in Washington DC with Caroline Little. It's Paul Sagan and John Huey. Good morning. Welcome. Caroline: Good morning. Thank you. Paul: We started with a similar question for everybody, which is, just go back and think about the first time you really saw the power of digital technology coming into this industry, the news business. Either it was an epiphany and you said, "We've got to go there." Or, "This is really going to be painful and what are we going to do about it?" Caroline: The first time I saw it, I was working as a lawyer at "US News and World Report," and a bunch of other entities that Mort Zuckerman owned. One was a pre print business. The whole technology of printing in magazines changing dramatically in the '90s. At the same time, this whole concept of third party content was coming into age. We got the first AOL contract and we actually thought it was another library database contract. We didn't pay much attention to it. Then we started realizing the possibility of commenting on news stories and the going back and forth. How does one regulate that? How does one protect it? How do you get insurance for third party content? People tell me, "It must have been really interesting working for a news magazine." Actually, it was pretty interesting. What was really interesting was the pre print business and the coming of age of some of the AOL kinds of contracts. What I realized was, as a lawyer, it allowed one to be a lot more creative than one generally could be being a lawyer. It was like convincing the insurance companies, "Listen, this is the way it works. You should provide insurance. This is the way things are going. This is how it would work. This is how copyright applies to third party content, et cetera." That was really exciting and fun. John: What year would that have been? Caroline: 1995. Paul: Height of the proprietary services and AOL. Really pre the web taking off still. Caroline: Right. Paul: You obviously signed some of those deals and did what most of publishing did, which was enter that world of effectively licensing content to a new distribution channel. Caroline: Right. Paul: Did it seem, besides these legal issues which we had to get through, that it was just going to be another opportunity or the biggest opportunity? Or, this could get really difficult to the business. How did it seem back then? Then how did it play out? Caroline: It seemed very complicated and difficult, but also full of opportunities. Paul: You were there and then transitioned? Caroline: Yeah. I had always been interested in publishing and the legal side of publishing. I thought about going back to a law firm, because a lot of law firms in the mid nineties were starting at publishing, Internet areas. But I, frankly, wasn't dying to go back to a law firm. US News was moving its offices up to New York. I was ready for another challenge. I heard about this job at what was called Digital Inc., in Arlington, which was an outpost of The Washington Post, but was doing digital, experimental. I went out and interviewed. I thought it would be so much fun. I took the job as general counsel there. My sense, at the time was, management at the Post, Alan Spoon, Don Graham, were very open to experimentation. And purposely put Digital Inc. across the river, for experimental reasons and other reasons. But I thought it could be really fun. Paul: You've touched on one of the big questions that's still being grappled with today, which is, separate or together? You want to build off the brand, use the brand to create an audience. But there was a question of whether the traditional newsroom could be prepared to ever do this in a way that was competitive. So the Post took one path that not everyone followed. Can you talk about that? What worked and what didn't work? Caroline: How much time do we have? [laughs] John: Did you have your own general counsel? Did you have your own CEO? Caroline: Yeah. We were a separate entity. John: Separate incorporated company? Caroline: Yep. Paul: With, effectively, a license to the paper's content. Caroline: Right. Paul: Created your own website. You had the right to their brand. Talk about how much negotiation with the newsroom was there. One of the things we've talked about is, in many ways the platforms that won were automated. They just ingested stuff and spit it out quickly. The challenge for the mainstream entities was just they weren't 24 hours. If they were newspapers, they didn't have video. There was the whole, "Wait, you can't break it on the web because you've taken the value from the morning paper." You joined an entity that had a very specific idea about how to try to navigate that. Caroline: At the beginning, we were so under the radar screen, and so viewed as this little thing in Arlington that people really didn't pay much attention to us. Which was nice, in a way, because we could really experiment. It got more complicated as time went on. What I found in the newsroom, Doug Fever was the editor when I came. Wait, no. Chris Moll was the editor when I came. Then he went over to the newspaper, to corporate. Then Doug Fever came over from the newspaper. There was a feeling like, "We need a real grown up over at WPNI." It was still Digital Inc. at the time. And a very seasoned newsroom person was there for a long time. When Doug retired, and by that time I was CEO, I felt that we needed somebody with some Internet juice. Not that Doug didn't. But, in terms of somebody coming from the newspaper, they just didn't have that experience. We had incredible journalistic talent, but not as much Internet experience. I knew that was going to be an incredible challenge. So I put together this panel of the top editors and people from corporate, so that everybody would feel like they had a stake. I had Merrill Brown come in and do a technology assessment, open everything up. There was a real sense, from the newspaper, that we were shutting them out of the future and I didn't want them to feel that way. But I also wanted them to understand that we needed different talents to drive WashingtonPost.com and Slate and Newsweek. John: How much emphasis was there on engineering. It's been observed that one of the things that happened was engineering ended up trumping a lot of the journalistic innovation. That most of the really successful disruptors were platforms that were created by engineers. Caroline: I think that's right. I think they're at it a lot now from the business side. Anyway, let me get back to the editor. We eventually got Jim Brady, who had been at WPNI and then had gone to, oh, he had been, sorry, Digital Ink. A sports editor had gone to AOL and he came back as editor. That was a real coup to get Jim, to get the organization to agree to have Jim to come. Now, people would say, "Why did you even need to get the newspaper?" My friend was like, "We weren't going to succeed if we didn't have buy in from the newspaper." Even though we were a separate entity... Paul: Even as a separate entity across the river... Caroline: We share content, we share a brand. Paul: Did you feel that that was sort of an ultimate trap for these businesses, that it was just so hard to move in the way the web needed it to? Or did you not feel constrained? Caroline: Oh, I felt very constrained. It was a very hard job because on the one hand, you're being diplomatic with the newspaper. I don't have the journalistic chops so I didn't have that kind of relationship with the newsroom. I had a good relationship but not I'm not a journalist. Then really driving a team to experiment. You look at whom we're competing with, it's very different than the newspapers competing with. It's funny. Over time, I think it was great for us to be on our own. Don was incredibly supportive but we didn't have a, if you look at the model that Clark Gilbert is running in Salt Lake City, he's a Clay Christensen... Paul: Clay Christensen, an innovator dilemma's disciple. Caroline: Exactly. He's essentially, he'll describe it as he's running two businesses and he is constantly there saying, "No, you guys go do this. This is what you guys need to do. Let them do what they need to do." We didn't really have that. Don couldn't possibility play that role. Paul: So talk about that. It was Digital Ink and it was across the river and it was separate. It even had started in the proprietary worlds, not even an open website, but it was... Caroline: That was before my time. It was on an AT&T platform. Paul: Right, exactly, and then it transitioned to the open web and it became WPNI or Washington Post Newsweek Interactive. You even moved back across the river at some point. It literally didn't stay separate. Caroline: No, we were always across the river. John: Just stayed physically separate but somehow emotionally or legally or reintegrated. Explain that a little bit. Caroline: Well, we didn't really integrate. That was later. I know around 2006, 2007 became obviously pretty clear that the web and different platforms were going to be a huge part of any news organization. I think it became increasingly difficult for Don to say, "Let Caroline and Jim run the web and you stay at the newspaper." I mean, that's ridiculous, right? It also became pretty clear from a business standpoint, circulation was dropping. It had been dropping. Print ad revenues were dropping, 80/20 split of print advertising and circulation was not probably sustainable. [sighs] There was a lot of tension. Jim had organized the newsroom somewhat like the paper. You had your politics vertical and a bunch of verticals. People were getting excited at the newspaper about opportunities. This was when the whole Politico thing came up and it was just a light bulb to me. Harris and VandeHei wanted to run a political site and evidently gotten an offer from Allbritton to do so. They had come to Don and said, these are the major struts of the story. I may not have the specifics correct. Don said, "Well, you could do this at Digital Ink and WPNI at the time." They came over and then it became this big discussion about who would run it because Digital Ink had its own politics blog. Then there were these people from the Post. It was absurd because it became fairly clear that we were actually competing with the newspaper. They hired a blogger at one point and that was just a big, huge issue. If you look at the economics of it, you're thinking, "Now so wait a second. I'm here at WPNI and we're hiring all these politics bloggers and whatever and then the newspaper has all their people. They're doing one kind of reporting and we're doing another kind of reporting. Technology demands that this is all about storytelling, so how do you tell the story in the best way? If you're going to hire a journalist today, you're going to want them to have the skill set to do all of that and to allow them to choose to tell the story in the best way." We had these constructs that were actually impeding, in my view, the best journalism. It was also incredibly tense and from my standpoint, very unpleasant because it was just untenable to try to bridge these gaps. John: Just to continue with that to the end, they leave the Post and go start Politico. Does that have repercussions at WPNI or at the Post? Caroline: I don't know. I think it was a big blow for the newspaper to lose them. It was clear to me that we couldn't move fast enough and coordinate enough because we had our own issues among us. I thought we, at the digital division, because the newspaper's so strong, because the newspaper has history of great journalists, we were trying to be like them. There was this incredible pull to be like the newspaper. We were kind of losing our identity in a way. Paul: Your web identity. Caroline: Our web identity and our web path. So at the same time all of this is going on, people had always said, "Well, the web, digital revenues will make up for, will cover the newsroom." And I'm thinking, like, OK, so we're making, about 15 percent of our overall revenue was coming from digital. And that was strong. I mean, the New York Times and us had the strongest at that point. And I'm thinking, "How are we going to pay for the newsroom? I don't think I can do this!" John: And the margins are shrinking, right? Caroline: Yes, and the margins are shrinking. And overall, I think about it now watching these businesses and watching the transformation, and I think what we had wrong was, it's not about print versus digital. And that's really, really limiting yourself, sort of thinking about it in those terms. And it's, how do we take these brands and move to a transformation in a digital world? I mean, hindsight is always 20/20, but the model of selling print advertising in a local market where there's not a lot of competition, to say the least, 25 years ago, and transferring that to trying to sell digital in a completely wide open world against content, I wouldn't bet the house on that. And it's certainly one very important part, but it's not going to make up for the world 20 years ago. John: It seems like there's a conundrum that you needed to get away from the mothership to foster the kind of innovation and cultural atmosphere that you needed to get launched. But then, when exactly is the right time to integrate that with the core product and try to turn it into an integrated business that can leverage off each other? And the Post would be an example of the extreme keeping them apart for a long time, I would think. Caroline: I think that's true, and I think when you put them back together, my sense was, with the exception of maybe one person, digital was kind of subsumed back into print. Of course, since I came from the digital side, I think you probably know my answer to that. But it didn't feel like a kind of new entity from a distance. John: So, you returned to the old form. Caroline: Yeah. I mean, even physically, people moved into the newspaper. Paul: So, you left in what year? Caroline: I left in 2008. Don was very gracious and said, "Come and work in corporate." And I didn't want to be bitter, and I thought I would become bitter sort of watching things being taken apart. So, I left and I took some time off, and then I started working with The Guardian. And I had always admired The Guardian from a web perspective. What was really interesting about The Guardian was that I was hired by the head business guy there, a guy named Tim Brooks, who's no longer there. And, at that time at least, things had changed. The business side didn't even talk to the editorial side, as far as I could tell, and the editorial side called the shots, big time. And so, I was working with them. I was running paidcontent here before it was sold and trying to gin up their U.S. presence, which was actually substantial, but they didn't really have a plan. So, I did that for a couple of years, and then I went to the Newspaper Association. Paul: So, talk about that current chapter, because now all your members are dealing with this challenge, and we are seeing the end of daily papers, right? We're seeing these... Caroline: In some cases. Paul: In some cases. So, we've got people experimenting with no paper, very few, or the weekend version, effectively which we're seeing, and a lot still trying to do six or seven days and make digital cover more. How do you see that playing out, and how do you see those various, really, experiments today? And even, ones that are trying to keep the traditional seven days going are almost an experiment, which is that model going to play out in how you...? I know you can't pick a winner, and they're all kind of your children now... Caroline: Right. Paul: But, how do you see that playing out, and what do you hear from them? Caroline: Well, when I was first approached about this job I was sort of like, you've got to be kidding me [laughs] . And coming from the digital side, there is this perception like, oh, they don't get it. And I thought, you want me? And I thought, why would they want me? But, when I interviewed for the job, and this was three or four years after I left, three and a half years after I left the Post, I actually saw a lot more willingness to experiment than I did in 2007, 2008, and maybe it was the bottom out of 2009, I mean, that will make people really look at other things. So on the experimentation, I actually think it's really good that there's experimentation. Most of the papers that are doing the kind of, "We're not going to publish every day" are very quiet about what the results are, so I don't even know. It's not unlike the politico model where they're publishing a print newspaper two or three times a week. I don't know how often it is, actually, but I suspect that the print advertising covers a lot more than digital does, and they've cut their cost substantially and they're still publishing. And they've done that in places where there is significant web engagement, like New Orleans. You know, one of the frustrations about doing this job is people just say, "Newspapers are dead." And all media has been disrupted in the past 10, 15 years. The saddest part for me is, when I came to the Newspaper Association, which pretty much does things the way that they've been doing things for a long time, we were publishing the print advertising numbers and the print circulation numbers every quarter. And every quarter, we'd send out a press release, which would start something like, "For the 21st quarter in a row, the newspaper industry has lost X, X, and X." And I'm like, we're press releasing this? I mean, it was so hard just to stop doing the press release, but at the same time you think, "Well, you're the trade association, you could make the numbers transparent." So, I did a little study, and I found that every time we released those numbers, about 100 stories would come out citing the NAA members saying the newspaper industry is dead. So meanwhile, the board is telling me, you know, we've got to get that. We're not suffering. We've got challenges, but everybody's challenged. We should get a PR firm. And I'm like, great, we can get a PR firm, but we've got to change the numbers and metrics, because we're going to get the same story. Paul: You were leading with your chin. Caroline: Which we do quite well. So, in the last couple months, actually, I said, we've got to look at this pie. I know we don't have to give all these numbers out publicly, some of these are really small numbers. But let's look at print advertising, digital advertising, digital subscriptions, print subscriptions, events, e commerce marketing, all of the various things that newspapers are doing. And if we just look at what we've been measuring things on, we were down maybe nine percent over. And any publisher you talk to, I'm sure they'll say, yes, we're going to be lower on advertising. We were actually down two percent last year, because that, you know, 80 to 20, sorry, that 80 to 20 model was moving more to a 60 percent advertising model, 40 percent other. And to me, it shows that we really are in transformation. Things are moving. It's not easy and it's not necessarily growing, but it's not dying the way that the industry is pictured. John: Which ironically, is most often pictured that way by newspapers. Caroline: Yes. Well, it's really interesting, because we actually have this study embargoed until Monday, and a lot of journalists are quite interested in the story. So yes, we're really good at slamming things. John: So, when you look back at all this and you look at the issues like the legacy culture versus the innovative culture, and journalists versus engineering, central versus divided in different corporations, is there anything that anybody did that you think made a big difference in the other direction from the way it worked out for you at the Post? And in the end, would it have made much of a difference anyway, or was this just the tide taking the swimmers out to sea? Caroline: I think this is growing pains. I do think some of this is growing pains. I mean, you have people with the best intentions and the greatest hopes, and the passion about reporting in whatever media. You know, I go back to Clark Gilbert. What he's done, he's actually been more radical in the newsroom in some ways, which I think is really healthy. He combined a newsroom of a radio and his own newspaper newsroom. And he said, "OK, breaking news, we're going to put here in a breaking news pod, or whatever. We're going to invest in these five areas, family, faith, X, Y, and Z. We know that our audience is really interested in this, and we're going to take these people and put them in a separate newsroom where they are going to be able to do long enterprise pieces," and he actually hired more people to do that. I mean, that's pretty smart. You know, hindsight is 20/20. Maybe it's easier to be able to conceive of those things when you're looking at the whole thing. We were sort of looking at digital, and the more we felt threatened by the newspaper, the more we sort of crouched down and did our own thing without kind of looking at the whole enterprise. John: Well, but to be fair to you and everybody else in that business, there was an arc. Digital was growing, and it was the future, and it was going to save the business. Then it flattened out and then it started declining. It turned out, "Oh, maybe it isn't going to save the business." It's the future of the business but it's not going to instantly turn into replacing these previous revenue models that included circulation. So, how much time, in your tenure, did you spend thinking about paid versus free and wrestling with that whole issue? Caroline: That was just so off the table by the user. I don't think we could imagine. The FT and The Wall Street Journal had models. Consumers aren't ready to pay. They're not going to pay. Those are business models. You talk to Martin, I think he felt a little bit, "Oh, man. Is going to charge. This is against our ethos," at the beginning. Now you hear people doing that all the time. Paul: Maybe this should be the last question, which is just now that the ethos has changed and people are starting to switch, including the Post, some people now look back and there's always this easy hindsight criticism which is now it was an original sin to go free. We just should have waited, should have been patient. It wasn't just the newspapers. It was magazines. Even some of the pay cable channels, at least. We all went free for that. We just had to try it and there was enough free stuff. Now some people are looking back and saying, "You just made a big mistake." Do you think it could have been done a different way? Do you think a different decision could have been made or would that have just simply made it just not come out of the gate at all? Caroline: Well, we tried that at The Post. 12.95 a month, and it was a complete disaster in 1996, I guess, they tried it. People forget to realize, not forget, is the Washington Post cost 25 cents 15 years ago. That was very heavily subsidized. That wasn't the true price of the paper. Consumers, things are changing. I guess, thanks to Apple, I think, and Netflix and the cable channels, we've gotten used to paying for content. So I guess I... Paul: It played out as it had to. Caroline: It plays out as it has to, yeah. ...
VIDEO: YES

Om Malik
BIO: YES: Om Perkash Malik (born September 29, 1966) is an I...
TRANSCRIPT: Martin: All right. Here we go. Martin Nisenholtz speaking to Om Malik on April 8, 2013 in San Francisco. Can you just give me five minutes worth of background? How did you come to digital journalism? Om Malik: My first interaction with the web was way back in '95. I had been playing around with it personally, and I started a personal website with the idea of using it as a hub for aggregating night life activities for people of South Asia, and in learning about the web I realized that my day job would be on the web. I was working for a news writer at that time. Lee K., and I left that job and hounded my future boss at Forbes.com into hiring me for what was going to be Forbes.com's web presence. I started with them in early '97, late '96, early '97 time frame. That was my entry into the world of digital journalism. We were very early. Forbes.com was a pretty pioneering project, at that time. A lot of interesting writers came out of it, including my colleague, Adam Penenberg, who broke the Stephen Glass story, and now he teaches at NYU. That was the early days of the digital journalism for me. But, I was always a believer in the web writing. The more time I spent at Forbes, the more convinced I was that it was the future. Even though I left Forbes and worked for "Red Herring" and later for "Business 2.0," I always felt that the web was the way to go, even for "Red Herring." I wrote for Redherring.com as well, even though it was not part of my job and the same thing with "Business 2.0." Even though I was just a magazine writer, I was completely writing online, and the reason for that was I believe that online created the necessary speed you needed for technology news. It was just made for technology. That was my brief history of traditional journalism, but completely obsessed with digital, completely, 100 percent. I always felt that the print just was going to go away, even from the very early days. Martin: Because of speed? Om: Because of the speed and the ability to actually to be more interactive and the ability to actually get feedback in real time, and the ability to write as much as necessary. The difference between a paragraph and an ebook, is basically how much you have to say. I think that is something so unique about the web. Any one person with many different styles of writing, can actually succeed, which is very difficult in the print world, right? If you're a news wire guy, you'll always be a news wire guy, because that's what you're really good at. If you work for a newspaper like "The New York Times," like writing "The New York Times" story is your thing. If you write for "Esquire," or "New Yorker" magazine, you are that guy. It's like you have a certain style, but the web allows you to go between various different styles of writing. That's what always drew me to the web. Also the fact that it was something people frowned upon initially. Being an outsider, I always thought, "Well, if people hate it, this thing is going to be good." Martin: You initially start out at Forbes then? Om: Forbes.com. Martin: Yeah, at Forbes.com. How long were you there? Om: About two years. Martin: What did you learn at Forbes.com? Om: I learned two things at Forbes.com. I learned the great lesson Jim Michaels used to teach everybody. If you can say it in a thousand words, you can say it in 500. If you can say it in 500, you can do it in 200. That's the best blogging training anybody can ever get. If you really think about it, all the good bloggers have come out of Forbes from that era. Peter [indecipherable 09:50] is another example. That was the number one lesson. You don't have to use too many words to actually have a great narrative. The other thing which I learned was to look beyond the obvious, which was when you are looking at a story, don't look at just one layer underneath it. Look three, four layers underneath it. That was through...I just picked it up. They don't teach you that there, but it's part of the conversation all the time. It doesn't matter whether you're on the online side or you are on the offline side of the work, you just picked up that you have to dig deeper, look at angles like three or four [indecipherable 06:31] removed from what you were looking at. Those were two big things I picked up from "Forbes." Martin: Did you think about the culture at all when you were there? Was there anything about the "Forbes" culture that was interesting to you at the time? It's interesting to me that "Forbes" is one of the few magazines that, at the time at least, was really trying to get significantly larger online than it had been. The other magazines seemed not to...well, that's not true. "Conde Nast" had a significant effort and "Time" was with AOL, so that was a little different. Om: My view on the culture of "Forbes" was that because of the fact that it was family owned and it was a single property, they were highly focused on finding out what would happen next. I think that's why they let David [indecipherable 07:27] and his merry band experiment with the web stuff. I don't think the print people completely bought into it. They, in fact, thought very little of us at the website. Now they come up with a different story, but back then the management, the Forbes brothers, were very open to the idea of what comes next and they were ready to spend money on it. Martin: You spent two or three years there and then what happens? Om: I briefly left to go work for H and Q as an investment manager, which turned out to be a bad idea. When banks like H and Q and Venture Funds start hiring journalists to do investments, you know you're at a market top. Jokes aside, I was there for about eight months. I was miserable. I didn't really like working there, mostly because I wasn't working with people who were changing the world. I was not even in the flow of things. There was just a difference between being a part of something which is exciting and something which is boring, so that got to me. I called Jason Pontin over at "Red Herring," who had been a friend for a very long time and a few other people. They tried to recruit me a few other times already. I called Jason, I think it was in July 2000. I said, "Jason, I'm miserable. What can I do to get out of here?" He says, "Why don't you start on July 7th?" I said, "What? That's it?" There you go. I was working for "Red Herring" and I loved working for "Red Herring." It was a good training ground for my full immersion into the Silicon Valley culture. Martin: The timing was auspicious though, if I'm thinking about it correctly, the dot com bust happens, you read how it went from being a telephone book sized magazine to a newsletter within a matter of months, as I recall. I may be wrong about that. Maybe I'm thinking of Industry Standard. Om: Yeah. That was Industry Standard. "Red Herring" took about three years to die. I still feel that it died less because of the market conditions and more because of bad management. I think it was a very poorly managed company. People who ran it didn't create a plan for a downturn, real stupid leaders. I could spend days talking about that. The magazine itself was actually putting out a good product to the very end, to the very last issue. In fact, the last issue would have been the 10 year anniversary issue, which is ironic. This perhaps was one of the best issues we had put together with a skeleton staff. Too bad the world didn't get to see it. The year I joined, probably after the market topped, but again, if you're a writer, you just write stories. The market is just work it. When things are going up you write about that, and when things are coming down, you write about that. A very encouraging editor that I had. Even though many of them were my age and young, but still always encouraging me to think different. I think that had a big role in how I eventually became who I am. Martin: You leave when they go out of business? Om: Yeah. I literally turned the lights out in the office. Me and Doc [indecipherable 11:33] were the two guys that [indecipherable 11:35] it can't be found. Martin: What do you do next? Om: For about 15 days I tried to do nothing, which is so hard for me. Then I talked to Josh Quittner over at "Business 2.0," and he said, "Come and work for us," and that's what I do. Martin: Yeah. We had lunch with Josh Quittner last week. He's at "Flipboard" now. Om: Yeah. He hired me and another guy, Michael Copeland, and Time Warner bought the mailing list of [indecipherable 12:19] . I went there and I guess this was the next step in my life. Just like people think the worst is happening, and from the worst came the best. I wrote for three years or so. I wrote a lot of articles for them, a lot of cover stories. Some of those cover stories have actually become management practices now, like the lean style startup. Martin: Now you're writing for a print magazine. Om: It was a print magazine, but they also had a website. I would write occasionally for Business 2.0.com, but I also had my personal blog which had actually blown up. Martin: When did you start the blog? Om: The blog started in December 2001, as like what it is, like career. Before that it my a repository for my links to my articles and my resume. It's been around since '97. I actively started writing in December 2001. There I would write pretty much every second day, or every day. Martin: Just your thoughts? Om: Just thoughts. People I would meet in the Valley. Again, I was working for a monthly magazine. I had a lot more to write than most people, because I'm just a daily guy. I like to write five times a day. That's who I am. I would start my [indecipherable 13:44] in a news wire, so I'm used to writing fast. At this time, because of my background, I was able to become a good blogger/reporter without even trying, because I was blogging, like a traditional blogger with a lot of voice and personal stuff, but I also was reporting, and I was also being able to offer my narrative experiences, like the magazine, things I learned at the magazine, I'd bring them in. I also learned magazines teach you how to think literally and use the graphics, and pictures. All those things are combined in my head somewhere. Like this happens, like you just learn these things while you're doing your job. When I turned professional blogger, which was in 2006, all those things came in very handy. Martin: When you say you turned professional blogger, you left "Business 2.0," or did it go away as well. I think it went away at some point. Om: I had left in June 2006, starting GigaOm, the company. Martin: Why did you do that? Om: I think it was funny that there were two people who would harangue me every day. One was Ratat Ali at paidContent, and Michael at [indecipherable 15:16] , Michael [15:17] , was like "Great. You are telling us to start blogging, blog based companies, and you yourself are still working for the man"? People gave me enough hard time, but jokes aside. What had happened was, people kept talking to me on whenever we'd go to parties or events. They would talk to me and say, and they would talk to me from the perspective of what I did on my blog, and not what they read in the magazine. I said, "That makes no sense. The magazine is so much bigger." I didn't realize how much bigger the blog had become. Also when that happened and I went to Toni Schneider, whose Matt's partner in crime and he said, "What makes you happy. Writing for the magazine or writing for the blog"? That was the answer, so I left to start a company. I could have done...I love Josh, so my loyalty for Josh is completely 100 percent, so leaving him was the hardest thing for me because I really loved working for him. He probably was, he found the genius in the [indecipherable 16:33] . He would look at things and be like, "Yeah. That's a story." Then he would turn that into magical cover story. It was really hard to leave. He was my [indecipherable 16:45], but I had to do it. The world was telling me, my intuition was telling me, that the time for the magazine was coming to an end, and this next wave of journalism, or writing, or content, or information is going to be driven by these real time systems. Whether it is a blog, or Twitter, or Facebook, it doesn't matter, but there is the real time nature of these things, which is going to drive the narrative of the future, and that's exactly why I left. Martin: Can you talk to me about this so called real time nature, because what we've heard continually throughout this process is, not always in conflicting terms, sometimes in complementary ones, but certainly sometimes conflicting ones, that the idea of a more traditionally journalistic process where there are teams of people working to create something and you know, then put it out, versus the individual who is going directly to his audience, not necessarily versus, but you know what I mean, in contrast to is a better way to put it. These are two very different things. One is meant to assure the truthfulness of something; the other is meant more to provide, to use your phrase, the benefit a more real time, more instantaneous view of something, and both have benefits but, both have down sides. Do you think that's right, or...? Om: To some extent yes. The way I see it is information is...The analogy I like to use is that a food. There is many different kind of food, many different ways of preparing food. There is the chef, the slow food way, and there is some art to it, but not everybody can create that. Not every publication can have 10 people working on a single story. Not every publication can hire Malcolm Gladwell. Not every publication can afford to pay David Carr. My view is that, that is one way of doing things, then there is the blogger way of doing things, which is one man trying to obsessively cover an industry, or a topic, or a subject, and finding all sorts of information about that topic, subject, or person, and then aggregating it on their blog. That too, to me, is information gathering, just like a reporter in a big city newspaper that does that. The two are very complementary. I think I'll use the idea of 21st century reporter, in my opinion is somebody who works for "The Times," is Brian Stelter, he's on Twitter. He is blogging, and then he writes a column, which is perfect. There is never a discontinuity in understanding his view of the industry. That's a good reporter, in my opinion. That is a prototype. Some of my people, especially some of the people who've been with me, for a long time. They're exactly the same. They write classical journalism, they work with a team, they do a little bit of blogging, and then they tweet. There is a continuity to it. I think the real time nature of information is important, because we don't put out just magazines that get distributed. The world is more connected today. Just like television changed our expectation of information, and cable news changed expectation of information, the Internet, too, has change our expectation of information flow. Mobile is changing it even more. I think there is nothing wrong with it. That's technology is the inevitable. We just need to do how we do things, adapt them a little differently. I love reading "The New Yorker," actually, in paper. I would not like not like to read it on the iPad. I don't mostly because I am enjoying my Michelin star meal, it's costing me, not money, it's costing me my full attention. I mean, you don't do that when you have a taco at a taco bar. You're just like stuffing your face. You have no regard for your body. When you eat at a Michelin star restaurant, you're enjoying the process, the food. You're immersing yourself into it. When you read something in "The New Yorker," that's exactly what you're doing. I cannot wait for Monday to come when David's column comes out. I read it on the web. Martin: I think the question, in large part, this history is not looking to answer, but certainly looking to outline is whether in the near term future, the Michelin Star restaurants have viable business models. As willingness to pay on the part of the consumer has been somewhat different on the web than it is in traditional media and the advertising, in particular. That business has changed. The question of whether you can support all of the staff that it takes to build a Michelin Star restaurant is viable, how do you react to that? Om: I think there are challenges of business model. These are not challenges of the business. The business model has to adjust to the new reality. Can a publication like "The New York Times" afford 5,000 reporters? Probably not. Can they afford a million square foot office in the middle of Manhattan? Probably not. Those days are gone. However, you can right size your business model. You can right size things you do and do them really well. I think there is going to be at least 10 to 20 top publications in each category, whether it's a newspaper, magazines and even online. Then there will be a lot of other individual means of expression. I think I find many Twitter feeds are more interesting and intelligent than reading some columnists, to be very honest. They're just short reach [indecipherable 23:47] . I think the model has to change. I think we have an old industrial idea and business model around news and information. That has to change. Why do we have to have fixed infrastructure? Why do we have to have a fixed idea of what a foreign correspondent is, or a news office is, or a news bureau is. Those ideas have to change drastically. They have changed over a period of time. The technology allows us to do many new things, as well. You don't need a lot of expensive Telex systems and all those kind of things anymore. It is a lot of cost savings as well. I do feel that if people put out good product, there will be need for that. Even today, you see a lot of these tiny startups are popping up which are using the web to write narrative, long form journalism, which is exactly what "The New York Times" does and some of the better publications do. It's not the idea of long form or good journalism has gone away. It just is adapting your business to it. You have to do it. Everybody has to do it. We have to do it. We are almost seven years old, now, and as a company we have to change to the ever changing reality of the business. Martin: It was interesting because Marty Baron, the new editor at the "Post" in Washington, really, I thought, gave a pretty compelling rationale for the need for the kind of investment that the traditional journalistic process takes. He talked about a couple of different things, but in particular the thing he worked on in Boston, the priest scandal, took a lot of time and a lot of sustained effort and a lot of commitment. If "The Globe" didn't do that it would still be going on or most likely would still be going on. On the other hand, maybe in this world of real time information, you can't hide anything from anyone. In other words, what was the thing that was ferreting out all of this corruption and all of these problems had to do that more aggressively because there weren't a million different ways to publish. I'm not sure whether that's true or not? Do you have a reaction to that? Om: I do, and I think he's right. We have to do those kinds of journalism, like we have to. That's the real reason we do journalism, is to kind of look for things which people don't want us to write about. "The Times" or the "Washington Post" have the resources to do those kind of things, but they just can't do them at the scale they used to do it. There's 50 investigative reporters going on at any given time at a big city newspaper. Or maybe there is five now, instead of 150 reporters dedicated to some investigation, there's only three or five. Like what I'm saying is the relatively...But there is other ways of thinking about it right? Like while the "Post" or "The Times" are thinking about it, just add the story or the paper, right? Why isn't it an ebook, why isn't it a Kindle single? Martin: Well it is now in today's world. To be fair it is. The "Times" has a... Om: When you are going in to an investigative piece the whole thing has to be end to end. From a tweet, to a book right? You figure out what does the entire ecosystem look like, how much money you can make in the entire eco system. Think differently about the same idea, just use what is at our disposal to do new interesting things. I do feel like there is few people who will just be brilliantly successful like this, a few big publications, and thank God for that. It would be a shame to see "The New York Times" not do its investigative pieces. Or "Wall Street Journal" not go dig deeper into companies. Because then, who else will? These things do need time and patience. I don't expect that from any of the traditional business magazines now. We try and do as much as we can with our limited resources. The ideologies are still there. We just are more cognizant of the world we live in. We are more aware of the business model we are competing with. I think that's just what it is. I'm still positive of our information ecosystem. I'm still excited about media. In fact, last year we bought paid content on that premise. That the renaissance in media is going to happen. It's going to happen relatively soon. All these new devices, these new mediums of distribution and consumption, mean new opportunities. We just don't know what those opportunities are. I think that's what makes it such a great time to be experimenting. That's how I feel. I'm an optimist from that standpoint. ...
VIDEO: YES

John Markoff
BIO: YES: John Markoff joined The New York Times in March 19...
TRANSCRIPT: Markoff: Journalism I started early but didn't come back to it, so it's slightly tortured. I edited my junior high school newspaper, and then I sort of fell away. I'd grown up reading I.F. Stone and "The Nation," so I was really influenced by I.F.Stone as a model. Then, while I was in college, I read the autobiography and perhaps biographies of Lincoln Steffens. I was very much in an investigative journalist, muckraking sort of domain. I was active in the anti-war movement, and we were doing a kind of journalism...where I fit into the political movement was doing a kind of journalism that was called "power structure research." Modeled after C. Wright Mills and G. William Domhoff. There were these organizations all over the country -- NARMIC in Philadelphia, NACLA in New York, Pacific Study Center in San Francisco. I was involved in Pacific Study Center. It was basically investigative journalism, but without a commercial connection. I ended up editing my college newspaper, and then there was this branch point where I decided that -- I think I had applied to Columbia, but I didn't finish the process there. I applied to graduate school at the University of Oregon, and made the decision to go to the U of O. In my head, it was about relevance. Which was crazy, because on the first day I was there I realized I was in the wrong place. But I had a fellowship, a graduate fellowship, and it sort of took me four years to unwind it. While I was there, I was very politically active and there was another research group called Pacific Northwest Research Center that I was involved in. I was involved in the . I applied and failed toward the end of my time in graduate school for a job in the AP Bureau in Portland. Didn't get it. I had done this 70 page report on "Corporate Farming in the Mid-Columbia Basin." I used that with the AP Bureau chief, a really nice guy. This had taken me six months, or something. He said, "Hey, this is really nice! Can you do one of these everyday?" I didn't get hired. I dropped out of graduate school. I had a master's degree, and I left. I decided that I really did want to be a reporter. I wanted to work for a newspaper. That was going to be my career. I was going to have to back into it. In that point in the world -- this was 1976 -- if you wanted to work for a major metropolitan newspaper, you had to go to journalism school and then you had to go to work for like the Fresno Bee or the Modesto Bee. I had sort of bumbled around. I brought my own money to Pacific News Service. That was an alternative news service run by Sandy Close, started by Franz Schurmann and Sandy Close. It was sort of a wonderful place to be. There was a small group of people interested in intellectual ideas. Their package, it went out on paper to about 300 papers around the country every week. I had no money but I'd get great by-lines. I had by-lines in every major paper in the country for these sort of think-y essays on the war. Then, increasingly, I got very interested, because I was living and working in Silicon Valley and could see... This was '76. Silicon Valley had been named. Silicon Valley just, how many years before? So, '73 or '74, it was named "Silicon Valley." I was there right around the time that the notion of this places was coming together. I sort of grew up with it. I saw it. I did a couple of things that I remember. I wrote about surveillance for Pacific News Service. I wrote about the social impact of the microprocessor and personal computing. I wrote about "Star Wars." As matter of fact, it was my piece on the "Strategic Defense Initiative," in which the headline writer used the term "Star Wars" for the first time with respect to SDI. We sort of coined it. I got it picked up everywhere, and then the name stuck. There I was, and I had been working for five years as a freelancer. I was writing for PNS. What had happened, the reason I got the gig at PNS and Sandy Close, to her everlasting credit, was I had found a Quaker family who gave me $6,000, I think. They gave me $6,000 to support investigative reporting on the military in Silicon Valley. Sandy took the money. She ran it through PNS, because that was a non-profit. She took no overhead and gave it all back to me, plus she gave me $100 a story. I was living on $3,000 a year. I was hanging out, both in the city, where I had a little office, and down in Mountain View in the middle of Silicon Valley at Pacific Study Center, where we were tracking what was going on. There was this amazing branch point, but I really wanted to get to a newspaper. I was tired of living on $3,000 a year. It was clear that that wasn't going to work in the long run. I was taking the summers off, and going and working in this wilderness camp. Then, I'd come back, and I'd be starving. From this great distance, it looks like it was a really great life, but at that point I was kind of burning out. There was this moment, where I was looking in the Palo Alto Times for a job. I had to get a job. The first thing I saw was a job for guys driving, they had just started a recycling program and they needed guys to run the recycling. I said, "This is really honest labor." I called the guy. He said, "You know, it's too bad. I just hired someone, but keep in touch. I really like college guys." I didn't get that job. Then, a week later in the Palo Alto Times, InfoWorld, which had just started... It had been Intelligent Machines Journal, but it became InfoWorld. It was bought by Pat McGovern. He began to put together a weekly newspaper for the personal computer industry. I walked in there totally off the street with my Pacific News Service clips from the "LA Times," the "Chicago Tribune," the "Washington Post." I had everything. They looked at them, and they thought I knew what I was doing. It's true actually. I knew more than what they... Because they were making it up as they went along. It was a really sweet group of people, kind of crazy group of some hobbyists, some sort of wannabe journalists like me and Paul Freiberger, some techies like Mike Swain, crazies like John Dvorak and Scott Mace, John Berry. There was a little team of people, who began covering this industry just as it started. I walked in right at the right time. There was this sucking sound. This is in terms of covering computing, at least. I want to segment covering computing from covering technology. I see what happened as an aberration in some ways, just deforming what should have happened. There was a huge sucking sound in a very rapid order. Dozens of publications exploded, just all focused on computing. It was a new industry. It was a consumer industry. It attracted this new kind of journalism, starting probably 1980 to 1981. John Geddes: OK. You're there at the start. It's pioneering. It's a new industry, just like you landed in a new country to cover as a foreign correspondent. You were there new. When did the social impact of it start to hit you? In other words, that tomorrow will be different than today? You came in from the surveillance side, from the passionate... John Markoff: Are you talking about media, or society and the technology? John Geddes: I'm talking first about society and technology. John Markoff: I had already seen that. I had already come into contact with Moore's Law which argues that things become faster faster. That was really sort of on the technical side, I saw that. I had seen three things, probably. I sort of knew about Moore's Law. I had read this book called "The Microprocessor Revolution," which was written by a British guy in the 1970's. It argued that the microprocessors were going to change society. I bought into that big time. The third thing that happened that sort of set me apart is that, through a strange set of circumstances, I became a friend of a guy who was one of the designers of the Alto at Xerox PARC. Before I was at InfoWorld, maybe as early as 1979, I had seen a Parc Alto. I realized that computing, networking and all of that stuff, was all going to be... It was kind of the same kind of insight that Bill Gates had. That there would be a personal computer on every desk and they would be connected. All of this fell out of that. I was writing about that. I was the one at both PNS and at InfoWorld that was writing about social impact stuff. John Geddes: Were you a geek? Had you ever programmed? John Markoff: I enjoyed hanging out with hobbyists. I was on the periphery. I had taken programming classes in graduate school because I needed to be able to do things for statistics. I had some experience. I was hanging around with the people. They were all around me. Particularly, after I got to InfoWorld and people were building their own S100 based computers. I was not going to be a geek. I was always going to be a reporter so there was a different path. I enjoyed playing with the machines. I had been going to West Coast Computer Fairs, probably going back to '77. I don't think I went to the very first one, but I was probably at the second West Coast Computer Fair. Just watching the hobbyist scene explode into this billion dollar industry. John Geddes: You walked in the with the feeling from your books and from your experience that this was going to change society. When did it become clear to you that it was going to change the news business, like journalism, your craft? John Markoff: I knew that, intellectually, very early on. Did I understand how much it would undermine it? I don't think I understood until much later that sort of the obvious thing, that the monopoly choke point would go away and Craigslist would pop-up and eviscerate the industry. I don't think I understood that. I sort of understood that the industry was in for a really dramatic rough sledding, not without knowing the specifics early on. You have to remember, you were looking at things through the lens of a 300-Baud modem. It's very hard to see. That was probably harder to understand, the impact bandwidth would have and mobility would have, and WiFi and things like that, toward transforming news, but in principle. The company that was in the office before InfoWorld, on Lytton Avenue in downtown Palo Alto, was this early networking company. I'm blanking on its name now, but it had been this early effort to basically do an Internet like sort of communications technology too early, and it failed. When we walked in there, the first couple of weeks, they were still pulling the parts of that company out there. It was everywhere. "The Source" was around. "CompuServe" was around. You could see that something like that was going to happen and there had been these experiments. Crazy Geoff Goodfellow at the Stanford AI Lab had managed to get the New York Times wire to flow into the ARPANET. I knew that was around and could see it. I don't remember writing a lot about the death of newspapers. I sort of assumed there would be a transition to an electronic world, but assumed it would still be profitable and maybe even more profitable, rather than profit-less. John Geddes: Profit-less. Well, it's a different world. I guess that's what's often said, that the pace had changed, that Moore's Law would affect the transitions too. It gets faster and faster. Nobody had anticipated that, because let's remember. The newspaper industry had been through 15 years of getting rid of "cold type." They had withstood that, which had been there for 300 years and maybe there was a cockiness about the ability to withstand change. John Markoff: The other thing is that computing and connectivity, those transformations -- I just have to try to stay away from the word "revolution" -- but those transformations were separate. The computing thing happened. The desktop computing thing happened and the pipes were very thin. As long as the pipes remained thin, there was something that wasn't happening, and that came later. Steve Jobs, as late as '84, sort of missed the thing that he saw at Parc. He missed that all the computers were connected. People knew it was going to be the Year of the Network. We used to joke about this. It was the Year of the Network every year for like 15 years, before it was finally the Year of the Network. Those two things had to happen, before you could really see where things were going. John Geddes: It's that further iteration, the network turning into the social network. It's that one come in one on top of another, which had multiplied. You've also lived, as have other reporters here, through that change in the relationship with the audience, that when you started at InfoWorld, when you started at Pacific News Service, you'd oftentimes get a letter in the mail once every five weeks. It's changed into something far more intimate. How does that effect your journalism? What has that changed? John Markoff: Well, I know that's going on, I've listened to guys. But I am the most protected and the last survivor of the old model. I mean, the Times really is. Everybody else is sort of chattering on about how journalism is a conversation. Not where I work. I frankly have no interest in that conversation. I do my job. I guess where I fit, where I come down on that is, I'm sort of more comfortable with George Orwell, who said, "Journalism is what people don't want you to know. Everything else is PR." Everything that I've done that I'm proud of is turning over a rock and finding something, as opposed to the scoop cycle of Silicon Valley, which I deeply hated and I'm now finally away from. It took me a long time to get away from that. John Geddes: Once upon a time, it was you and others -- the people at the Journal, the people at the Times -- you were the main target for all of Silicon Valley, as far as scoops…right? John Markoff: Yeah. It was a certain part of the ecosystem we lived off of. I had a very love/hate relationship with that. Didn't want to miss the story, but you knew you were playing a part in an ecosystem that was about money and everything else, that is not what I signed up to be as a journalist. As the Silicon Valley reporter of The New York Times that was a big part of my job. John Geddes: That ecosystem's changed now, not just because of your position. The ecosystem's changed radically now. John Markoff: Yeah. I see it as being more confused. Yes, you're right. I'm thinking now about these communities of interest around products, where now I would say that's right, it's become more decentralized. The barriers to entry have fallen. Everybody can create their site. Everybody can be a journalist. Most of those people are trying to do it on a for-profit basis, but there are lots of hobbyists out there that are in the mix. Everybody can be a voice. There's lots and lots of cross-cutting and things going on now, and I don't think it's settled out. I have, for a long time, bought the idea that much of what has been journalism will be automated. In a way, maybe we'll go back to my notion of journalism, as the role of the press is to report what society needs to know and isn't being told and everything else will be automated. I think I got this for the first time relatively recently. Probably 10 years ago, I saw Intel Labs build a system that automatically created a highlight reel for a basketball game just by pulling on crowd cues and things like that. They did a very nice job of generating the evening news. I looked at it and I thought, "You could do this for a city council meeting just as well." Nobody had done it, but it was obvious to me that any kind of set-piece interactive function could be picked up by technology and automated. It's been slow, but I can see it's bubbling all over the place. I'm 20 days away from my pension, so it's not really my problem, but I can really see that a young writer has some deep choices to make. This is right now. This is best of times, worst of times. I see so much stuff going on and I don't see a lot of super profitable stuff going on. There's capital flowing in and so there's lots of support for experimentation, but it's not clear to me that anyone's nailing the business model. Although, maybe it never changes. Here, what are we, 10, 15 years out from Justice League of America, this effort from brand- name journalists to create a news site that never went anywhere. Steven Levy creates something called "Back Channel" on the Medium website. I keep pressing Steven, "What's your business? What's your business?" because they don't have any advertising. His business is he's got a billionaire who's funding him. This is probably a rounding error. If a billionaire can do this as a hobby and has an audience, maybe it doesn't matter. Maybe that is the business. John Geddes: One could always argue that the history of newspapers in America was always the billionaire. John Markoff: That's what I was going to say. John Geddes: Let me go back and ask two things. Justice League of America -- tell me about that episode. John Markoff: What I don't remember now is whose idea it was. I remember some of the people who were at the table. I don't remember. Was this at a PC forum? John Geddes: You had said it was either a PC forum or one of the gatherings where the same group came, year after year. John Markoff: Showed up every year? PC forum or...Stewart Alsop's was not PC forum. His was the other one. John Geddes: No, his was the other one. John Markoff: It was one of those two events. It was the same group. Was it '97 or '98? It was fairly early on, when things were very frothy. Walt was there, Walt Mossberg, Kara Swisher, Steven Levy, myself, Peter Lewis, Dan Gillmor. There were three or four others. John Geddes: Dvorak? John Markoff: No, Dvorak was always a loner. He wasn't there. We talked about the idea. It seemed kind of obvious. Some people like Dan were really into it. Dan was a deep believer in looking for new models. All the rest of us had our...I didn't need this. I was not feeling entrepreneurial. I already had all the platform I would ever need in my life. I kind of liked the group, but I wasn't committed in any way. Before anything could happen, I remember just one discussion around a table where everybody was sworn to secrecy. Kara immediately went to Jim Breyer at Accel Partners that night while he was drunk, as I remember. That's hearsay. He wrote, I think, $10 million investment on a napkin. Then it fell apart. Nobody was willing to commit, to jump. I think Dan would have jumped. John Geddes: It's that interesting thing. We've lived through an era where, when we started it was almost the institution we worked for. We weren't meant to overshadow the institution. The institution was supposed to be the brand, not necessarily us. It always existed that there were brands out there -- a bad columnist, Johnny Apple. There were always brands out there. We weren't expected to promote ourselves. That's different now. John Markoff: I agree, although that discussion began very, very early. It was at the Berkman Center. Early on, it began holding these Internet and media conferences. I think I was at the first one. John Geddes: You were at one in Nieman in '92 or '93. Was there one at Berkman, too? John Markoff: Maybe it was Nieman. John Geddes: It was at Nieman, because I went back and read your speech. John Markoff: That's interesting. There's a transcript. There was this interaction between Esther and Arthur, where Esther suggested that I was a brand name. I was aghast at that idea, because I had always loved reading new journalism. Brand-name journalism had been around in limited form. There were the Tom Wolfe-style journalism where you put yourself in the story. I really loved reading it, but it wasn't me. For me, dying and going to heaven was working at the New York Times because I never expected to be at the "New York Times." That was serendipity. I always ran away from the idea that I would be a brand. I was committed to the idea of not being in the story, although I enjoy reading people who do the other. John Geddes: How do you think that's changed now? The fact that that expectation that you went into and you didn't want to be the brand and other people didn't want to be the brand. Now, it's almost presumed with tweets, with social networking, that you build up your own. Your following is something that travels with you. John Markoff: My sense is that different institutions have different commitments to this notion of forcing the...that's an interesting question. I still think that this cobbled-together social presence that comes from lots of different things is an imperfect mechanism. It's not as effective, for example, as video or TV where you have THE personality. The Charlie Rose. There are Twitter equivalents of Charlie Rose for those little universes, but they don't have the kind of force that television has in terms of personality, I don't believe. Maybe that's just a matter of the platform hasn't emerged yet. John Geddes: Right. It may be a matter of the difference between 10 words and 30 minutes. 140 characters and 30 minutes. John Markoff: There's this new wave of experiments that I see. I keep watching this thing morph constantly. Vice popped up over the last couple of years. Now, I haven't even looked at it yet, what's Fusion? Do you know Fusion? John Geddes: No, I don't know Fusion. John Markoff: Alex Madrigal, who had been at The Atlantic just jumped to Fusion. I saw that. Fusion is about video. I haven't had time to go look at it yet, but I have a sense that there's yet another model. Lots of money, lots of talent, and they're taking these people and they're going to be doing video. Maybe it's a print/video thing. I see this as a search toward finding...it'll obviously be Max Headroom at some point. Isn't that where we're heading? I've seen this. John Geddes: Max Headroom, putting together clips from the basketball game. John Markoff: Exactly, with the AI in the background. It will emerge. I know that. For good or evil. John Geddes: Talk a little about the chronology of journalism coverage in the Valley. How has all this changed what you've observed, as far as, are we covering this well? John Markoff: I'm a huge critic. I think that the deformation I talk about is the role of vast pools of capital and how they've influenced coverage. When I first came to the New York Times, for example, the Times had this wonderful weekly meeting of the technology pod. We were called pods, right? There was really a broad view of technology. There was a guy that covered the chemical industries because that was technology and there was somebody that covered energy. Computing had a seat at the table. Telecommunications was separate. Computing had a seat at the table but it hadn't eaten the world. Then, I watched as everything changed. Let's just look at the Times, going from nobody covering to computing and having one technology writer at the paper. David Sanger circa '84 to '88 defining this beat nationally. At that point, Andy Pollock, who was in San Francisco, was still covering banking and, oh by the way, there was this thing called Silicon Valley. He was doing both and began to do more Silicon Valley coverage. When Sanger went to Japan and I went to replace...no. I replaced Sanger first in New York and then I replaced Pollock when Pollock replaced Sanger in San Francisco. I went to San Francisco, and I didn't have to cover banking. The banking industry was New York. I just covered Silicon Valley. By that point, Silicon Valley was everything from semiconductors to networks to computing and it wasn't the Internet when I showed up in '92. It was just me, and I had a stringer, Larry Fisher. Larry left. I got another stringer. During that period, beginning in '96, we went through the first bubble. There was a point where it was me and Matt Richter and I think there were 13 reporters at the Journal. Just this vast switch in coverage. This was a "follow the money" kind of thing. That's the way I saw it. The Times, to their credit, stayed back, but you could see our technology coverage change. Now, you come forward to today and there are seven people just covering technology for the "New York Times" in San Francisco and I'm not one of them. I write about technology, but I'm notin the business section covering technology. That's how deeply it's changed. To my mind, what's left of newspapers and even on the Web, has forgotten balance. I mean, the Internet has perturbed coverage and it's this prism with which you look at the entire world. John Geddes: Has the prism been too much corporate coverage? Do we pay too much attention to Apple? John Markoff: Clearly, we do. Apple has always been a reality distortion field. For reasons I do understand and reasons I don't understand, Apple perturbs the universe. But it's not just Apple. The New York Times coverage, as I see it, has largely devolved into four companies -- Amazon, Google, Facebook and Apple -- which I find bizarre and frustrating. But it was a bit celebrity — follow the people and follow the money. I don't think that reflects...Maybe I'm just an old fogey and out of tune, but I really think the coverage got eaten by the Internet. John Geddes: Have we lost sight of what you started off on with the social impact of technology? If you look back over the last 20 years, what strands have we picked up? Follow the money? Celebrity-hood? John Markoff: There's a lot of coverage. I wouldn't say that we're not covering the implications of technology. It almost becomes like a cliche. Right? Every technology, there's the dual-sighted thing and it's sort of formulaic in a way. There's a lot of discussion of the impact of technology, maybe even too much. But I wouldn't say we under-cover that. I think the other technologies in the world have been marginalized. That's probably because of the way computing and communications have become a universal medium. They've reinvented everything in the world. They've reinvented science. You can't touch something that hasn't. Maybe it's inevitable. John Geddes: Is there something in news organizations that prevent us from innovating? Someone said, in one of the interviews in "Riptide," that the problem is news organizations aren't used to beta because news organizations and newspeople are meant to get it right the first time. A beta existence says you're going to get it wrong, and that's an anathema. John Markoff: I often tell people when I make mistakes, "Think of it as beta." That's funny. That's my cop-out. But you're right. I actually think that news organizations have trouble with this because they're not start-ups. You've got a newspaper to put out everyday, whatever the frequency is. There are certain things that are sort of ritualistic and required that have to work and you don't have a lot of time to rethink the process. Being stuck inside a paradigm, it's probably even worse than the kind of corporations that get stuck inside their particular paradigm and can't innovate out. They get, what's the word? John Geddes: They get a self-fulfilling prophesy? No. John Markoff: No, when someone comes along and takes their business and their industry. Disrupted. John Geddes: Disrupted. If you look back over the last 20 or so years, are there key junctures that you think made a difference in journalism, in news, in how people cover it? Some people say 9/11 was a key point, because suddenly everyone started turning on the computer more during the day to see what was going on. It was a news event that drew a different audience away from the next day, from the news night, into an immediacy. Are there other things? Was AOL/Time Warner? John Markoff: The ones that have really shaken my world are "WikiLeaks" and Anonymous and Snowden, the more recent stuff, that really the story has been taken out of the professional journalism world and just liberated. John Geddes: Something like that. Is that because, is the next story going to be surveillance? Is the next story going to be privacy? John Markoff: I don't think that, so much. That was more of a move to citizen journalism, in a sense. Snowden really controlled that story and turned the whole world upside down. Before that, Anonymous had been having this kind of impact. And before that, WikiLeaks had shown that the Internet could be used as an effective medium and extremely disruptive. It's hard to control the whole story anymore. What happened before that, let's look back. That's very recently and really dramatic. The way news is gathered has profoundly changed. Who calls the librarian for clips? We all do our own research now with Google. Google had that kind of impact, the emergence of search engines on the web. That had been forecast for decades and then, all of the sudden, it arrived in a hypertext kind of world. Were there other junctures? I was at Bruce Koon's wedding last night and Larry...he's the publisher of "USA Today." John Geddes: Larry Kramer. John Markoff: Larry Kramer. Larry Kramer who invited myself and Paul Freiberger to give him an introduction to the Internet in 1995. Was it even earlier than that? Was I already at the Times? It was really early. Freiberger and I went to a group that he was starting. I think he was doing sports betting initially, before MarketWatch. Did you ever financially get involved with that? John Geddes: No. John Markoff: That was separate. Kramer took a great lesson away from it… He was one of those people who saw things really early on, from a business point of view. Interesting that he's the publisher of USA Today now. Google News was a dramatic point. News by machine. News by algorithm. I think that was a really big deal that we're only beginning to see…..still, it's been around for 10 years. There have been lots and lots of experiments, but I think that's a major force that we don't completely recognize yet. John Geddes: To circle back to the thing about WikiLeaks and the changes, the confirmation of citizen journalism as a force, that the news is uncontrollable or it's happening out there without the validation of citizen journalism. When I talk to Esther or others about this, Dan today, they both say there's a missing piece here. The missing piece is the readers have to get smarter in knowing how to read news, that they have to be able to discriminate more. It never was required of the reader. In a world of info- besity, how do you decide who to pay attention to and who not? John Markoff: Boy, I think I see it. I'm not a real waterfront kind of guy, but I see news communities, which are the readers, emerging around things like Reddit or 4chan these things you would never have thought of as news publications. Or Facebook or X. Was the word "info-besity"? I refer to it as the fire hose. For a long time, I tried to keep up with the fire hose. Then, I gave up. I've taken refuge inside myself. I've taken refuge inside the Wall Street Journal and the New York Times. For a while I had an RSS feed. That is a technology that I think has failed basically. If you want to be a wire editor, please. But if you want to know about the world and be educated and up to date that's not the answer. There's a missing piece, but I think the audience has self- selected and has gone places. Hacker News, Reddit, 4chan, these huge communities -- or Huffington Post -- have emerged. Huffington Post fascinates me because, to me, it is a step towards... It used to be that you chose your newspaper by your politics, even in America, and still in Europe. Huffington Post and many other types of news platforms seems to be a step in that direction. They want to see the news world through a political prism they're comfortable with and that's going on right now, which seems to be the metronome swinging back in a way. John Geddes: Does that make you happy, someone who came from the far- left of the Pacific News Service? John Markoff: If you ask me, personally, no it doesn't, because I began as an activist. Somewhere around, I would say, the end of the anti- war movement, I picked my head up and realized everyone else had left. There was no political movement in the country and I decided, "Oh well, I better get a job." Actually, what happened to me personally, my view of society didn't change. What changed for me personally was that I no longer felt that I had the solution. Which made me perfect to be the kind of reporter at a place like the New York Times. I have my perspective, but I don't really pretend that I have a solution for society. I never did. I think there are a lot of people who believe they have the solution. I'm just not one of them. John Geddes: Coming up close to time. Last question for now. I may come back. Are you optimistic about journalism? I'm not saying about newspapers. I'm saying about journalism. John Markoff: If I didn't feel that things were still changing so dramatically, I'd be very optimistic. What's striking to me is how much journalism there is out there, how easy it is to commit journalism. How easy it is to reach an audience and how much innovative stuff I see. That makes me feel very...despite the fact that my publisher is cutting back and seems in doubt, still in doubt, the idea is, to me, right now it's very easy to be a journalist. Easier than it ever has been, to the point where if a young person starting out in the field comes to me, I wouldn't say no at this point. I would say, "Just be agile. Be ready to change with the technology." Where I worry is that seeing what's going on in terms of technological change and my sense that we're not in an end-game in terms of this media at all, I just spent a year on an AI book. Watching the pace in these automated systems and what they're doing to intellectual work, why should journalism be protected? If you can do sports and you can do the city hall and you can do entertainment all very well by machine, what's left? Right now, Narrative Science and a couple of other companies are taking stumbling steps, but I expect more. That forces us, as human journalists to be more creative and maybe spend our time turning over rocks, but there might be fewer of us too. John Geddes: There might be. Now, you've just triggered a second to last question. How well do you think we as journalists covered the last 20 years of digital? John Markoff: On one level, I'm very critical, because technology journalists as a group have become too close to the subject they cover. It's always troubled me. When there's that much money, it's very dangerous for journalism. Let me relate a story from the very beginning of my career, when I first realized. I had been an investigative reporter and I was getting sucked in by the rise of the personal computer. I showed up at InfoWorld. Maggie Cannon, who had been a secretary and ended up editing InfoWorld, the first real editor. She was wonderful but she was making it up as she went along. She took us to my first ComDex in the fall of 1981, which was the big computer show at that moment. She took us out and she put us in a limousine to take us there. I didn't want to be seen. What were journalists doing in limousines? But we took a limo to the airport. Then, I went to my first party, one of those evening, glittering events. Who was it held by? It was someone like Sanyo, someone who made disk drive peripherals. There I was standing and there was this immense bowl of shrimp. I had just entered this world. I looked over the top of the bowl of shrimp and there was Stewart Brand on the other side. I go, "Oh, I get it." John Markoff: It was palpable. Nothing's change in a way. It's very dangerous. By and large, the technological journalist corps that you're looking at has not been an adversarial group. They haven't told the hard stories well enough, I think. Part of that, I'm critical of myself for that. John Geddes: Thank you. ...
VIDEO: YES

Brock Meeks
BIO: YES: Brock N. Meeks (born 1956) is an award-winning inv...
TRANSCRIPT: John: I'm here with Brock Meeks today, visiting Washington. Brock, why don't you just tell me how did you get, career-wise, to where you are today? What's your path been? Brock: That's a pretty long story. Let me see if I can give you the journalistic shorthand of it. Never went to college, I did go to college for a couple of years, but I don't have a college degree, so I'm a proud holder of a high school diploma. I started really writing for my local bulletin board system, BBS's. In fact, I have called myself Journalist Zero when it comes to online reporting, and have asked my colleagues, "Please prove me wrong. If there's anybody out there that was doing this before me, fine. I'll gladly hand over the mantle to them." I started writing, going out to different events and reporting, and then bringing that reporting back and putting it online for my local bulletin board community, which was in San Diego at the time. I remember one of the only other folks online at the time that was doing some of that type. He'd never called himself a journalist, but he was doing social commentary, was Dave Hughes from out in Colorado. From there, it evolved into more of just going out and covering local events from my local crowd to freelancing stories. Then I actually became a freelance writer, and I looked long and hard at what it took to be a freelance writer, and read probably 14 different books on it. They all had different opinions and so forth, but one of the things that was constant throughout all of those books is you have to persevere. You have to keep trying and keep trying and don't worry if you don't get the first thing published, or you rack up all these rejection letters and so forth. Just persevere. I told myself I'll give this a shot. What I'll do is I'll try for two years. If I don't get anything published in two years I'll give it up and become a plumber or something. The other thing that they all said was writing about something that you know. The thing that I was really interested in, and knew the most was this arcane world of telecommunications. I knew that by using telecommunications you could tap into these things called databases, the Fortune 500 companies were tapping into for lots of money and stuff like that. The little guy could also tap into these things and do research, and do things like fight the incinerator in your backyard. I thought, 'I'll start writing about telecommunications.' This was in the era I had a Commodore 64 computer. John: We're talking about '84? Brock: You're right, '84. A Commodore 64 computer and what, at the time, was called a HesModem where you actually had to dial the phone number, and then unplug the cord from the handset when you got the carrier tone, and plug it into the back of the Hess modem to make the connection. It had 300 bps. That was it. The very first thing I wrote about was a database program and how to use it and sent it in. Lo and behold, I got a $35 check back in the mail. The very first thing I tried to get published was published. To this day, I've rarely had an article accepted that has given me as much joy as seeing that $35 check in the mail. From there, my freelance career just took off, and I kept writing for bigger and bigger publications. Started a column in Byte Magazine that was called Comm1 that was talking about communications. At the time, I had upgraded through the ranks and I was writing on a Kaypro computer, and had a column in the Kaypro magazine, the magazine for Kaypro computers, which was called Profiles. That was called "Life at 300 Baud” Again, it was all writing about being online and using this thing called telecommunications, and the type of stuff you could do with it. One of the early columns I wrote was buy a modem, welcome to the white boys club, which was all about how it was overwhelming white males and there was no diversity. This was back in the mid-'80s. How if this area was going to thrive it had to diversity and it had to bring in other voices. Sure enough, today you hardly see anything anymore about non- diversity of the online world. It was all technology that I was writing about. It was all freelance. Then I got some jobs, regular jobs. I was a contributing writer to several different computer magazines and so forth. Then I decided to try my hand at being a foreign correspondent, and got on with San Francisco Chronicle and did a stint with the Chronicle as a foreign correspondent in the War in Afghanistan. Had a horrendous time over there, because I was reporting right after the Soviets pulled out. I was embedded, before the term was even invented, with a group of mujahideen that was in the first offensive to try, and capture the old provincial capital of Afghanistan which is Jalalabad, so they could get up their interim government and the U.N. could recognize them and all this kind of stuff. The Afghan guerrilla army tried to turn overnight from this guerrilla army to a conventional army and they got slaughtered. Everybody that was around me died. My interpreter saved my life unwittingly by acting as a human flak jacket for me. I got wounded over there. It was a very horrendous experience. But $10,000 in therapy later I can sit here and I can tell you all of that without suffering any of the nightmares. My editor at the Chronicle just told me, I won an award from the World Affairs Council for that reporting, that I might win a Pulitzer for it, but that was the same year that the Berlin Wall fell and Tiananmen Square. Of course, Kristof won it. Such is life. My editor told me to just come back to the Chronicle and write from my notebooks and write anything I wanted to. I found that I couldn't. It was part of PTSD. Back then, I just locked up. Couldn't write, dropped out of journalism for two years. Thought I'd never write again and worked my way back into it. At the low point of my life I hired myself out as a word processing temp. As I was doing that, I would be retyping memos and so forth, I started to edit the memos and I started to change some things around and people started to notice. I started getting some writing assignments from that. From that, I eventually hooked up here back in Washington with a trade publication called Communications Daily. That really saved my journalism career. It was like going back to boot camp, writing for this newsletter, because I was having to crank out 3,000 words a day. I was covering the telecommunications industry back when we still had the Baby Bells and AT&T sitting out there and this thing that was beginning to pop up called the internet. I had always been using services like CompuServe, and the Source that Murray Turoff. I forget where Turoff was out of. He wrote "The Networked World" and would talk about these things as computer mediated discourse, but it was really forums that were locked up inside, things like CompuServe, and America Online, or the Source. I found early on that you could mine the special interest groups for experts. Again, I think I was one of the only reporters that were doing that at the time except for a guy named Art Kleiner. Art Kleiner, last I heard, he was a professor at NYU someplace. Art was writing for Whole Earth Review out of San Francisco. John: Stewart Brand. Brock: Yeah. Art, I found out, was doing the same thing, but his was all print. All the stuff I was doing was online. Art was out there but he was the only one I can remember that was mining these computer systems like CompuServe and the Source. My home base, of course, was the WELL. It had a tremendously fascinating group of people and some of the brightest people on the planet were trafficking on the WELL. The WELL was my home, my home base. When I got to Communications Daily and was writing all of this stuff about the Baby Bells and everything and this thing called the Internet started bubbling up, writing for the newsletter was like writing with handcuffs on. At the time, they wrote in what was extended headlines. They never used any articles so you couldn't say “today the company announced a new product”. You would say “company announced new product.” John: Telegraphic. Brock: Telegraphic. It was considered a success if I wrote one or two interesting sentences in the entire story. Out of that, I started writing at night CyberWire Dispatch and adopted this alternate Hunter Thompson persona. The New York Times famously said that CyberWire Dispatch was laced with savage profanity at the time. That was Evan Andrews that wrote about that. CyberWire Dispatch was unnamed at the time, but I was doing investigative reporting based on stuff that I was hearing here and there. I was doing some hardcore investigative reporting on CyberWire Dispatch all on my own and all at night and did a big piece, I remember, on the FBI's Carnivore system. This was a scheme by the FBI to place a tap on people's modems and so forth, and capture all the traffic coming out of them. The FBI had tried to deny it. A group here in Washington that's still in existence, EPIC, the Electronic Privacy Information Center, run by a great group of people and headed by Marc Rotenberg, who is still there,got some documents and leaked those documents to me. I used those documents to write about this. It had a budgetary proposal in it or something like that. I wrote about it, and I put this out on what was then my unnamed publication. Lo and behold, the next morning the New York Times had a story on it, too. Too much of a coincidence. I'm not going to say the Times stole it. John: It was too much of a coincidence. Brock: Too much of a coincidence. I groused a little bit about this on the WELL which was the home base for my publication, and Kevin Kelly said, "You know what you have to do is you have to give this thing a name. If you give it a name and you brand it people will have a lot harder time stealing from it." I came up with the name CyberWire Dispatch. Mitch Kapor said that by doing that I created the first brand in cyberspace. I created this thing called CyberWire Dispatch. CyberWire Dispatch, at the height of its readership, had about 800,000 people reading it. That was based on how many at the time it was called newsgroups. People would have newsgroups. I know it went throughout 40,000, 50,000 newsgroups, throughout the FBI and the Pentagon. I had about 800,000 readers at the time. It was breaking stories left and right and competing with the mainstream. The notoriety I got from that led me to get a job with Wired magazine. I was on staff for Wired magazine for a while. Then MSNBC came in and they stole me from Wired magazine. I spent 10 years at MSNBC where I wrote for the website. I was on NBC News Tonight with Tom Brokaw and also was on-air for the cable channels. I was a triple threat doing all these things, working out of the NBC office here in Washington D.C. with Tim Russert and Pete Williams and all those great folks. Andrea Mitchell and all that. I did that for 10 years and then I had done everything I thought I could do with MSNBC, had won all the awards I could win. At the time, they still weren't giving Pulitzers out for online stuff but I won all the online awards that were given out for online stuff so I just walked away from journalism at that time and decided I wanted to see what it looked like from the other side. Instead of always trying to figure out what's happening inside the room, I wanted to be inside the room. I joined on with Center for Democracy and Technology, a public interest group here in Washington D.C., as their communications director and got to be inside the room and see how legislation was influenced and really be a part of keeping the Internet open, innovative, and free, as the tagline says. But I always missed journalism. I always, always missed it. About a year and a half ago I left CDT and this opportunity here at the Atlantic became available for this new kind of journalism which people call all kinds of different things. I prefer the term “branded journalism.” I decided to come on-board and try to do the same thing I did for online journalism which was elevate its integrity to the same spot as print journalism. I don't think anyone now sees a difference. It has just as much integrity but that wasn't always the case. Now I'm trying to do the same type of thing for branded journalism and make sure it is done with the same rigorous standards that any type of straight- up journalism would be doing. That's where I am today. John: Branded journalism is also known as what else? Brock: There are different names for it. There's sponsored content, there's native advertising. Branded journalism, what we're doing here is, for example, where a company isn't paying for an article to be written to be placed as an advertisement on some place. For example, for a year I was running GE's Ideas Lab. Ideas Lab publishes all kinds of things from advanced manufacturing, 3D printing, and lots of stuff about innovation, healthcare, and aviation. It's sponsored by GE, but it's not a mouthpiece or a platform for GE content. In fact, when I left Ideas Lab the content was 90 percent contributed by outside contributors and not GE people. A lot of it was op-ed style perspectives. Some of it was what we called in-the- field reporting which was straight-up journalism about all those different topics. It was no different than the stuff you could see in the New York Times or any other newspaper. The only thing was instead of having the New York Times being the publisher it was GE who was the publisher. I've switched from Ideas Lab. We're going to be launching a new site called Brink that is going to be sponsored by Marsh & McLennan Companies and it's going to deal with global risk. That's the branded journalism as opposed to native advertising which is where a company like, for example, a gas company or an association, the American Association of Natural Gas or whatever, will buy a spot on The Atlantic or Vox or someplace else and say, "We just want stories about natural gas. How natural gas is affecting the economy, how natural gas is effecting transportation today, and that type of thing." The associations won't tell you what to write they'll just give you some broad ideas. You won't be writing about the association, but you'll be writing these stories about natural gas to up the level of natural gas in the minds of people. Then, of course, the publications themselves have different ways of, even the Times, setting that content off from the regular stuff that's done by their staff. That's what we're doing. John: One of the interesting things about your career path is that, unlike many of the others I've talked to, you almost stepped backwards in the transmission thing. I have to believe you were using a telex in Afghanistan. How were you getting your stories back to San Francisco? Brock: That's a great question. The telex machine at the San Francisco Chronicle was broken. However, at the time there was a great email network called MCI Mail. MCI Mail had a couple of different facilities to it. You could send a fax through MCI Mail, but you could also send a Telex through MCI Mail, and you could send a telex into MCI Mail. MCI Mail would take that, turn it into an electronic mail message, and send that electronic mail message to the address. So from Afghanistan, it was actually from Peshawar… All of the news out of Afghanistan went through this little two-telex machine shop in Peshawar. Mr. Aziz ran the telex shop and he was a master at being able to route your stuff wherever you want it to go. You would sit down at a telex machine, you would type into this old telex machine and it would cut a tape. It almost looked like it was in braille. You would do your story and you would take your tape, and you would hand it to Mr. Aziz and say, "I want it to go to this address," and he would feed it in. I had a freelancer back in San Francisco that had an email account, somebody that would take my copy. The telex machine would transfer it to her email account. She would do some copy-editing on it, and then send it by electronic mail. Also, it was only in upper case so she would take care of going upper and lower case. Then she would send it on to my editor, David Hipschman at the Chronicle. He would work his magic on it and then it would go into the paper. John: It was truly an intermediary effect in the sense that changing from telex to email or a precursor of email at that point. Brock: Yeah, it was fascinating how it worked. I remember at one time it got routed to a wrong place so an MCI operator who had seen my email come through at one time…. When we would get emails back it would have to be transferred the other way. We would get the email back, but it would be cut into a telex and Mr. Aziz would hand you a printout from the telex machine. I got a message that said I'm so-and-so and so-and-so from MCI. I intercepted your message because it got sent to the wrong place. I assumed you wanted it sent here so I sent it on. I hope that was OK. It was just serendipitous stuff like that and how the news got out. It was amazing. John: It was. The other interesting part is your audience. Going from a bulletin board which is far more intimate than a print paper, also your career has marked huge transitions in the audience. Have you felt that? How did that influence your storytelling? Whether it's using a bulletin board for sourcing, to change the CyberWire Dispatch to hear the readers, how has that affected your storytelling about how you think about things? Brock: It made me a lot more accountable because, believe me, if I got a fact wrong, or some minor point was misstated I heard from hundreds of people, and people that knew what the hell they were talking about. I felt immediately accountable every time I put a piece out, because I knew I was going to hear from these people, and I heard from them immediately via email. Throughout my career, I've made it a principle of mine to respond to every single piece of email that I ever got. I checked and double checked. Throughout my career, I've had very little corrections because one of the things I also was able to do, because I knew all these experts were out there, and this is an early form of crowdsourcing is, I would go to these people and I would say, "What is this all about?" I would get back 20 or 30 replies. You could do it all by emails. This was especially useful when you were in a computer mediated system like, The Source, or CompuServe, because you could just jump into a specialized area and say, "Hey, I'm doing a story on such-and-such. I don't really understand it. Could somebody explain to me?" You get 20 or 30 replies from experts and then you would say, "Can I quote you saying this?" It was really easy to generate sources and stuff. I think being online made me a lot more accountable because my readers were personal to me. John: A similar arc is going from a readership and a source that's very industry-centric like when you came back from Afghanistan and writing for a trade press into going into MSNBC which is not. How did that change? Did you find that general interest more daunting or was it easier to reach? Brock: It was more daunting being on TV. Let me tell you that right now. John: That's why I'm sitting beside the camera. Brock: It was amazing. That little red light would come on and you're on with Tom Brokaw or somebody, how that affects your head. It got easier through the years, but it never got easy. It never got easy. It was interesting, too, when somebody would see me on television. I always found this fascinating. They would say, "Hey, I saw you on TV last night." I'd say, "Great, what was it I was talking about?" "I don't know, I just saw you on TV." It must have been something really important, right? The thing was I rarely heard feedback from the folks that saw me on television. Maybe it was because they didn't have a ready way. They didn't put my email address up there on the chyron or anything like that. Certainly, I heard from people that were reading my stuff on MSNBC.com so that was the same type of thing. I would get hundreds of pieces of mail from them. John: Question. Did you hear more from the people reading on MSNBC.com or the people watching on TV? Which was the more active audience? Brock: MSNBC.com by far, that could have just been a couple of reasons. The people watching me on TV, just knowing the demographics of the people that were watching the news at night and stuff, probably didn't have computers in great use at the time as people that were reading me online. John: That level of engagement always seemed stronger online? Brock: Always. Always. John: How did companies respond? In talking to colleagues throughout, they argue, and you had an arc, too. They argue that at one point it was far more accessible. Companies really came to you at one point. Now it's less so. Yes, no, how do you see that? How do you see the arc of you as a...? Brock: Interesting. That's true, but I think it all came down to relationships that you made. I never found companies that difficult to reach but it was because of the relationships that I made with the press people and stuff at those companies, or the relationships that I made with officials at conferences and stuff that you would meet. John: It's relationships rather than the brand, you think? Brock: Yeah, but people knew me, too, as a brand. They didn't see me as the New York Times. They really didn't see me as CyberWire Dispatch. They saw me as Brock Meeks who writes CyberWire Dispatch. Relationships, really the key for me back in those days. What's interesting today is that companies are finding out that using things like branded journalism they don't have to go through press people, whatever, and hope that somebody on the business desk of the New York Times will write about their thing. They can go directly and get their stuff published by having a journalistic piece written by somebody, like I said, about strategies that’s sponsored content. Or they can take the route that GE has done or Marsh & McLennan now with Brink, and sponsor their own publishing platform on areas that are important to them. John: Just as you said and colleagues have mentioned, companies get their message out its multi-channel now rather than that single channel that was journalists for many years. Brock: I'll tell you what never changed was government was incredibly hard to crack, no matter what. Government always remained tight-lipped no matter where I was, MSNBC, or just out on my own doing CyberWire Dispatch. It was always hard to get government to open up. John: Particularly because one of your interests over the years has been privacy and they're particularly close-mouthed on that. Brock: Right. Exactly. After 9/11 happened I was made the Homeland Security reporter for MSNBC, and had to standup that entire beat. I broke a lot of stories, a lot of important stories, in one of the hardest nuts to crack which was the Air Marshal Corps. Then again it wasn't because I was such a brilliant reporter, but it was because a disgruntled air marshal that happened to be a boyfriend of a former girlfriend of mine, she introduced me to him. This guy was a standup patriot from a long time ago and he was upset with how he saw some of the stuff happening in the early Air Marshal Corps when they had to go from 33 air marshals on 9/11 to 4,000 three months later. They were bringing in all kinds of questionable people and so forth. This guy was just Mr. Patriot, standup, and he left a good job as a military investigative reporter to become an air marshal. He felt things weren't going right. He didn't get any satisfaction talking to his bosses so he started talking to me. Once I published that story it was like shaking the tree. Other air marshals saw that I did a good job with the story and then the sources started coming. That's how I was able to crack government, but they've always been hard to crack. John: They always have. It's interesting, as I mentioned to you walking up here that it seems like in this series of interviews I'm being an alumni party, or holding a reunion by proxy, because many of you worked together as colleagues in the '90s and 2000s. What was the relationship like within that press corps covering tech? Was it collegial? Was it competitive? What was it like? Brock: It was always competitive. Among the reporters it was collegial. I consider all those guys my friends, but it was their bosses that certainly thought that online journalism took a backseat, or was a lesser form of journalism than what came out in print. I remember the days when it was forbidden for a story to break online before it appeared in the paper the next day. Can you imagine this? When the San Jose Mercury News would have some big story about tech they couldn't break it on their online. They had to wait until it was published in the morning. The Dallas Morning News was one of the first ones to start publishing something before it hit the paper. I could be wrong on that but that's what I remember is the Dallas Morning News published a story, a big scoop, online and then it was like oh my god. Everyone as scrambling to cover it, it was like maybe we don't have to wait anymore. Today that's unfathomable that you would hold the story until it first saw print, but that's what I was working against in those days. John: Can you remember the first story you broke online? Brock: The first story I broke online? John: Yeah. That would apply to all of us today. Brock: What was the first story I broke online? Probably the biggest one was the one on Carnivore that I mentioned before, the FBI's thing. John: That was on CyberWire Dispatch. Brock: That was right before CyberWire Dispatch. John: Before it became named. Brock: Before it became named, yeah. That was probably the biggest one I broke. John: Are there other inflection points, as you think back, things that made a difference in the growth of this online medium? Some people have mentioned 9/11, only because you suddenly had people at their computers looking for news during the course of the day. Other people mentioned AOL. Some people thought it was earlier than '95.Are there any inflection points you see and what turned? Brock: I know that one of the earliest examples I can remember of crowdsourced news happened back when, I don't know if you remember this or not, but Time Magazine published a horrendous story about online pornography. It was a complete hoax. They were hoaxed by a named Marty Rimm. I started to investigate it using CyberWire Dispatch, but it was really a crowdsourced effort because I put it out on the WELL. People on the WELL said this thing must be a hoax. We must have had 25 people all "pounding the pavement" looking for pieces of this story, and they would report back what they had found, people they had talked to on a discussion group on the WELL. Then I was taking that and doing my own reporting. Eventually, I got to Marty Rimm himself. He basically admitted that it was made up and I published this big piece about how the Time had been duped. CyberWire Dispatch won an award for it. I could not have done that without the folks on the WELL doing their own reporting. It was really crowdsourced. People fed off of each other, took tips from each other, and took pieces of the puzzle and got together and that type of thing. That was a big inflection point. Of course, you see that in real time today with reporters using Twitter, and being able to get pieces of the story, and pull in things like that on a real-time basis. John: Interesting. One of the things you touched on earlier I want to drill a bit on, when you started out, when you worked for the San Francisco Chronicle you worked for an institution. In other words, your work was designed to boost the institutional brand more than your own. How do you look at branding now where now it's important for the reporters to have their followers to do their tweeting? How do you view that tension between institutions and journalists over the question of brands? Do you view it as tense? Brock: I understand where the tension could be, but if a publication is leery of that I think it's at their own peril. I remember a time when the Wall Street Journal wouldn't allow its reporters to talk online about anything that they were doing. How amazing is that? They were forbidden from going online and talking about anything they were reporting. Insane. Of course, that's not the case anymore, but it was because a managing editor, who shall remain nameless, at the Wall Street Journal told me, I was at a conference talking to him at lunch, he said, "We don't want to give away our intellectual property." I was like, "Are you kidding me?" That was amazing. Today, publications that allow their reporters to become their own brand, I think, are doing themselves a service. I know some reporters don't want to do that or don't know how to do that, but I think, again, it goes back to creating those relationships and creating that name for yourself out there in cyberspace. People are drawn to that because there's so much out there, that the brand of the reporter then becomes the filter. They may not like the publication, or they may not like this or that, but they can trust the reporter. When I was doing CyberWire Dispatch I can't tell you how many times I had people tell me, "You know what? I don't agree with 90 percent of what you write," because I was very opinionated in what I was writing. Along with the opinion, what I always made sure to do was I was rigorous in presenting both sides of the story. My reporting wasn't objective. I think objectivity is the false god of journalism, and I've said that from early on, but I was rigorous in reporting both sides of the story. Then I would put my opinion on it and say this is which side I think is right and why. A lot of people would write to me and say, "I don't agree with your opinion, but I follow you because I know you're going to give me the truth on both sides of the story, and you're giving me stories that I don't see anyplace else." A lot of people used me as their filter for finding things. I think it's the same way today. Because there's so much to choose from, people will gravitate toward a particular reporter because they trust that reporter, they trust that brand, and they use that reporter as a filter for their news rather than the publication itself. John: One of the questions that we're all riddled by, we're all asking ourselves, is are you surprised at big media is in trouble now? The day after CBS decides to stream on the Web, two days after HBO. Are these developments stunning to you? How do you navigate? Brock: I think that big media for a long time has been struggling to find the alchemy that a lot of these newer publications, like Fox and Vice, and even going back to some of the grandfathers, it seems funny to call them grandfathers now, like Slate and those folks picked up on early on. I don't know if it's because the leadership has tried to protect its big cash cow or something like that. They have so much invested in it or they're afraid of change. They're afraid of letting their reporters have opinions. They're afraid of letting there be too many cowboys out there or not. They're coming to see that that's what an audience wants. I've always said this; the reader is smart enough to know if somebody's just blowing smoke up their ass. The reader's smart enough to know, and they'll just disregard them. Let your reporter have an opinion. Who else knows the thing better than the guy that's covering it day in and day out? Let the reporter have an opinion as long as the reporter's not playing fast and loose with the facts. So what? You've got an editor that's keeping him in line. I always said I wrote the hell out of a story, and thank goodness I had editors that would edit the hell out of the story that could rein me in. I'm very, very lucky over the course of my career that my editors all realized what I was doing, and how I operated and gave me my head and let me do that. John: A number of your colleagues have said the one thing that needs to happen in parallel of this, of the reporters becoming brands, getting out there, whether they're working with editors, is that the readers have to become smarter. They have to be able to make their own judgments and be schooled in making their own judgment about this source is good, this source is bad, and who do I listen to. Do you think that's a requisite or do you think that's hope against time, hope over experience that readers become smarter? Brock: Was it Barnum or Bailey or somebody who said, “Nobody ever went broke underestimating the intelligence of the American people.” I don't know, I always found the readers to be smart enough to filter out the good from the bad. I don't know that they have to be better educated or better at finding the source. I think people that gravitate toward Fox News are going to gravitate towards Fox News. That's what they like. Does that mean they have to be smarter? I don't particularly think Fox News is the paradigm of journalism, but they probably don't think what I do is the paradigm of journalism, either. The reader will gravitate towards what they know and what they think is best. I really don't think the reader has to become smarter. Probably, they have to become more efficient because there's so much out there they can easily become overwhelmed. This gets back to why I think they will gravitate towards the brands of the reporters, because they'll start to pick and choose. As far as the readers getting smarter, I think the readers have always been smart. John: You start off by covering telecommunications and being in Washington. You were never in Silicon Valley. From afar, how does it look to you like the tech world has changed, the culture of the technology world has changed? Brock: I think they've gotten better at realizing you can't keep Washington at arm's length. It used to be Silicon Valley would just say, “F-U Washington, let us do our thing." They found out pretty quickly that if you do that they're going to get rolled every time. I think they realized now that you can't ignore what's going on here in Washington. They have to educate people here in Washington. They have to be a part of the Washington dialogue in some way, shape, or form whether that's being active participants supporting some kind of non-profit organization, like where I used to belong to Center for Democracy and Technology, Electronic Frontier Foundation…. People that are engaged with Washington back here, or they have to be ready and willing when the flag goes up to step up and take an active part. For example, a couple years ago when we had the great Internet blackout. That was in the big SOPA/PIPA debate where people stood up, they participated, they actually melted the phone lines, they overflowed the phone lines. A big part of that was the tech community got behind that. They understood that now is the time. Here's the line in the sand. Silicon Valley is getting more and more educated to the fact that you've got to play in the same game that the man's playing in, you have to play the man's game, but you have to be in the game or you're going to lose every time. I know that start-ups don't like to think about policy and some of the other technologies companies that don't want to be bothered with policy, because it's not putting hardware in people's hands or it's not coding software. Unless they take more of an active interest, and unless they pay attention, they're going to get rolled. It's just going to happen every single time. John: Some people have said what you've seen because of the growth of the influence and the money in tech, these two journalistic worlds are getting more and more alike. Covering politics is like covering tech. You're trying for access, you're trying for influence. You need to get in that closed circle. You're here in Washington. Do you think that is at all true, that it's you've got to get close to Apple. Is there any parallel or don't you see it? Brock: Maybe I'm misunderstanding your question. I think you've always had to get closer to whomever it is that you're covering. John: I think it's the level of influence in these circles that you're covering. In politics, it always helped to get close to the top. In tech now it's get to Google, get to Facebook. It's closing in, and it's harder, the argument goes, to keep it requisite journalistic distance. Brock: Oh, I see what you mean. John: OK? That you trade off access. Brock: Yeah. That is always the danger. The more access you have, the less willing you are to write something negative, and could be afraid of losing the access. I know that certainly is endemic here in Washington with political reporters. I don't know for sure, but I can see the same thing happening in tech. There's so much, there's so many other ways to get access to things and these companies that you don't have to get close to the people at the top. Man, today, there are just so many avenues that I don't know how some of these companies keep secrets, because there's so many ways. Not just ways here in America, but people are going overseas. Just look at all of the leaks about the iPhone 6 before. We already knew everything about it before it showed up on stage, and it was amazing with pictures and everything else. There's a whole cadre of global sources out there that are within arm's reach, that weren't there when I was doing Cyberwire Dispatch. It was still a global world but you couldn't get to them as easy as you can today. John: Now, do you looking back, how would you say journalism covet this digital era, this digital trend these last 20 years? How did we do journalistic, we as a group? Brock: How did we cover the digital transformation? Well, I think dragged kicking and screaming into it. Going back to what we were talking about before, about how online journalism was always seen as the red-headed stepchild of journalism. I don't know how you could cover tech without being in the online world itself, it was such a part and parcel. Telecommunications was infused in all of that. The fact that I broke a lot of stories on CyberWire Dispatch that weren't showing up in the mainstream press is another indictment of how they were covering it. For a long time, the San Jose Mercury News probably did a better job than most, because they were right there. I remember some early stories that they did about the health of workers on assembly lines. You'd just enter the grade A components and having to work with the chemicals and stuff like that. They did certainly some good stuff. That was their beat. We hoped that they would do that kind of stuff. You had one or two guys, Markoff, certainly. Markoff's arc of his career, he grew up through "InfoWorld" and all that. He was hard-coded into that. John: Not quite the native you were. Brock: Right. He always had access and did good stories and did a good job of covering it. But As a whole, it was in fits and starts. There was more of gee-whiz reporting than there was holding people's feet to the fire. John: Did you see this meteor coming? Could you have predicted where we are now 20 years ago? Did the speed of the transition surprise you? Brock: I predicted a lot of it in one form or another. I remember a story I did for ACM Magazine talking about how one day you'd be able to walk around and be able to go online from wherever you were, because there would be these things on telephone poles or whatever. I was talking about micro-hotspots and now it's WiFi all over the place. I foresaw an era where you would always be online at some place. I didn't know how you were going to do that but I foresaw that type of thing. What I did not see, I did not see social media in the form that it is today, certainly with the rapid, real-time and rolling present of how you can cover things and get information like that. I saw more access to things that I saw with computer systems, computer conferencing systems like the WELL and CompuServe. The people have more access wherever they were to those type of things and you would have these sequential discussion things, but I couldn't have thought that you would be able to have 25, 50 conversations in a two-minute time period with Twitter and be able to grab things real-time like that. I didn't see that coming at all. John: What do you think about journalism prospects? Are you upbeat, downbeat? How do you think the craft you've got into, how do you see that going forward? Brock: First of all, I see it being as strong as ever. I think that reporters today have to work a lot harder because they're in competition with everybody that can be a reporter today, and everybody basically is. I also think that really good reporters, and this is a total switch from what it was. In my day, I used to go to IRE conferences, investigative reporters and editors, and be on panels and tell them all my secrets about going online. People would say, "How come you're telling us all these secrets?" I said, "Look, the truth of the matter is 90 percent of you are going to go out of here and forget everything I said and not do it because it's too hard. They're not going to take the time to learn so it's not any competition. The 10 percent of you that do are going to find your way." Reporters had a reluctance to get online and do this kind of stuff. Now everybody's online and they do too much of it online. The really good reporters, the ones that are getting the scoops, are getting up out of their desk and they're going back to shoe leather reporting. They're knocking on the doors and they're waiting for the government executive to roll into his house to say, "Excuse me, sir, can I talk to you for a few minutes?" Instead of sending a piece of email to some spokesman. It's the people that get up off their ass now and get away from the computer that are the unique ones. I think it's come full circle, and I think that pretty soon people will have to have a discipline, and do all things in moderation to really get the good stories, to get the depth and everything. You have to step away from your computer. You can't rely on Google and Twitter and all that or this old thing we used to call the telephone. You have to get up off your ass and go talk to people face-to-face. Ultimately, what it all comes down to, again, at the very beginning we started talking about it, it all comes down to relationships. The one-on-one aspect of this is really where reporting gets done. Knowing your sources and having your sources trust you. A lot of times, that can only happen these days when you meet people one-on-one. John: Thank you very much. Brock: Sure, my pleasure. ...
VIDEO: YES

Betsy Morgan
BIO: YES: Betsy L. Morgan is currently the President and Chi...
TRANSCRIPT: John Huey: It is March 13, 2013. We're in the offices of TheBlaze, speaking with Betsy Morgan. Betsy, you've been a mainstream media, digital news person, and you've been a disruptor more than once. Could you give us just a brief bio of yourself and where you fit into this picture? Betsy Morgan: Thank you, John. I'm a little bit of a strange bird. I am not a television producer. I was not a communications major in college. I'm a businessperson who, in many ways, fell into the news business when I joined CBS News back in 1999, after I had been at corporate CBS for a couple years. I have always been the person that has had the good fortune of looking over the horizon, looking over the horizon of television to the world of digital and looking over the world of digital to think about disruption. That both have happened in the course of The Huffington Post and in my current job in TheBlaze. I'm an unusual person in that I have straddled both worlds I'd say pretty successfully and have been successful in both environments, both of which are very, very different. The things that it takes to get ahead in a traditional, large scale media organization are far different than what it takes to grow an audience, to grow revenue, and, most importantly, to grow a brand in a startup, which is what we did at The Huffington Post and what we're doing now at TheBlaze. Along the way, I've broken a lot of rules. I've challenged the establishment more than once, on more than one occasion, and I've had an awful lot of fun. I do think the world of news is changing rapidly, and I'm glad to see some of my colleagues from traditional media continue to stay in the fight and continue to be very, very successful in allowing their brands to stay relevant and part of the conversation. I'm also very, very excited that newer brands in the space remember, Huffington Post was not even on the scene until 2005, which really wasn't that long ago. And, brands like TheBlaze, which is just two years old, are coming in and challenging all sorts of historical beliefs about what it means to be a news and information organization in a digital age. John: You obviously have a strong point of view, and we're going to get to a terrific story here in a minute. Before we go there, could you just speak briefly about, really, the core differences between the culture of an established media company, say CBS, and the culture of a disruptive media company, say HuffPo or TheBlaze? What is the essential cultural difference? Morgan: The essential cultural difference. In traditional media, you get up every day worried about the audience that you're going to lose and worried about the revenues you're going to lose when you lose that audience. Every day you're preserving something not growing anything, you're preserving something. In a startup brand, with no audience and no revenue and, in many ways, no idea how it's going to fit into the ecosystem, it's all about gaining. It's about gaining audience. It's about gaining revenue. It's about building a brand. It's a much different mindset. The way that established media responds to disruption, threats, innovation, is far different than how a startup, innovative organization responds to all those things. For me, I'm now one experience in traditional media and two experiences in startup world. I must say I prefer the startup world and the world of growing something out of nothing much better than preserving a legacy. It's hard out there. It's hard to preserve a brand. It's hard to preserve revenue. It's hard to keep that audience. I think that's why it's hard for mainstream media to be disruptive, because they can't afford to break what they have, because what they have keeps a lot of people employed. [recomplied] John: What we would like to capture here today is some of that feeling, of both sides of that equation. Betsy: I think I am an interesting person in this ecosystem, and an interesting executive in that I've been on both sides of the equation in a really, really new frontier and in challenging times. I think what's interesting, if you look out over the landscape of news executives, there aren't a lot of people that have had great success in established media and legacy media and traditional media, and also great success on the startup side. I think in a lot of ways, the skills, particularly if you're a business person, the skills don't necessarily translate. What's really good, what you're really good at in being successful in a big corporation is often a different skill set than in a startup space. For whatever odd reason, I've had the opportunity to do both, and I've had the opportunity to be successful... John: You started out as what? Betsy: I started out at CBS in corporate development. When I went over to the news division of CBS in 1999, I dare say many of my colleagues and peers on Andrew Heyward's senior staff thought I was some sort of spy from corporate that was going to look at their books and look at what they're doing and got the place and report back to Black Rock. What happened was not that at all. I was able to work in the news division forming strategy and thinking about how this business that was $500, $600 million in revenue was going to be relevant 10, 20, 30 years down the line. At the time, we were less worried about the web and more worried about CNN cable television. How would the broadcast news network survive in an era where Fox News was just getting started and was interesting but nothing to be frightened of yet from an audience standpoint or from a revenue standpoint. Same as true at MSNBC. CNN, on the other hand, was really the 800 pound gorilla in news because it was making money both on the affiliate side, affiliate revenue and advertising revenue. The broadcast news networks were beginning to get a little bit nervous. Here I was, this business executive, who wasn't running a show, wasn't overseeing content day to day in any fashion, but had this strategic perspective and the ability to think and show the other executives over the horizon at what was coming. What, of course, John, is so fascinating is that the 800 pound gorilla, what was coming over the horizon that was so important wasn't CNN or the rise of Fox News or MSNBC. Of course, it was the Internet. John: What was your first scent of the gorilla? Betsy: Gosh, my first scent of the gorilla was probably right around 9/11. I think in many ways, 9/11, from an editorial standpoint, was a changing agent in terms of how people were getting their news. If we remember, back to 9/11, where people went back to work for the most part the next day or a few days later and tried to resume, across the country and across the world, some degree of normality in their work life, yet very much wanted to continue to be glued to the news and what was happening. No one really knew exactly what had happened on September 11th, what the fallout would be, would be go to war? Who were these people that flew planes into the Twin Towers? Most work environments didn't have televisions, so many people got that information, and really, if you look back at the ratings numbers from AOL, from cnn.com, from msnbc.com at that time.... John: It's interesting that you cite 9/11, because Martin Nisenholtz, who is a partner in this project but also the developer of New York Times Digital cites 9/11 as the turning point for digital news at the New York Times. It was the first time that suddenly they were in a serious 24/7 environment, where they were reporting real time, and it continued ever since then. CBS was there with no real cable outlet, no real 24/7 television out, so that must have created some kind of realization there. Betsy: For the first two weeks after 9/11, that was OK. Because if you remember, those first two weeks, certainly the first week after 9/11 all the networks went without commercial, without interruption, seamlessly, they stayed on the air all the time. In a lot of ways, the initial response to 9/11 put us on equal footing with the cable networks. It was after that point when the broadcast networks resumed regularly scheduled programming that CNN certainly, people were turning to the CNNs and the Fox News and the MSNBCs of the world. Again, I really think it was more CNN than the other two to get their news and information. John: By that time, CNN.com was a well known entity already. Betsy: Absolutely, an absolute powerhouse. As was MSNBC.com, because it had the power of Microsoft to drive traffic. John: When did CBSnews.com, which you started, right? When and how did that happen? Betsy: CBSnews.com was started in, if I remember correctly, '97, '98. There were a number of people in the news division. Steve Jacobs is one of them, a long time CBS News executive that was instrumental in the early days of CBSnew.com. Dean Daniels, another executive and ex local news director was also instrumental in the beginnings of CBSnews.com. John: What year was that? Betsy: That was '97, '98. I joined CBS in '97, so it was just about when I was coming into CBS that they were starting their efforts on the web and on the entertainment side as well, for CBS.com on the entertainment side. CBS had taken an interest in Sportsline, which then became CBS Sportsline, which then became CBS Sports. We had taken interest in 1997 another site called MarketWatch, CBS MarketWatch, which was eventually sold. John: I'm going to ask you about that. Betsy: Which was eventually sold to Dow Jones, and part of the Dow Jones empire. John: We interviewed Larry... Betsy: Larry Kramer? John: ...just this week, so all your buddies are in here. Betsy: Which was very fun. Larry Kramer, I've had many lives with Larry Kramer. The first CBS MarketWatch, and it was called DBC at the time...Called DBC for Data Broadcasting Corporation. The first CBS Data Broadcasting Corporation meeting took place, I think, two weeks after I joined CBS. I flew out to San Francisco with some other executives, including Derrick Ricefield, who did the original deal with Larry to make the original investment in CBS MarketWatch. I've known Larry since 1997. He came and has been a friend all along. He came back into my life in a day to day way in 2005, I believe, 2004, 2005 when he came in to run CBS Digital. That was after MarketWatch was sold to Dow Jones. John: To back up, when you started CBSnews.com at the time, was this part of a strategy that you were working on to make CBS News more competitive in the future some way or another? Or was it an advertising strategy? Betsy: I think at the time it was a novelty. I think at the time it was... John: Everybody had one, so you had to have one? Betsy: Everybody had one, so we had to have one. I don't think we had thought at that time that it would be a big advertising platform. I don't think anyone had any idea that the web would be where it went to.... [pause] Betsy: CBSnews.com, at least when I started, everyone believed that the web was something...I don't think we had much expertise in house on how to build, what to build. It's one of the reasons that we had made those early investments in Sportsline and MarketWatch, so we could watch some standalone companies build and see what they were doing. CBS then went on and made a number of other investments. They were an exchange of equity for marketing and promotion of those brands, made a whole bunch of those investments in the late '90s. Again, from a perspective of not really wanting to put so much cash towards this business, but being interested in learning and being interested in growing these companies and feeling like...Again, this is during the first dot com boom, pre the first bust. Thinking like, "This is of value, but we don't really know where these businesses are going." John: 9/11 was when you saw the possibilities? Did you see the possibilities more from a positive point of view? What CBS News could do with it, or more from a threatened point of view? Betsy: I think both. I certainly as a young person at CBS News felt it was a door opening to a world of possibilities. On the television side, I think the web was still very much thought of as a threat and a competitor to traditional television and traditional television news. I think we were... John: You had that whole innovator's dilemma which everyone talks about? Betsy: We had the innovator's dilemma combined with the fact that CBS News was not a 24/7 news outlet, nor was NBC News, nor was ABC News. The content team was used to working towards certain day points, a morning television program, an evening television program. The folks working on "60 Minutes" worked on a totally different schedule. We were prepared for breaking news at any time. We were prepared globally for breaking news, but we weren't broadcasting breaking news, so the web posed an enormous threat because it was clear that this was a medium that was not a nine to five medium. John: You were looking suddenly at Yahoo! And AOL and outlets like that, and cnn.com and going... Betsy: Absolutely. John: People want this post 9/11 news all the time, and there it is and we're not there. That leaves me to the question that I'm really curious about, and we've asked several people this question. Television networks still have the largest audience for pure news in their big shows. They still aggregate tens of millions of people to watch these shows. They're very trusted, very well branded news outlets. Why have they been unable to make much of a mark online? Betsy: I think that one, audience that is still watching 6:30 news, evening news broadcasts. It is almost universally a very old audience. It's not a younger audience. I think really a lot, for the broadcast news networks, a lot has factored into no matter who you talk to and what they say a news organization that has its roots not being a 24/7 outlet. One reason. The other reason is television news, I believe, didn't start out this way, but really grew interesting a medium that did not write particularly well. The value of the printed word and the appreciation of the editorship needed for the printed word. That set of skills didn't really exist in television news the way it did in newspapers and magazines. [pause] John: So after 9/11, what happens at CBSNews.com? Betsy: I think there was absolutely a realization that the world was looking different, and that the Web was important. Certainly we saw the numbers. The numbers at CBSNews.com spiked tremendously after 9/11, as they did for every other news website. We really started going down that path of trying to understand what the Web was and how we could take our television assets and put them online. Again, still very, very early days in the video space... John: Because broadband was just... Betsy: Broadband was just getting started, and the legal ramifications of putting clips that had AP content in it, that had Reuters content in it, putting it online, we didn't have clearance for all these new mediums. So that became more difficult, because here our bread and butter, the television side, the video side, of news was not showcased in a super meaningful way online, the way it is now. And a lot since then. Now a lot of those hurdles, a decade later, have very much been overcome and dealt with. John: But yet, network television news, and we'll leave this subject in a minute to get to what we're really very interested in, which is the big disruptorship, when you go from being a traditional media company to a disruptor. I want to get you to say this again, just in case I missed some of it before. Yet, network television news still hasn't become a major player in the online news business, and you were saying earlier, that was because... Betsy: I think that was because a number of reasons. One, broadcast network news never really understood the 24x7 news cycle. They weren't set up, they didn't have a history that was geared towards being on air, except in very specialized, breaking news moments, 9/11 being one of them. That was a great effort for CBS and ABC and NBC to stay on air continuously as long as they did. We could do it on election nights, on presidential election nights, but it wasn't commonplace to us the way it was of the cable networks. There was a combination of that, and there was also the issue of really writing. That people in television at that point, that had been communications majors in college that had gone into television in the '80s and early '90s didn't have the same skill set that print journalists did. The web was still very much then, I really think, and even today, still very much a print text medium, which is why the newspapers and the magazines had such a competitive advantage over the broadcast news networks and still do. John: Now, you were a strategist and you were a business person, and this is the last CBS question. Did you ever consider that CBSNews.com might be something that would be charged for? Betsy: No. John: Even after you bought MarketWatch? Betsy: We never really looked at it as a pay business, and I think that was a combination of not having this sophistication to be in the commerce business. Now remember, CBS as a television network never had meaningful revenue other than advertising revenue. John: Right, so one stream business. Betsy: It was a one stream business, so it wasn't the core competency in the company to really explore what it would be like to have a commerce business, a subscription business. Had we had magazine people or newspaper people in at the highest levels of the network, I think that would've been a different story. John: You embarked on a series of investments that included...I guess the most notable one was Market Watch, the biggest one. What was the thinking there? Betsy: The thinking there was very smart thinking on CBS's part, the part of CBS corporate led at the time by Mike Jordan and Fred Reynolds was, we would invest in these companies. We would take, in exchange for equity in these companies, and a seat at the table to understand how they were growing, we would give them marketing and promotion on the network, which was very, very valuable. Market Watch actually changed its name to be CBS Market Watch because of the brand that it was associated with. To be associated with the brand of CBS and what that meant in the news and information business was valuable enough to Market Watch, this teeny little brand that no one had ever heard of. That was part of the exchange. If you remember, CBS Market Watch had a green CBS eye on it for many, many years. That was a branding strategy of [indecipherable] , I think, turned out to be very smart. John: Were you there when it was sold to Dow Jones? Betsy: I was still there when it was sold to Dow Jones, absolutely. Andrew Hayward, my boss at CBS News, was on the Board at Market Watch and was obviously part of the discussions. In the sales, CBS bid for CBS Market Watch, as did Pearson, the other outside company that was invested in Market Watch at the time, we both lost out, as did I believe the "New York Times," but I think it was early on in the bidding, all three of us lost out to Dow Jones. Leslie Moonves said very famously when he hired Larry Kramer, months after the Market Watch deal closed "While I might not have gotten the company, I got the guy. I got the guy that built the company, and that's far more valuable." That's when, I believe it was 2005, when Larry Kramer came in to work for CBS. John: Then later of course, CBS bought CNet but you were long gone by that time. Betsy: That was after my time. I was long gone. John: How did you become the CEO of the "Huffington Post," and go to the disrupter side? Betsy: John, I have told this story many times. I had 10 magnificent years with CBS. I was really fortunate to work with some exceptional professionals across the board, Leslie Moonves obviously being one of them, Andrew Heyward in his division, obviously being another one. I had amassed, in probably my last three or four years at CBS, I started keeping a list of the things that I couldn't do, and things I couldn't do because we were part of a legacy brand, because we wanted to make sure we wouldn't do anything to disrupt our television audience, which was slowly eroding as it was at other competitors. We were very, very mindful of the legacy brand of CBS and not tarnishing that brand. Every time we'd want to do something new, innovative, disruptive, you had to go back to those brand questions and traditional media questions and say, "Can I do this new innovative, disruptive, thing," knowing...? John: Totally trapped in the innovator's dilemma. Betsy: Very much trapped, and my list got longer and longer and longer. In 2007, I was celebrating my 10 year anniversary at CBS and I said, "Holy cow. I might spend the rest of my life with this company, and there's a whole new world out there that I had been very fortunately exposed to through my work at CBS News.com, through CBS was part of Viacom for a long time, through all of the friendships and the business partnerships we formed with Viacom, and had a real taste for many other sides of the media equation. I was getting a little frustrated. I think, for me, the breaking point, and I've told this story many times in Martin's class and at other places, I think the breaking point for me was in 2006. If you remember, in the summer of 2006, Katie Couric had famously just signed on to be the first female anchor of the CBS Evening News. It was really exciting, a big coup for CBS. People were thrilled beyond belief that she was coming over to the network from NBC and from the "Today Show." It was really a resurgence of energy in the news division, and everyone in the news division was really feeling that. That summer, all of us feeling very excited about the fall to come, with the new evening news, I took several engineers from Google around to meet different executive producers at CBS News, and senior producers and some of the content folks that I was close with. I wanted to show them something very early on that was called Google Trends. It was in Google Labs at the time. Now, very much commonplace. 2006, not so much so. At the time, Google Trends, which was in Google Labs, had lag data. You couldn't see anything current, because Google was afraid if they made that open to the universe, that people would start gaming the algorithm. Now you can actually see that stuff live. It had a six month lag, but sure enough, you could search, in a crude and elementary way, words like "Iran" and "Iraq" and find out when people started searching more for one word than the other word. You could really chart the history of things happening in the news space and learn all sorts of interesting things. Famously, there was a cover story in The New York Times, several years later, about how Google Trends predicted flu outbreak. They were able to near perfectly correlate it with CDC data. We got to see this early on, from these fabulous Google engineers that we had befriended from part of another relationship with Google. We took these engineers around to meet various senior producers and executive producers. I said, "This is fantastic. You could change your line ups for the evening news based on what's trending that day on Google if we had current data. Won't this be fantastic for some of the investigative reporters at 60 Minutes or 48 Hours. You're going to see connections to things that you never would have seen before, as a normal course of investigating a story or sourcing a story." John, universally, at every meeting I went to and these Google engineers were fabulous and smart and articulate I got shut down. I was told that, had I not learned anything in the time that I had been at CBS News, had I not learned that it was not the way that journalism was done, and that these funny, skinny kids from Google had nothing to say about the business, the creation of journalism. I have to say, that was sort of a breaking point for me. I thought, "Oh my God, this is a company that's just going to find change to be very hard." So in the fall of 2007, cheered on by Kenny Lerer and Arianna Huffington, I took the leap to become the first CEO of The Huffington Post. I have to say, all of my good friends from CBS wished me well. They totally understood why I might want to embark on a new challenge and leave CBS. They absolutely did not understand why I would go and work for this start up thing that couldn't possibly pretend to be journalism, that was being led, on the edit side, by a woman who ran for Governor of California. Yet I knew that this business that had been started HuffPost was about 18 months old at the time was really going to be something different and magical. We were just going to go in and break a lot of the rules of traditional news gathering. And we did it. John: ...Why did HuffPo take off so fast? Betsy: There are many reasons. HuffPost was not bound by the constraints of traditional media. It had no legacy brand, it had nothing to lose. Many, many things have been said about Arianna and her exceptional qualities. One, that is a standout for me is that she is fearless. Kenny is fearless. Jonah Peretti, who built the back end of HuffPost and was absolutely our technical advisor through all of HuffPost's life, enormously important to the company, was also fearless. So, we didn't have anything to lose. We also weren't going to play by somebody else's rules. Every time somebody said, "That couldn't be possible. You couldn't do that," we said, "Watch us." HuffPost, in many ways, was in early days, an exercise of routing around the establishment because we were going to do things differently than the establishment. The establishment was both on the television side and the print side. Nothing gave us bigger smiles on our face than to see HuffPost show up in the first page of a search result above sorry, Martin The New York Times. It was because we cared, really early on, about the value of search and SEO before many of the other publishers did. The things that we did very, very early on, in SEO, were all very much organic, very respectful of the Google spiders and how Google tracked the news and information space. The other news organizations weren't willing to look as deeply into what would make that work, than we were. John: That goes to everything, the kind of headlines you wrote, that worked the spiders. Betsy: The splash pages, the visuals that were big and bold and in your face. John: That changed the whole landscape. I know, on the other side, a lot of time was spent examining the legal implications of aggregation. Did you spend any time thinking about that or was it just, "Damn the torpedoes, straight ahead. Full speed ahead"? Betsy: No, of course, we spent time thinking about that. I think, the difference was, legacy media and traditional media were continuing to rest on the value of their brands. We had a new brand, so we had nothing to lose. We were going to try to grow this new brand. We looked at everything we did from the point of view of the audience and the consumer. When you saw a story that was a major news story, that was a headline on CNN, was on the cover of The New York Times and the cover of the Wall Street Journal, our editors, from the very beginning, would say, "We want to tell our users who's doing the best job covering this story, our opinion." HuffPost, in very early days, was a lot like Drudge. We were just linking out to other sites. Today, this story on the administration, the site and the news organization that has the best headline and the best story on the budget is the Washington Post or is the Wall Street Journal or is the New York Times. That began the process of what we called curation to take major news stories and be able to distill them down. John: Did HuffPo coin the term curation? Betsy: I believe Willow Bay, who was the HuffPost senior editor, coined the term curation. John: Really? Betsy: Yes. John: I did not know that Willow Bay coined the term. Betsy: Willow Bay gets credit for curation. Aggregation seems, I don't know, aggregation doesn't seem sort of highbrow enough. John: Well, aggregation I think was coined by, I don't know who, but probably not somebody who was doing it as much as somebody who was being aggregated. I'm not sure. Betsy: John, it's sort of funny. Curated has become a term of art, right? [crosstalk] John: But curated has become another word for editor. There's editing, and there's curating. What's the difference? I don't know. What is the difference? Betsy: In the HuffPost case, the idea was to have a number of different verticals covering a number of different beats, and have editors take topics that we believed were of interests to our audience, and pull the best from a number of different sources. There were plenty of times we just linked directly to different...if it was a one source story. What was interesting about HuffPost was we began to see an audience that was coming to our site to blog, to converse, to share, to comment, and they were so pleased that we had found for them kind of the best of the web and brought it into one place. The noon news habit of going from site to site to site to site to site, to make sure you got everything, if you were a news junkie, you just come to HuffPost and you could get most of that in one place. I think a tipping point for us was linking straight out to a 60 Minutes piece where that was an exclusive, and 60 Minutes had a story on something, and the only person that had the story on a certain topic, and seeing more comments about that link out to the 60 minutes piece on our site than on the 60 Minutes page. We were really curating a community. John: Explain the business model to me because from the outside some people would say that HuffPo did a fantastic job of disrupting the traditional news media, that it created all sorts of influential patterns that changed the way everything that came after it. But that it really was a one score business in that it made all of its money by selling itself to AOL, and may or may not be making money today. Do you have an opinion about that? You're a strategist and a business person. Betsy: I think John, I think it's hard to look back and say, "If HuffPost had been left independent for two more years or three more years, what would have happened, and how the ad revenue would have scaled?" We set out to do three things. What's interesting, and I think you haven't seen a lot of other sites be as successful as HuffPost has been, because other sites are doing one or two, not all three of the things. We set out to build an audience, to build a brand, and to build revenue. We've seen a lot of sites out to build an audience, and maybe get revenue or not. Maybe get sold. But not really sort of care about building a brand. We've seen a lot of sites go out to build a brand, but not care so much about how big an audience they could get. Because we did those three things that took the efforts of myself, of Kenny, of Arianna, and of Joanna, and they were all very, very important, audience, revenue, and brand, I think that's what put us on the map. There were plenty of things that we did on the front page of HuffPost in the early days, and I'm sure even now, that were not done for pure traffic driving reasons. HuffPost gets a bad rap for, "Oh, all they're doing is putting celebrity content up, and they're doing a lot of low cleavage stories, and that's driving all the traffic." We were very thoughtful about, both to thank Tina Brown for her efforts on this, to think about a high low strategy where you were happy to not have to go to another site. You could read in one place a very wonky story about the economy and also look at celebrity content, sort of understood a high low strategy in our front page and in our content generally. John: But one to the questions that we're trying to answer is, "Is there anybody offering a profitable growth model in the news business? Is the Huffington Post a profitable growth model?" Betsy: It certainly was absolutely a growth model and a profitable growth model under my leadership. It was under Eric Hippeau's leadership. AOL now...I don't know. John: How much money did it make in your best year? Betsy: Toward the end of my tenure, we broke even. I would believe under Eric's tenure, they were profitable. It was a short time span. John: What kind of profitability are we talking about? Betsy: Small numbers. Small numbers. John: Like under five million dollars? Betsy: Probably under five million dollars. John: Today, your best guess? Betsy: Today, I don't know. The hard thing about today is that it's now within a much bigger organism. John: Is it a profitable business model? Betsy: Oh I think it's absolutely a profitable business model. What's fascinating, when we went out in 2008 and raised capital, our Series C round of capital, for which we had to do five year projections. What's HuffPost going to look like five years from now? The margins that we set out to build in future years were very significant operating margins. Part of it is we did not have a lot of the expenses that constrained a lot of the legacy media companies. This was looking at a model that would take a company that had some very young people editing and curating content, to a much richer hybrid of people. I think you've seen Arianna grow that, of people doing original reporting, people doing curation, people doing voice and opinion. We often talked about, and this goes back to the focus on the consumer and the audience, that what mainstream media didn't understand back in 2007, was that there was an audience out there that was craving three types of content, we called it the rule of 3s. Three types of content under one brand voice and opinion, original reporting, and curation. If you only did curation, you were looked at as just stealing from somebody else. If you only did voice and opinion, you were looked at as just a commentator and nothing more, and not taken seriously as a news organization. If you only did original reporting, it was going to bankrupt you. The idea was to do all three in enough of a perfect blend that we could make our margin numbers, and we could satisfy our audience. John: This sounds when you talk about it with a great deal of enthusiasm, it sounds like that this may have been a real high point for you. Correct? Betsy: Absolutely. John: And something you're very proud of. Betsy: Absolutely. John: You seem to be saying that the strategy was good and it was executed with a lot of energy by this team who were all exceptional, so what broke up the gang? Betsy: Gangs break up. It was very disappointing for me to leave HuffPost in 2009. I stayed very close. I'm still very close with Arianna and with Kenny. They're great friends. They've been great partners. They're great supporters of what I'm doing in the next chapter of my career. But sometimes bands break up. John: Well, let's talk about the next chapter in your career because this seems like a pretty unusual model too. Betsy: It sure is. John: Explain this to me? Betsy: Sometimes life is stranger than fiction. I had the opportunity in 2010 through a mutual friend to come and meet Glenn Beck. I was really excited and sort of interested. Glenn was on the cover of Time Magazine. I don't think his cover story on the cover of the New York Times Magazine had quite come out yet. I hadn't really followed his career. I certainly knew a little bit about him. It seemed like an interesting meeting to attend. On Glenn's side, I think he had to be pulled kicking and screaming to that first conversation. Because as he was shown my CV, which included a CEO stint at the Huffington Post, a long stint at CBS News. I was a Harvard Business School grad, and God forbid, I worked at the Federal Reserve at the beginning of my career. John: You sound like the enemy. Distilled enemy. You have everything. Betsy: I was the distilled...exactly. John: Harvard. CBS. Arianna. Betsy: Arianna. Yet, within the first five minutes of meeting, Glenn, probably in many ways not unlike the first five minutes of meeting Arianna, there was a connection. Glenn and Arianna have many things in common. They have many things not in common, but many things in common. One of those things that they have in common is, as I said about Arianna, and I'll say about Glenn, they're absolutely fearless. They have imaginations of what they can build beyond anyone else's imagination. Glenn had thoughts and a vision of a media company that he wanted to build, "TheBlaze." That very much resonated with things that I had done at CBS...I'm sorry, things that I had done at the Huffington Post, and another opportunity to disrupt the industry. John: Explain the disruption model here? What is the model? Betsy: What's interesting about what we're trying to build, it's still the early stages. We're two years in. I joined HuffPost 18 months in. This venture I got to see from the very beginning. HuffPost I didn't quite get to see from the very beginning. We're two years in, and what we're trying to build is a multimedia business three different multimedia businesses. What's different is, is we're trying to build them all together. There's no tail and there's no dog or there's no dog and there's no tail. John: It's online radio and television. Betsy: It's not radio. Radio got left behind in a company called Mercury Radio Arts. We have created a new company, TheBlaze, Inc., that has theblaze.com with right now about 11 million people coming to the site every month. Not shoddy. John: That's your audience. Betsy: That's our audience online. That's one of our audiences online. We have a subscription network online. We call it internally theblazetv.com. But that's the subscription network that was started about 18 months ago. It started as GBTV, it's now been re branded "TheBlaze" 24x7 streaming network, and then you can watch all the programming on demand, 300,000 people paying 10 bucks a month. Those are two pillars of the business. Economic aren't bad. The third business is to get into the cable business. We are now on Dish Network with... [pause] Betsy: The third pillar is TheBlaze on cable. We're on Dish Network and more cable networks to come. So, looking to get fully distributed on the cable side as a cable network. John: This is very much a two stream...A three legged, two income stream... Betsy: Three income stream. John: Three income stream. Betsy: Advertising revenue, on the web, and on television. Subscription revenue, direct to the consumer so I know who those subscribers are and I can communicate. I have their email addresses and I have their home addresses. I have their credit card numbers and I can talk to them as often as I want to. And then, affiliate revenue as a cable network. John: Is this a model that, if it works, is replicable? I mean, can others do this? Betsy: I surely would hope so. John: Or is this only...? Betsy: Ari Emanuel thinks it's replicable. Mary Meeker thinks it's replicable. John: Will you be the one replicating it or will you be...? Betsy: I'll go on to disrupt something else at that point. John: After this you'll go disrupt something else. Betsy: But I think, John, what's interesting is there are a couple things that have similarities to Huff Post. There is a very passionate leader at the helm that has commanded a certain amount of attention and audience. At the Huff Post, it was Arianna. At TheBlaze, it's Glenn. John: You have the three. You said audience, brand, revenue. Those three are obviously... Betsy: Right, we're doing the same here. It's interesting in that we're not interested in the mainstream media gatekeepers to reach that audience, in the sense that we have complete creative control over this network. We have not... John: If you have people paying you $10 a month in the hundreds of thousands, what do you need them for? Betsy: What do we need the cable side for? John: No, the mainstream gatekeeper. Betsy: I think what's happening in the television business is this interesting time of, will the world continue to be bundled in the television space in cable or will it be unbundled? We've been able to play in both spaces and let the marketplace determine what's going to happen. I'm not saying, "Hey, the whole world is going to become unbundled and I have got TheBlazetv.com and that's where I'm going to spend all of my energy and at some point, 300,000 will be a million, will be 50 million, will be 100 million people." I'm very much playing in backend traditional media. That's what's kind of interesting and disruptive with this brand new network, to say. Cable television is still very valuable and still very valuable from a revenue standpoint, still very valuable in terms of reaching eyeballs, and we want to play in that space, too. From a content standpoint, I have, on the web side, a lot of editors that are young like at HuffPost, but have their roots on the print side. You can look out on the newsroom and see a lot of people much younger than the two of us. John: I would hope. I don't know about you, but... Betsy: We have on the website, writers and editors that have print backgrounds and are very, very strong writers. We have television personalities that are very good on television and understand that means of communication, and we're putting it all together in the same company. John: You've seen a lot. You've been on the establishment side. You've been the disrupter not once, but twice. When you look at the great broad landscape of the news business today, which includes declining businesses, businesses that are holding their own goods, newspapers, television, magazines, and all the people, and the dotcoms, where do you think this is all headed? What is the next...When you wake up five years from now, what are you going to see? Betsy: Everybody says I'm crazy, and you'll say I'm crazy, too... John: I don't judge. Betsy: ...but I don't think there has been a better time for journalism. I know that, as a consumer, and I'm certainly not alone, there is more great writing, great stories, great coverage, globally. Technology allows us to do things we could never do before, we certainly couldn't do in early days that I was at CBS, in terms of news gathering and news coverage. John: But you wouldn't argue with the idea that all that is still in search of some business models, right? Betsy: I think all of that, if all of that continues to search for mass audiences, I think they will be woefully disappointed. I think where the opportunities are, as with HuffPost in the beginning, as with TheBlaze today, is finding dedicated audiences where your brand, your content, your voice, your coverage, resonates with that audience. In some cases, those audiences can get bigger. HuffPost started very much in the center left space with a very clear group of leaders reading the site, being interested in the site, being interested in the content on the site. Arianna put her stake in the ground. It was very clear from the beginning about what she believed in, and let lots of conversation happen around that, and to have that strong voice and opinion was an early hallmark of HuffPost. It's certainly been a hallmark of Glenn and creating TheBlaze. And in some cases, like in the HuffPost, that audience gets bigger and bigger and bigger and bigger, and it attracts readers that are very different than the early readers because there's more content, because there's more conversation. In other cases, that audience never broadens. I think where journalism is challenged today is really thinking about who are the 10 people, the 100 people, the 1,000 people, the 10,000 people that you want whatever you're writing or taping, who you want to read that piece of journalism and knowing where they are and knowing how to get that content to them. That should be everyone's starting point, but often it's not. Often, it's if you're in, like I said, media you're just trying to hold onto everybody that's subscribed to you forever before or has watched you on television every night. John: Thank you very much. ...
VIDEO: YES

Mike Moritz
BIO: YES: Michael Moritz (born 12 September 1954) is a Briti...
TRANSCRIPT: John: It's April 2nd, 2013. We're on Sand Hill Road in Palo Alto. Mike: Menlo Park. John: In Menlo Park. We're in Silicon Valley with Mike Moritz of Sequoia Capital. Mike, we really do think you represent a sui generis character here because not only did you work as a journalist, and you covered Silicon Valley and venture capital, but then you managed to invest in a number of technology companies that have played major roles in this whole journey of journalism and technology. Could we start out with just a five minute exegesis from you on when you first began to figure this out and how you came to this? I'll just let you tell that part of the story. Mike: Like everything that we do, there's only a grand design in retrospect. At the time that particular investments present themselves, it's not as if there is, despite what all the myth makers and marketing departments might say many years afterwards, a huge, enormous, grand design right at the outset. When we invest in a small company of a few people, what we're really thinking about is how we survive the next year. Rather than where things might be 10 or 15 years from now. That's certainly been true of the investments that we've made on the Internet. As the years went by, we became more educated about the possibilities and instincts became, perhaps, a bit more refined. But at the beginning, we were really feeling our way. I suspect, in the mid 1990s, when Sequoia Capital first encountered the founders of Yahoo, which was really our first Internet investment of note in a software company. Bear in mind, some years before that, Sequoia had been the only investor in Cisco Systems, which helped lay the underpinnings for much of what was then possible for all the software and media companies. But when we encountered Yahoo, the only real differentiated insight that we may have had at Sequoia was the fact that we had a lot of belief in the notion that, if a substantial audience is built for a site on the Internet... This is before they were called destinations or properties. Then with time, it should be possible to attract advertisers. The idea that was heretical in 1995 in these environments was the idea that you could provide a service for free. People in the investment world, in the venture world and elsewhere got all tangled up in the conundrum o f whether or not it was possible to have a business that on the surface gave itself away for free to consumers. Our assumption all the way along was that Internet sites were no freer for consumers than network television or broadcast radio, which in retrospect, seems straightforward, very evident, extremely apparent. But for whatever reason, it perplexed a lot of people. Don't forget, there was no history in Silicon Valley perhaps outside of AOL, which was not really considered a Silicon Valley company because its center of gravity was in the east. There hadn't been any investments from our sector in these sorts of companies. The only investments in "media companies" that people could conjure up were in long since obscure and failed magazines. Then, Sequoia in the very early years, had invested in a little magazine that went nowhere. John: What was it? Mike: I think it was before I arrived here, something called "Executive Magazine" or something like that. Martin: Can I ask you about...Because I recall this notion of free intersected with the New York Times in the mid 90s. I think part of the issue was that these industries collided in roughly 1995 in a way that they hadn't before. One of the things that kind of comes up as a theme in some of our interviews is that Yahoo managed to get access to Reuters and the AP pretty early. We packaged content that had been coming to the consumer indirectly through broadcast and print channels and brought it directly to the user in an almost a kind of very updated way and so created in a sense, a superior free service to the legacy service that thought they should be paid for. Yahoo News, in a sense, set the stage. It became large very quickly because of the size of the portal. It set the stage very quickly for the rest of journalism to go free. Can you comment on that? Do you disagree with that or is that something that...? Mike: I wasn't talking about Yahoo going free in as narrow a sense as you were just alluding to. I was just talking about the whole idea of the website and all the different things over time that it offered. Best as I recall, at the beginning, there wasn't a purposeful desire to get into the news business. I think it was very much the result of the fact that Reuters at that point had a corporate venture on that was quite active, run by a thoughtful person. They had identified Yahoo and I think also Excite, had made small investments in both. We had said to them, "As a result of the investment, there's got to be something more than money. We need some sort of relationship. Can we perhaps distribute the news and information that you provide on the Reuters' wire?" That was what led to the beginning of the news business. The news business, in and of itself on the Internet has not been a great business. It's been a very useful service for consumers but there are many other ways and far more profitable ways for companies like Yahoo and Google and others to build large sales volume than trying to sell advertisements around news and information. It does not, to use the dreadful word, monetize as well as so many other portions of their business. Martin: Yet, you've continued to invest in news and information. I think you were an early investor in the Bleacher Report, right? Mike: No, we weren't. Martin: You were not. In Sugar, maybe? Mike: In Sugar? I think after Yahoo we'd also invested in a financial services company called Quid.com that eventually I think was bought by Lycos, but they had the idea... Let me just finish with...There's a fair amount. If you're interested, we can say more about Yahoo. Martin: Yeah, let's do that please. Mike: I think to some extent, it was a little accidental that we got into the news business. When Jerry and David were first talking about the site, news certainly, current news was never on the road map. It became about like so many things on the Internet, accidental and opportunistic. John: Is it fair to say that for the most part, your media investments have been at least the most successful ones platforms, not content, right? Yahoo, Google. Mike: YouTube. YouTube, I think of is one of Sequoia Capital's really wonderful media investments. I think, John, these companies at the beginning, they're not platforms. They're very narrow, niche companies. I think any company that sets off to become a platform at the beginning will get eviscerated along the way. I think what happens is these little Silicon Valley companies, they start with an offering that for whatever reason, becomes popular and then the opportunity widens out and they then become recognized as a distribution platform. John: Twitter could've been just a notional thing but it became a platform. Mike: It's become a form of distribution of other people's content as well as in some cases and in other companies therein. John: Is there anything you can say as somebody who evaluates thousands of these things over decades? Is there anything that you can tell us that you see in one that is destined to go on to something versus ones that you pass on or ones that ultimately fail? What is the secret sauce? Mike: At the beginning, it's very difficult. Every time we feel that there's certain successes attendant to any particular business, when we make the original investment decision, I think we're deluding ourselves. Because if we've done our work properly, the decision rests on a narrow knife edge because there are so many reasons why the company might disappear. Again, 15 years after the original investment when everything is obvious through the rear view mirror. That doesn't seem like the case, but if you place yourself in 1995, there were two people who dropped out of the PhD program at Stanford. They're surrounded by all of these other companies that are really powerful. AOL, for example, all the networks, the broadcasting companies, other companies out here like Netscape, not to mention Microsoft and the browser wars. The people at AOL and Netscape and to a lesser extent Microsoft saying, "Goodness gracious. We're going to eradicate this little company from the face of the Earth." People forget that 15 years later. Nothing about these things is certain, but at Yahoo they led with alacrity onto a lot of these things. John: Yahoo becomes a tremendous disruptor of fundamental models of journalism and news and in many ways, improves what consumers can get and when they can get it and changes the [inaudible 14:55] . Mike: I never thought of it all that differently. This will sound weird, from Time magazine circa the 1920s. When Time magazine...People forget this now. John: Your alma mater. Mike: My alma mater for three or four years. John: Yeah, come on. Mike: No, you're right. For three or four years, it was home. When I began in business, it was a packager of third party information. John: An aggregator. Mike: An aggregator, packager, and distributor of third party information. It didn't supply any of its original content, best as I know, perhaps outside the cover art at the very beginning. Then it crept into the original content business over time. To me, there were at least some rough...I don't want to overstate it, rough analogies between what Yahoo was doing. Repackaging third party information and distributing it in a slightly different way or in a new way. John: Time moves on and Sequoia backs the next and even larger more disruptive player, Google. Can you talk a little bit about that transition and how you're...? Mike: The Google investment wasn't centered around media. It wasn't centered around news and information. It was centered around technology. The obvious point that the power of the search technology that the founders of Google and their close friends had worked on were superior to everything else that was around. John: But you saw it early on as an advertising play, right? Or not. Mike: Initially, Google was going to be a licensing company to... Martin: It was. It was licensing to Yahoo. Mike: That was part of the way that Sequoia got involved with Google. Google was licensing its search technology to Yahoo for Yahoo to distribute. John: When and how does the advertising lightbulb go off? Is Sequoia involved in that? Mike: The advertising lightbulb went off very early in a tiny way at Yahoo. The first advertisement, I think, was a tiny, inconspicuous Visa advertisement, which provoked all manner of hand wringing within Yahoo. This was a tiny little, I think, probably just a little Visa button or Visa placement on the home page. There was enormous fear that we were selling out to the demons, that this service on the Internet was going to be perverted and spiral downhill into the clammy hands of the capitalists. There were all these outraged emails from the devoted that there was this little Visa advertisement. But that was in 1995, and I think that year, for pure Internet companies, total advertising revenue was probably under $2 million. Martin: Part of the reason that we're all sitting here today and part of the reason that we're doing this oral history is because a lot of the traditional institutional journalism entities... I mean, you can see what's happening at Time, Inc., now and others, are really troubled. The business models are difficult. From your perspective in the valley, what is it that the legacy folks are doing wrong, if anything, and do you think they have a future? John: Could they have done anything differently that would have made any difference, or was it just the tide is coming in and you swim with it or you swim against it? Mike: When you have an existing business, it's a tremendous boat anchor around the corporate ankle. You have existing customers to take care of. You've got your daily affairs to take care of. All the confusion of the day to day existence apparent in the newspaper or magazine or TV station. 95 percent of management's time is worried about putting out tomorrow or next week's publication or product. A tiny little percentage is devoted to worrying about the business model and thinking about the future, particularly at the beginning. Then I think there's also, again, the natural confidence that comes with an established place and the firmament that makes it very difficult to really appreciate the power of some of it...It doesn't matter what the business is...The power of a young small company and the havoc and destruction it can cause upon your business. There's the fear of antagonizing your customers by providing them with something completely new. I think, on the whole, that media and forms of journalism that have something original to say, have their own content, have stuff that's really proprietary and have their own voice, as opposed to distributing the wire services or being warmed over versions of stuff that you can find all over the place. I actually happen to think that they have a far brighter and better future than they ever did. The entities that don't have really original content I think are going to, obviously, find it extremely difficult to survive in today's world. Martin: Why are you so optimistic about that? What would the... Given the downward trends in terms of revenue and profitability in places that create content, what's the catalyst that turns them around? What's the catalyst that reintroduces growth into those businesses? Mike: I think almost every media company management has made one. I don't want to be too harsh and say terrible mistake. I could be charitable and say failed to appreciate that their business could be a lot healthier if it was far smaller than it is today. It goes against every instinct in management, who have been trained since birth that revenues, increasing revenues every year are the real benchmark of success. But I think a lot of newspapers would not have... Most newspapers are in this dreadful race between the death of their existing print business and the death of their subscribers. The death of their subscribers is a sure thing. But, again with good reason, they're very apprehensive about stopping the printing presses. But if you're sitting at the helm of a media company that's got really original content, I would stop the printing presses this afternoon, change the business model entirely to digital. Be completely prepared to have in the short term, far lower revenue, but you're going to have a much healthier bottom line. Now, that's hard, it's callous, it's cruel and it's harsh. But I think that's what's going to happen sooner or later to any of these companies. The thing that people failed to I try to make this point to everybody who comes and talks about magazines and media and everything really appreciate about the enormous triumph of the return of Steve Jobs at Apple was that he shrank the size of the company. John: To that same point you're making, one of the things that... Do you have any thoughts on this? It struck me that some big media companies like Time, Inc., for example, they started out as an aggregator and then they discovered data. They had all the subscriber data and they were data driven marketers. RDA, Reader's Digest was a global data company. And yet, somewhere along the way, about the time that Yahoo became emergent and then Google became transcendent, none of these legacy media companies invested in all in their data and didn't transform any of their data. If they wanted to do what you're suggesting now, which is to shrink, go all digital, if they had data, if they had developed that data capability, they'd be in a much better place, wouldn't they? Mike: I suspect that might be true. I think the other thing that they lacked, again, no fault of theirs, they'd grown up in a different era, was they lacked the engine of these young companies out here. They didn't realize they lacked the engine. And the engine was software programs. John: Somebody said the real problem with legacy media...Eric Schmidt said the real problem with legacy media is they don't have any engineers. Mike: I couldn't agree more. John: But if they had been focused on data, they might be more interested in social...I'm not trying to re write history, but I'm saying that is a place where the road divided. Now, they have no data. Mike: Best as I can remember, at the helm of America's largest 50 media companies in the mid 1990s, there were no programmers, there were no software engineers anywhere near the top realm of the company. You could probably have let 100,000 of yesterday's media employees through the door without spotting one software engineer. John: What about the next phase? Some people divide the Internet media into the portal era, the paid search era. Now, we're in the social era. That's simplistic. Mike: That's fine. Or the mobile era. John: And then the mobile era. Mike: Where, all these media people who are whinging and moaning and wringing their hands, and here they have an opportunity to market to several billion people around the world, depending, obviously, on the property that they have, who are eager to gobble up information, any time of the day, anywhere they happen to be. That's the first time that's ever been possible. I think a lot of people in the media should take great consolation in the fact that record sales for the very first time were up last year because after a decade of having their, to some extent, head in the sand trying to defend yesterday, being utterly litigious, being scared of their future being taken away, the record companies, on the whole, have finally woken up to thinking about the future as an opportunity rather than as a challenge. I know that sounds glib, but, again, if I was running a media company, that's what I'd be thinking about. There are all sorts of ways to repackage information. Distribute it far more cost effectively. Gather it in far quicker and more effective ways than ever before. John: In that environment, do brands still matter at all? Or is it all distribution platforms? Mike: I think brands matter a lot, and if you have a trusted brand, it doesn't matter if it's TMZ at one end and the Economist at the other, you're going to have a following. Martin: Mike, I want to go back to this point about engineering because when Eric Schmidt and Mike Moritz make the same point, it's worth listening to. [laughs] The push back that I often hear about putting engineering more at the forefront of particularly the newspaper companies is that that's not really their "core competency," and that these companies are never going to be able to out engineer Facebook, Google, the companies that are in their DNA engineering companies. That they should stick to their niche, create the original content and maybe have a small engineering team supporting the application value of that content. But they're not, in essence, tech companies, and they'll go out of business if they try to be tech companies. Could you just parse that a little bit for us, because I think it's a critical point? Mike: It depends what form. I think both Eric and I aren't talking about the sort of engineering that would bring about a huge change in something very foundational. What we're talking about are engineers and programmers who are capable of using tools built by others in artful and creative ways to help with the distribution of content from a media company. That's what we're both talking about. We're not expecting the "New York Times," as you put it, to outmaneuver Facebook or whatever the next Instagram happens to be. It's not going to happen unless they get incredibly lucky. But being able to have a very capable group of people who can create and manage websites and mobile properties and quickly take you onto tablets and do so in very interesting ways for the consumer. That's very well within the reach of...Or it certainly was within the reach of the well heeled US media. Martin: Absolutely. I think the struggle has been, and as someone who has been through this directly, it's just something I've noticed. It's often a cultural struggle between the legacy processes and the introduction of these engineering talents and processes, as well. Who's in charge? Who gets to make decisions about products and what those products do? And so, oftentimes, you have a kind of freezing up, if you will, because the product direction is sometimes unclear. It's hard... Mike: I agree. That's what's been lacking for so many of these companies, that you don't have anybody at the top or the senior management is not given the authority to take a fairly sizable risk, perhaps a huge risk, and embracing a very different future. In the collision of yesterday and tomorrow, for all of these companies, or for most of these companies, it's yesterday that's triumphed. John: We have run across two distinct schools of thought, in looking at the landscape going forward. One of them is that legacy media companies will continue to decline and they ultimately will be absorbed into some version of either the super stacks or a social giant. The other view is one that, why would anybody invest in low growth businesses? In the past, I remember calling you once, evaluating a potential deal that I was asking you about. You said, "I think I would think of it as a small island in the South Pacific during World War II, best flown over and ignored." I have a guess where you might come out on this answer. Is it some of both or clearly one or the other? Mike: Most of the existing media companies who don't have their own content will go the way of the dodo. No doubt about that. There will be a few that are able to engineer a leap over this gulf. But we all know the industries where the makers of horse carts or locomotives weren't the leaders in the next form of transportation. It's no different in the media business. John: But they usually turn up somewhere down the food chain, in some odd place. Like the buggy whip manufacturers are Caleco, manufacturer of the Cabbage Patch Doll. Mike: Yeah, they wind up as interesting, amusing asterisks in the history books. But that's not a very profitable place to be. John: But you don't see these super stacks, social media giants or anything gobbling up legacy media? Mike: It's happened a little bit already. I don't know how you feel about, for example, Google's purchase of Zagat's guide. I think of that as an acquisition. John: Actually, they're buying a user generated content business, which makes a lot of sense. Mike: It's a media business. John: You've been singing that song for decades. Martin: I think it would be more interesting if Netflix bought a studio or something like that. Mike: I think it will be a mixture. John: Or Twitter bought The New York Times. Mike: I think some of these properties eventually will wind up in other peoples' grasp, but no fast growing Silicon Valley technology company is going to go and encumber itself with a slow growing business that hasn't already, I think, put itself well on the path to success tomorrow, because their opportunities are too big to worry about that sort of costly management distraction. ...
VIDEO: YES

Walt Mossberg
BIO: YES: Walt Mossberg is the co-CEO of Revere Digital, the...
TRANSCRIPT: John: Let's start. I'm here in Washington with Walt Mossberg of Re/code Walt, why don't you start telling me about your career path? How did you get here? Walt: This is turned on. Geddes. John: This is turned on. I checked it. The red light thing. Walt: Because I've known you a long time. I don't associate you with this. John: Walt: How did I get here? I worked for the Wall Street Journal for 43 years. They hired me out of the Columbia Journalism School directly in 1970. I spent just under 20 years, a few years covering the auto industry in Detroit, which is an interesting story, only because we had a five-person bureau there. Two of them went on to be managing editors of the Journal, one went on to be national editor of the journal, another went on to found the New York Sun, and I was the least successful. I went on to be me. John: Walt: But mostly it was in Washington. I had a variety of beats. I covered energy when it was a hot topic. I covered the Pentagon during the Reagan buildup, the defense buildup. I was the deputy bureau chief there for a few years in Washington. Then, I covered international economics and the trade war we had with Japan in those days. Then, I covered the national security, really got to cover the collapse of communism and the US winning the cold war. But all that while, the last 10 years, I became computer hobbyist. I had no background. I never entered the computer building at college. I was a politics major. John: No Fortran, nothing like that? Walt: Nothing. I bought a computer and I learned Basic. I joined the precursors of the Web, the precursors even of AOL, which were called "bulletin boards." I joined CompuServe where there was a forum for people with Apple IIs. That was not my first computer, but eventually, I had an Apple II. Most of our conversation was, "How the fuck do you get this to work?" or, "How the hell do you get this to work?" Walt: That could be another take. John: Give me a break. Walt: "How the hell do you get this to work?" And people would say, "I figured out a way to do this." "Oh, that's great." "I figured out a way to do that." Years later, after I became a columnist on tech, I would occasionally meet these people, who said, "Do you remember me? I was in that forum." But mostly, we didn't know each other. That was my introduction to the idea of online communities. Anyway, I taught myself computing. I did a few freelance pieces for computer publications. I did one article for a special section...actually, it was a cover article. The "Wall Street Journal" ran a special section about computing. I think it was the first thing they ever did on it. I wrote the cover story, and I became a little bit of a...when I became deputy bureau chief in Washington, I bought everybody a Radio Shack Tandy Model 100 which is sitting up there. But it was a hobby. I was busy covering the Pentagon and covering all these other things I explained. In 1990, I went to see the managing editor of the Journal, Norm Pearlstine. He's now the chief content officer, or something, of Time Inc. He said to me...I'll never forget. I went to New York. I was always based in Washington. I never worked to New York. I turned down countless jobs in New York. But I went to New York and I walked in his office. He goes, "What do you want?" "I just gave you a raise." This is literally what he said. I said, "Thank you. I know that. But that's not what I'm here about." He goes, "What are you here about?" I said, "I want to stop covering national security, and I want to write a computer and technology column." He goes, "Really? Tell me a little more." I said, "Well, we're the last newspaper to have this kind of column." The New York Times had one. A lot of other newspapers had them. "But for the most part, these columns are by geeks for geeks, there's a lot of jargon, and they're very reverential about the computer industry. "Here is my idea," which I gleaned from being a hobbyist and having to spend all these hours learning this thing. I said, "These things are too hard to use, and they're about to explode." This conversation was taking place 13 years after the Apple II came on the scene, 13 years after the computer had entered… . A lot of people had computers but nothing compared to the number that we're going to them over the next 10 years. I said, "It's about to be democratized. It's going to about to be a situation where people who have no interest in knowing how this works are going to need to feel comfortable with them. The companies are going need to adjust. I want to write a column that flips the formula on its head. No jargon. Only English. Champion the non-techie. I'm going to ignore the enthusiasts, the hobbyists, the techies. They're all read it anyway, I guarantee you. But that's going to be my focus. Because I think, in anything you do, including journalism, you'd better have a focus, a laser focus. Norm, I'm going to be critical of the companies for ignoring that audience, because they are ignoring that audience. Some of those companies are our advertisers, but that's what I want to do." Norm said, "That's the best idea anybody's brought me since I've been managing editor. I love that idea. But you can't do it for a year, because national security is so important right now. I'm telling you that..." John: This will happen. Walt: "...this will happen." So in '91, after the end of the Gulf War -- the good Iraq War, which I covered -- I said to him, "OK, I'm ready." There was some kerfuffle. I had to write a written proposal which I did and I still have around somewhere. There was some kerfuffle in New York about where I wanted to be on the front of a section every week. He had to convince the publisher and all this kind of stuff, but it got done. What I said to him was, "Look, I want the prominence in the paper and I want the leeway. If it fails you can cancel in six months and you can either fire me or I'll go back and I'll be a beat reporter. If it succeeds then we keep going." It didn't take six months, it took 8 to 10 weeks. It was like the cocktail party effect. He would go to a cocktail party, the publisher would go a cocktail party, and somebody would say, "I love that new column. I finally understand this stuff." It became a hit. That was, to me, important on a number of levels. It wasn't important that there was a computer column in the Wall Street Journal -- there were plenty of computer columns -- but it was the sense of being able to be a little bit entrepreneurial. By the way people in D.C. thought I was out of my mind. They all thought I was demoted. I actually had a conversation with the Secretary of State at the time James Baker, Jim Baker, who I had been covering for five years. I said, "I'm going to leave the beat." Each head journalist tells him that a lot. He said, "Are you going to the White House, Congress?" I said, "No, I'm going to write a column about technology and computers." His exact words were, "What the fuck do you want to do that for?" I learned later that the minute I left the State Department building he had his assistant, his top PR person, start calling around to find out why I'd been demoted, what had happened. So, I did that. It was very successful. That was in 1991. Then in 2001 or 2002, I had already become friendly with a terrific journalist named Kara Swisher who had worked at the "Washington Post," written a book on the rise of AOL, and I had talked her into switching to the Journal. She was based in San Francisco and she also had a column in the Journal. Mine was focused on products, hers was focused on the industry out there. We decided we could run a tech conference that would be much better than the tech conferences that were running at the time, and that we could make it journalistic, that it would break news or illuminate news topics. We decided to do it by banning speeches, by banning PowerPoint and by just doing what we called "Wall Street Journal" interviews on stage. Real interviews done by real journalists. We'd follow-up, we'd do whatever. Instead of going to the business side of the company, we went to the editor of the paper because we thought of this as a journalistic project. Paul Steiger was the editor at the time. He bought the idea. He helped sell it to the business side. They wanted us to do it in the conference division of the company. We refused. We did it in the news side and we hired all outside experts at how to put on a conference. That was a big success. That was called All Things Digital. I was still writing my column, Kara was still writing her column and we were running All Things Digital. Then in 2007, which was coincidentally the 30th anniversary of the personal computer, we did two important things. One is we started a website. Again, we had convinced the company that we could do this. The company had several websites but they had a big one. Of course, still do -- wsj.com. It was behind a pay wall. We insisted ours be free and pointed out we had this other revenue stream from the conference business, which was, by then, bringing in quite a lot of money. They let us do it. We had this strange thing where we remained employees or in Kara's case she became a contractor to the company, but I was still a prominent technology columnist -- the principle technology writer -- at The Wall Street Journal. At the same time, I was running a business unit. We actually had a contract with Dow Jones to run the business unit. The second big thing we did in 2007 was that we got Steve Jobs and Bill Gates together on the stage at our conference, which had never happened and didn't happen after that. That now is used in business schools and various other places. That was a great moment. We did that and we expanded the website, which became very influential. Actually, it competed with the technology stories on Wall Street Journal's website. Big media companies can have competing properties. It was very small. At one point, we had three journalists, and then, we had a few more and a few more. I think by the end of it it still only had 10 or 11 journalists and one developer and one business person. That was it. Rupert Murdoch bought Dow Jones and he agreed to continue all this and leave us alone, he left me alone and continued to treat me fine. I had a personal employment contract with them that helped. All things continued to thrive and be left alone, for the most part. We began to feel like we needed to grow it. We needed to grow the franchise. We had beats we needed to cover so we needed to hire reporters. We had editors we felt we needed to hire for more editing structure. We had additional conferences we wanted to do. We even had an idea for an additional website so that we would have had two websites. We had all these ideas and we sent them (in). We even had our business person create spreadsheets to help us and all that kind of stuff. They just wouldn't invest to grow it. They didn't interfere with it but they wouldn't let it grow. We made a decision in 2012, Karen and I, that we were going to start a company. We went to the CEO of Dow Jones. His name was Lex Fenwick. He had come from Bloomberg. He was eventually fired from Dow Jones. He had been fired from Bloomberg, too, which raises the question of why they hired him. We said, "Lex, our contract is running out at the end of 2013," which was about 16 months later. This wasn't abnormal, starting negotiating at that point. We said "We just want you to know, we are not going to sign up for the deal where you own a hundred percent of it." By the way, we were compensated fine. We had a share of the profits and all that. But we wanted ownership. We wanted the ability to expand. We wanted to raise money and invest. We said, "We are going to start our own company. We are not going to re-up. But we are happy to have a discussion with Dow Jones or News Corp, which by then owned Dow Jones, about investing." He said "Oh, it is too early to negotiate." We said, "No, it is not really because we have a bunch of offers." For some reason, companies and some investors had, honest to God, we didn't put a word out on the street. Not that we are above it. John: But... Walt: We even thought about leaking stories, doing everything to get investment interest. But by that meeting, we had a dozen unsolicited offers by people who had figured out that we were on a three-year or four- year contract cycle and assumed that by the end of the following year we would be free and wanted to start talking to us about investing. These included media companies. It included investors. By the end of the process, by the way, we had more than 30 unsolicited bids. There were some sporadic discussion with News Corp and Dow Jones about them investing. It never really was serious. I don't think at the beginning that they believed, they thought we were bluffing. I don't know. He said "I can't stop you from meeting with these other companies," and so we did. We went off and we started having meetings. We went on a little mini-roadshow. We hired an investment bank. My God, if you had told me that I would ever employ an investment bank and an M&A law firm, I would have been astonished. There was not a word about that at the Columbia Journalism School when I went there. We found two very congenial investors, private investors who put up half the money we felt we needed, and NBC News, which put up the other half. In addition to putting up the money and being a great board member, we have an operating agreement with them (NBC News) which gives us a TV platform and in turn gives them a bunch of technology news. We got the money to create our own company and on January 2nd of 2014, about nine months ago, we started our company. We have hired reporters, editors, and we have created a whole business side of the company. That is how I got where I am. John: One of the things your path embodies is some of that tension between institutional brands versus individual brands. When we started working at newspapers it was the institution that counted, was accountable. We subsumed our identity for them. Walt: Absolutely, yeah. John: When did that change? You embody it. You didn't leave in '92. You left in 2014. What happened over that span to change that? Walt: First of all, my professors at Columbia in 1970, I am an old guy John, would have shot me. People like Fred Friendly, who was Edward R. Murrow's producer, who was one of the professors that I had there would have shot me if I ever used the word brand to describe myself, because journalism is a calling. I still believe that, by the way. But the idea that you are a product or a brand is ridiculous. Secondly, I would say this. It is not an entirely new idea. Although nobody used the word, and I think some of the power that we associate with these journalistic brands wasn't present but somebody like Mike Royko in Chicago or Walter Lippmann or Scotty Reston or famous movie and theater critics. John: They were always so. Walt: They were always stars. They might have been called stars. They always made publishers uncomfortable. It was a two- edged sword. It helped the paper, because they had followings. This is a really important word, followings. I kept trying, once I became successful and long before I started my own thing, even inside, I tried to get the Journal to create more columns or more people that would have followings. They just, you know. There always were stars. I think what makes it a brand is the web. That is what makes it a brand. My columns were print only. But then the Journal syndicated them to AOL, so very early I was online. I didn't have to do any extra work. But I was in AOL. Then, I was in the Journal's online site. This exposed my name and my work to a much larger audience. The Journal was very often, in many of the years I worked for it, it was the number one circulation print paper in the country. But that is a small number. I think their high point was 2.1 million, right, 2.2, 2.1? . That is a lot of people. But the country, even then, had 250 million or 200 million people, whatever it had, just not that many. The web, not only does it have more people, but it has the ability to replicate through linking and through sharing. John: And it has the ability to measure. Walt: And to measure, right. John: That is almost the difference between a following, is it is non-numeric, whereas an audience, specifically for you, how many people come to view it... Walt: They had their crude readership studies and I always did very well on those readership studies. John: Right. You and I both know in that era they were very crude. Walt: Very crude, every once a year or twice a year, whenever they did them, they never told me, because they didn't want to give me bargaining leverage. But they did tell me in general. I would show up in the top two or three things people wanted to read in the paper. There was one point in 1997 when I got a very lucrative offer from another company and was about 80 percent out the door, because it was triple my salary and other great things. It was a company I could imagine working for, good journalistic standards. The Journal kept me. They matched the pay package, which was extraordinarily high by their standards, by anyone in print journalism's standards. I think that same year Rick Reilly, the sportswriter, was paid roughly the amount that I began to be paid. I know, I learned later, that one of the ways in which the editor of the Journal kept me, convinced the management to keep me, was by getting the advertising department on his side. They said, "Look at the readership studies. We can tell you that we are getting these tech companies' ads, because they know people will read the paper, because Mossberg's column is in it." I guess maybe that is when I transformed into a brand. I don't really know. But by then, I was online already. Online is a big factor. John: It is interesting. You talked about being a hobbyist and getting comfortable with posting online, with using online, with asking questions online. Yet, at the same time, you were covering defense and foreign policy. You began in the days when the only interaction you had with an audience was once in a while a letter that came into the mailroom. John: Typewritten. Walt: By the way, half of them were anti-Semitic. They had yellow highlighter on them. But you are right. I got very few letters. John: Yeah. All of a sudden, you're on the mount, making a sermon to people. Walt: Right. Even before Twitter, even before Facebook, there were comments. If they weren't insane comments, I would sometimes get involved in them.. But you are right. I had a lot of feedback. The other thing is, remember, I was by then and still am a reviewer and a commentator. Either I am reviewing a product or I am doing some sort of essay or commentary. I still do that at Re/code, in addition to trying to run Re/code with my pal Kara, and finally, we have real management people who know something about business helping us. So everything I did was opinion. I think that also helps you be a brand because it is provocative by nature. I am not saying I set out to be provocative. But anybody who knows me knows I have opinions. If I said "This computer is better for average users," remember, my laser focus was on average users. I can't stress that enough. You have got to have a focus if you are a journalist and you want to be successful and you want to do something ion your own. I don't care. Even if you stay inside the "Los Angeles Times" or whatever it is, or NBC, you better have a focus. You better become known, become deeply grounded in it, and you better become known. I wouldn't have a focus on something I hated, of course. I love this stuff. I had a focus. My focus was technology for average people. I never wrote a word about technology for big businesses. I never wrote a word for technology for enthusiasts and hobbyists. It turned out that they read it anyway. Why? Why did the IT director at some big company read my columns? Partly, maybe it was because I often had access to new products that they needed to know about. But a lot of it was that the CEO and the COO and the CFO and the CMO of the company would read "The Wall Street Journal" every day. They would read my columns once a week and they would go to the IT department and say "Mossberg says that you can accomplish this with this thing that costs $75. I just signed a thing you put before me for $75,000. What the hell is the deal?" In a lot of companies, I was very unpopular with the IT departments. In fact, I did a couple speeches to IT managers and it was very interesting. You're right. I had a community around me that could get to know me. A lot of them actually think they know me better than they do. I think that is the case with every columnist, because a columnist can use the word "I" a lot.. "I tested this," or in a sports column, "It is time for the coach to get rid of the quarterback." After a while, they get to know the guy's style or the woman's style and they either like her or hate her, but they feel like they know her in a way that they don't with a reporter's byline, even the finest reporter. Yeah. John: Yeah. Is that the reason you never moved west, you never moved ? Walt: Oh, there is a very good reason for that. The reason I never moved west, they wanted me to move west. The Journal would have paid me to move west. They would have actually made up the housing. This is a bygone era. They would have paid for the move and I think they would have helped subsidize, whatever, make me whole on buying a house in Palo Alto or whatever. I explained to the editor. First of all, I didn't want to uproot my family. But secondly, there was a very practical reason. I was afraid that if I moved to Silicon Valley I would become too close to the industry. That would be fine if my job was to cover the companies financially, but my job was to represent the average person. I needed to keep that perspective. I knew a lot more than the average person, I had to work to keep that perspective, even here in Washington. To move to Palo Alto I would have been going to the PTA meeting and the Safeway and everything else and seeing the people that made these products that I was reviewing, that I was critiquing, that I was saying were either good or no good or whatever. I was afraid that I would become sucked in to the industry culture the way some reporters who cover tech are, the way some reporters who cover Washington or Wall Street are, because they live right there and they're there. I can remember having this conversation with the managing editor of the Journal. I explained what I just said about keeping my consumer focus. I promised I'd go to Silicon Valley six or eight times a year, which, by the way, I have. I've made, I don't know, 250 trips there or something. I remember him saying to me, "How will you see the new products if you're not there?" I said, "When we announce that the Wall Street Journal is going to do critical reviews of the products they will all come to Washington and show them to me. Regardless of whether it was me or somebody else and regardless of the city, if we said we're going to put the person in Des Moines, they would go to Des Moines." It was true. Within, I don't know, a month of us announcing it they all had made appointments to start coming to see me because they wanted me to review their products. John: That question you bring up about how do you, as a journalist, maintain your distance from those you cover is one that goes on all the time in Washington and, to some extent, one hears it a lot in Silicon Valley. Walt: It goes on in Detroit with people writing about the car industry, and it goes on in Wall Street, I repeat, with people that cover the finance industry. There are probably many other examples if we start to think about the trade press. If you're an oil reporter and you're based in Houston and you get to know the oil executives. It's a long-time journalistic problem. It's not just an Internet age journalistic problem. You have to work out a sense of arm's length. I think the thing to do, my own personal point of view - and this is what we try to convey our reporters at Re/code is get to know these people. By the way, I did get to know. I spent dozens of hours in private conversations with Bill Gates and Steve Jobs. I'm not bragging, but I did. I know Bill Gates and I knew Steve Jobs very well and I know Mark Zuckerberg. I could go down the list. It sounds braggy. It's stupid. By the way, not just them but their vice presidents. I know the product managers. I met this morning with the people who are the product managers for the new iPads. I also know Tim Cook. If I were to pick up the phone there's a fair chance he would answer it. If I were to email him he would respond. If I were to ask for a half an hour on the phone with him, particularly, if it was not on the record, he would probably do that. I also know the product managers. I know all these people. Our reporters who are based there also know these kind of people, and they also know, because they cover things that I don't, the bankers, the VCs, that kind of stuff. We want them to know them well enough so that they'll be sources or they'll help with stories, but we always caution our people not to get involved. We also have very strict ethics rules. The Web is very big so you have to be careful. I think we're the only website -- at least, we're the only one I know of -- where right next to the byline of every reporter's name, there's a link to their ethics statement, and everyone has an individual ethics statement. It's not buried at the bottom of the site, sitewide. There's a Walt Mossberg ethics statement, there's a Kara Swisher ethics statement. Just to mention a few of our people, a Peter Kafka ethics statement, Ina Fried ethics statement. Some of them are similar in some of the language, but then, they are all tailored to the person. They go to the question of what investments do you have and don't have? If you're a reviewer, they go to the point of explaining to people that you don't actually keep these products that are lent to you. This morning I was given, for testing, some new iPads. Even if I decide to buy that iPad, I have to send those back to Apple, and if I decide to buy it I have to buy it full price at the retail store. No discount, nothing like that. I've put it in the ethics statement because not every reader understands that. John: Here's one that just struck me. Here's a question for people in the Valley, too, the journalists in the Valley. How much of your drive, your entrepreneurial drive, over the last 20 years was fueled by knowing people, covering people, covering companies where wealth came cascading in? I want my part, too. Walt: Why are you apologizing for asking a question, Geddes? John: Because I haven't been a reporter for 20 years and I'm back in the game now. Walt: You've got to remember you can't apologize. You're almost right just like I'm almost right. Everybody's almost right a lot of the time. You're not exactly right. Yes, I was happy to be making a lot more money than typically reporters...it's not nearly as bad as teachers or police officers, but print journalists have historically and continue to be generally underpaid. If you're at the New York Times or the Wall Street Journal and you're responsible for covering, I don't know, the Pentagon or Google or poverty, health, some super important subject, I think most Americans would be stunned to learn that these people a lot of them don't even make $100,000. I understand that to somebody that's on food stamps that still sounds OK, but if you're the Pentagon reporter for the New York Times -- I don't know what the Pentagon reporter for the New York Times makes -- and you don't make what a junior associate at a law firm makes there's something strange about that. Lots of people are depending on what you do. Yes, I was happy to make more money, but the making more money, like in many careers and jobs, in my personal case, it was mostly a market opportunity. People would offer me a job at much more money and I would go and bargain with my employer and get a little more money or I had a choice, of course, of leaving. Why you're almost right is what made me, and I think Kara, increasingly entrepreneurial was the people we were covering, but it wasn't about the money. Really. I haven't signed up for the clergy so I am fine with making more money and I'd like to make more money and I'd like my people to make more money and I'd like our company to make more money. I am a capitalist, and I'm fine with that, but it was not that. It was really the fact that you could start a company or a venture or a product and actually shape it and build it, and the barriers of entry to that were lower than ever in modern history, particularly, if it was online. In other words, it was a digital product. This is a ridiculous comparison. Facebook is a digital product. It can scale. It can make money. It can also fail, but it can be a big deal. Re/code, my little company, is not Facebook and never will be, but we can do that, get online, we can add more people, we can say this thing we're doing is a failure and drop it in a second and turn around and start a different approach to something we're doing. If we think of a new idea, whether it's the bosses, me and Kara...because we do a lot of things by being collaborative and collegial. One of the reporters comes up with a great idea, a new kind of beat, a new kind of way to approach stories, a new kind of video thing to do, whatever. We're on television, we're about to go on radio, we're on every platform. We have a conference coming up at the end of this month. It's just on mobile. The name of our conferences is called "Code under our Re/code banner." It's called "Code Mobile." It's going to be a terrific conference. It's being produced by two of our reporters. Kara and I are overseeing it, but they're producing it. That's the kind of thing you need. Watching these tech companies. I watched the beginning of AOL and so did Kara. She wrote two books about it. I watched the beginning of lots of them, of Facebook, of Google. I wasn't there at the beginning of Apple, but I was there at the revival of Apple when they were 60 days from bankruptcy, and I watched what Jobs did there. When I started covering Microsoft I think they had 3,500 employees and Bill Gates still had a policy of reading every email sent to him from inside of the company. It was not nothing, it was a reasonably big company, but it was very nimble. I watched what these people were able to do. I watched them succeed, I watched them fail, I watched them do amazing things. In all of American business, it has happened that in this period of time that I've been able to cover it tech has been the most dynamic part of the economy. That did affect me. John: You were inside big media. Why didn't that level of innovation and entrepreneurship that you mentioned occur there? Walt: I'm cracking up. John Geddes, you were inside big media. You can answer that question, but I know you want me to answer it, I'll give you my version of the answer. In my experience, and, granted, I've only worked at one big media company so people can shuck that off, but I really don't mean this as a particular criticism of Dow Jones or News Corps. Actually, Rupert Murdoch does take risks, sometimes dumb ones like the Daily. I think big media companies tend to be risk averse. I just do. Particularly the ones that have achieved a lot of influence and power, whether it's the New York Times company or Dow Jones and the Wall Street Journal or it's, I don't know, CondÃ© Nast or Hurst or it's the television network companies, whatever. I just think they tend to be risk averse. John: Is it because the innovator's dilemma, that they have too much cash flowing in? Walt: I think it's cash. They haven't had that much cash flowing in. I think it's that all of them have extremely successful products that are revered by some a lot of their customers and depended upon by millions of people. They are used to that carrying everything and just being the end of the story. One thing piles on the other. I don't think they tend to feel entrepreneurial, and then, I don't think they tend to hire entrepreneurial people. We went through this interesting experience of people offering us money to fund Re/code, some of whom were big media companies. We met with quite a few big media companies. Their approaches, almost all of them were willing to give us the money we wanted. There wasn't too much argument about the amount of money. There was negotiation but there wasn't big disputes about that. It was almost all about how would we be deployed, how would our brands and our content and our talent and our people be deployed inside the company. In most cases, they were all very conventional in what they wanted to do so we didn't go with them. We went with NBC because NBC understood that they shouldn't try to control our new company, which they don't. They're a minority investor, a very good one. We could have an operating agreement, which would help both of us journalistically and both of our brands, to use that word. They were the exception. Most big media companies are very hierarchical. In journalism, in particular, even on the edit side - maybe especially on the edit side - a lot of sharp elbows. You have to be collaborative. It has to be different to do entrepreneurial journalism. For all I know, this is true of big companies in every industry. I don't know. John: How do you think we did -- and I say, "We," I mean, journalism as a class -- did covering this huge transition where one point tech will take over the world was seen as a boast and at some point it become not a boast but a statement of fact? How do you think we as journalists covered this? Walt: I don't think you can generalize. I think some publications and journalists, if you look back at it, did a good job. I just finished reading Walter Isaacson's book "The Innovators." For instance, he quotes John Markoff quite a lot, who is a reporter at the New York Times and, at one point, was an extremely prominent reporter. I don't mean to say he's not. I don't notice his stuff as much in the paper as I used to or on the website but it's still there, and he's a very smart guy who I admired a lot and got to know some. There were particular reporters. This is always true, I imagine. There were particular reporters. The Wall Street Journal went through periods where it was a must-read on tech, and then, it fell down and now it's trying to come back up. It had terrific reporters at various times. I'm taking myself out of it. I'm talking about the reporters that covered it. Other papers, I keep talking about the big national papers, but I think some of the regional papers. The San Jose Mercury News certainly caught on pretty quickly, because it is the paper of Silicon Valley. There were good tech writers at the Chicago Tribune. There were good tech writers at the Houston Chronicle. Some particular newspapers with some particular kinds of staff caught on to it. Television was slower, much slower if you're talking about journalism as a whole. Magazines also slower, some better than others. I think there's a record. In fact, in Isaacson's book, he quotes a lot of stories that overestimated tech in the '50s and '60s. Somebody would come up with a computer and would claim it was a brain that would replace people in 10 years and all this kind of stuff. He shows how these articles almost read exactly the same 10, 15, 20 years apart. This wasn't an ignored subject. John: Do you think we saw it hitting journalism? Do you think we saw this media coming in and changing... Walt: I can only tell you about the Wall Street Journal. It was very slow. The PC became mainstream in 1977. I mentioned that. You have the Commodore, I think, the Commodore Pet, and you had the Apple II which was really the one that had the most impact, and you had a Radio Shack computer. Those were the first computers. I'm not going to say they were easy to use -- they were certainly not -- but you could use them without being an engineer. There weren't kits that you had to put together. The computer that inspired Bill Gates to drop out of Harvard, which was called the "Altair," it had no screen, it had no keyboard, you could not write anything or draw anything on it. It just had lights that flashed. You could program it to flash the lights with switches in a certain sequence. It was a computer, but that was like in '73 or '74. '77 we had these things. In '84 here at the Wall Street Journal, we were still using typewriters, manual typewriters. The editors would edit it on paper, and then they would hand it to a teletype operator. We were running a national paper. We had a lot of technology at the back-end. We had satellite printing, we had laser engraving of plates. Dow Jones had patents on some of this stuff. The journalism part of the thing was still, seven years after the Apple II...I still remember I had an Apple II and I was doing some writing on it, but I had to print it out. Then, they figured out a way that with a modem you could send something to a printer, but it still had to go to paper before it could be edited. I think there was an Apple II in New York at the page one department. For the people that don't know, the Wall Street Journal has a page one department that, particularly in the old days, was responsible for one page and features. They had an Apple II for writing headlines. I have no idea why, but I remember them calling me with a question once about it or something. I think we were slow. John: You think we were slow. Did you ever hear of a thing called Justice League of America outside of comic books, in regard to tech journals? Walt: No. John: I'll tell you this episode that people related to me. It was either Comdex or one of the gatherings in the 2000s. 10 or so journalists who usually covered tech got together and decided suppose we set up our own site where... Walt: Oh, I was in that. John: You were in that. Walt: Now, I totally remember it. John: Tell me about it. I think this is one of those... Walt: I just forgot that we used that name. I can't remember everybody who was in it, but it was most of the columnists and some of the bigger beat reporters. It was about 10 of us. Who told you about this? John: I heard it from two people. I heard it from Kara, I heard it from Markoff. Walt: From Markoff? Yeah. John: Yeah. Walt: Yeah. No. I was in that. John: It might have been Dan Gillmor. It might have been Walt: Yeah. Dan Gillmore probably was in it. It was also Matt Goldhaber was involved in it. He was not a journalist, but he was an entrepreneur. He had the idea that you could charge for articles. You could sell, basically you could turn into a piecework business that would be very successful. It was an early instantiation of this idea that the brands were big, this why you're asking I'm sure, that the brands could survive outside the institution. Yeah. We all believed it was possible and we talked about it, but it never happened. It never came to anything. Nobody ever carried it forward because we were journalists and not businesspeople and we didn't do it. Personally speaking, I found other ways to be entrepreneurial. Kara and I both found other ways. But boy, I haven't heard that for a long time, but you're right. I don't remember what year it was. But you're right. It was in Vegas. It was either at COMDEX... ...Or CES. It started probably from a typical gripe session. All journalists are always griping about editors and constraints. John: And how this was an opportunity Walt: And Goldhaber, who was not a journalist, had this idea. John: Somebody said that it was, you all got together. It was all pledged silence. Walt: Pete Lewis was in it too. John: Pete Lewis was in it, too. And we'll all pledge silence. And that night somebody just happened to mention it to a hedge fund guy -- not a hedge fund guy; somebody from Sand Hill Road. That person said to them, "I will write you a $12 million check right now... Walt: I don't remember that. John: ...to start this up." Walt: That part of it I don't remember. John: The problem with it, they said, it just like burst… Walt: If that was real, it would have happened. John: ...Yeah. Yeah. No. It was just sort of birthed because everybody was so shocked. Walt: The guy might have been drunk. John: Yeah, he probably was drunk. Walt: Who knows? But I remember it as more of a...it was a micropayment model, I think. We never thought it through. But that's actually really what Kara and I went and did with All Things D, although we stayed within the safe confines, but also eventually, the constricting confines of a media company. That's what we're doing now. You're right. That might have been the first time. I certainly knew by then that I was a brand and so were some of the others that you describe in that meeting. Pete Lewis was a brand and Markoff was a brand. It's easier if you're a columnist and you're a columnist at a national paper to have it occur to you that you're a brand. I can't remember if I was even using that word inside my head in those days, but I certainly understood that my work and my name had some economic, some market value. I don't know if we used the word brand in that conversation, but yes. Yes, I completely confirm that that happened. John: It's just an interesting arc to January 2014 when you guys set up... Walt: Yeah. Or to May of 2003 when we started All Things D. John: Correct. Walt: It wasn't completely independent from Dow Jones, but within a couple years, you know, it was operating as a business unit. We were getting a profit share. We were running it autonomously, which wasn't true for most of the other tech journalists. It was steps and you could argue that we should have argued that we should have broken off and become independent sooner, but there's also cycles. There is right now a high valuation being put on content so it was a good time to do it. John: What do you think of the next cycle? Last question. Next cycle for journalists. Are you upbeat about journalism? I don't mean just examination of products or companies; I mean public service. I mean writ large. Are you upbeat? Walt: Oh, writ large I'm very upbeat about journalism. I think it's a great time to be a journalist. It's not necessarily a great time to be a publisher. Although done right, I'm hoping because I am a publisher and a journalist that you can do it well. I think that there are so many...look. When I got out of journalism school...why did I go to journalism school? John: Because you probably couldn't find... Walt: No. I already knew how to write, and had been published by a reputable paper scores of times. I was a summer reporter at the Providence Journal.... Walt: ...in Rhode Island. You know where Rhode Island is, right? John: Yes, I'm familiar with it. Walt: Providence Journal was a paper that in those days had about a quarter of a million circulation. It was a feeder paper for the New York Times and the Wall Street Journal and some other big papers. Why? Because it was regarded as small, but high quality. The editors of those bigger papers could take a chance on you if you came through there. It had won, I think, four or five Pulitzers by that point. I had a stack of clips already written and published about everything you can imagine... John: City Council issues, you name it. Walt: Politics, City Council meetings. I had written obits. and wedding notices of course, but I had also written real stories, a few business stories. I had one or two scoops that put me on the front page. I knew how to write a story, and I knew how to develop sources. I knew how to do all that stuff, when I was a kid. But I went to the Columbia Journalism School, because in those days it helped you skip a bunch of small...I wanted to be on a national newspaper in Washington. That was my plan. To me, it was the Wall Street Journal, New York Times and the Washington Post. I come from a household and a family of not business people. Nobody read the Wall Street Journal that I knew and I didn't really read it until I got into college and grad school. But I understood it by then to be a very high quality paper. I applied to all of them and all of them offered me a job. Some other papers offered me jobs too that were more regional, but I was interested in national things. The New York Times offered me a job as a news clerk which was very common for people coming out of Columbia. That was their standard M.O. John: It was their entry level, right. Walt: It was considered very nice that they were offering you a job, but I was a published reporter at a very good newspaper. I was like, "I don't want to be a news clerk." The Washington Post offered me a job on Metro. That meant covering police and local politics in the suburbs but I had already done that. Besides, some of the professors at Columbia and other people said to me, "You'll never make it to the national staff from there, because they would rather hire somebody from outside.... ...than promote somebody who was based in Arlington, Virginia, or Bethesda in Maryland, or whatever." The third was the Wall Street Journal and they said, "We'll make you a national reporter immediately. We don't start new people out of school in Washington. You have to go to one of our other bureaus." I went into the Detroit bureau which I thought was a horrible thing at first, but it turned out to be a terrific thing. It was a very important bureau to them, and I met all kinds of terrific people there, including two future editors of the paper. But then, I went to Washington. Within less than four years after graduating, I was at a national paper, highly respected, able to get sources to return your calls, in Washington. John: That makes you optimistic, mainly because...? Walt: Oh, I'm sorry. You see, I lost the train of thought. Walt: It was hard, but you had to do that. I had to be lucky that the journal was expanding that year. They were expanding because Reuters was coming into the country or something. Today, you have to go through that stuff. You didn't only have to go through journalism school. If you can write and if you have somebody...obviously, you can start your own blog. But that has the disadvantage of how do I get audience? Also, if I'm not a journalist and don't have any experience, how do I get edited properly? You may think you need editing, but most people... Walt: ...need editing. Or, how do I get mentoring? When I was a kid at the Providence Journal, the bureau chief in the suburban bureau, where I primarily worked, would sit around after the end of my shift and tell me stories and say, "Good job on this. But you know, you could have done this a little better or differently." I had this huge favor done for me by somebody being a mentor, which I've tried to pay back with other people. You can start your own blog. Lightning might strike and you either might become influential and rich, or influential or rich, whatever, or somebody might buy you. Probably, you want to get in with Mashable if it's technology. Or you might want to get hired by Quartz if you're a business reporter, or you might want to get hired by Grantland if you want to be a sports reporter, or Politico if you want to be a political reporter. Or some influential website in your town if that's what you want to cover. I just think there's more of those opportunities than there were when I got out of grad school, and there were a limited number of newspapers, magazines and television outlets. It's a great time to be a journalist. Not necessarily a journalist who can earn a living wage. That's an interesting question but it's a hard time to be a publisher. If you're an existing publisher, an existing medium, you have to make the digital transition. They all have but most of them not hugely successfully. If you look at The Atlantic, it's done a very nice job. I can say nice things about The New York Times online, but I could also say a lot of things they don't do. They've done generally a good job. Probably, some of the local papers have done a good job, and a lot of others haven't done a good job. If you're trying to start out as a publisher, you have a lot of decisions to make, a lot of which go to the quality of what you're doing. You can be Buzzfeed, which does some very good serious journalism, but primarily, I suspect is making its money and getting its audience... ...from link bait. I would not, personally, and this is not meant as an offense to them. Because, by the way, most newspapers are crappy. Most radio stations are crappy. Most television stations were crappy, and I would say, I've said that 40 years ago. The fact that most websites are crappy is not surprising but I wouldn't want to run a site that depended on listicles and slideshows that say, "20 Pictures of Kate Upton You Won't Believe," or, "20 Ways to Die From Ebola That You Won't Believe," or something. That's just not me. It's a perfectly fine business model. I still think there's a lot of people who consider themselves publishers, or would-be publishers, that don't want to go down that road. I don't care, by the way. It could be entertainment journalism. It could be humor journalism. I think The Onion”\ is a major cultural institution. I don't know the numbers. Maybe you can investigate it, but I'll bet they're doing better being online than they were when they were being distributed at campuses as a free newspaper. It could be humor. It could be tech. Look at Politico It could politics. It could be whatever. It's a harder time to be a publisher, but not an impossible time. I'm actually optimistic about that part, too, but not as optimistic about journalists and journalism. We have succeeded now in opening the gates to hearing tens of thousands of voices, and you don't have to have landed a job at... My example of picking those three papers, those were the three most influential news organizations in America. Even the television networks followed what they reported. Some very high percent of the original stories that were being produced across the entire spectrum of journalism were produced by those three newspapers. They had a ton of money. They had a ton of journalists, and they got to pick from the best candidates, they had the best journalists. Of course, there were wonderful journalists in Anniston, Alabama, and Providence, and Sacramento. As a concentration, they had fantastic staffs and talent. Today, they still are awesome and then there are some additional things, depending on the field you're talking about. I'd like to think, and in fact, I'm completely convinced that "Re/code" has the highest quality team of journalists covering tech. I believe that. We hire carefully. We've been lucky, and we have great people. People want to work for us. Just in general, there's a lot more openings. There's a lot more places. You don't have to think about three. You can think about 300,000. John: Excellent. Walt, thank you very much. Walt: You've got a lot of editing to do on this, Geddes. Is this going to be shown anywhere? No. John: Who knows? Somebody may want to do a full length movie. ...
VIDEO: YES

Harry Motro
BIO: YES: Harry Motro currently serves as a psychotherapist ...
TRANSCRIPT: Paul: It is April 9, 2013, and Paul Sagan and Martin Nisenholtz are in Los Gatos, California with Harry Motro. It's great to see you. Harry: It's great to see you. Paul: Long time. So start with just, your background wasn't in news or media, so maybe give us the two minute resume that got you from accounting to the media business. Harry: My love of news really originated from my father's background. My dad was born in Palestine and grew up in Israel. As a person living in Jacksonville, Florida, he was addicted to news, because it was news of his homeland. The evening news and the newspaper were a big deal in our house. I think I just inherited a chunk of that. The other piece of my story is that my mother was a Holocaust survivor. As a Jew in Holland she sort of did the Anne Frank story and escaped. As such my parents were determined for me to be successful and have a job. My brother became an engineer, and I became an accountant. It was really security that my parents were searching for, although it was never a great fit for me. I did it for six years, I was actually pretty good at it, but I was living in Atlanta at the time, working for Coopers & Lybrand, now Price Waterhouse Coopers. Ted Turner was getting up a head of steam. The business was growing. My dad was an entrepreneur his whole life. He was that Israeli make it up as you go. I was attracted to Ted's business. I came in through the accounting side, went into finance, then went to new business development. It was great at Turner Broadcasting because Ted liked to get people who thought like he did. If you could be creative, start a new business, think outside of the box, and be aggressive, Ted loved it and you tended to do well in his organization. I went to new business development. The first businesses that I got associated with that were connected to news were the Checkout Channel, which were TVs in grocery store checkout lines, and the Airport Channel. Those were being done by Scott Weiss and some other people. I got associated with that, and that set me onto that path. I'll take a breath there. Was that the two minute background? Paul: Yeah. That was excellent. I learned 10 things I didn't know about you, and I have known you for 20 years. Harry: There you go. Paul: You were then there, CNN is really revolutionizing TV and what we now call old media TV journalism and it invented the 24 hour news channel. But it wasn't an interactive world, and then things started to change. When did you first see the power of what digital or interactivity was going to do to news, and did you follow that immediately with this entrepreneurial instinct, or what happened? Harry: What happened first was the impact of digital on the backend. I think it was Sony that started doing the 8 track tapes not 8 track. I don't know, but tapes that you stuck into a big machine and you could put a little video... Paul: It was the video jukebox. Harry: Video jukebox. You would take little pieces, that would grab the tapes, and you could compose chosen different formats. You basically programmed it. That helped Headline News, that helped the local news feed business that Jon Petrovich did at Headline News. Paul: It was the backbone technology of NY1. Harry: You're very familiar with it. That started making its way into CNN. We took that to Germany for NTV, Nachrichten Television I'm probably not saying that right at all where we did a partnership with Siemens and some other people there. I was involved in all those "new businesses," and I saw the power to change the economics of creating 24 hour news. At the same time, a guy named Ken Tiven I don't know if you know Ken... Paul: Oh, yeah. Harry: Ken was running around CNN advocating Avid, because Avid had basically digital editing, and everything else was, you know, we were running around with tapes. Those pieces started to show me, because I was working close with Ken, because Ken was supporting all the new businesses from a technical standpoint. Paul: He had launched a news channel in Orange County, California. Harry: That's right. He was deeply into that. It's funny, because I really appreciate him. He had narcolepsy. [laughs] At meetings, he'd fall asleep. But just a wonderful guy. He never really got full recognition of what he did at CNN. We saw the backend build. The frontend started happening as PCs started making penetration. Paul: Was it the proprietary services first? Because, for a lot of publishers, print publishers, it was the dialup. Harry: It was CompuServe for us. Our first deal was with CompuServe. They were aggressive. They were much bigger than AOL to start with. I think we initially spoke to CompuServe and Prodigy. We didn't get to AOL till later, although I do remember meeting with Steve Case in a little conference room, half the size of this room... Martin: What year was that? Harry: God...I want to say '94, '95. Paul: It would be about right. Harry: Maybe it was before. It could have been a little before. It could have been '93. Paul: Within that period. Harry: It was that period. It was the early '90s, for sure. Steve was telling us how this was going to piece [?] different pitch at it, it was going to be much more creative, much more colorful, much more interesting. But we did start with the dialup services. Paul: It was dialup, so you were repurposing or creating text or stills, with no video. It was still not a TV experience, like CNN was. Correct? Harry: It was really tough for us, because we didn't have content. Martin: Right. You could do what the medium required in some ways. Because you didn't have content, you didn't repurpose content, which is an advantage, in some ways. Harry: Yes, it forced us to do some work, but, on the one hand, we had the right brand, because CNN brand meant instant news. Martin: Absolutely. Harry: We had the right mentality of going after a new opportunity, I think. The bad news is all the text that sat inside of CNN was scripts. It was people writing stuff for someone to read over, which didn't fit if you didn't have a video. What we had to do is figure out how do we get rights to Reuters and AP. This is where Burt Reinhardt single handedly enabled the creation of CNN Interactive. I think he used to work for Reuters. He knew them forever. He was a trusted figure in the industry. Reuters and AP knew that they were having someone who wouldn't abuse their content. CNN negotiated massive deals with Reuters for content. Otherwise, we were paying them a lot of money. Paul: I want to make sure we get this part right, because we did talk to Scott Woelful, and he remembered Burt's critical role in founding CNN Interactive. But one of the other things we really focused on was Reuters as primarily a wholesaler and having a different business model than AP, and kind of cracking the door open, we hadn't realized with CNN, and with Yahoo!, and effectively putting commodity news out there in the wild for the public to get it. Talk a little bit more. Was Reuters first at CNN ahead of AP for interactive? Harry: Yes. Reuters was friendlier. If I get this right, AP is a consortium of all the newspapers, and they were much more resistant and restrictive. Paul: They actually forbid them to sell for quite a while until Reuters kind of knocked the door down. Harry: Reuters nudged them through the door. It was like, "Well, we're going to do this." We were much more reliant on Reuters, which is stronger internationally. That influence, I think, Scott Woelful would probably be clearer about this, but Reuters leading position influenced the actual content early on. I didn't realize this until I got to Infoseek, but Reuters was very aggressive in the valley at the same time I was at CNN and Paul, you were at Time. Reuters was an early investor in Infoseek. Paul: And Yahoo. Harry: And Yahoo. And they had a board observer position on our board at one point. They never attended a board meeting that I remember, and they sold their position shortly after I arrived. Paul: We talked to David Graves who was at Reuters and did the first deal with Yahoo! And then went to Yahoo! He talked about Yahoo! Would ask for a product, they would make it and then they would run around everyone else online and say, "Look what Yahoo! Has. Don't you want to buy it, too?" So they really played this game, particularly out here in California, very well. Harry: They didn't do it to us because, as part of their equity investment, if I remember right, we had a great Reuters deal. Paul: Let's go back to CNN then. Then we'll get to Infoseek. You started, like many, experimenting with the dial up services and having to create a new product, which as Martin said, may have been something of an advantage because you have to figure it out. But it was still a pretty limited medium, and then the web came along. Harry: Let me make another comment about the dial up services, Compuserve and we did AOL later, too. Early in Compuserve, the value that they wanted was on air promotion because they were trying to advertise on the cheap. We wanted to really experiment with the integration of television and online. We had people creating news, basically rewriting Reuters and AP. I can't remember how much AP. But we also had a whole staff of people who were monitoring the forums. Do you remember that? That was actually the more interesting part because you could see usage spikes around shows. There was a show that was done in the center of the CNN Center in the floor. Paul: In the mall. Harry: In the mall. I can't remember the ladies name. She didn't last that long. Paul: No, but it was a live show in the afternoon. I remember. Harry: It was a live show in the afternoon. It was sort of our feature integration show. It was actually a great learning experience. It was probably one of the most heavily integrated early shows that was done, especially around news. Martin: I want to go back to this notion of the rationale for your developing this. The newspaper folks, Tony, others, really were focused on classified advertising and the disruptive potential of this technology. You didn't have... There was no existential threat at CNN. It neither threatened the television advertising business nor, at that time in particular, the cable MSO subsidy. Why did you even... As I recall Ted Turner didn't even like it. Why did you even do this? It doesn't add up to me. Was it just because you thought there was some huge business to be had? Harry: I'm not going to take that much credit for it. It was actually the Turner entrepreneurial culture. That's what I really think it was, that, "Hey, here's a new business. Let's go explore it." It was not heavily funded. It was really self funded through the Compuserve. Martin: Right. They paid you. That's the key. They paid you for the content. Harry: They paid us. So it was a financial opportunity. And the other piece where we got a bunch of money was from Lexis Nexis. Lexis Nexis, have you already heard this story? Martin: No. Paul: Certainly not in the context of CNN or television. Harry: Lexis Nexis wanted to have as much researchable digital content as possible because their stuff was text, it was easy to research. They were getting a lot of money from people who subscribed to Lexis Nexis. They were getting a limited amount of our transcribed text of our shows and previously the CNN librarian had negotiated a deal with Lexis Nexis for $10,000 a year, almost no money. I started scratching my head. Mark Bernstein and I cut this deal. This is great content and they wanted it. We flew out to California. Our content was being transcribed by a company that was using the legal touch system, where they could do it almost real time. We upped that deal with that company and sold the content to Lexis Nexis instead of like $10,000 for over a million dollars. So we got a million from Lexis Nexis. We got more than million from Compuserve. It was enough to build the business. Tom Johnson, he came totally from the newspaper space. Martin: And he was running CNN. Harry: He was running CNN at the time. Tom was not a big supporter... He supported. He was a people person so he supported me and our team, but he really didn't understand the opportunity. It just wasn't intuitive to him. John Petrovich at Headline News, on the other hand, was very supported, and Bert was supportive, too. And Ted, Ted didn't get it either, really. I remember the first time I showed Ted a page of CNN.com. We had started our offices under a stairwell. I don't know if Scott Woelful told you this story. It was the most unattractive space in the entire CNN Center. It was under a stairwell. The windows were papered off because you weren't supposed to look in. Wires in the ceiling. It was a little hell hole. We started there, but as we gained momentum we finally moved to a marquee spot because they were starting to show it off because it started to be cool. That was the first time that I got Ted to come down and look at our web page. I was nervous. What's Ted going to think about it? It was just our home page and it had a pretty big graphic on it. This was on a T1 inside of CNN Center. For some reason it was slower than usual and it was a slow load and after about two seconds Ted was like just didn't get it, big thumbs down, and walked away. I'm thinking my God, good thing he didn't see it on dial up the way most people did. Ted's so used to instant gratification with three secretaries and television. He didn't get it. I have to give Ted's brilliance full credit. Even though he didn't get it, his entrepreneurial gut said go do it, supported it, was interested in it. The other thing I think, Ted had a fascination with what was going on in the Valley. He closely followed the net worth of Gates and Larry Ellison. That got his attention. Because of the humanitarian that he is, he was all over them about giving. Almost every executive meeting I was in with Ted he would digress into that topic. He knew something was going on and he knew it was important for CNN to somehow be a part of that. Paul: Let's make sure we tie off the CNN story. You went from these early experiments with dial up and a B2B service, LexusNexis, to a total consumer play on the web. How did that happen? At least up until the point you left CNN. Harry: We're sort of fast following you, Paul, at Pathfinder. Paul: How? Harry: You and Walter. We saw that. Paul: We did politics together. Harry: We did politics together after we launched cnn.com. Scott Teissler came to CNN and he brought another guy and I cannot remember his name. Paul: Sam Gassel. Harry: Sam Gassel, thank you. Paul: And Monte Mullig. Harry: And Monte Mullig. Paul: That, I think, was very important as one of those accidents of history. Three guys who came from the Academic Computing Center at the University of Chicago. Harry: Absolutely. I can't remember if it was Scott or Sam who showed me for the first time what a hyperlink was. I said that's really cool. I was in my young 30's. I was still young enough to have enough energy and I still really hadn't made my career so this is great, let's go do this. We were doing the content anyway and getting paid for it by CompuServe and the other people and Lexus Nexus so let's get some incremental revenue here. Martin: At a certain point, because now we're into the year of the Internet, of the web, CompuServe and AOL, AOL in particular, say we're not going to pay you if you've got all your content on the web. Didn't that happen at CNN? Harry: We spent many hours negotiating around that. I can't remember the details. Martin: You managed to string it along for long enough to transition to an add model at CNN? Harry: Yes, basically. Yeah. They were not happy. Let's say we'll give you some international news, we're going to do so much here. Really, what we had to offer some was still the television promotion. We'd give them a certain amount of mentions, check it out on CompuServe. Then it was check it out on CompuServe and the web because we had a lot of leverage. This was another genius of Ted. He carved out a certain number of minutes per hour for internal promotion and we had access to that. In fact, we sold a chunk of that to AT&T when AT&T was doing an online ploy. Martin: Interchange. Harry: Interchange. We did a deal with them. Really infuriated Lou Dobbs because he didn't know about it. Again, it was a self funding model. It helped us to get onto the real Internet eventually. There was a guy named Richie Glassberg who was the sales guy at CNN Turner Sales and he was the guy who liked Linda McKutchin. It was that little group of people that were inventing it. Paul: Banner ads. Harry: Right, banner ads. Paul: CNN straddled both worlds, dial up and then the web and then the broadband web and it became more a graphic rich and then TV friendly media. You have to fast forward now 15 years and you can start to do TV. CNN was really suited for this. Harry: Yeah. I remember realizing early on that of all the content, entertainment content, sports content, news content is ideally suited to be chopped up and rearranged because we figure that out when the back end got digitized. I got that and then cut it up and people like it in little chunks. We did some television pretty early on before very few people could enjoy it and what happened was we did a deal with Intel. It was called CNN at Work. Intel had so much money back then they were just throwing it around to experiment. They wanted to get video on PCs so they could sell more processors. Their idea was we've got dial up at home but we've got broadband at work and people want CNN at work. We did a thing with Intel and that really helped us understand how to do video on the PC. Paul: Before we move to the search part of your life, let's talk about business models. CNN did have the beauty of the dual revenue stream. It did get subscriber money but it didn't have to go beg for it because it was bundled and it had ads. There were revenue streams at risk. TV on the Internet today is still trying to figure out how to make that transition. You guys really had no issue with that, right? It was all new ad sales. You decided to go free. Tell us why you did that because it obviously had a lot of impact on other businesses. Harry: Tom Johnson said, "Harry, if you give it away you'll never be able to charge for it." He was sort of right. Someone was going to give it away. He didn't put his foot down enough because we were self funding. We weren't burning up a lot of money. Harry: Tom didn't want to have it for free. He struggled with it. At one point, later on, we launched CNN Plus and played with what newspapers are even playing with today, segregating out a chunk of the content. Martin: To have a premium tier, so to speak. Harry: To have a premium tier, exactly. There were a lot of discussions on the sales side about the break up or the split between digital and television advertising dollars because you could play games with that. Paul: If you bundled the sales. Harry: If you bundled the sales and how that was done. It was probably the same on the magazine and the Pathfinder side. Paul: The big risk was it would be digital would be given away for free and never even improve an ad model. Harry: Right. Then the other side happened, too, because the online guys like Richie would try to work it the other way. Paul: You get the TV for free. Harry: Early on there was a lot of experimentation spending that probably you saw and that we definitely saw. Like GM. When we first met with GM they were really interested and they did a big buy that would be impossible to justify. Paul: That's right. There was a period where the agencies were walking down the street trying to throw money at experiments because it was the new cool but it wasn't a sustainable model. Harry: It wasn't sustainable, but it was great in terms of growing a new business. Paul: You were there and then you left. You went west. Talk about that. You went to search for, not to a portal. Talk about that. Harry: It's interesting. In my exit interview with Ted, Ted was asking explain this to me. What is this search? How does it really work? At the time that I left, even little InfoSeek in their news section, because they had news already but not extensive, was doing a significant amount of pages, like maybe half of CNN. Paul: So Infoseek's news was already half the size of CNN's? Harry: It was substantial. It was enough that when I said that to Ted he was like, "Whoa, seriously." Martin: Just for the sake of the listeners, why don't you talk about what InfoSeek is because it no longer exists? Paul: And the year. Harry: The year I left was '97. InfoSeek was one of four search engines that raced out to go public. It was really Yahoo was the clear leader, the clear brand name guy, and then there was Excite, which was KP, Lycos, which was based in Boston, and InfoSeek. InfoSeek was founded by Steve Kirsch and six other guys. InfoSeek had a good search engine and search technology that the guys developed. They had hired a guy named Robin Johnson who came from Time Inc. He built the company. It was a little over 150 people when I came. InfoSeek was under complete chaos when I got there. Martin: What was your role? Harry: I got hired as president. My first day I became the CEO because Steve and Robin were having a proxy battle because Steve thought Robin was the wrong guy. Robin wanted to reposition InfoSeek to a business search engine and he, not telling Steve, hired a bunch of people, bought a little company on the east coast away from Steve, and was going to do that. Steve freaked out and said I don't want this to happen. They had been interviewing me anyway to work for Robin. The first day I got there I went to a board meeting with Robin. They excused Robin, said hey, we're firing Robin today. Harry, go fire Robin. You're the CEO. That was my introduction. CFO quit, head of sales quit within a week. I had to do a restart. The good news was people were flocking to the Internet at that point in time and they wanted search engines. They needed a place to find content. That's how we got to InfoSeek. Martin: Talk about how it developed, because they didn't start to be content creators. I don't think any of them did. They were organizers and guides to the web. That's certainly where Yahoo started, but they morphed into what we call portals and content destinations. Talk about that. Then, obviously, that gave way peer search to Google in a very different model. Harry: Yeah. Yahoo had a directory, no search. Alta Vista did Yahoo's search I recall initially. Then it was replaced by Google. That's how Google got their start. Info Seek was the first paid search partner for Netscape. Martin: You paid Netscape to be... Harry: We paid Netscape. Ned Barksdale and company were really smart, well, sort of smart and stupid at the same time. They were smart in terms of they figured out a way to monetize the traffic that was coming to their browser. They mastered it in term of...we started. That's how we got our initial market share. Then they rotated everybody else. They basically auctioned it off at the most competitive auction possible. Our traffic was probably more dependent on Netscape than any other surf portal. One of my big mandates was to find other ways to get loyal customers outside of this expensive Netscape opportunity. The mistake that I think Netscape made is they could have started their own search engine. They had smart technical people. They could have hired a couple of people in the search business. They could have been the Google today. But they were so focused on other opportunities more enterprise software opportunities, because I think that's what Barksdale understood. It was started out search, mostly for the search engine companies. The portal concept wasn't new. Pathfinder embedded that in everybody's mind, but it probably didn't have the support infrastructure and... Martin: Engineering keeps coming up as the key missing ingredient. Is that true, do you think? Harry: I wasn't at Pathfinder... Martin: Whether it's Pathfinder or CNN, one of the themes that we continue to hear over and over again is that the Valley culture really puts most of its emphasis on engineering and engineering innovation. The media culture is more defensive. They're content guys, and that's a huge difference. Harry: I think that's right. I think CNN suffered a little less from that because we had Monty, Scott, and...Help me again. Paul: Sam. Harry: And Sam. Paul: It was an unusual situation that helped, but it wasn't still at the level... Martin: Ted Turner wasn't. Harry: It wasn't the level of... Paul: But you had a few computer scientists, which was different than all the print guys, basically. Harry: We did. At least, on the news side, we didn't feel like we were always a year behind. At Infoseek, the founder was Steve Kirsch. He was an MIT engineer. He had done several startups, and he had a whole cadre of engineers who followed him around company to company. He got it. We could keep up, although it still felt pretty tough. Paul: The portal idea had started a little earlier. The search engines were basically trying to become portals, and that didn't really work in the end. Harry: What was interesting, we launched portals like everybody else did. I had Beth Haggerty, who came from the East Coast media world, and it was like back in CNN days of selling opportunity. I got experimentation dollars again. I got big branding dollars to go into channels. We made a lot of money, way more than probably could be justified by the actual customer interaction with the brand, by launching portals. It was successful, we got a lot of traffic into the portals. When I got to Infoseek, it was interesting. There was a guy, Peter, and I can't remember his last name. He got hired away from us by Ridder Newspapers because he wanted to start doing the individual tracking and database mining around customers and around advertising, really what we see as par for the course today. We put a technical team on it and we spent a lot of money on it. It was just too early. The technology didn't work. We couldn't get the payback. It was too complicated to sell. It was just a little bit early. We bailed on it. We probably shouldn't have. It was a mistake that I made. Paul: You then merged with content businesses, as I recall. What was that about and what happened? Harry: Every time you ask me a question, I have to tell people stories. Here's another one. I knew Mike Slade because... Paul: He was ex Microsoft. Harry: He was ex Microsoft. Because Microsoft came to CNN. I want to jump back to CNN for a second... Paul: This is very important because it brings in the MSNBC story. Harry: They tried to do a CNN Microsoft deal before the MSNBC deal. I don't know who they spoke to first. They were probably negotiating both of us against each other. Nathan Mervold came. We all sat in a big conference room. A lot of meetings. They wanted half of CNN in perpetuity digitally. A lot of people talked about it and they were going to throw a lot of money at it to create it and Ted said no. At the end of the day, he was not going to give away half of CNN for any amount of money. He knew the intrinsic value of the CNN brand and so he said no. That's how I got exposed, extensively, to the Microsoft team. When I got to Infoseek, Mike Slade had done a deal for Starway, which was running ESPN with Disney. Paul: So it was a digital content company based in Seattle. Harry: Mike Slade's business was a digital content company that did multiple, different brands, including running ESPN with his joint venture with Disney, because Disney was trying to leverage their way into the digital space, just like TimeWarner was. Mike brokered a meeting with the three, Mike and me and Jake Weinblum. That's how I got introduced to the Disney guys. It happened probably within a month or two of me starting at Infoseek. Then we started having some conversations. Not much happened. But the media companies were talking to... Martin: And Disney acquired Infoseek when? What year? Harry: It was in two pieces. Forty three percent in 1999 and closed the deal in January 2000, something like that. Martin: Wow, just got out in time. Paul: When did you leave? Harry: I left a couple of months after closing the acquisition. Paul: That's about the best timing we've stumbled upon here. Harry: Yes. Martin: Steve's was pretty good, too, with TimeWarner. But you're right. Paul: Steve Case's was pretty good, too. But if there was a time in the saddle versus getting out at the right time, Harry's... Harry: I am thankful to God that this was just the perfect timing. When you're in a bubble, the optics are incredibly important. So a CEO selling shares in a bubble company is not a good idea. So I didn't sell a single share until I left the company because it would be disclosable and hurt the company. I didn't want to hurt the company. Once I left, I started selling. Immediately I said I need to divest. The bubble didn't pop overnight. It was over three or four months. Martin: It leaked first. Harry: It leaked, so I sold during that leaking period. I was very thankful for the time. Paul: Let's just conclude by asking you about a couple of themes that have emerged for us. We touched on the one about the engineers and the challenge for traditional companies. Even CNN which had some true engineers by default even before you started online and Knight Ridder out here that did some early projects, but they never had many. They couldn't hire a lot, and they would never put them in charge. That seemed to be one of the themes that just made it, in the end, impossible to compete with the tech driven companies that took over the Internet. Does that make sense to you? Harry: I'm a little torn. There's a guy that I hired, Miguel Garcia, who... Paul: At CNN? Harry: At CCN in Atlanta. He was a talented engineer. He brought in a good team. He worked with Scott and Sam and Ronnie. He built our content production system. There were smart engineers in Atlanta. I think you probably could have launched a good news company, maybe not a search engine which is even more intensive around the algorithms. I want to believe it could have been done. Paul: But not inside CNN. Maybe in Atlanta, but not inside CNN. Or do you think there was a way to go all in? Harry: This is the optimist in me. I think it could have been done all in in Atlanta if it weren't for the traditionalists who were there that made it a little bit more difficult. CNN was successful when I left. I didn't leave because cnn.com was going down. I left because Infoseek gave me a million options. It was a hard deal to turn down, A. And B, once it got successful, it was intensely political. I spent almost half my time negotiating internally for resources or fighting power battles, be it with Lou Dobbs at CNN FM or in CNN SI/CNN Sports. It was just too much, with everybody reaching in for a piece of this now politically attractive pie. Paul: Our experience at Time Warner was very similar, maybe with a zero added... [laughter] Paul: ...in complexity, whereas the tech companies were new. Harry: They didn't have the overhead of all the people grabbing for space. Paul: That was a big piece of it. Harry: Yes. I think that was as big as the engineering, or maybe, my guess, bigger. Martin: That's why a lot of the newspapers built totally separate operations. In fact, Ridder described the process of taking his operation, although it never happened, public. They were completely trying to separate them for that reason. It just never happened for lots of reasons. Harry: I experienced the same political dynamics with the Walt Disney company, too. I spent basically two years interacting in some capacity with Walt Disney. I had to give Michael Eisner a lot of credit, too. He got it at that point that this was really important. But that was still hard, in as big an organization as that is, to keep all the different powers out of it. Jake did a great job trying to compartmentalize things, too, but it's just really difficult. Paul: Let me ask you that last question, and go back to that boy you described, who was so influenced by his father. Even though you started in accounting, you loved news and you went that way. You've seen this arc play out, and clearly a lot of organizations, not CNN, but a lot of news organizations are in pretty deep trouble today trying to figure out how they'll keep doing what they're doing. You've been an observer. How do you look at news now, and do you feel better served, less well served? I know you, you're right, you are an optimist, but are you optimistic about where it's going or pessimistic? Harry: I'm totally optimistic. I think we always look back in history sort of with "oh, it was so great then." I can get almost any news story I want about any content type at my fingertips at any time. I think the biggest fall back is that I read shorter stories. My attention span has shrunk probably, although I'm doing a doctoral program and read all the time and in depth stuff. I love the capacity of being able to find out what I want to know when I want to know it. I think that's incredibly powerful. I think the digital revolution has brought that to us. I think people are story tellers, people are curious. News will always happen. People will always want to tell what's going on with other people. I have seen the pain of a lot of journalists being laid off in the newspapers and transitions are always very difficult for certain people at certain places, and my heart goes out to them. I don't know how to stop or change that. I tell me kids, "Get on the new thing, not the old thing." [laughs] ...
VIDEO: YES

Matt Mullenweg
BIO: YES: Matthew Charles "Matt" Mullenweg (born January 11,...
TRANSCRIPT: Martin Nisenholtz: We're rolling with Matt Mullenweg, in San Francisco. On, I want to say today is eight, the eighth of April, 2013, Martin Nisenholtz. Matt: Hi. Martin: Nice to see you after all this time. Matt: It has been a few years, hasn't it? Martin: A couple years, at least a couple. You look the same. Matt: [laughs] Martin: That's a good thing. Working... Matt: Hair's a little longer. Martin: A little bit, maybe not. Beard's a little shorter maybe. [laughs] Matt: That's true. Martin: Anyway, let's start, just because, how did you come to publishing? I mean, I know your history, for the sake of the interview, just talk about how you came to publishing, and why you decided to do what you did? Matt: Sure, I probably found the first blogs I read were economics blogs. One of the early ones I remember was Brad DeLong. It was just in a subject area I was interested in, and folks were writing about it every single day. Like fairly esoteric things. There was no news website on macroeconomics, but there were some professors that would blog about, pretty much, daily. Tyleco, those were my first blogs, and then I discovered... Martin: What year was that have been? Matt: This probably would have been 2000. Martin: OK. Matt: Blogs were already a thing. Blogger started, David Winer had had all of his things, you should talk to him. Martin: I've talked to him. Matt: Then I discovered the cool blogs, Anil Dash, Kos, some of the guys who are still going today, Daring Fireball, and that made me feel like I could blog and so I started blogging. I used Movable Type. I'd done some CMSs for publishing news before, like organizations have their news, there's a meeting next week, we're going to have this speaker next month or something like that. But never personal blogging. That's what brought me to publishing. Martin: Mm hmm. Just to be clear, you were a freshman at that time. Matt: This was still in high school. Martin: OK. What brought you to WordPress? I mean, how did that happen? Matt: Sure, so Movable Type, I wasn't crazy about the software, so I switched to something called b2. b2 was open source. I started hacking on it, contributing some code, which was a great way to learn how to code, because I didn't really know. b2 sort of was abandoned as an open source project. Myself and a fellow over in the UK, Mike Little, picked it up and continued it, and that became WordPress. Martin: I see. OK. What year was that? Matt: That would have been 2003. Martin: OK, and then you landed at CNET? Matt: Yeah. That was about two years later. I had come out to San Francisco to visit a friend, Tantek Celik, who worked on the Microsoft Internet Explorer team. But he was very well connected on the web. I had met a lot of these folks at SXSW, which at the time was much smaller. I feel like 5 or 600 people in the tech part, and so you could kind of meet everyone there. It was like, still like it is today, like San Francisco went to Austin. Being in Texas, I was amazed, all these Internet luminaries were going to be in my state. I visit Tantek , and I spent a week here. It was a lot of fun. I went to Google, I met the Blogger team with Google, actually, because they had already been acquired at this point. I visited Yahoo, I visited a ton of different companies. One of them was CNET. They had said, they just wanted me to come in and talk about RSS, which was a big thing at the time. I guess they were figuring out, and they were already using WordPress for Download.com, and a few other properties. When I went back to Houston, they, a couple of those companies got in touch, saying, would you be interested in a job, and CNET was the most interesting. Martin: Why? Matt: Because they were a media company, not a technology company, and so from an intellectual property point of view, they weren't trying... You work at a Google, you sign something that says everything I create while I'm here or at home or whatever belongs to you guys. CNET did a carve out that let me retain the IP personally to any open source code I did, which I thought was really cool, and they also carved out 15 percent of my time, I could just spend hacking on WordPress. Martin: What were you doing for CNET? Matt: It was kind of odd. I was in a strange group. I worked on Help.com and helped relaunch that. They had some educational stuff they ran through CNET.com and News.com. I just ended up doing some random...I was like a product manager, but I was also the only engineer on that team. So, I ended up coding and managing product and helping them out. Martin: One of the things that has been a persistent theme for us is that media companies just don't get engineering. Was that true at CNET? Did you find that you were alone there? Matt: I did feel relatively alone, partially because of a technological point of view. There wasn't that much going on. Most of CNET's platform was a Java based thing. Obviously, CNET has a huge history in publishing. Vignette spun out of them in the early days. They're really probably one of the first Internet publishers that scaled. Martin: Yeah, they probably were the first Internet publishers. We haven't talked to Halsey, but... Matt: It would be good. Halsey or Shelby. Martin: Yeah, Shelby. Matt: They deeply understood it, which was fantastic. Shelby and there was this guy there Mike Tatum, who were the guys who brought me in, essentially. But, all that stuff was in Java, and I was PHP. The only thing that was PHP at the company was GameSpot, which was very different from, they called the "Red ball properties," that I was in. News.com, CNET.com, Download.com. The had the red CNET ball logo. It's kind of weird how these things inside companies are demarcated. I was the only engineer, and then IT was a little bit of a pain. I wanted a Linux server that I could hack around on. It was easier for me to actually order a second desktop and then configure it as a Linux server, under my desk, and then just point people to that IP address than it was to get something officially going with IT. Of course, IT is notorious at many organizations. Martin: At that point in history, as I recall, blogging is relatively new. It's not brand new, but it's relatively new, and there is a real distinction between publishing articles on the Web and publishing a blog on the Web. That era was... [doorbell] Matt: I'm sorry. Can we pause for a sec? Martin: Sure, we can. [door opening] Martin: Om, how are you? Om: I'm good, Martin. Martin: That's OK. How are you? Good to see you. Matt: You want to help yourself to coffee or something? Martin: Let's just continue. Om Malik has just walked in the door and... Matt: It's a small world. Martin: [laughs] It's a small world, right. We're going to do a little interview with him in a minute. These two things are quite separate. Did you view them as separate? Did you view them as two different worlds, the world of articles and the world of blogging? And if so, what was your thought about what the differences were? Matt: I feel like blogging was in a teenage phase. There was a lot of crisis of self identity. I personally hated the word "blog." I called it either a "weblog" or a "journal." All my sites were called journals. Some folks were trying to define blogging as strong point of view, single author, comments were very, very important, by a lot of people. Yeah, I did see it as something different. But then, very early on, you started to have these blogs, essentially group blogs, for something less popular, even from their early days, which looked a little bit more like a traditional media organization, more than a single author opinion. Martin: Like Boing Boing. Matt: Boing Boing was an early one that was very popular. One of the economics ones I followed, which was called "Marginal Revolution," which is actually still going today. What else? That's all I can think of, off the top of my head. Martin: The world of blogging begins to develop now, and you leave CNET? Matt: Yeah. I was at CNET for about a year. I was a big believer in personal publishing, and I wanted to do something where anyone could start a WordPress.com blog on CNET. They had all these cool online domains like online.com and computer.com. I figured we could use one of these like online.com and say let's have martin.online.com and then everyone could have one. It could be your own sort of voice on the web. Martin: Dave Winer came to the Times with the same idea in the early part of this first part of the decade, around 2001 or 2002. Matt: How nice. Martin: It was just very hard to get that done at that point. Matt: It was hard to get it done now. Slate had done something, right? Martin: I don't remember. We talked to Michael Kinsley. Matt: Salon, maybe. I think it was Salon. Salon had done one of those, using Dave's software, I believe. They just weren't buying it because, at the time, they were locked in a Titanic struggle where their premier properties like CNET and news.com doing tech news were in battle with like Engadget and a Gizmodo and not winning, which was almost inconceivable that four guys with lame software, no journalism degrees, whatever, were beating these very large organizations. Martin: How come that was happening, do you think? It's interesting because CNET's not a traditional news organization like the Washington Post. It's a native web operation so you would think they would be a little more nimble. Matt: I guess they still took that approach to publishing that was much slower. I'll give you two examples. One, the idea that one person would write the article and email it to someone else who would format it who would then go to someone else that would add the photos. There were five or six people involved in it. Obviously with a blog you just do it all yourself and press publish. I recall a meeting I was in at CNET. Some people there really got it. Very, very impressive in terms of what was going on. The thing about when I was there, David Carpenter was there around the same time. A lot of early web folks were there. There's this meeting and they were taking their publishing system at the time that was called Comment or Ajax or something like that and then they had a screen of WordPress on it. I said alright, here's a finished thing ready to publish. We'll set a timer and let's publish one live to the web on both and started the timer. Of course, on WordPress it took 15 seconds. I copy and pasted the article, pressed publish, and it's live instantly. In their system, and this was probably the most uncomfortable meeting I've ever been in my life, it was maybe 15 or 20 minutes. It had to rebuild things. It was excruciating and all these engineers with gray beards were just staring at me, glaring at me really angry. I guess the point they were trying to make is that our system needs to be as fast as this little, dinky thing some kid wrote from Houston. I think that was part of it. Speed was important. Tone was very clinical I felt like. It wasn't really personal there. It was more like an objective point of view approach to writing versus more opinionated, fun, no curse words, those sorts of things. A little less relatable to people, I think. Slower in both of those ways, both at a technical level and at a speed of adapting to what an audience wanted. Oh, and comments were terrible. They had one of these weird BBS system sort of things. Martin: You think comments are important in his direct world? Matt: I think still comments are really important. With WordPress, you just put in your name and your email and you commented where there you had to register and put in your demographic information so they could market to you and all this sort of lame stuff. Conversations there ended up being jilted and not very good. Martin: Clearly, one of the other themes that is really present throughout this whole series of interviews is that there's this sense that, on the one hand, a world in which journalists can directly publish to their audiences is emerging, but, on the other, there's a concern that this whole series of intermediary processes meant to make sure that whatever people are publishing has a reasonable chance of being true is being costed out of the equation. How do you react to that as the guy, or one of the guys, who basically created the software around this more direct world? How do you feel about that? Matt: I feel, on a whole, blogs are probably more accurate particularly in the long term. When I publish a blog post it's not edited beforehand, it's not fact checked beforehand, but it's my words, my name's on it, I feel personally attached to it, and if there's anything wrong in it I get a comment within five minutes telling me about it. That was the beauty of blogs and that conversation would be transparent under the blog post. I feel like bias was clearer, understood, and that the conversation that could happen so easily after the blog meant that the truth came out, even if there was a mistake, an honest mistake. Even if there was a dishonest mistake people would blog about it and link to it. You could have these conversations. One of the things I thought was really powerful at the time was Technorati. You could put in any URL into Technorati and it would show you everyone linking to that URL. It was pretty much real time. Blog posts became a single post, even if they didn't have comments like a CNET article could become the center of a conversation happening on dozens of blogs and you could find all of those really easily like there's this article about X. Let me see every blog that's about that. The blog post, of course, were more interesting and longer than comments because it's someone on their own website or banner writing things. I liked it. I still believe in it today. Have there ever been mistakes in the New York Times? Of course. Newspapers have sections dedicated to correcting things. Books. Everything. Everything will always have a mistake so if you accept human fallibility you don't try to optimize for never making mistakes, you try to optimize for correcting the mistakes as quickly as possible. Martin: Yeah. We were talking just before we went on the interview about alternatives to a more traditional journalistic process, this notion that Wikipedia has largely replaced Britannica with something that's quite miraculous. It has its faults, obviously, but it's also amazing. Was it ever in your mind that blogging would be that kind of thing to traditional journalism? Do you see them as completely separate worlds? Matt: I think there is always a space for both. Whenever there's a new form of media we always think it's going to replace the old thing and it never does. We still have radio, however long after TV was introduced. Different forms of media are important. I did always feel, and I still do. There's an incredible power to, for example, on the Internet, I might click away from anyone just like the Washington Post or the New York Times is. As a source, as the original source of information for any number of stories, I can put my own words out there. That's amazing, as well. It's kind of that realization I think anyone goes through, that you read the paper. Let's say you read it every day for five years, and you assume that it's reasonably accurate. Then there's an article about you or about something that you know a ton about written, and you're reading it, you're like, wow, this is totally wrong. Then you're like, well, is it just this article that's wrong? Or is maybe everything I've ever read has that sort of degree of, kind of? It's never, like, straight out lie, but a little off, right? That filter, I think, is just something now that you apply to everything. You start to want to thirst, I think, a little bit more for those original sources. Martin: Yeah, that's interesting. You've now left CNET and started WordPress. Just talk briefly about the WordPress experience and the development of it. Matt: Well, WordPress had already started, but I started the company Automattic. Martin: Right, sorry. Matt: That's OK. CNET was supportive, in fact, both Shelby and CNET put in, I think, 25K each to the first round, which was fantastic. They were supportive of it, but clear that they didn't want to do this blogging thing, because they felt like it was on the decline. Our competitors at the time were all the Internet giants, Microsoft, Google, AOL, Yahoo, all with blogging platforms, and this company called Six Apart, which was pretty dominant at the time. Martin: They (Six Apart) were pay, right? That's what kind of doomed them? Matt: Yeah, they had some business missteps essentially. That, I think, feel like rubbed the community the wrong way, which kind of was the tipping point for WordPress in a lot of ways because we were there, an open source, and ready. I think, at the time, it was one of these waves where people started thinking about who owned their software, and their content, and everything like that. And of course open source is the most free thing you can possibly use because all the way down to every line of code writing on your site you can control. People were actually worrying about that, so being an open source solution alternative was really powerful. We did two things at first. The first I worked on was called Akismet. It was actually the first product we launched, and that was because spam had become a really bad problem because the openness that enabled conversation on blogs was also just a goldmine for spammers. Both spamming bloggers, and then also exploiting Google's algorithms that looked at the number of links you had. So they found, "Oh, I can leave a comment on 10,000 blogs, get 10,000 links. Google now thinks I'm hot stuff," and when I search for rag right now the spammer comes up. Huge problem, and it was actually, I'd say, one of our big competitive advantages, was this anti spam system called Akismet. And then a few months after that WordPress.com, which was the idea that you could just start a blog in a couple of seconds for free, and it was run on WordPress. Martin: Now, A bunch of other things followed. A bunch of other companies have since followed WordPress, Tumbler, Twitter, so called microblogging services. Do you view them all as one big complement to each other? How do you view...? Matt: No, some are certainly replacement goods, and for certain people. Some might Twitter instead of blog. But, by and large, the rise of social networks in, call it 2007 to 2012, that incredible rise has benefited blogging hugely. Where a lot of people worried that, say, Facebook, or even MySpace in it's day, would replace blogging, it turns out that people still wanted their own sites, and wanted their own home on the web that wasn't just a generic profile on one of these services that are driven largely by advertising. So they provide distribution. Even Tumblr today. Twitter, Facebook. I do a blog post, it automatically goes out to each of those, and people who might follow me on each of these services get my stuff and they click through and come to my site. And so, in aggregate blog traffic is higher than ever, which makes more people want to publish and write. I think that's actually really cool. When you think about it each of these services is kind of just a version of a reader. It's a version of the front page of a paper, and each has its own sort of take on it, but mine oriented itself more towards photos, or more towards headlines essentially, which you could call Twitter, or towards more social actions like Facebook, but they all sort of have a reader. That was actually something interesting that news.com I'd seen it have early on, was they attempted a RSS reader that I though was pretty smart. In fact, RSS readers at the time were kind of the hot thing. You had Blog Lines, News Gator, Feed Demon. I mean these were kind of, and I would say still, among a very small passionate minority, what drove the all the cycles, and readers are kind of what these social networks are too, or what they evolved into. Martin: So what does blogging evolve into in your mind? You don't have to talk about...I'm not asking you about the next ten years, but like what happens next for WordPress and how do you think it affects, you know, the world of news and journalism? Matt: It's kind of funny. Exactly what I just said, we're working up to. So after 10 years of being just about writing, WordPress is now incorporating a reader as well, and the thing we've seen is that, that really...because blogging, certainly for me, has always been kind of about a conversation. Even when I start a post from scratch, it's often in response to something that I experienced or read or came across, which is kind of a beautiful concept. It's kind of like a cross domain conversation constantly happening, where something you write inspires something I write, which then inspires 10 other people and it kind of comes in a loop. By having that reader integrated, we find people blog a lot more, which is fun. And then, for us, it's really about...The one thing that hasn't changed in our entire history we'll be 10 year old in May. I know, nothing to other organizations, but it feels like a long time. A third of my life. Control. The people want control and flexibility just as much as they did five or 10 years ago. The idea that there's been many of these services that, because they provide distribution, get people to trade off some of that, certainly in the short term, but long term, if you are serious about publishing, you want your own domain on the web. You want a home. That's kind of beautiful because I think that the independent web, for lack of a better term, is cyclical, just like everything else. Probably one of the negatives before my time was when you drive by billboards and they'd show AOL keywords. Now you drive by keyboards and they show Twitter hashtags. Hashtags are actually kind of distributive but Twitter handles are not, obviously. I think we're at another one of those points I think we've actually passed it where people, because of the technical and social convenience of these centralized networks, flock to them. They've shown huge growth. And now people are starting to come out the other end and say, "Wait. I just spent four years of my life on this thing. What do I actually have?" Or they changed the terms of service, or they went away, or the company decided to go in a different direction and I'm not important to them anymore. They want to have their own thing again. That's always been our wheelhouse. That's exciting for me to see the independent web is coming back. ...
VIDEO: YES

Nicholas Negroponte
BIO: YES: Nicholas Negroponte (born December 1, 1943) is a G...
TRANSCRIPT: Paul: So it is April 11, 2013. Paul Sagan and John Huey, we're on the campus of MIT at the Media Lab in Cambridge with Nicholas Negroponte. Welcome. Nicholas: Thank you. Paul: So one of the questions we've started with is, "What was your first time when you saw or had a glimpse into what digital technology was going to do to the media business or even the news business?" Nicholas: I came to MIT in 1961, so I was here when Norbert Weiner was still alive. Actually, he died that year. Then I was doing my thesis work in areas that had to do with computers. As far back as '65 I was using computers every day. We had just invented time sharing, so people could go up to terminals and type things in. You could search databases. The first time it was news centric, that I could actually go and look up news stories, was in the days of teletext and videotex. Maybe Lexis had already started, Lexis and Nexis, so that puts it early 70s. Paul: '70s into the '80s. Nicholas: That puts it in the early '70s. The '80s, a lot had already happened, but it was the early mid '70s. Paul: That's pre the web, pre dial up, pre proprietary services. Nicholas: Well, it wasn't pre dial up, but it was pre domain names, because a student of mine designed and built the Domain Name Server. I was using what is today called the Internet back in '70, '69 '70. But it was really Multix that was loosely connected with three other computers, and Russell Newman, who's a neighbor, had contracted a man named Licklider. JCR Licklider was very much a mentor and somebody I had worked with. Lick had written a book in, I believe it's '65, called "The Future of Libraries." While libraries isn't news, necessarily, it was the online nature of it and searching, and news feeds would very quickly be available online. It really for me started to happen in the early '70s, to see it emerge. Paul: This is still pre a consumer experience and really pre a B2B experience, even. It was pretty much academically centered. Nicholas: Well, as you know, the Internet or ARPANET, as it was called, and DARPANET as it was called after that, wasn't available to companies until the mid '80s. In fact, it was I think '87. It wasn't legal for companies to use it. The reason I know that is that when we opened our doors for business at the Media Lab, which was October 1985, we were fronting for companies to have email addresses, because we, as an academics institution, could have email addresses on the Internet, and companies who funded us could have them. In other words, it wasn't quite laundering, but it allowed companies to have Internet access. We started in that year, I believe, in '87, something called "News and the Future," which for us was the Media Lab's first real step into the newsroom and news gathering organizations. Paul: Why did you do that? What did you see? Nicholas: We did that because we saw the nature of news changing very quickly. We had something called "Television of Tomorrow" that predates it by about two or three years, but that was really the technology about high definition and delivering television over telephone lines. It was very tech oriented. The news in the future, we thought, would be more content oriented. In the case of news in the future, we basically went to media companies and said, "You better hedge against the future and fund us." I believe that at our peak we must have had 50 or 60. Paul: I remember some of them. Nicholas: You would be hard pressed to tell me one that wasn't, in other words, everybody. Time and Warner were separate still at the time. John: Warner had QUBE and Time had (Time) Teletext. Times Mirror had Gateway. All of those people were... Nicholas: Every single one of those companies was a member of "News in the Future." The only one that was a hold out that I don't think ever was part of it was "The New York Times." Am I correct? I think it might have been the only one. Paul: We'll ask Martin. Nicholas: You should check. I think so. John: Do you know why? Nicholas: I remember in 1981 82 going down to "The New York Times" with Jerry Weisner to see...who was the CEO? John: Russ Lewis? Nicholas: No, his wife, might have been former wife, was a reporter in Paris for the Herald Tribune. Paul: Madison? John: Sydney Gruson. Nicholas: Sydney Gruson and Jerry Weisner have this story they're chatting away about. Then Sydney Gruson looks at me and says, "Young man, what is the future of newspapers?" I said, "Sir, it's to wrap dead fish." Jerry Weisner never forgave me for that comment. As we walked out of the building he said, "How could you say that?" When we did our first electronic newspaper here at the media lab, that was really the first web application. I don't think there had been, really, a previous application, they named it Fish Wrap, sort of in honor of that remark. That goes back to the early '80s. Paul: There's no web threat yet. This is very early. These companies are all here. They understand there's a future that's changing somehow. You've shown them some of it, yet it didn't work out so well. Nicholas: It depends on the companies. Some tried. The Newhouse people, particular Steve... Paul: Who we spoke to. John: He mentioned that he came here and this is where he got this. Nicholas: I think most of the people will tell you that. A lot of them came here. John: Could you step back just for one second and talk for just a minute or so about the founding of the MIT Media Lab, what it was intended to do, and why it was thusly named? Nicholas: Sure. Actually, that's a pretty good topic, and thank you for asking. A couple of things are a bit circumstantial. One is that Jerry Weisner was president. I don't know if either of you ever had the privilege of knowing him. He was very interested in the arts and in science. His office as president was on the same floor, and if you followed the corridor, it went through my lab to the elevator that he took down to the ground floor where his chauffeur, he was the last president to have a chauffer, Mr. Tibbs, parked his car. John: So this is a location, location, location. Nicholas: This is a location story. Jerry would walk with his lunch guests to the car through our lab. Who visits the president of MIT? People you would love to have walk through your lab. Our lab was very photogenic. We were doing a lot of display work, floor to ceiling displays, touch sensitive displays, electronic publishing on screens with images and video all mixed, which back then in the late '70s was very astonishing. In fact, when we would show somebody an image that had text and a photograph, they would be impressed to see the two on one screen, but then when you touched the photograph, and it turned into video, you would hear sucking in noises. People who go, "Huhh." Paul: This was in what year? Nicholas: This was '78. Paul: Wow. Nicholas: People would be astonished at that sort of thing. When you could move your finger across text and it would say the words and stuff like that. It lent itself to a 30 second experience, and then you could continue to the elevator and go to lunch. It was very accessible. It was very, as I said, photogenic. Over that period, from let's say '77 to '80, I got to know Jerry really well. Some would say he was, in fact, like a father figure. One day he confided in me. He said, "I'm going to retire as president, and I'm not going to become chairman." Usually the president becomes chairman and the chairman becomes chairman emeritus, and everybody shifts up. He said, "And I'm not going to because Howard Johnson," who was then the chairman of MIT, was younger than Jerry and doing a wonderful job, and Jerry didn't want to. He said, "I'm going to go back and do research. The problem is that there's no lab that I want to go to." I said, "I have an idea. I'll build you a lab, and it will be at the intersection of art and science." At the time I was the academic head of all of the, let me call them, "extradisciplinary" elements of the School of Architecture and Planning, which included photography, video, computer graphics, graphic design, and then we even had the graduate music program. All of those pieces that were orphans at the institute were academically my charge. When we decided to build the Media Lab, we took those pieces, and others, and put them together in this thing called the Media Lab, which was very much a salon des refusés, people who were not accepted in their departments. When I went, at the time, to the provost and said, "I'd like to include Seymour Papert and Marvin Minsky in the Media Lab," they said, "Bless your heart." [laughter] Nicholas: They were troublemakers, and they weren't necessarily welcome in their home department because they were too edgy, too risky, too outspoken, whatever the right word is. The people who formed the original Media Lab did so in a frictionless fashion, and the statement, the "mission statement," if you want to call it that, was that the inventors and creative users of new media should be in one place. The example of where that didn't happen was in television. Engineers invented it and then threw it over the fence, and people used it. The example of where that did happen is photography. If you think of the history of photography, the people who invented it were the creative users, and when you wanted to do something else, you invented more. My argument, had you been in the room and I was trying to persuade you, in 1985, was that the computers would be the same thing. That the future of computers would be driven by the creative users, not computer scientists. That was the basis for the Media Lab. John: Almost everything you just described hit the retail market again, in terms of both product and rhetoric, in Steve Jobs, 35 years later. The science and art, the touching the screen, but television missed out on it too. Nicholas: When we opened the building, 1985, he was our speaker. I've know Steve very well. Steve, four years before, wrote a $500,000 check to help build the Media Lab, which he could ill afford. He not only was our speaker, but as a side note, our caterer was Martha Stewart, an unknown caterer. [laughter] John: That is new media. Nicholas: I said, "Boy, we've launched careers." [laughter] Paul: High/low. John: We don't want to divert into that, [laughs] although after the tape quits rolling, I'd love to hear more about it. Paul, I'm sorry, but I think we may be [crosstalk] . Nicholas: No, I'm glad you asked. The going to News in the Future was very much on mission, because it was about content and invention simultaneously, and people like Steve Newhouse were leading the pack. A lot of people came to those meetings in a more absorbing and reflective mode and would not go back necessarily and invent things, but it was an era of change. The Web, which was born, and some of the people on the team came right out of the Media Lab. It was born at that time and used here. Tim Berners Lee didn't have a clue what he was doing. Not a clue. When he came and he did stuff here, I remember seeing him at dinner once. He was the dinner speaker. I said, "Tim, you don't know what you've done. It's really very important." I remember having the same conversation in, I want to say 1988, maybe it was 1987, in London, with a group of people who were arguably the inventors of the Internet. Larry Roberts was there, Vint Cerf was there, Bob Kahn was there, Len Klein. It was that group. I remember it was 40 people. I forget why I was leading the discussion. I said, "How many people will be on the Internet in the year 2000?" The numbers were numbers like 30 million, 40 million. One person, I forget who it was, reached to 100 million and I said I think it'll be a billion. People said, "You're joking." Paul: Explains why there weren't enough addresses. Nicholas: It's amazing how nobody guessed the extent of it. Really did not. Paul: Walk us up to that a little bit. The lab launches in '85 so no web, no proprietary dial up services in any scale quite yet, right? This is pre CompuServ taking off or maybe just starting, no Prodigy, no AOL. Nicholas: General Electric had a time sharing system available in the early '70s that people used. Paul: But not most people. Nicholas: No. CompuServe must have been around then, too. Maybe '75. Then there were a few others that came and went. It wasn't very common. You could argue the media missed the web a little bit because we were very much into interactive television and television on demand and bandwidth compression and some of the people who graduated from here won. [inaudible 18:45] went and worked with Tim at CERN at inception and brought with him some of the graphics and stuff he had learned here. We certainly contributed but didn't do as much of the invention until it came time to do the applications and I think it's another case where the creative users became the inventors. Paul: Describe that. Did that happen in the same lab with the same group of people or a different group? Nicholas: The lab is a whole building. The building had groups in it and there was one particular group. Actually, they had multiple names but it was called electronic publishing, actually, in its early day and in the same one there was interactive video, which in '85 was a pretty astonishing name and a pretty astonishing thing to be doing. They co habitated. There was a project called "Advanced Television something" which was similar on the same floor. It happened on one floor in the building that was the media lab. John: When you're presiding over all this, and this was an exciting time, obviously, people were getting their own computers in exponential numbers and you're running the media lab. What was your big extrapolation of where you thought all of this was heading, not just for the news business? Where did you think this was going? Nicholas: I will answer the question of where I think it was going by not only telling you what I think it was but also there's real evidence today that that was the case. I thought it was going straight for lifestyle. This was about life, not computing. What was relatively rarefied, people using computers, whether it was the hobbyists first or scientists and so on, was going to, in fact, be a way of life and was going to change the way we did everything from cooking to living to vacationing to communicating just in general. I said back then, before the book being integral, that computers were about living, whatever. Computer science was about life. I forget what the exact quote is, but now it gets thrown back at me a lot because I see it in tweets and so on because when you have a name like Negroponte you don't get false positives on Google alerts. It's either my older brother or me so I track these things, not so much narcissistically but because they appear on Flipboard or whatever you're looking at. I think that was the key, that it was about the quality of life, lifestyle and the way we'd be doing that and the future. John: So you saw it as the great transformer or the great disruptor? Nicholas: I didn't think too much in terms of disruption because it was destiny. I didn't think of it as a surprise and I think of disruptions as surprises. John: That gets to one of our big questions. Paul: Go ahead. John: We've explored all though talking with everyone this concept. In the news business, there is a prevailing theory or myth or whatever that there was this original sin. That tthe original sin was deciding to give it away rather than to charge for it and that that happened in 1994 with Yahoo and Reuters. There's an alternate theory which is once HTML and the digital file was invented and all news could be put into a digital file, that what followed was inevitable. How different companies or different individuals reacted to it is one thing, but that the trajectory that we were on was inevitable and that where we are is where we're supposed to be and where we would be. Nicholas: I certainly prescribe to the inevitability thesis. I don't believe for a moment that there was a misstep, that if we had not taken it that it would have unfolded differently. Information wanting to be free and all of that theory about it leaking out and having the ability to do so is very true. Even if you buy something, you pay and you follow all of the right economic models, then just the ability to cut and paste and copy and distribute and send and so on is going to create that anyway. Paul: Only in digital. Nicholas: Only in digital, yeah. Paul: If you can take the fish wrap and cut it and have one copy and send it and the ability to do it infinitely it's a game changer. Nicholas: That was the inevitable part. Once it went digital and people's lifestyle was digital. If people didn't have lifestyles that were digital the fact that you can cut it and paste it and ship it around doesn't mean much, either. There had to be these things happening in parallel. It's the inevitability. I think that was clear to people. It was certainly clear to Rupert Murdoch. You look at the people who are doing pretty well in the news areas, even maybe they take losses, they're people who, I think, subscribe to this is going to happen anyway so how do I participate. John: Who else would be put in that category? Nicholas: I would put Jerry (Jerome) Rubin, who died about two years ago, who was at Times Mirror for a while. I certainly put Rupert in it. Some of the people. I think Walter Isaacson certainly falls in that category. It's funny because it's on a sharp line because you find people who I think understood it but their organizations didn't allow them to move. John: If you look back at the history of this thing, some of the companies that would have appeared to understood it earliest and best and invested first were companies like Tribune and Knight Ridder and Jerry Levin at Time Warner. You had all of them, in one way or another, crashed on the rocks for maybe, as you say, more organizational reasons than technological reasons. Paul: One of the things that has emerged is a theme because, arguably, Knight Ridder was early and did lots of experimentation. Nicholas: They did? Paul: Mercury Center built a prototype of a tablet before you could even build a tablet, even created a lifestyle movie to show. John: Which is what you was doing in '78. Paul: There were lots of models. Nicholas: Those were a little late, those video prototypes. Paul: They may have been later but they were still before you could have built one. They were 25 years before the iPad almost and yours were 30. The visions were there. Yet, those companies couldn't survive through that. Was that because of the inevitability of changing the business model, blowing apart the lifestyle experience, the bundle they had no longer met the lifestyle? Do you think it's one or the other or the force of both? Then the third thing that's come up has been not being engineering centric, that the digital piece has been driven so much by companies with lots of engineers and engineers in charge. The media companies, by and large, have few engineers or the few that had some like Knight Ridder, Tribune had some, CNN had some but didn't stay a leader, would never have put the engineers in charge. They still would have kept them over in the corner. You can look at them but don't get too close. Nicholas: Let's look at one of the biggest players in news today is certainly Google. There's not a person in Google on the founding team who thought they were at all related to news and they would effect it. It was not a motivation, it was not a purpose. They didn't think they were going to end up doing that. I think what emerged, because you could do these things globally and instantaneously, is quite extraordinary. The people who were running the news organizations became victims pretty quickly because they weren't as general and as expandable. Yeah, you're right, they were not run by engineering people, but had they been I'm not so sure it would have been different. I don't think back to any one decision where I said, Wow, if Time Inc. or someone had only done this or only done what I said or only listened to someone then it would all be different." There really is this other thing happening that you're not part of. It's trains and airplanes and something else was going on and this other thing was happening anyway. Paul: Our favorite metaphor has been swimmers and tide. You have some pretty good athletes swimming, but the current was so strong it just carried the strong ones and the weak ones out. Nicholas: But it's a little bit like being in the smoke signal business when somebody is inventing the telegraph. They are sort of related but not related and there are actually texts as to why the telegraph was a bad idea and smoke signals were better that had to do with your enemy couldn't cut the line and you could still get the signals across. There were real arguments made for that. John: Wind could be a problem. Nicholas: Yeah, exactly. [laughs] I think there was an unrelated concurrency that changed lots of things. It's not just the news industry. Look at all the things that have changed. [crosstalk] Nicholas: Yeah, retail. Could Wal Mart do something different today? Yes, you could do something different. I just said it to the CEO of Wal Mart, and he didn't think it was particularly interesting, I said, "There are ways of printing meat, literally steaks. If you were to take a lead in this..." They have a large food business. "...you could actually deliver food electronically." He just wasn't interested. He just was not interested. Paul: It doesn't sound appetizing. Nicholas: The disinterest was... [crosstalk] Paul: I get your point completely. John Huey: Wal Mart rode one wave of computerization in that they... Paul: And Amazon. John: ...had the data. They always knew what everything was in. Then Amazon took their model and put it on top of that. Paul: Let's go back to the Google News point for a minute. So they're big in news in terms that many people go there as their first news page or Yahoo would be another place that people might go. Certainly Google has taken the lion's share of advertising which drove a lot of traditional print media before, but they don't produce anything. They don't actually produce the stories. It begs the question, "Who is going to do that, and where do you see that coming from?" Nicholas: Let's tease them apart. We can at least categorize three of them. One is what I'll call the long form. It doesn't have to be investigative, but some kind of in depth treatment of something. That's sort of one question. The kind of news alerts which is kind of the other extreme... Paul: So one is total commodity, and one is about as far as you can be from it. Nicholas: Right. Then there is probably a space in the middle which is the more typical news story. The one that's taking the hit right now is the long form, because that used to be kind of subsidized by the others. Paul: Absolutely. John: That's what I do for a living. Nicholas: Right. It's a really interesting issue, because there are two parts to the long form. We only think of one part, which is the consumption side. The amount of time it takes to cue it and the effort and deliberation and research and reflection and seeing it from as many points of view as possible is really important. That's the part you don't want to ever lose, but it's the one that's at risk. The other stuff I don't care too much about, because I trust that it will exist in some way. The question is, "How do you make sure that happens?" Everybody's answer seems to be by strengthening the business models of the organizations that used to do it so that their business can still...I've started to think a little bit differently about it because there are some examples, and the BBC may be one of them, where some material is created sort of more through the public domain. NPR or WBUR, why listen to any other radio station in greater Boston that BUR? So these are not civic but it's not private enterprise, it's a public resource. Maybe it has some form of advertising or the equivalent, but I'm beginning to look at that much more as a way of not just get alerts in the middle form but some more reflective and long form stuff. Maybe this is going to shift more from the private to the public sector in some way over time. I'm sure people discuss that at your (Shorenstein) Center. John: The philanthropic model, the public model, the non economic but strategically linked model, there are all kinds of new models that already operating with no clear verdict on what will stick and what won't. If you look back on it all, do you have in your mind mileposts along the way that mark eras or epochs or big changes? If you do, great, could you share them with us? If you don't, can you extrapolate from where we are now to what you think the next stage might be? Nicholas: Clearly, the web marked an epic. That's very clear. The presence of Google marked another one. That really changed things. More recently it's a little harder. I'm always interested in what happens in parallel unrelated, so the movement away from film to digital photography. It's arguably unrelated, but, yes, they might be pictures and stories, but boy has that really changed things. It's just like we go back to personal computers in their early days. People tend to forget that, in the United States, we had the breakup of AT&T at the same time. You had other things that happened that changed telecommunications in parallel with personal computing. Another coincidence that people conveniently forget is when Europe deregulated their telephone system, it was exactly when cell phones were invented. It's not that one caused the other, but since they occurred at the same point in history, then the way to create more phone companies and more privatization was, guess what, you can have cell phones. Europe became very advanced with cell phones, and we didn't because we had phone booths on every corner, and you could get phones really easily. Different things happen. I think now the changes that are going to happen, whether it's what's in your pocket or the amount of intelligence in the system, if you extrapolate, it's not going to be that big until we can start getting stuff directly into the body. When you can squirt things into your brain and stuff without having to go through the human sensory system, it's a big change. Maybe you'll put on your little news cap in the morning for 10 seconds and that's it. Paul: After you've printed your bacon. Nicholas: After you've printed your bacon, right, if you have to eat at all. [laughs] There are some pretty big changes that are kind of unrelated to extrapolating the digital world as we know it, wireless or wired. John: So do you think that world has pretty much reached its plateau here? Nicholas: Has it become plastics? Paul: Yeah. Nicholas: Yes, it has. Insofar as when we look back, I think the big changes were either previously leading up to now, because they're really quite extraordinary the things that are happening, so by comparison they'll be small. Sort of we're silicone and biology... John: Yeah. If that's true, that has much more profound implications than what we're talking about here in our little corner of the world. That has big economic implication, because this whole world drove the economy for 30 years or 40 years. I assume it... Nicholas: It's not disappearing. I don't want to suggest that it is. John: No, no, but the explosive growth of that whole new industry really changed our economic trajectory for that whole period. I'm assuming you're now saying that's going to bio... Nicholas: In terms of technical innovation and surprise, I'm constantly impressed by the new apps and the new things. But they're all... John: Lifestyle, that's all lifestyle. Wouldn't you say? Nicholas: Yeah, modest changes in lifestyle. John: It's easier to find your restaurant every day. It's easier to get around, know where the tea is. Paul: But refinements. John: Yeah. Nicholas: I think it's in a stage. It's attenuating in terms of the big changes. John: So what are you personally working on right now? Nicholas: Personally, for the past seven years, I've been working on children and learning in developing countries and in the past two years focused on an experiment, on a rollout. "One Laptop Per Child," everything you see behind me, is a really project. It was about a billion dollars. Most people have no idea of the scale of it. The last couple of years I've done a very small experiment to see if children can learn how to read on their own, because of the 60 million kids who do not go to school, most people don't appreciate that most of them, even it's only 40 million but it's probably closer to 50 million, don't go to school because there isn't one. If there is no school, what do you do? The question is, "What can the kids do on their own? Can kids learn how to read, for example?" It's a very specific question because of the cliché, but a very true one, if you can learn to read, you can read to learn. So there's a cusp. As part of that, we dropped off in two villages in Africa that had no literacy, no adults, no children, no words, no road signs, no printed matter, no television or telephone, nothing. We dropped off as many tablets as there were kids. The tablets were in closed boxes without instructions, with no teachers. Paul Sagan: This was Cynthia? Nicholas: Cynthia and Maryanne Wolfe. John: We met Cynthia. Nicholas: Did you talk to Cynthia about... Paul Sagan: Not for this. John: No, but we've both met her. Paul: She's married to Bobby. Nicholas: I know her husband is your CTO? Paul: Head of networks and engineering, so he runs everything that's technical. Nicholas: At any rate, the experiment has worked sufficiently that, about a month ago, we converted it into the next X Prize. We created a 15 million dollar prize for anybody who could basically do what we did, enough to prove that it was doable. And now, if you could do it at scale were the premises. I've spent my time on that sort of thing, and because of the X prize, I've suddenly become a source instead of a sink. It's nice to be on the other side of the equation. [laughs] That's where I've spent my time. ...
VIDEO: YES

Steve Newhouse
BIO: YES: Steve Newhouse, 56, is a graduate of Yale Universi...
TRANSCRIPT: Martin: ...Steve Newhouse. New York. March 14th, 2013. Let's just start with when did you first realized that electronic media, digital media was going to have a meaningful impact on publishing of any kind. Magazine publishing, newspaper publishing. What was your first time? Steve: I first became aware in the early '90s when there wasn't an Internet yet. It was called "New Media." No one quite knew what that was but everyone was afraid of what it could be and wanted to become more familiar with it. And so, I was editor of the "Jersey Journal" in Jersey City, New Jersey and in the third generation of a family business. Because no one else in the business really cared or wanted to pursue new media, I elected myself. That's how I started learning and experiencing what was then new media. Martin: What was that? Was it AOL? Do you remember? Steve: There was the first of the online networks. It was Compuserve and Prodigy and AOL. Paul: So closed wall garden model. Steve: Walled gardens and...I joined a consortium at MIT, News in the Future, which was a really pioneering effort by Nick Negroponte, who ran the Media Lab, to investigate the changing landscape and remarkably accurate in its focus and prediction. Paul: Do you remember any of them? Can you recall any of that? Steve: I remember sitting with the grad students in the Media Lab and hearing a view of news that was digital, that was interactive, and it was community based. That was very different from the kind of news that I was dealing with in Jersey City. I actually saw the Internet for the first time in the Media Lab. It was before Netscape. It was text based. It looked like the early computer programs where you typed in equations and got an answer. They were actually playing something called NetTrek on what was the Internet, but no one really knew what it would become. Paul: Did you have any inkling at that moment that it could become something else, or did you just look at it as curiosity? Steve: Over time, at the Media Lab, I became convinced that the Internet was the way of the future. We then decided to embrace the Internet as our publishing platform. We never did a deal with CompuServe, or Prodigy, or AOL. At the same time, as I was learning about the digital future at the Media Lab, we had become interested in an unknown magazine called "Wired," which had been founded in Amsterdam by Louis Rossetto and Jane Metcalfe. We made an investment in Wired. Martin: What year was that? Do you remember? Steve: It was early '90s. I'm really bad on dates. Paul: '93 maybe? 92? Steve: I can check it out but... Martin: Negroponte had a relationship in that, too. Steve: Yes, Nick steered us to Wired, and it was a fantastic relationship. On the one hand, I was becoming more educated through the Media Lab, and on the other side, I became the advanced representative to Wired. I would go out there every couple of months and sit with Louis and Jane, and they were really pioneering people. Then we were starting to do our own digital development. We had hired Jim Willse, who was then the President of the "New York Daily News," to become our first new media executive. That was the early '90s. Jim had an office at the Jersey Journal where I worked, and we were basically it, the two of us. Martin: How did that evolve into CondeNet? Steve: In the early '90s, we decided to start Internet sites. It was really based on the first Internet site that ever existed, which was at Wired magazine. It was called "Hotwired." I saw how Wired was starting to develop on the Internet. They were the first publisher to... Paul: Did you say your first application being in the newspaper business or in the magazine business, or did you not say it that way? Steve: Concurrently. I was interested in taking what I was seeing at Wired into both the local and the CondeNet spaces. Jim Willse hired Jeff Jarvis, who was a friend of his, to run our digital operation for that local group. Jeff started planning a site which would become NJ.com. As a sense of how early we were, we were able to sign up URLs like NJ.com, Cleveland.com, Syracuse.com, because no one was doing websites with those names. Now, if I had really been smart, I would have bought a thousand of the best URLs and made hundreds of millions of dollars. But, so be it. We just bought city names. On the national side, we tried to think of how we could apply what we were seeing at Hotwire to magazines, and we decided to start a food site and build a Hotwire like site for food, because we thought looking for recipes would be a good application, which it turned out to be. That's when we started "Epicurious." Paul: I remember that. The editor, what was her name... Steve: It was Joan [Feeney] was the editor. Martin: I was always curious to me because you had these incredibly big food brands, like "Gourmet" and "Bon Appetit," and yet you decided to do a new brand, that was unique at that point, because everybody was just simply taking their old brands and, yeah... Steve: I think we felt that we needed to give the new medium new brands, and experiment with new things. Epicurious was both a site that combined content from the two food magazines, at the time, Gourmet and Bon Appetit, with a searchable recipe database, and all sorts of other enhancements. With the Epicurious brand, we were able to include both Gourmet and Bon Appetit, and also all sorts of other features that made it to the Internet. Most importantly, we believed early on in interactivity, and we allowed our users in Epicurious to comment on recipes, so the recipes became annotated with the comments of people who actually used them, and that became very popular. Paul: Did you see a lesson somewhere else that led you to go a different direction, because it was trying to create a new format and a new medium, not just a blueprint to this online world, which so many did?" Steve: I think that the lesson of "Wired" was instructive, that they really felt Hotwire should be something special and different and not just a digital version of "Wired" magazine. I think that gave us the courage to try something different. John: It was so separate, as I recall, that they actually sold it separately from the magazine. Didn't they sell the website and then sell the magazine? Steve: They had a dedicated staff, yes, which was good at the time, because there were so little dollars in digital that magazine sales staff, which was selling hugely expensive packages. They weren't going to bother with tiny digital buys. Martin: At about that time, a bunch of websites came into being. All of these different media collided. The cable folks, the broadcast folks, newspapers, et cetera. A culture of free evolved. Those of us from the print world were always used to charging for content. There's a subscription price for magazines, as well as for newspapers. Was it a big deal that these sites were being offered for free? Or did you not think very much about that? Steve: At the beginning, no one was building an audience like crazy. Even on a free platform. It was still relatively new. The Internet use hadn't grown to the point where it did. Just getting a critical mass of users was a challenge. If we had charged, at that moment, we might never have built up anything. John: We had an interesting interview this morning, with Gordon Crovitz, who talked about the reason that Dow Jones never gave it away. It was the fact that they had 100 year history of selling an electronic news service, real time news, and they'd always charged for it. It wasn't in their DNA to give anything away. They got a lot of credit for being visionary. But he says, mainly they already were doing that. And changing from the DOW Jones news service to the Internet was not as profound a shift as it was for somebody like The New York Times, who had no wire service 24/7. They just produced a daily newspaper. It was a different culture. Steve: I think The Wall Street Journal's lack of a critical mass in the early days, allowed a site like Market Watch to grow like crazy. Didn't Dow Jones eventually buy MarketWatch for like... Martin: 580. Steve: $580 million, making Larry Kramer rich. John: Culturally, was there a big difference between the newspaper side of your business and the magazine side of your business, vis a vis the Internet? Steve: Culturally, there's a complete difference between the magazine and newspaper worlds. There is, naturally, a different sensibility. The early pioneers of the Internet were willing to try things, and embracing an approach that was different than the print sensibility, especially the interactive elements. That helped make it grow. Martin: Going back to Epicurious. You launch Epicurious and it gets a lot of notice. What did you learn in those early years? What were the key things that you took away from Epicurious, that you then took to some of the... Steve: The most important lesson was that, unlike print, which was very much an us to them paradigm, where really great editors selecting content and presenting it brilliantly could attract a great audience and make a great magazine or newspaper, the web was a very interactive experience. It was important for the readers, the users, to participate in the process. Epicurious didn't just have amazing recipes. It had readers discussing the recipes, improving the recipes, offering solutions. On the local side, the users of our local sites like NJ.com started jumping in and talking about things that were interesting to them. The Giants or the local political races, in different counties in New Jersey. That became really great content and made the site grow. John: Can you remember your evolution of your thinking, from being excited about the Internet as an opportunity, to becoming concerned about any threats it might have to traditional models? The whole innovator's dilemma situation, where you go, "This is a great thing, but we have this other great thing here." How did that evolve in your world? Steve: One of the many areas that we fell down on was, we didn't realize how, in the newspaper side, the pure played classified category killers would have such a profound negative impact on newspapers. Martin: You were part of Career Path, weren't you? Steve: We were not part of that. We were part of some group classified plays. But we didn't sense, early on, how destructive to the newspaper revenue model both free and vertical classified sites would be. As they started taking share away from us, that's when we realized that the Internet was going to be a real challenge, as well as an opportunity. Martin: Craigslist first and then the paid verticals second? Steve: Probably in that order. Martin: Monster. Steve: Yeah. People started searching on the Internet, rather than searching in our newspapers. Martin: There was a paradox, certainly at the Times. I think this was true at The Globe, as well. 2000, which was the height of the dot com boom, was the height of our classified businesses, too. People think it happened in the nineties, but it didn't happen until after that bust and the recession. Because everybody was taking a big sigh of relief. They thought, "The Internet's over." I'm not speaking for you. But a lot of people said, "Hey, the Internet's over. We can go back to printing newspapers and magazines now." The classified business never recovered from that recession. It just went right down after that. Fascinating how the dot com boom fueled the classified business during those years. Paul: And ended a subsidy to the newsroom, or a partial one. Martin: That's where I was going to go next. Speaking of the newsrooms, what do you see as the principle benefit of...How do you think that local journalism will play out on the news side? In other words, is it about the interactivity? Do you view local bloggers as being important? How do you view the emerging kind of relationship of newspapers to local communities coming about? Steve: I think on the news side, much more so than on the revenue side, the Internet has offered some tremendous opportunities. First of all, as the Internet cycle because a 24 hour cycle, it allowed our local news operations to play in the game in a way that we hadn't been able to at a time when television and radio were the only mediums that allowed continual access to the news. When cable introduced 24 hour news channels that really heightened the challenge to newspapers who are only really able to reach customers once a day. But the cycle on the Internet allowed newspapers to play in the up to the minute news game, and we played really well, and our local sites outstripped televisions as the leading sources of local news on the Internet. It also gave our newsroom the chance to participate in different types of mediums, such as video, and that's been a huge opportunity. The multimedia newsroom is a consequence of the Internet and gives us a stronger position locally, a position which we hope over time will result in a very re invigorated local franchise. Martin: I'm going to skip to another topic just because I think it's something that few people even know about, and that's [your investment in] Reddit. [edited] Steve: We've always been interested in community plays and interactive plays, and so when we first met the founders of Reddit, who I think were barely out of the University of Virginia and they were living in Boston. I think all three of them were in a one bedroom apartment. We saw what they were doing, which was allowing a community to decide what news was interesting them and ranking news based on the communities voting and then allowing the community to comment on the stories that were presented. That was right up our alley, and we really saw great value in what they were doing. I think it was in 2007, although my dates are hazy. It could have been a year earlier or later we hit it off with the founders and really within six months did a trial of the Reddit technology in the entertainment area, and it was through CondeNet at the time. We built a site called, "lipstick.com," which used the Reddit voting to rank entertainment, and it was not a huge success, but it was a proof of concept that you could use the Reddit concept in different ways. Within a couple of months after that, we acquired Reddit and really became committed to helping these founders succeed. They had a three year contract, and in the next three years, they helped grow Reddit on the trajectory that today really has put it at the forefront of news on the Web with 40 or 50 million users a month, and just last month in February we had our biggest page view month. We had the first month over four billion page views. Martin: Is there a business model for Reddit? What are your thoughts about how it can be a...? Steve: Certainly Reddit's scope gives it the opportunity to do many different things. I think that it's important at looking at a company like Reddit, which in an incredibly high growth company, not to impose a business model until it evolves organically and until it really also supports the community itself. Facebook had a 20 billion dollar valuation before it saw any revenue at all. It's not foreign to the growth of great companies to grow without a clear business model for a long time. Reddit, we feel will be a tremendous company as well as a great website. It's still finding its way. One thing that we've done over the last year or two is try to set it up more as an independent company that mirrors the great companies like Facebook and Twitter that really have the opportunity to grow organically. We recapitalized the company so that equity could go to the management team. We went out and found a CEO from the technology world, Yishan Wong. Yishan was an early director of engineering at Facebook and had previously been at PayPal, and really knew how to drive a technology team. We think with Yishan's leadership we have a tremendous opportunity with Reddit and it continues to grow dramatically. John: One thing we haven't talked much about is the advent of paid search and the enormous impact of Google on all your industries and they're now approaching 50 percent market share of all advertising dollars spent. How do you see that playing out as we go forward, and looking back on it, could it have been any different, or not? Steve: There have been companies that have dominated various eras of the Internet. First it was AOL, which really was the gateway to the digital world for a long time and became a gigantic company. And then, when the walled garden kind of fell apart, search...Yahoo became a dominant company as a portal to the digital world. And then search... [inaudible] It went from ramp to guide. Steve: Search became almost the gating factor in digital content. I don't know if that was inevitable or if the brilliance of the Google algorithm furthered that, but who knows if it will stay that way, because certainly social media and Facebook has now put a dent in the Google world. John: That's what led me to the question. You're talking about Reddit as wanting it to be like one of the great companies like Facebook or Twitter, and you didn't mention Google as the great company. Is it your Google killer, or your Google defender, or...? Steve: No, I guess I mentioned relatively young companies, whereas Google now has been around long enough to be really more of an established tremendous success. I think aspiring to be like Google or startups that emerged in the Valley and became great companies is certainly what we hope for with Reddit. [edited] Martin: I wanted to go back again to the Epicurious conversation and one of the themes that has been woven throughout these conversations is this idea of separate versus integrated organizations. One of the things that you guys did first was create CondeNet as more or less a separate organization. We created "New York Times Digital." Do you think in retrospect that was a good idea, to break something out and manage it separately, or do you think it would have been better if you had kept everything inside of the core business and managed it from the inside? Steve: I think at the time early in the growth of the digital world, it needed dedicated people who didn't have tremendous responsibility for other mediums, and to have started Epicurious within the Gourmet organization or the Bon Appetit organization. It would have had a hard time getting the attention it deserved, and also the sensibility for building a website or a digital operation was very different from a print organization. It really needed its own team to jumpstart where it needed to go. But later as the leadership of the company as a whole became more attuned to the digital world and as digital became more mainstream and more important, that started to change, and now we have a Wired operation, for example, that is completely integrated and functioning at a very high level. Martin: Is that true across the organization, Steve? Is very every part of the organization integrated at this point? Steve: It is. Everything is integrated. Martin: Is that going well? Steve: I think it took a while to get to a really effective integrated operation, and there were some speed bumps along the way, but it was a learning curve that could be expected and turned out be very positive that, right now, we're really hitting on all cylinders and Wired is just going from strength to strength both as a print magazine and as a website. Martin: So you guys joined with some of the other magazine publishers in this consortium. I think it's called "Next Issue." Can you talk about that a little bit and what you think that will do? Steve: Next Issue media is a digital newsstand for digital editions of magazines, and the digital replica editions have been very popular and are really attractive compelling products. The iPad and the Kindle and other digital devices are tremendous platforms for digital content. They're almost like super high grade paper, because they show photography so beautifully. If you read Vanity Fair on a tablet, it's really remarkable how well it looks. Magazines like the New Yorker have proven to be popular not only on pads but also on smart phones. The smart phone audience reading the New Yorker was a pleasant surprise. A lot of people said, could you really read a long New Yorker article on the subway on a phone? The answer is yes. Martin: Do you think that's really a big part of the future, the idea of electronic distribution on these? Steve: I think it will be an exciting part of the future. Next Issue Media has come up with a really clever offering, which is a kind of cable subscription to whatever magazines you'd like to read for a flat fee. That cuts across all the major magazine publishers. I can choose some of my favorite magazines, Sports Illustrated and Vanity Fair and the New Yorker and each month, or each week, I get an email that the new issue has arrived. I can read my favorite magazine on my iPad. Martin: How much is that? Flat fee, do you remember? Steve: I don't remember the pricing. Martin: The money flows based on usage? Is that how it works? Steve: I don't know the exact details but it's shared among the publishers whose magazines are selected. Paul: You actually jumped to the conclusion, but the march of technology. So if we had barely get online with AOL and it was dial up, which you couldn't do much compelling on the screen. The more interesting the site, the slower and the less appetizing it was. Then we got broadband, which helped, but it was still locked to a desktop. Mobile and tablets and high resolution and broadband have changed it, but it's still not television, but you can see where it will be full motion video and it'll be like TV and another iteration or two. Do you think that creates a whole new business modem environment for publishers? Steve: The one thing that you can guarantee in the digital space is nothing stays the same for very long. There will certainly be new iterations of models and products. No one would've guessed that you would suddenly, in the space of a couple years, be connected to your friends all over the world through a digital site like Facebook. You would be able to see what they were reading and discover interesting news stories because they had posted them on their feed. It was almost incomprehensible until it actually happened. I think there's going to be more opportunity like that and more challenges. Martin: Do you have a view? I noticed two days ago, LinkedIn acquired Pulse. Do you have a view of how copyrights should be or have been managed online? In other words, there's this tug and maybe Reddit's a little bit part of that, but there's this tug between this notion of free links and open web and the idea that much of the values seems to be accruing to the guys that aggregate, not create. Do you have a view of that? Steve: I'm not really a lawyer... Martin: No, I know that. Steve: It's hard to really...I think that in the end, whoever delivers the best product to the audience is the winner. I think the compelling nature of Facebook, for example, has more to do with how it's evolved over time and continues to change and find new value. That's what keeps people engaged. Martin: Let me ask the question in a different way. Rupert Murdoch, he's not been on this lately, but for a very long time, was threatening to pull his links off of Google News because he felt that Google was in essence, exploiting the content, the creative material that he was paying all this money to have created. It doesn't sound to me like you view that as a viable strategy at all. I don't want to put words in your mouth, but that... Steve: For example, Reddit simply gets much of its traffic from linking to stories that appear elsewhere, but the stories that it gets linked to get tremendous audience. Certainly, a lot of the sites that I work with aspire to be linked to and have that traffic driven, so I don't think that would be something that is an unfair exchange of value. Martin: That's the answer. OK, thanks. ...
VIDEO: YES

Martin Nisenholtz
BIO: YES: Martin A. Nisenholtz (born April 1, 1955) is an Am...
TRANSCRIPT: John Huey: It's April 16, 2013. We're at the Shorenstein Center at Harvard's Kennedy School and we're interviewing Martin Nisenholtz, who is not only our colleague on this project but who built and ran the New York Times' digital business for 17 years. Paul: You should say you're John Huey and I'm Paul Sagan. John: Oh. I'm John Huey with Paul Sagan. Martin, we're going to ask you the same question we've asked everyone else. What was your first time? Martin Nisenholtz: Well, that's easy. I was a graduate student at the University of Pennsylvania. I was a PhD student and I was asked to take a year off on a research project. John: What year is this? Martin: 1979. At New York University. The National Science Foundation had funded a division of N.Y.U. to experiment with this new technology called teletext. And, at the same time, they were starting a graduate program in what was called interactive telecommunications at the time. It's now called I.T.P., which is one of the principal graduate programs in new media. Red Burns hired me to participate in the teletext project. And I moved to New York, and I never moved back to Philadelphia to finish my doctorate. John: OK. So you got involved with teletext in this project. Martin: Yeah. John: At that point, did you come into contact with the legacy media business? Someone hired you or you... Martin: No, what happened is the teletext project was being conducted at Broadcast Station WETA in Washington. It was a Public Broadcast (PBS) station. There were several other teletext projects taking place at the time. About 1980, I would say, Time Inc. announced that it was going to do a large teletext project called Time Teletext. Jerry Levin was the sponsor of that project. That caused a bunch of things to happen, including all of Time's agencies, one of whom was Ogilvy & Mather, to begin to get interested in that technology, because Time wanted advertisers for its teletext service, and they went to the agency world to find them. So, in 1982, Ogilvy & Mather hired me as a consultant to begin to think about how to bring advertisers into the world of interactive media, and I joined the agency in March of '83 and founded something called the Interactive Marketing Group, which was the first digital agency, you know, at a large advertising agency company. John: Did it survive? Martin: Yeah, it survived. Not only did it survive, but it became a successful business, and it ultimately merged with Ogilvy & Mather Direct into an entity I believe called OgilvyOne. John: So you started the first digital agency. You're a Ph.D. graduate student. You're working for O&M. What are you seeing at this point? I mean, do you have a vision of what it's going to become and have you thought at all at this time about journalism? Martin: No. The journalism that was taking place were these short form screens of information that were being broadcast in these teletext and videotex projects, so it was a very limited form of interactive media, I mean in comparison with what exists today. I think, in general, the thinking was that, because the PC really hadn't penetrated at all by '81 or '82, the only viable way to get interactive media into the home was by bridging the telephone network and the television set. Those were two ubiquitous technologies in the home, and so that's what teletext and videotex services attempted to do in different ways, and they failed at the end of the day. I can talk about why, but I think the more important point is that the PC, which was invented in the '70s, I think in Xerox PARC... ultimately IBM came out with its PC in 1981, and that technology supplanted the videotex/teletext services so that, by '85 or '86, AOL had started. CompuServe, The Source and other online services were in the background operating as hobbyist services for the nascent PC users. John: So, do you remember your first online experience? Martin: Online, yeah. I mean, obviously, it would have been teletext. John: Well, OK, I should have said online PC experience. Martin: Oh, jeez, yeah, it probably would have been some form of accessing CompuServe is my guess. ASCII... Paul: Which would have been... Martin: Exactly. Text only. ASCII text, you know, screens of information. John: But at this point you're a pretty deep wonk in this world. Martin: Well, there weren't that many people working in this area mainly because nobody was crazy enough. [laughs] It was fairly early. There were a couple of other people. In fact, we interviewed Richard Gingras, who was working in teletext at the same time as I was doing that. So, there are still some people who are around who were working in the area. We talked to Tony Ridder who was the... obviously Jim Batten was the sponsor of Viewtron, but Tony was involved in that as well. Cathy Yates, others. John: So, unlike everyone else that we've interviewed, you have the advantage of having talked to some 40 or more people who have been involved in this. You have a lot of firsthand, primary information of your experience, and you also know what everybody else remembers and what everybody else thinks, so why don't you just start with The New York Times comes along. You end up at The New York Times, and give us about five minutes on what you think happened and why and how, and we'll ask you questions as it goes, but just tell us your story. Martin: OK. Well, as I just said, I came to The New York Times not as a journalist but as somebody who had been working in interactive media for... by that time it was 15 or 16 years. John: What year did you go to the New... Martin: 1995. So, by then, I'd been working in the field for many, many years, and my orienta... Paul: I think it's fair to say the PC had won. The Web was coming along, and the proprietary services you just referred to were already yielding. Martin: Yeah, I'd say they were just beginning to yield. By 1995, I think AOL hadn't even reached its apex yet. Paul: Fair. Martin: Yeah. I mean, AOL was really winning at that point. In fact, the Web looked so crude at that point to a lot of folks in comparison with the way AOL was working that some people felt that AOL would actually continue to grow for a very, very long time, certainly much longer than it did, as a proprietary service. John: So The New York Times has the wisdom to hire you, and they bring you in, and the assignment is what? Martin: The assignment is to get the Times on the Web. AOL had already convinced The New York Times to start an online service, and a group of folks had done that. It was called "@Times." As I recall, it was a very limited, mostly an entertainment service. There was a feeling, I think, at the time that certain people at the Times didn't want online services to compete with a businesses that had been set up in the B to B space. I mean, it's a more complex story. In any event, I arrived at The Times not from a journalism organization, but with an interactive media background. My orientation in coming in was really more AOL, Yahoo, other native Internet companies. Other native interactive companies, I should say, because AOL" wasn't strictly an Internet company at that time. My thinking was, The New York Times should maybe approach the web, in some ways, the way Yahoo did. Yahoo was a directory. I thought, "Well, jeez, The Times could do, in essence, what "Yahoo" was doing. It could find the best stuff for people." The journalism of The Times, probably, was not at that point in any event, very interesting on a PC. It was very, very clunky. But I realized very quickly that was not going to happen. What The Times wanted, for good reason in some ways, was to publish the journalism of The New York Times on the web. In fact, that's what I think, probably, 99 percent of the people who would use The New York Times on the web would expect from it. Now, of all the things, of all the decisions that have been made, I think that one is the most seminal. The idea to publish what was, in essence, the newspaper instead of going in a different direction at the outset. I think that, certainly, publishing the newspaper on the web is what was expected. It's what the consumer expected. It's what was logical. It was low risk, in many respects. It didn't cost very much because we already had the content. It made a world of sense. But, in some ways, some fundamental ways, it kept The Times from truly being a great innovator because it didn't allow for something startlingly new. [laughs] John Huey: So that was the big fork in the road? Martin: That was the big fork in the road. Not whether, in my view, you charged for content. The big fork in the road was publishing the content of The Times versus doing something else. John: So, you hadn't been in the news business and you're there. You're looking at it. You look around at the competitive landscape. You've mentioned quite a few things there that you saw. So could you talk a minute about that, about Yahoo and CNN.com? Martin: Sure. What occurred to me almost immediately, is that the distribution silos that existed in the past were going to go away very quickly. Paul Sagan: You mean by those, media distribution not online competitors, but traditional... [crosstalk] Martin: Right. We would not be competing with other newspapers. We would be competing with a whole range of providers. And CNN had already come on and was doing a very good job. It had breaking news in its DNA. It was writing short form, very pithy, good articles for the web. Remember, it was a desktop world, small screens, not very much resolution, slow modems, narrow band connectivity. And so, you know, you're talking about a user experience that is, in comparison with today's user experience, pretty clunky. CNN had done a pretty good job, mapping the content to that user experience. They, in my view, set the bar on the news side. Now, there were a lot of people who felt that the content was not as deep, or as analytical, or as interesting, as New York Times content. I would agree. It was very difficult to read long form New York Times articles on a screen at that time. It's become much more comfortable to do with an iPad or even a modern display device, but at the time, it was really clunky. So, we were competing, yes, with CNN roughly at the same time as we came on, maybe a little later. MSNBC came online. Yahoo News was already online, I believe, with the full Reuters feed so that was very current, also very comprehensive. There were a couple of other newspapers that had come online and were producing pretty good reports. The News and Observer had a news website called NandO. I believe The San Jose Mercury News was up with Mercury Center. Yes, there were quite a few online newspapers and they were all free. I shouldn't say newspapers. There were quite a few online news services, including the cable folks. I don't remember whether ABCNews.com came up in that first year or not. My sense is it probably did not. To your question, we were colliding, now, with a range of media competitors, not just newspapers anymore. Paul: The magazine companies had started updating more frequently than weekly or monthly, as well? Martin: Yes. Certainly, Pathfinder had come online. They were one of the earlier services which, of course, you ran. There were other services, as well, all of which were coming together in this space. All of whom were, now, going out and trying to attract advertisers. John: We don't want to dwell on this too long because there are exciting things to talk about that come later, but looking back on it all...One of the things we've talked a lot about with other people is the cultural issues and the cultural barriers of both legacy news business and of successful businesses trying to innovate. Do you have any rich memories of that period? Martin: The fact is at the outset, certainly, for the first two or three years...I want to be clear I don't say this for any other reason that it's true, I was incredibly well supported at The New York Times. Joe Lelyveld, who was the executive editor at the time, and Russ Lewis, The Times' general manager, couldn't have been more supportive. The fact is, hindsight is 20/20. It was a small effort, a small experiment, with a very small impact. For most people in the organization, it really didn't touch them very much. It's not that people were hostile or that they didn't want to do it. They just didn't care very much to be perfectly honest. Paul: It was just peripheral? Martin: It was totally peripheral, totally marginal at the time. Now, that's changed, obviously, but at the time it was marginal. Having said that, I think there was a clear expectation that The Times on the web would be principally re purposing The Times' journalism. I will go back to this theme. I think, if I could do it over again, one of things I probably would have pressed harder, although the financial side of this would have certainly intruded, was to do something more aggressive, maybe with the Times brand as a side project, or with an entirely different brand. But certainly the Times I think could have played a broader role than simply one that reflected its newspaper. Paul Sagan: Just to pick on some on some of the themes we've asked other people about, it was not an engineering led effort? Martin: No. Paul: Or it wasn't an editorial led effort? Because you're certainly in charge, and not a very large engineering staff. You talk about roads not taken. It wasn't as if it was an engineering company that you had that you restrained from becoming... Martin: No. I understood the technology extremely well at the time, and while I'm not a trained computer scientist I had been around it and created a lot of stuff in the online arena for 15 or 16 years. I was very well versed in the technology. As I say, I came to the position with the idea that we could do something fundamentally different than we ended up doing. But yes, to answer your question, I'd say that in a major news organization, the culture is such that journalism typically is in the lead position. That's the business the company is in. John Huey: What is the next aha moment? You have this peripheral effort going on. Martin: The next aha moment came with the dot com boom. The dot com boom starts, and all of a sudden we're seeing people leave the organization. We can't hire people because people are expecting stock options. By 1998, I would say it was clear that something much more, let's just say interesting, was going on, than a small bore experiment. At that point, Russ decided we needed to breakout into a totally separate operation. I believe he had read the "Innovator's Dilemma" by Christensen, and sort of believed that in order for us to truly get some kind of scale here we needed to have our own separate operation. John: Tell us about that. That happens. Martin: Yeah, so that happens. There was let's just say a very vigorous debate in the company as to whether we should be broken out or not. Obviously the folks at the newspaper were not happy about losing control of their website, which in many ways I don't blame them. But it was determined that we would become a separate digital operation, much like many of the other operations that existed at the time. In addition we would pursue a public offering of the stock, which again, other operations were doing at the time. Some news operations, some not. Barnes and Noble, for example, had a separate company with its own stock. That was the seminal moment. I would say the other thing that happened at that point is that we decided that we really did, to Paul's earlier question, need to ramp on the engineering side, and we acquired a company called Abuzz, which had been started at MIT. It was a precursor to businesses like Yahoo Answers and Quora. It was a very sophisticated question and answer platform. At the time, it was called a knowledge management platform where people would put questions into the system and the system would find in this vast network of users the five or six best people to answer those questions, send them the questions, and then the answers would come via email. We acquired that business, acquired the engineering team, and began to integrate that capability into the Times on the Web. That was our attempt to create some platform economics around the Times on the Web. That was in '99. John: Tell us how the public offering comes to an end? Martin: It came to an end in a very strange way. We were working with Goldman Sachs. John: What year? What month? Martin: We worked through much to the latter half of 1999, and now into 2000, AOL had just acquired Time Warner. We were sitting in a room with our bankers, the Goldman folks. I believe it was April of 2000. Taking a company public, you work very closely with your bankers. You've created this thing. It was actually a tracking stock. We created this document called an S3 which is like an S1 except for a tracker. We were rehearsing the road show at that point. At that time I think people were still carrying beepers. Remember those little beepers? They started to go off all in unison. The Goldman folks basically said there's some issue...I think the market was actually diving hundreds of points that day. They went back to Goldman, but they said, "We'll be back tomorrow to rehearse again." We never saw them again. [laughs] Because the dot com boom was over, so there was no IPO. [laughs] John: For you the dot com boom had a very personal pointed and dateable moment. Martin: Well it came to a very sudden end. There was a sense that we might reinvigorate the IPO, but as 2000 wore on it became clearer and clearer that this fantasy was just that, and there was no dotcom boom anymore. [laughs] John: Takes us through the 21st century up to now... Martin: Yes. [laughs] John: ...before we circle back and talk about in general. Martin: Then the dot com bust happened, the Web winter. John: Web winter? Martin: Yeah, the Web winter. Like many big media companies, the Times needed to retrench some. I was told, "Look, you got to find a way to get this thing profitable. We've invested a lot of money in it." 2001 dawns, and in January we had our first series of layoffs, and then in April it became clear that the recession was going to be even deeper. We had a second series of layoffs. We did manage to at least get the business to cash flow profitability by the end of 2001. Paul: How big a business is it? How many people are in it? Martin: That's a good question. I think probably, I'm going to guess, at that point across the company, maybe 140 people. But we probably lost 40 percent of them in 2001. It was really taken down. I'd say that the revenues at that point were maybe 25 or 30 million dollars. Remember we also had this B to B entity embedded in the overall business that included our LexisNexis deals and others. I almost don't count that money because it wasn't dotcom money. Paul: The consumer business, the dotcom business, was very small. Martin: Well yes. Once the dotcom bust happened, it got very small, very fast. That's why we had to retrench. Because there wasn't any sense of when this might come back. Now I do want to say that from a usage perspective, the dotcom bust didn't do a thing to our usage curve. Our usage curve was a straight line growth. John: This was all about advertising. Right? Martin: This was all about advertising. Yeah, it was all about the stock market too. If you plot the NASDAQ it looks kind of like a wave form. If you plot our growth rate, it looks like a line, a straight line up. The consumer basically all through the dot com bust, was saying, "I really like this." John: But the economic model had eroded. Martin: The economic model had collapsed. It hadn't eroded. It just collapsed. It was very, very difficult to sell Internet advertising. In fact, we started the OPA in 2002, because the buzz on the Online Publishers Association, because the buzz on Internet advertising was so bad, that I felt that the industry needed to come together and put a fact base out there that at least said, "Look, there are these users who are actually using these services, and they actually see these ads, and they respond to them in these ways." We did put that fact base out there. Michael Zimbalist came in to run it. Paul: That's right. Web 1.0 happened with too much hype much too publicly. In many ways Web 2.0 happened much more out of view, but much more as a reality. Martin: Yeah. Well Web 2.0 was really defined by Tim O'Reilly and I think to some extent John Battelle a little later on, I think around 2004. But the beginnings of it had... Paul: But it's happening. Martin: It's happening right as the...yeah. John: Does that mean network ad sales and all that? Martin: No, no. The idea of... John: Let's go to Web 1.0, Web winter, and then Web 2.0. But before we get to Web 2.0, would you just answer this question, which is, "What were you and other digital people thinking, and what was ownership and the leadership of the company thinking Web winter meant?" Martin: Well I can tell you what it meant to me, it meant some of the best Internet businesses on the planet were selling at unbelievable discounts. That's what it meant to me. I think what it may have meant to some of the more traditional folks is that this was a bunch of bull and it was over. John: Do you agree with the people who say because of that, that gave the advocates for the traditional print arc of journalism to say, "OK, well this turned out to be a bust. We need to get back to our knitting and reinvest and push that over digital? Or is that exaggerated? Martin: I think that maybe a little exaggerated. First of all, I wouldn't say, certainly speaking for the Times, from a perspective of having been at the Times, we ever stopped focusing on our knitting which was the journalism and whether it was in print or digital. John: Well I'm talking more about economic financial, where you're investing your money in digital and digital growth. Martin: Well no. Certainly, once the dot com bust happened, I think there was an expectation by the Street, if no one else. Look, you got to put yourself in the position of being a public company CEO at that time. There were very, very few public companies CEOs that I know of that did any investing during the dot com bust. Whether they were newspaper CEOs, broadcast CEOs, they basically all ran for the hills. John: But you're saying that you, in your view, there were a lot of values out there. Martin: Yes. Absolutely were. Barry Diller, who is a very smart guy, was investing heavily in some of those businesses at that time. It wasn't like no one was doing it. He was the one guy who was doing it at the time that I can recall. John: Take us into Web 2.0. Martin: Right. As Paul just indicated, Google was founded I want to say 1998 or 1999. Paul: '98. Martin: Right. By Larry Page and Sergey Brin. What was very interesting about Google, unlike the Web 1.0 companies, which really were portals for the most part. They were destinations that you typed a URL into and the whole purpose of them was to keep you in the environment. Web 2.0 was characterized by joining many web companies in a loose federation. And so, Google's entire raison d'etre was to get you off of it as quickly as possible. It was to get you in and off quickly. That was not something that a lot of Web 1.0 folks thought would be a profitable model. But, as it turned out, it was the most profitable model anybody could possibly dream up because the notion of intent was clearly... Now, I don't...Just to be clear, just for the sake of the folks who may be listening, there's a very clear definition of Web 2.0 that O'Reilly and Battelle wrote that is on the O'Reilly website that everybody can read. I don't remember all the attributes of it, but it's there to be read if anyone wants to read it. We should link to it. http://oreilly.com/web2/archive/what-is-web-20.html Paul Sagan: And I meant it more as shorthand of the second phase of development of business models and where the audience went and which companies reigned supreme in the next phase. John Huey: Just to get very parochial here, I would like to point out one huge difference between Web 1.0 and Web 2.0 was in Web 1.0 the big players spent heavily on print advertising. I was the editor of Fortune Magazine in 2000 and we had several 500 page issues. And we earned over 100 million dollars in operating profits, driven principally by this wind at our backs from web 1.0. And the Industry Standard in that year sold more advertising pages than any other magazine in the country. The next year, it went out of business. Martin Nisenholtz: Well, that was Battelle's magazine. John: Right. And it had a very small circulation. And it sold more ads... Martin: Yeah, I remember that issue. John: Because I was in negotiations to buy it at one point. But the next year, it was gone, and then as web 2.0...you get through the web winter, web 2.0 comes along, and the Googles and every other player, there's no or very little print advertising. It was self contained on the web. So print got left behind in sharing in the bounty of that. Martin: Right. Well, the classified business never really recovered from the recession. Monster, by then, had become a very dominant job board. And of course, Craigslist was spreading all around the world by then. So you're right, the classified industry did not have a typical cyclical rebound following the 2001 recession. John: So now, here you are. You are leading the digital effort of the most successful newspaper in the country, the most serious about its news report. And you've made it through this web 1.0 in a very disappointing fashion. Web 2.0 is starting to come back. What are you thinking then, and what do you do? There are acquisitions, there are...what's your... Martin: Well, no, I mean, I think at the time, as I said, my perception was that there were quite a few great Internet companies that could have gone for fire sale prices. But as I said, we emerged out of web...we emerged out of the web winter. The advertising markets began to come back around 2003. And we really began to grow robustly once those markets returned. John: "We" being? Martin: The Times on the Web, and Boston.com, which was obviously still in the portfolio. But the Times on the Web, by then, was the largest newspaper owned website in the world, which was not necessarily an intuitive position for us to have, given that the Times in print had always been more of a niche. We did manage to get into that position and to hold that position, which I was always very gratified by — as largest the largest newspaper owned website in the world with this unbelievable audience I mean, we had a great audience — this was before you had Facebook out there with a billion users. Yahoo was out there with maybe 120 million uniques. John Huey: But this is back when 20 million uniques meant something. Martin: This was back when 20 million uniques meant something, exactly. And so our feeling at the time, and boy, was I wrong about this...there were a few things I got very, very wrong, and one of them was scale. I thought if we could get to 70 million uniques, 50 to 70 million uniques, globally, we were just going to be a major, major player globally, because of the character of our audience, and that size, we might not be the size of Yahoo, but it didn't matter. And I was off by...100 million uniques today at Facebook is a rounding error. Paul Sagan: You're an order of magnitude away from being... Martin: Yeah, I'm off by two orders of...yeah, I'm off by...no, by a lot. Put it that way. I was very, very wrong about what would happen, the definition of scale on the web. I just got that fundamentally wrong. I think the other thing I got wrong was that I really did expect that traditional media — not just newspapers and magazines, but television broadcasting as well — would start to give up brand advertising much sooner than it has. I think it eventually will, but it hasn't yet, not in any numbers that you would be really staggered by. The business has really gone into a kind of direct response mode. John: Explain that a little. Give us an example of that. Martin: Well, the examples are everywhere. The advertising metric that was most used from the beginning was the click through. My hope when we started the OPA was that we would migrate well beyond the click through to a more traditional set of brand metrics, and those brand metrics would be tied...you could have offline to online measures and attribution. John: So you're selling influence and engagement and impact and all that kind of thing. Martin: Yeah, you're selling more than just a click, put it that way. John: Right, but at the same time all the digital businesses at that moment are still chasing traffic, because you're thinking scale is 70... Martin: No, I guess what I'm saying is that if anything, the creation of Google really doubled down on the click. People get paid on clicks with AdWords and then AdSense. The click became the currency online. From there, the direct response economics — retargeting — the idea that data was at the center of the web's value proposition for advertisers arose in a way that went well beyond any single publication and is now today a part of this overall trend toward programmatic. John: Which leaves newspapers like The New York Times where? Martin: Well, it leaves all premium brands in the position of having to create very, very special advertising experiences, campaigns, for their clients, which are sometimes called native campaigns or native advertising positions that break through what you can buy, in a sense, off of the exchanges, the traditional banner ads, by the pound. John: Are you optimistic about that business? Martin: I'm optimistic about the fact that I think...let me put it this way. I think that there will always be a role for premium, well constructed, well designed advertising on the web. What I'm a little bit disappointed, or maybe more than a little bit disappointed about is the creativity that the industry has brought to that. The Mac/PC campaign which appeared on the Times' home page a few years ago, I think, is still the best example of a cross media campaign executed on the web in a premium environment. It was us. It was the Journal. I think maybe one or two others. It was just witty. It was interesting. It was just a great campaign. Unfortunately, there aren't that many people creating that kind of advertising. And so, what you have is a lowest common denominator approach oftentimes. I'm certain, having seen that Apple campaign, it can be done. It's a shame that it isn't done more often. That's... John Huey: The world would be very different if there were a lot of Apple computers and Steve Jobs who cared about creativity and where they advertise. Martin: It certainly would be. John: Because he also advertised in outdoor, magazine covers, New York Times. He liked those. Martin: Lee Clow should be given some credit, as well. John: That's true. Paul Sagan: I was going to suggest we should take a break and come back. Martin: That's fine. John: Can we ask one question before we do that because we're asking all these big questions and we're just right in the middle of this. Could anything have been any different? Just that one big question. Martin: You mean in an overall industry sense? John: Is there anything you could have done or the industry have done or the New York Times have done that would have made any big difference? And then we'll take a break. Martin: I think that there are two answers to that question. I think from a company perspective, yes, I think that companies could have been much more aggressive and much more imaginative in developing businesses that may not have had anything to do with journalism, per se, but which are very big and profitable businesses, OK? And whether you view that... John: Like say Bloomberg instead of...Dow Jones instead of Bloomberg? Martin: Whether it's Dow Jones instead of Bloomberg or whether it's company X owning...I'm just sort of pulling this out of the air, but a business like Expedia, which of course, Microsoft sold to Diller, whether it's either one of those or any number of examples, you could certainly envision that to have taken place. If you're asking about whether I think journalism itself could have taken a fundamentally different course, I'm not sure there's a good answer to that because fundamentally what happened is that the old packages became unbundled. And that was an inexorable development. Paul Sagan: Martin, we're back again. You described that the ad world or the model collapsed all around the industry. Let's go back to another fateful decision. Some have called it the original sin of the media companies, which was not starting with paywalls, not being patient, and giving content away for free, which earlier you described as not, you think, one of the major decisions. But a lot of people have looked at that and said that was a pretty major decision and many, particularly the Times, was one of the leaders in deciding not to do pay. Can you take us back to those times and what you were thinking and why that was the obvious decision then? Martin Nisenholtz: I want to reiterate something I said before, which is that there was a collision of a whole bunch of different industries at once. CNN had already come out with a very good free website. There was no indication that they would ever change that model. They had a cable model and they were, in essence, going to be advertiser supported. Paul: And in fact, our interviews with Harry Motro and Scott Woelfel confirmed that. Their model was that they were going to be free. Martin: Absolutely. The Yahoo News folks had launched with Reuters. They actually had the portal to depend upon. As did MSNBC. Paul: What year was this decision? Martin: I want to say the decision was made in late 1995. We knew that in order to build an advertising business we needed to build an audience. We were thinking very flexibly about how we would ultimately charge, if we would ultimately charge. We decided to run an experiment outside the United States where we did charge, which is something a lot of people forget. The website was free in the US, but outside the US you had to pay for it. We kept that going for about 18 months. We got, I want to say, about 3,600 subscribers. One of the things I like to say is we ended the experiment on Bastille Day, and that day, I believe it was in 1998, we got more registered users in about an hour than we had subscribers in the last 18 months. The fact is that, at that time, in a general news context, given the quality of the product that we were building in a narrowband context, very crude technology, we absolutely, I think, made the right decision to build the audience because, as I think we'll get to later, we'll see that a lot of the economics of going pay have to do with conversion rates off of your loyal base, the people who are coming to you every day. So those conversion rates are very material. The bigger your audience, obviously, the more people will convert. I think, a little bit later, we'll probably get to a point where you'll see the logic of having a big audience, not just in the advertising context but in the pay context, as well. Paul: I think it's worth just reminding people, because it does seem just a little bit like ancient history, today's model, and you'll get to it in a minute, of the meter. X number of pages for free and then the wall goes up and you have to pay, but you can link in and out. That technology was not available then. Martin: That idea was not... Paul: You couldn't have done it. Martin: I don't know if we could have done it or not, Paul, but the fact is, maybe it was a lack of imagination, but at least at the time the thinking was very binary. Either you were going to be free or you were going to be pay. Paul: Just to remind people, even back '95, '96, '97, the act of taking a credit card online or having a multiple payment system was not all that easy. Even a commerce server was not easy to set up, relatively. Not to make excuses for the past, but we made some of the same decisions at Time, Inc. and Time Warner at the same time. It was pretty crude tools. Martin: In any event, honestly, I don't remember that being the barrier. I'm just suggesting that, at the time, there was no hint of a metered model. Our decision to build the free site had to do with building a large global audience. We felt the Times had finally become completely unshackled from the distribution constraints. Unlike any other newspaper, certainly general interest newspaper in the United States, we had the capability of really building a big, global audience for this brand. And that was something that I think within four or five years, we proved we could do by ultimately becoming the largest newspaper owned website in the world, so... John: Put that in a context of when we talked to Gordon Crovitz, he said that the two of you exchanged views often. And they were a national newspaper, had been a national newspaper for a long time, with a worldwide global information system. And they decided to stay behind the wall. Why was that the right decision for them? Paul: And "they" meaning the Wall Street Journal. John: "They" meaning the Wall Street Journal. Martin: I always thought it was a decision that was made based on two notions. One was fear. I think they were afraid that if they went free, their paper would simply be cannibalized because let's keep in mind that this was well before Rupert bought the business, and they were a core business to business product. They were not a general interest newspaper. John: No, but they had a circulation of almost two million at that time, which was bigger than the New York Times. Martin: No, I'm not arguing with that. I'm just suggesting that they had a different positioning in the marketplace than we did. They were a business to business product, and we were a general interest product. Even though we had a business section, have a business section, their whole focus was business at that time. I think they were deeply concerned about cannibalization. And by the way, there were folks at the Times and other general interest newspapers who were very concerned about circulation. As it turned out, the web became a very significant source of print starts. Within four or five years, it was driving more print starts than... John: Print start being New York Times-ism for subscriptions? Martin: Yes, print subscriptions to the paper, print subscriptions, yeah. But in the earliest days, there was a fear, I think, in a lot of circles. But in particular, in a business to business product like the journal, that there would be some cannibalization. I think the other, and Gordon expressed this, I thought, well, is that they just felt that their information was such they could get a price for it. So they doggedly developed a subscriber base from zero people over a very long period of time. My view is that two things happened as a result of that. One is that they never really developed a large audience, not a really large audience, on which to build the advertising business. They were constantly running out of inventory. The second... John: Which led to their buying Market Watch. Martin: Not only did it lead to their buying Market Watch, I don't think, and I think Larry confirmed this in his interview, that Market Watch would have existed if the Wall Street Journal had been a free product. I think it would have basically...there would have been nowhere for them to go. I think that the fact that the Journal was a paid product from the beginning allowed Larry to come in and build that. He'll argue that some...that they're a little bit different. Obviously, the Journal was more focused on covering the world of business, and Market Watch may have been a little bit more focused on individual investors. Putting that aside, ultimately the Wall Street Journal had to pay over 500 million dollars to buy Market Watch. And that's a high price for a company of that size. From a strategic perspective, I could argue that they made the right decision, didn't make the right decision. I think certainly for the New York Times, we made the right decision. There were many decisions that we made that were not right, but this is just not one that I believe is worth relitigating. Paul: Then let's fast forward over a decade. And in the last couple of years, that model flipped or started to flip to this idea of the meter. So describe where that concept came from, which was the metered model, as opposed to the paywall, because they are different, and they often get lumped together. Martin: Oh, but they are very different. Paul: Describe that and then describe what's happened so far and what promise that brings to this question of journalism in the digital age. Martin: Just before we get to the metered model, I do think it's important for people to understand that we continued to experiment with certain kinds of paid services from the beginning. TimesSelect, we implemented, which was a hard paywall against just our Opinion content... Paul: Thanks for reminding me. I was going to ask you... Martin: ...which quickly developed into a $10 million business that we judged to be problematic in a couple of other ways, but at the end of the day, I would hardly suggest that it was a failure. It was larger than many websites even today, in terms of revenue production, just that. That was one experiment we did. Paul: That was effectively putting the columnists behind a paywall. Martin: The columnists and the (news) archive. I think it was the entire...Yeah, it's effectively the columnists, yeah. That was essentially what people thought of it as. John: For one thing, it made people in India have to pay if they wanted to read Tom Friedman. Martin: Which I think is a problem because obviously that content...The problem I always had with it, as an idea, is that...I know it's a cliché, but I do believe that the web is a big global swirling conversation. If you take yourself out of that conversation as a news company, you diminish significantly many things, including your brand, your reach in the marketplace, and your influence. That's a problem. I think intuitively, the columnists knew that. That's why perhaps some of them may not have been such big fans of it. It ended. One thing about the Times is, we may make mistakes, but we ultimately, I think, get there. The fact is, it ended. It ended right as the era of search was booming. We had acquired About.com and really got very, very capable in terms of SEO (search engine optimization) and insinuating our content into Google so that we added tens of millions of new users as a result of that over that period of time. That was the TimesSelect thing. We had other experiments going. We were charging for our crosswords, for example, so we created a little games business, which is a few million dollars now. It's not like we weren't thinking, "Well, can we monetize this content in other ways other than advertising?" We were always doing that. I think to get to the metered model, I think the breakthrough there happened when we saw what the FT was doing. The FT was the pioneer in that model. They had succeeded with it and they were very, very open, generously open, in terms of sharing information with us. I think we saw this as a great solution because it both preserved the very large audience that we had of fairly light users. Most news companies, all of them in fact, have a very significant audience of light users who come in from search and blogs and email and all these side doors, Facebook, Twitter. And a relatively smaller group of deeply loyal either everyday or every other day people coming in and actually using the product directly. The recognition of that created this notion of a metered model or a "freemium approach," some people call it. We got that idea pretty much from the FT and then refined it after that. Paul: Describe how it's implemented and what it's done. Martin: It's very simple. The idea is that users get up to a certain number of pages per month for free. I think we started at 20. I think the meter is now at 10. That allows you to provide this massive sampling of content to tens of millions of people each month. It also provides inventory and reach for your advertising business. From the side doors, by that I mean companies like Facebook, Twitter, Google, etc., you can go to a search and get again, an article for free or if somebody wants to share an article, they don't have to send you an article that you're going to hit a wall on. It's a very easy and friendly way of dealing with content on a global web. Paul: If you hit that number, what happens? Martin: Once you hit that number...Before you hit that number, you're told by the system that you're about to hit the number and hopefully you'll subscribe at that point. Once you hit the number, then you're unable to see more content until the first of the next month. You've used your quota. Then you come back and on the first of the month, get a new meter. In essence, the meter is reset. Paul: At least in 2013, what's the result? Some of that's been publicly reported. Martin: A lot of it's been publicly reported. The result has been, I think, stellar. It's certainly exceeded, I think, the Times' expectations of what would happen along essentially three dimensions. Dimension one is the number of subscribers. I think we talked about 640,000 in the fourth quarter of 2012. We'll release earnings, I think, this week or next, we'll have a first quarter number very soon. I think by anybody's calculus, the number of subscribers is positive. Secondly, we thought that it would diminish the advertising inventory more than it has, so more free users are coming than we expected. Third, there was some thought that there would be a migration out of print and into the web faster because of the price differential, and that hasn't happened. It's actually been additive in some ways to the print side. I think the model has been a success pretty much along mostly every dimension that you can think of. That's why, I think, you've seen so many other newspapers take a whack at implementing this model. I think at last count, there was something like 400 or 450 newspapers in the US pursuing a metered model. Paul: Let's take a really broad arc to this. Because as you described at the beginning, you were involved in the earliest projects. As we've looked at this as a 40 year span of when digital technology first started to show up to today when it hits full blown, lots of video and broadband always on and moving to ubiquitous and mobile. What are the two or three lessons that you've drawn from this? Particularly for where media companies went right or wrong or the lessons they learned, good or bad through this experience. Because most of them waded right in got knee deep or deeper, and not all of them have come back out. Martin: The whole notion of the swimmers and the tide, which is something that we've been talking about from the beginning of this project. John coined the metaphor, is I think a very material part of your question. How much could anyone have done given the very profound changes that are taking place in the technology and whatnot. I think you have to parse that carefully because on the one hand, you can say, "OK, if we had done this, this, this, and this we might have preserved certain economics in a different business." An example might be today you see a lot of newspapers locally going into marketing services, which is a whole new area of revenue production for them. They may succeed at that. They may not, but it's a different business. Versus keeping the Baghdad bureau alive or covering the local city hall. The linkages between those two things, I think, are very, very important, Paul. Understanding that yeah, a company can perhaps succeed as a business without succeeding with its civic mission. That's one thing I would draw as a conclusion, that the separation between the business side and the mission side is important to make. The second thing is I really believe, and I think this is reflected in many of the interviews, that there will be and have been a lot of incredibly positive movements in journalism from this statement. I don't believe that a world of 1979, when I got into the business, where there were three broadcast networks and a handful of magazines and a newspaper in each town, and nobody got to have any participation very much in any of that, is not particularly healthy. I think, for all of the problems that journalism has, the world that we live in today, the world that we inhabit today, is exponentially richer and more interesting. Will that continue over the next 5 to 10 years? I have no idea, but I know that today, on any given day, my Twitter feed is full of more interesting things than it was probably in a month 10 or 15 years ago. For whatever it's worth, I have a very positive view of the impact of digital technology on journalism. That's the second thing I would say. We can continue this conversation, but I don't know that there's much more to say beyond that. You need to ask me more specific...it's a little hard to... John: If you go back and go through each major... Paul: You thought you were done at the dentist's office. Martin: It's a lot easier being on the other side of the camera. No, I'm kidding. John: Just go quickly through each of the eras and how you think that era led into the next era, starting with teletext and its effect on what the industry did, going to proprietary walled garden, Internet, search. Just, very quickly, bullet points. Martin: The industry invested heavily in teletext and videotex in the early '80s. The media industry failed to gain traction with those services. They shut them down. To go back to Paul's question, one lesson learned there might be, instead of going in with 300 people and trying to conquer the world inside of 18 months, maybe a more entrepreneurial approach would have been better. In other words, slower in, more patient, more committed, over a longer period of time, in order to find out and then discover and iterate on what the consumer actually wanted. Lesson learned there for me was entrepreneurs trump big iron in almost every instance. Absolutely true. I don't think there's a single case that you can make where that isn't true, particularly of that era. John: While they were doing that, and they were doing it with the television and telephone, the PC was growing. Martin: Nobody could have seen that, so that would have been part of the entrepreneurial approach. John: Right. Martin: And it was. John: Somebody would have said, "Hey, let's try this... Martin: Let's move over to the PC, right. So that's in essence what happened. Quantum actually started as a PC based service which became AOL. The second big thing that happened out of videotex and teletext is that it created a sense that the Internet or interactive...not so much the Internet, but interactive media was a failure, that it wasn't something that the newspaper or journalism industries needed to be concerned about. That created a huge eight year gap, pretty much from roughly 1986 until 1993 or '94, when AOL came in and started to convince people that it was worth coming back in. That was a very important period of time because that was the period of time during which the PC was put into place, people were getting modems, and essentially... John: The Macintosh came along, desktop publishing. The Worldwide Web was created. Martin: All of those things were going on, and the journalism industries, whether they were in broadcasting or in print, pretty much had decided, I think by the mid '80s, that this was not something that was particularly relevant for them, at least not in the form that it had developed in that timeframe. That let the AOLs of the world come in and build fairly substantial businesses and learn, more importantly, what the consumer wanted. By the time AOL and, to a lesser extent, CompuServe were beginning to approach the newspapers in the early '90s, they had already, in a sense, won the proprietary services business. The newspapers were, quote, "information providers" to an intermediary that had a customer relationship. The newspapers had lost that customer relationship in that era. They did not have a direct relationship with the user until the Web came along, which is what they liked about the Web. The online services arena was one in which, certainly until the early '90s...And to their credit the Tribune made a significant investment in AOL, and Knight Ridder in the early '90s began to develop a service called Mercury Center on AOL. All very good but, again, they weren't AOL, so that's a problem. That era, I think more than anything else, reinforces the notion that entrepreneurs with patience and staying power, flexibility and agility trump this notion of big iron moving in with hundreds of people and trying to make something work in a year. John: Dot com boom and bust you've covered pretty well already, but the arrival of Search and Google, the reaction of the industry to that, and how that played out. You haven't gone into... Martin: I don't think the industry recognized how important that was until after it had taken shape, frankly. A lot of people didn't. When Bill Gross first started Overture, a lot of people were skeptical that paid search was going to be a meaningful business. Google, initially, at least, was simply syndicating its search product to AOL and Yahoo!, and that's what its initial business model was. When they acquired Applied Semantics, I think the company was called, which was the underlying technology for AdSense, nobody quite understood it. Once it got into place, it took off pretty quickly. I don't think at that point the industry...Let me just put it this way. There wasn't much of a product relationship between the direction that the journalism industry was taking and the direction that the technology industry was taking. They were two separate worlds. To my mind, there was no attempt...There wasn't even much R&D or engineering talent in the major media companies at that time so there would have been no way for anyone in those companies to get deeply involved in algorithmic search. It sounds like a joke to say it, but it just... John: But it's something that ultimately had to come out of either Silicon Valley or Boston. Martin: It had to. Exactly. And it did. Alta Vista, which was born inside DEC, did come out of Boston. Alta Vista was, I think, the first algorithmic approach. I don't believe it was Google, but I'm straining my memory at this point. It may have been someone else. John: Can you give us word on social and the impact of social? Which did, in a large way, come out of Cambridge. Martin: But I mean there was a lot of social before Facebook. The earliest videotex services discovered...One of the key discoveries, and I think a couple of people have noted this, was that essentially what people wanted was interactivity in these services. They are interactive services, so treating them as broadcast networks is not the brightest thing to do. John: Steve Case talked about community and the social impact. Martin: So did Roger Fiddler (in context to Viewtron.) John: Facebook won the day. Its impact on the... Martin: I think Chris Cox explained why Facebook won the day. I think his...I'll let Facebook speak for Facebook, but all I'm saying, John, is that social media was a part of this arena from the late '70s on. It was a big part of The Source and Compuserve. It was always a big part of AOL. Steve's exactly right about that. I mean...those guys essentially invented the idea of a screen name. Everything was kind of like a telephone number before that. Paul: I think it's interesting. It took someone to figure out the winning formula in each of the categories we've talked about, often not the first player. But when you look back, the clues are all there, they just weren't clear at the time. Martin: Well, wasn't it Steve Jobs who said it's easy to connect the dots in hindsight? John: That was a good last line. Paul: You connected the dots. Thank you. Paul Sagan: Martin, we're back again. You described that the ad world or the model collapsed all around the industry. Let's go back to another fateful decision. Some have called it the original sin of the media companies, which was not starting with pay walls, not being patient, and giving content away for free, which earlier you described as not, you think, one of the major decisions. But a lot of people have looked at that and said that was a pretty major decision and many, particularly the Times, was one of the leaders in deciding not to do pay. Can you take us back to those times and what you were thinking and why that was the obvious decision then? Martin Nisenholtz: I want to reiterate something I said before, which is that there was a collision of a whole bunch of different industries at once. CNN had already come out with a very good free website. There was no indication that they would ever change that model. They had a cable model and they were, in essence, going to be advertiser supported. Paul: And in fact, our interviews with Perry Montroe and Scott Woelfel confirmed that. Their model was that they were going to be free. Martin: Absolutely. The young news folks had launched with Reuters. They actually had the portal to depend upon. Paul: What year was this decision? Martin: I want to say the decision was made in late 1995. We knew that in order to build an advertising business we needed to build an audience. We were thinking very flexibly about how we would ultimately charge, if we would ultimately charge. We decided to run an experiment outside the United States where we did charge, which is something a lot of people forget. The website was free in the US, but outside the US you had to pay for it. We kept that going for about 18 months. We got, I want to say, about 3,600 subscribers. One of the things I like to say is we ended the experiment on Bastille Day, and that day, I believe it was in 1998, we got more registered users in about an hour than we had subscribers in the last 18 months. The fact is that, at that time, in a general news context, given the quality of the product that we were building in a narrow band context, very crude technology, we absolutely, I think, made the right decision to build the audience because, as I think we'll get to later, we'll see that a lot of the economics of going pay have to do with conversion rates off of your loyal base, the people who are coming to you every day. So those conversion rates are very material. The bigger your audience, obviously, the more people will convert. I think, a little bit later, we'll probably get to a point where you'll see the logic of having a big audience, not just in the advertising context but in the pay context, as well. Paul: I think it's worth just reminding people, because it does seem just a little bit like ancient history, today's model, and you'll get to it in a minute, of the meter. X number of pages for free and then the wall goes up and you have to pay, but you can link in and out. That technology was not available then. Martin: That idea was not... Paul: You couldn't have done it. Martin: I don't know if we could have done it or not, Paul, but the fact is, maybe it was a lack of imagination, but at least at the time the thinking was very binary. Either you were going to be free or you were going to be pay. Paul: Just to remind people, even back '95, '96, '97, the act of taking a credit card online or having a multiple payment system was not all that easy. Even a commerce server was not easy to set up, relatively. Not to make excuses for the past, but we made some of the same decisions at Time, Inc. and Time Warner at the same time. It was pretty crude tools. Martin: In any event, honestly, I don't remember that being the barrier. I'm just suggesting that, at the time, there was no hint of a metered model. Our decision to build the free site had to do with building a large global audience. We felt the Times had finally become completely unshackled from the distribution constraints. Unlike any other newspaper, certainly general interest newspaper in the United States, we had the capability of really building a big, global audience for this brand. And that was something that I think within four or five years, we proved we could do by ultimately becoming the largest newspaper owned website in the world, so... John: Put that in a context of when we talked to Gordon Crovitz, he said that the two of you exchanged views often. And they were a national newspaper, had been a national newspaper for a long time, with a worldwide global information system. And they decided to stay behind the wall. Why was that the right decision for them? Paul: And "they" meaning the Wall Street Journal. John: "They" meaning the Wall Street Journal. Martin: I always thought it was a decision that was made based on two notions. One was fear. I think they were afraid that if they went free, their paper would simply be cannibalized because let's keep in mind that this was well before Rupert bought the business, and they were a core business to business product. They were not a general interest newspaper. John: No, but they had a circulation of almost two million at that time, which was bigger than the New York Times. Martin: No, I'm not arguing with that. I'm just suggesting that they had a different positioning in the marketplace than we did. They were a business to business product, and we were a general interest product. Even though we had a business section, have a business section, their whole focus was business at that time. I think they were deeply concerned about cannibalization. And by the way, there were folks at the Times and other general interest newspapers who were very concerned about circulation. As it turned out, the web became a very significant source of print starts. Within four or five years, it was driving more print starts than... John: Print start being New York Times ism for subscriptions? Martin: Yes, print subscriptions to the paper, print subscriptions, yeah. But in the earliest days, there was a fear, I think, in a lot of circles. But in particular, in a business to business product like the journal, that there would be some cannibalization. I think the other, and Gordon expressed this, I thought, well, is that they just felt that their information was such they could get a price for it. So they doggedly developed a subscriber base from zero people over a very long period of time. My view is that two things happened as a result of that. One is that they never really developed a large audience, not a really large audience, on which to build the advertising business. They were constantly running out of inventory. The second... John: Which led to their buying Market Watch. Martin: Not only did it lead to their buying Market Watch, I don't think, and I think Larry confirmed this in his interview, that Market Watch would have existed if the Wall Street Journal had been a free product. I think it would have basically...there would have been nowhere for them to go. I think that the fact that the Journal was a paid product from the beginning allowed Larry to come in and build that. He'll argue that some...that they're a little bit different. Obviously, the Journal was more focused on covering the world of business, and Market Watch may have been a little bit more focused on individual investors. Putting that aside, ultimately the Wall Street Journal had to pay over 500 million dollars to buy Market Watch. And that's a high price for a company of that size. From a strategic perspective, I could argue that they made the right decision, didn't make the right decision. I think certainly for the New York Times, we made the right decision. There were many decisions that we made that were not right, but this is just not one that I believe is worth relitigating. Paul: Then let's fast forward over a decade. And in the last couple of years, that model flipped or started to flip to this idea of the meter. So describe where that concept came from, which was the metered model, as opposed to the paywall, because they are different, and they often get lumped together. Martin: Oh, but they are very different. Paul: Describe that and then describe what's happened so far and what promise that brings to this question of journalism in the digital age. Martin: Just before we get to the metered model, I do think it's important for people to understand that we continued to experiment with certain kinds of paid services from the beginning. Times Select, we implemented, which was a hard paywall against just our opinion content... Paul: Thanks for reminding me. I was going to ask you... Martin: ...which quickly developed into a $10 million business that we judge to be problematic in a couple of other ways, but at the end of the day, I would hardly suggest that it was a failure. It was larger than many websites even today, in terms of revenue production, just that. That was one experiment we did. Paul: That was effectively putting the columnist behind a paywall. Martin: The columnist and the archive. I think it was the entire...Yeah, it's effectively the columnist, yeah. That was essentially what people thought of it as. John: For one thing, it made people in India have to pay if they wanted to read Tom Freedman. Martin: Which I think is a problem because obviously that content...The problem I always had with it, as an idea, is that...I know it's a cliché, but I do believe that the web is a big global swirling conversation. If you take yourself out of that conversation as a news company, you diminish significantly many things, including your brand, your reach in the marketplace, and your influence. That's a problem. I think intuitively, the columnist knew that. That's why perhaps some of them may not have been such big fans of it. It ended. One thing about the Times is, we may make mistakes, but we ultimately, I think, get there. The fact is, it ended. It ended right as the era of search was booming. We had acquired About.com and really got very, very capable in terms of SEO and insinuating our content into Google so that we added tens of millions of new users as a result of that over that period of time. That was the Times Select thing. We had other experiments going. We were charging for our crosswords, for example, so we created a little games business, which is a few million dollars now. It's not like we weren't thinking, "Well, can we monetize this content in other ways other than advertising?" We were always doing that. I think to get to the metered model, I think the breakthrough there happened when we saw what the FT was doing. The FT was the pioneer in that model. They had succeeded with it and they were very, very open, generously open, in terms of sharing information with us. I think we saw this as a great solution because it both preserved the very large audience that we had of fairly light users. Most news companies, all of them in fact, have very significant audience of light users who come in from search and blogs and email and all these side doors, Facebook, Twitter. And a relatively smaller group of deeply loyal either every day or every other day people coming in and actually using the product directly. The recognition of that created this notion of a metered model or a "freemium approach," some people call it. We got that idea pretty much from the FT and then refined it after that. Paul: Describe how it's implemented and what it's done. Martin: It's very simple. The idea is that users get up to a certain number of pages per month for free. I think we started at 20. I think the meter is now at 10. That allows you to provide this massive sampling of content to tens of millions of people each month. It also provides inventory and reach for your advertising business. From the side doors, by that I mean companies like Facebook, Twitter, Google, etc., you can go to a search and get again, an article for free or if somebody wants to share an article, they don't have to send you an article that you're going to hit a wall on. It's a very easy and friendly way of dealing with content on a global web. Paul: If you hit that number, what happens? Martin: Once you hit that number...Before you hit that number, you're told by the system that you're about to hit the number and hopefully you'll subscribe at that point. Once you hit the number, then you're unable to see anymore content until the first of the next month. You've used your quota. Then you come back and on the first of the month, get a new meter. In essence, the meter is reset. Paul: At least in 2013, what's the result? Some of that's been publicly reported. Martin: A lot of it's been publicly reported. The result has been, I think, stellar. It's certainly exceeded, I think, the Times' expectations of what would happen along essentially three dimensions. Dimension one is the number of subscribers. I think we talked about 640,000 in the fourth quarter of 2012. We'll release earnings, I think, this week or next, we'll have a first quarter number very soon. I think by anybody's calculus, the number of subscribers is positive. Secondly, we thought that it would diminish the advertising inventory more than it has, so more free users are coming than we expected. Third, there was some thought that there would be a migration out of print and into the web faster because of the price differential, and that hasn't happened. It's actually been additive in some ways to the print side. I think the model has been a success pretty much along mostly every dimension that you can think of. That's why, I think, you've seen so many other newspapers take a whack at implementing this model. I think at last count, there was something like 400 or 450 newspapers in the US pursuing a metered model. Paul: Let's take a really broad arc to this. Because as you described at the beginning, you were involved in the earliest projects. As we've looked at this as a 40 year span of when digital technology first started to show up to today when it hits full blown, lots of video and broadband always on and moving to ubiquitous and mobile. What are the two or three lessons that you've drawn from this? Particularly for where media companies went right or wrong or the lessons they learned, good or bad through this experience. Because most of them waded right in got knee deep or deeper, and not all of them have come back out. Martin: The whole notion of the swimmers and the tide, which is something that we've been talking about from the beginning of this project. John coined the metaphor, is I think a very material part of your question. How much could anyone have done given the very profound changes that are taking place in the technology and whatnot. I think you have to parse that carefully because on the one hand, you can say, "OK, if we had done this, this, this, and this we might have preserved certain economics in a different business." An example might be today you see a lot of newspapers locally going into marketing services, which is a whole new area of revenue production for them. They may succeed at that. They may not, but it's a different business. Versus keeping the Baghdad bureau alive covering the local city hall. The linkages between those two things, I think, are very, very important, Paul. Understanding that yeah, a company can perhaps succeed as a business without succeeding with its civic mission. That's one thing I would draw as a conclusion, that the separation between the business side and the mission side is important to make. The second thing is I really believe, and I think this is reflected in many of the interviews, that there will be and have been a lot of incredibly positive movements in journalism from this statement. I don't believe that a world of 1979, when I got into the business, where there were three broadcast networks and a handful of magazines and a newspaper in each town, and nobody got to have any participation very much in any of that, is particularly healthy. I think, for all of the problems that journalism has, the world that we live in today, the world that we inhabit today, is exponentially richer and more interesting. Will that continue over the next 5 to 10 years? I have no idea, but I know that today, on any given day, my Twitter feed is full of more interesting things than it was probably in a month 10 or 15 years ago. For whatever it's worth, I have a very positive view of the impact of digital technology on journalism. That's the second thing I would say. We can continue this conversation, but I don't know that there's much more to say beyond that. You need to ask me more specific...it's a little hard to... John: If you go back and go through each major... Paul: You thought you were done at the dentist's office. Martin: It's a lot easier being on the other side of the camera. No, I'm kidding. John: Just go quickly through each of the eras and how you think that era led into the next era, starting with teletext and its effect on what the industry did, going to proprietary walled garden, Internet, search. Just, very quickly, bullet points. Martin: The industry invested heavily in teletext and videotext in the early '80s. The media industry failed to gain traction with those services. They shut them down. To go back to Paul's question, one lesson learned there might be, instead of going in with 300 people and trying to conquer the world inside of 18 months, maybe a more entrepreneurial approach would have been better. In other words, slower in, more patient, more committed, over a longer period of time, in order to find out and then discover and iterate on what the consumer actually wanted. Lesson learned there for me was entrepreneurs trump big iron in almost every instance. Absolutely true. I don't think there's a single case that you can make where that isn't true, particularly of that era. John: While they were doing that, and they were doing it with the television and telephone, the PC was growing. Martin: Nobody could have seen that, so that would have been part of the entrepreneurial approach. John: Right. Martin: And it was. John: Somebody would have said, "Hey, let's try this... Martin: Let's move over to the PC, right. So that's in essence what happened. Quantum actually started as a PC based service which became AOL. The second big thing that happened out of videotext and teletext is that it created a sense that Internet or interactive...not so much Internet, but interactive media was a failure, that it wasn't something that the newspaper journalism industries needed to be concerned about. That created a huge eight year gap, pretty much from roughly 1986 until 1993 or '94, when AOL came in and started to convince people that it was worth coming back in. That was a very important period of time because that was the period of time during which the PC was put into place, people were getting modems, and essentially... John: The Macintosh came along, [indecipherable 22:43] publishing. The Worldwide Web was created. Martin: All of those things were going on, and the journalism industries, whether they were in broadcasting or in print, pretty much had decided, I think by the mid '80s, that this was not something that was particularly relevant for them, at least not in the form that it had developed in that timeframe. That let the AOLs of the world come in and build fairly substantial businesses and learn, more importantly, what the consumer wanted. By the time AOL and, to a lesser extent, CompuServe were beginning to approach the newspapers in the early '90s, they had already, in a sense, won the proprietary services business. The newspapers were, quote, information providers to an intermediary that had a customer relationship. The newspapers had lost that customer relationship in that era. They did not have a direct relationship with the user until the Web came along, which is what they liked about the Web. The online services arena was one in which, certainly until the early '90s...And to their credit the Tribune made a significant investment in AOL, and Knight Ridder in the early '90s began to develop a service called Mercury Center on AOL. All very good but, again, they weren't AOL, so that's a problem. That era, I think more than anything else, reinforces the notion that entrepreneurs with patience and staying power, flexibility and agility trump this notion of big iron moving in with hundreds of people and trying to make something work in a year. John: Dot com boom and bust you've covered pretty well already, but the arrival of Search and Google, the reaction of the industry to that, and how that played out. You haven't gone into... Martin: I don't think the industry recognized how important that was until after it had taken shape, frankly. A lot of people didn't. When Bill Gross first started Overture, a lot of people were skeptical that paid search was going to be a meaningful business. Google, initially, at least, was simply syndicating its search product to AOL and Yahoo!, and that's what its initial business model was. When they acquired Applied Semantics, I think the company was called, which was the underlying technology for AdSense, nobody quite understood it. Once it got into place, it took off pretty quickly. I don't think at that point the industry...Let me just put it this way. There wasn't much of a product relationship between the direction that the journalism industry was taking and the direction that the technology industry was taking. They were two separate worlds. To my mind, there was no attempt...There wasn't even much R and D or engineering talent in the major media companies at that time so there would have been no way for anyone in those companies to get deeply involved in algorithmic search. It sounds like a joke to say it, but it just... John: But it's something that ultimately had to come out of either Silicon Valley or Boston. Martin: It had to. Exactly. And it did. AltaVista, which was born a deck, did come out of Boston. AltaVista was, I think, the first algorithmic approach. I don't believe it was Google, but I'm straining my memory at this point. It may have been someone else. John: Can you give us word on social and the impact of social? Which did, in a large way, come out of Cambridge. Martin: But I mean there was a lot of social before Facebook. The earliest videotex services discovered...One of the key discoveries, and I think a couple of people have noted this, was that essentially what people wanted was interactivity in these services. They are interactive services, so treating them as broadcast networks is not the brightest thing to do. John: Steve Case talked about community and the social impact. Martin: So did Roger Fiddler in [indecipherable 27:51] . John: Facebook won the day. Its impact on the... Martin: I think Chris Cox explained why Facebook won the day. I think his...I'll let Facebook speak for Facebook, but all I'm saying, John, is that social media was a part of this arena from the late '70s on. It was a big part of The Source and Compuserve. It was always a big part of AOL. Steve's exactly right about that. I mean, Ian...those guys essentially invented the idea of a screen name. Everything was kind of like a telephone number before that. Paul: I think it's interesting. It took someone to figure out the winning formula in each of the categories we've talked about, often not the first player. But when you look back, the clues are all there, they just weren't clear at the time. Martin: Well, wasn't it Steve Jobs who said it's easy to connect the dots in hindsight? I think that's absolutely...it may not have been Steve Jobs. Everything gets attributed to Steve Jobs these days. But that's a pretty easy thing to do. I just...oh, my...oh, we're done? John: That was a good last line. Paul: You connected the dots. Thank you. John: Steve Jobs has said it's not easy to connect the dots...it's easy to connect the dots in hindsight. Paul: Thank you, Martin. Martin: Sure. John: That's a good ending. Martin: Yeah, it was better today than yesterday. ...
VIDEO: YES

Robert November
BIO: YES: Robert November joined The New York Times Company ...
TRANSCRIPT: Martin Nisenholtz: I am here at the New York Times on February 28th, 2013 with Robert November. I want to start by asking a very simple question. Can you just tell us what your role was at the New York Times insofar as the electronic products are concerned? Bob November: Yes. In the 1970s, I was the Vice President for News, Education, and Information Services. As such, it was my job to help create and supervise businesses which took the flow of information that was coming into the Times and turn them into profitable enterprises. Included in that was the New York Times Information Bank. Martin: Can you talk about the birth of that and how that started? Bob: Yes. I can tell you that... Martin: I don't mean to digress. We'll get back to the... Bob: Yeah. That, I assume, is the purpose. I need to make clear, because it's not from this distance as clear, that we're talking about a time before the Internet when we were building information businesses which were distributed by high speed transmission lines, but they were all dial up and that sort of thing. When the world became computerized, we were looking for ways to, as I say, expand the reach of the New York Times. One exciting and interesting way was how we could make the news and information available in a retrievable mode retrospectively. Part of the story, but it's an important part of the story, is that the New York Times was indexed from its very first issue in 1851. One of the things we did in building an information business was to fill in a couple of years which were in the 1860s, which somehow had been lost. We had a continuous hardcopy record of articles in the New York Times. That was actually a good business because the index and the microfilm editions of the Times were in every major library and in many smaller libraries as well. There was a complete journalistic record of the coverage starting in 1851. Increasingly, the index under John Rothman's direction had become, as he would say, indicative as well as indexed. The published index would give you not only a citation but would give you quite a concise summary of the story itself. The index was published every two weeks and was quite voluminous. In trying to figure out how we could create a retrieval system, the idea was to use the informative abstracts that we were doing every day as a summary of the news in the New York Times. Each of them, of course, had a citation to the full text of the paper. Unfortunately, this was the days before, because of union restrictions, that the output of the New York Times was in machine readable form. But the input, at the time, was in machine readable form. The news department was using word processing, was editing. So the instructions that went to the composing room were machine readable. Martin: What year was this, roughly? Bob: Roughly, I would say we went commercial with the information back in, probably, 1980. What we did was... Martin: And The Times moved to ATex in the early 70s? Bob: Yes, but... Probably not so early 70s. But yes, and the process was a continuous one as to the input, the editing and so forth. But there was no final page makeup, for example. There was no machine readable actual pages in the New York Times. We decided to build an enterprise around the abstracts. That was machine readable and computerized. We created that as a database. I should know, but I don't, probably starting with the 1968 information. We created a technical and a sales staff, so that in 1970 we could offer this to, principally, businesses. Although our index work was with libraries. Martin: You said 1970? Bob: I meant '80. To make it economical, the sales really had to be with businesses and other publications, people for whom the information had an immediate value and saving them the time of going to the index or spending two days looking up something, to be able to do it in a matter of moments was there. We actually built an information bank of the summaries of all the information in The New York Times, with citations. At the same time... Martin: Did you report to Rothman? Bob: No, he reported to me. John Rothman. Martin: So he reported to you. Bob: Yes. When we decided to go forward with this, we hired an ex IBMer to supervise the information bank, by which we meant the technical and the selling aspect of it. So that the index fed into the abstracts, but the information bank was a separate entity. We had sales people. We had customer service, whom we called trainers. Again, this was the days before Internet, so when a customer came on, our trainer would train them as to how to interface with the information bank. We branched out a little bit. I just glanced at the... Martin: Let me just say. Was there anything else like this at the time? Bob: No. Simultaneous with this, the Meade Corporation, which had created Lexis, announced that it would do the same thing for newspapers. But for them to put up the newspapers, they would be willing to make the articles machine readable. Although individual articles were delivered...Our own news service, for example, which went through the AP, our customers would be able to use that as a machine setting. But there weren't newspapers that were advanced enough that they had page makeup. We decided, at that time, the company was committed to being in the information business. As well as the advertising based journalism business. Martin: Which is a very prescient thing, at that point in time? Bob: But it followed, I have to say...Sort of interesting to me. I came to work full time at The Times in 1960. In 1963, there was a disastrous strike by the typographers union. Following that, when Punch became publisher, there was a decision made that we had to create some income stream other than the daily New York Times because we were so vulnerable to labor disruptions. The Times went on an acquisition campaign. That's when Family Circle television stations...In my area, we branched into the education field. We developed, as I said, from our internal resources, library publishing. We began to treat the news service as a business. It seemed important to us that we have this separate stream. We deliberately went our own way. We did that, in part, because we felt we could be the journalistic information bank. Our microfilm business, which was part of the division, we not only did The New York Times on microfilm, but we did The Times of London and a couple of other leading newspapers. We were able to persuade them that we would be the most effective. Martin: In a way, you were the first aggregator? Bob: We were the first aggregator. Actually, with the information bank, we were the first people to think of doing electronic delivery of news information. But it was not full text. It was hard because the world was not very much attuned to getting electronic information. So we had the training and the technology. We got to the point where this was a break even business. At the same time, almost miraculously, it must have been late '81, it became possible for us to get the full text. The composing room system had gotten to the point where we could pick up the composing room output. By having one intelligent person with the actual hard copy of the New York Times and the composing feed, we could eliminate from the composing feed, something which had been cut on the composing floor. We could make sure that what went into a full text information bank was exactly what had been published in the newspaper. That possibility happened in late 1981. It became clear that we should reconfigure the information bank to be full text for The New York Times. Then, frankly, we could go after the same publications that Meade was going after. But with our special sales. The story I thought would have been very good because Meade was in the legal business and so forth. Martin: Just one question. It's a sidebar question, but I need to ask it. There's another stream that we're exploring in this '80, '81, '82 timeframe. Principally at Knight Ridder. They had started a video text service called Viewtron. You would have been the natural... Bob: We did. All along, we tried to follow what was being done. There was a trade association called the Information Industry Association. Martin: Yeah, I remember. The IIA. Bob: I was the president of it. The purpose of that was to make sure we were plugged in. Martin: It still exists, by the way. It's now called the SIIA. (www.siia.net) Bob: Because it merged with the Software Association which turned out to be a more viable organization. But also in that were DOW Jones, McGraw Hill and Meade. Martin: Don Wilson, right? Bob: Yes. We followed that. It didn't seem to us, at that moment, that videotex made...Arthur D. Little had a thing where you paid your $20,000 and you became part of a study group on broadband communications, which we also followed. That had applications, obviously, to businesses, but we didn't see those as being the avenues for The Times. Martin: So you're sticking now with this... Bob: The information bank was our commercial window on the...While keeping our eyes open as to what the other aspects would be. But if we were to go to full text, that required a bigger computer center than we had with the abstracts. In those days, with mainframe computers, there were plenty of time sharing applications. There were companies that had big computers that were not used 24 hours a day that were willing to sell time. The economics of that, I and our division felt, would then make us viable. Without having to make the investment that Meade had to make in its own huge computer center. We were at the point where the abstracts were break even, maybe a little bit profitable, depending how you did the numbers. But it was time to go to full text. That happened to coincide with the change in management at The Times. Where Walt Mattson became the Chief Operating Officer. He decided that we would not be in the information business. We would be in the newspaper business. Therefore, we would make a deal with Meade. They would then offer the New York Times in full text. Although, in a way I don't quite understand, we still kept selling the abstracts. Maybe because we had deals with some other information services to do that. Also get out of the education business, get out of the microfilm business. Get out of all those businesses. That's the point at which I left The Times and found something else to do. I was sad about that, because I thought it was a great opportunity. Martin: Do you know why we decided not to pursue it? Do you have any recollection of any rationale, any meetings, anything that might have taken place? Bob: I can tell you what Mr. Mattson...Walt and I knew each other. We both worked on the western edition of The Times in 1962. We'd been colleagues here. He told me that, as far as he was concerned, we had invested far too much in the things that I was working on, and that henceforth we would concentrate on the newspaper. The amount of capital that we invested in the information business was miniscule. But he was right in that we had had the excitement while he had to do the hard work. That was simultaneous with a huge effort that Punch had initiated with the consulting firm, McKinsey, which had worked in all of our businesses, with cash flow and so forth which was reasonably helpful. I thought I was trained in economics, so this was a useful thing. But it was my impression that the fad then, in consulting, was to say, "Concentrate on your big business and don't waste your resources in sidebars." I thought that was very foolish for two reasons. One is, the geographical reason, with The New York Times. Another reason that we started decentralizing in 1963 was New York City was not in very good shape and it seemed sensible to be in other cities. Hence, other newspapers. I think that message resonated, certainly with Walter, that we knew the newspaper business. We were so good at selling ads that we should concentrate on this. As you know, over the years, they gradually sold all the information businesses but the magazines and the specialized things. I think that was part of the McKinsey strategy. Martin: Were you watching DOW Jones at all, at the time? Bob: Oh yeah. I mentioned, through the Information Industry Association, the people who manage the information business...My successor, as the president of the Information Association was called Lenty, who was...I can't say the counterpart because DOW Jones had invested in decentralized publishing much more. Obviously, it had an information service that was very profitable. Yes, we talked a lot. They were in a different business. They would not have considered joining with us, because they rightly felt they had real time information which people would pay for. But I did follow them. They, as you know, bought Telerate, because they wanted to expand in the information business, which was decimated by Bloomberg, who did a fantastically good job. Martin: And yet, businesses like Wolters Kluwer, which is a business to business information company based in Holland. It's a global company. Reed Elsevier are big businesses today. Bob: They are big businesses. Reed Elsevier prices things very well. No, it was not my idea to get out of the information business. I think it would have been a good thing. What's interesting about it though is, once Internet came in, it became a publishing business. As opposed just to information business. Crazy enough, with the Information Industry Association, the Software Association, the best, I have to say, that I thought DOW Jones and I and the Times were all placing, that the information would be the valuable thing... All of a sudden the software, the ability to get the information, became the valuable thing. Which, of course, Microsoft...I don't have to tell you. The question of how you get rewarded for the information is a very tough one. I must say, I think it's nice that somebody else has to solve that problem now. Martin: It is a tough one. There is no doubt. But the reason that we want to go back and look at some of these early efforts is because there were decisions made at certain potions. Interestingly, DOW Jones did decide to pursue this. I don't know whether it's mismanagement or simply DNA, whatever it is. But it's not like DOW Jones has a business the scale of Reed Elsevier or Wolters...They too... Bob: They saw themselves, incorrectly, in the financial information business. Martin: But Telerate was a failure. Bob: Telerate was a failure because — this is just my reading — of Bloomberg. Bloomberg invested in that system and he understood the customers. I have to say that Carl and Bill Dunne, my buddies, were newspaper people. Bob: DOW Jones was so far ahead of us on the production side. They decentralized publication and they exploited the value of their information amazingly. We didn't have that kind of information. Martin: Right. To be fair, they were in national newspaper very early on. Bob: But it seemed to me that Bloomberg was able to steal the DOW Jones wire and the Telerate business which was built on this very narrow base of bond...The danger of that was that narrow franchise would be somehow undermined which happened and they did a good job. Not directly, but after The Times, I was the publisher of The Bond Buyer, which is a daily newspaper in municipal bonds. And has real time information. It was still kind of a dream, the real time information itself. But there, Bloomberg invested in bond information on a scale that we weren't ready to do. He's (Bloomberg) a very savvy investor. Not with the kind of payback he's gotten on the other kinds of stuff. It was interesting to me that DOW Jones, which made a much bigger bet in this area, was not a success. But I attributed that to Bloomberg. Martin: You also said something interesting, which is that these were newspaper people. The DNA, it seems to me, matters here. Not just back in the 1970s and 80s, but also right up until the present. One of the things that the newspaper industry and the institutional journalism industry in general, has been unable to do, is really understand the intersection between what they do and the delivery mechanisms, the software, services that underlie it. Maybe part of that is simply DNA. Although you brought this guy from IBM in. He should have understood that. Bob: Our organization and our sales were effective. I think we would have been significantly profitable selling full text of The Times. Martin: I think so, too. Bob: But we were not looking at the business of consumer information. We always started working on niches. We worked with J. Walter Thompson on an advertising news niche. But again, that would be to sell to agencies and to ad Vice Presidents, which we saw as our market. In an amusing way, I had not thought of this before. But Bill Dunn and Walter Mattson are similar kinds of guys. They're production newspaper guys. Martin: And your background was journalism? You came up in... Bob: I started working at The New York Times... Martin: In advertising? Bob: After the summer of my junior year at college. This was 1957. I had expected to get a summer job at a bank, which declined to hire me, so I did what is now called networking. I knocked on neighbors' doors. One of my neighbors was the business manager of The Times, who said, "The Times is starting to move from being a family thing to a company. We should think of a way to get bright, young people." I have to immodestly say that I had...The timing of this was fortunate for me, because I had been elected Junior Phi Beta at Harvard, which had, of course, given local newspapers this thing. I knocked on this guy's door. He had just read I was a successful academic. I worked that summer as a newsstand inspector, a summer replacement at a time when The New York Times cost a nickel. But a newsstand inspector's job was to adjust the order, so that you had enough but not too many papers. And when the Middle East blew up, which of course it did always, to make sure the Jewish neighborhoods had enough. But also it gave me a chance to understand the whole circulation distribution system, the broader system which was very amazing to me. By happenstance, a friend of mine was the head of the Harvard newspaper, the Harvard Crimson. The person who had the job of circulation manager was on academic probation, so he asked me if I would do that. For my first half of my senior year at college I was the circulation manager of a 2,000 paid circulation newspaper which was actually a very good experience. When I came to work at The Times full time, I worked in something called the ad promotion department which is the promotion department that works with the ad to write presentations. I did a presentation on selling automobiles. The point of the presentation was to convince advertisers that The Times was the best publication. I learned what would be the hot buttons that work with the advertising people. Then, in 1960, Arthur Hayes Sulzberger, who was still publisher, decided that The Times should publish simultaneously in Europe with here. So an international edition was created. It was directed by a couple...Harding Bancroft and [inaudible 07:33] . Who were senior people. Harding decided that he needed somebody, as he said, to be the amanuensis, which I went to look up. But to be the coordinator. I got the job of coordinating the international edition. It was everything, from making sure we had the light bulbs that fit the linotype machines in Paris to working with the news department to make sure we understood the flow of copy, to make sure we got it... I did that for six months, I guess. It was a fabulous job. Then The Times decided to do a western edition. I spent several years being kind of generalist. But I ended up as the promotion manager of the western edition. Technically I came in, in the circulation department. But in fact, I was just basically in the business department. It happened when we finished with the western edition, that the person who had been in charge of library publishing got sick. I was asked to take that over. I discovered that this could be a significant business. The microfilm business was a multi million dollar business. Interestingly enough, in 1940, Kodak had come to The Times and offered to microfilm the back issues, in exchange for the right to sell them. And to provide The Times with the back issues. The Times agreed to that. Then after the war, a very good company called University Microfilm, in Ann Arbor, which does lots of things, came and said, "Hey guys, that's crazy. If you work with us, we'll microfilm it for you. We're really good at that. And you can sell it yourself. You don't have to give the rights way." When I came into this business, Kodak was selling up to 1939 and we were selling and manufacturing the rest. We persuaded Kodak that this was not the way they should go. We took over that whole thing. Using that as a baseline... Martin: Kodak gave you the films? Bob: Kodak manufactured the films. Martin: But they then turned them over to you? Bob: Yes. They turned them over. Maybe we owned a set. Maybe part of the deal was that we had a master set. Martin: But the point is that all throughout this period, there's a group of people creating this index. Bob: And way back. Martin: And way back. That becomes the basis for this computerized service because it's a database, in essence. Bob: It's a database. John Rothman...When Times got its first computer... Martin: Did you hire John Rothman? Bob: No. John Rothman was hired in 1946. Martin: Is he still alive? Bob: Yes. But he's long retired. He's a great indexer. He's not a great businessman, I have to say, which is why I ended up being his boss, so that we could integrate this into... Martin: But he had a great vision, if he invented this info bank. Bob: He had a great vision. He knew about Boolean searches, the idea. When The Times got its first computer, which was a Honeywell, I'd went to programming school, so I could figure out what a computer could do. We were looking for ways to use the power of the computer and the information that we had. But yes, we had a machine readable record of what went on. There were many exciting sales things that we could use to sell things with, that companies would use it to get background on preparing themselves for annual... It was an effective tool. It's interesting. Because full text searching, obviously, is a much more powerful tool. But it's also much more of a voluminous tool. Whereas abstracts, informative abstracts we made that distinction are impressive. Martin: It seems to me that...I'm not quite sure when Moore's Law came about, when Gordon Moore proclaimed that. I should know, but I don't. Bob: I should know that, too. Martin: But storage, it seems to me, was inevitably going to be more powerful and cheaper, and so the forces were with you. Bob: The structure of the industry was with us. We didn't have to be a huge computer center. For the paper we did, but there were plenty of people who would be happy to sell us the time and host us and hook us up. We were very good on the front end. We had a good technical staff. And then the customer interface. It was exciting and I was sad that that Times decided not to do that. But that's the way it was. Martin: Thank you. This was a fascinating...Is there anything that you think I've missed in terms of this history that is relevant? I, obviously, wasn't there at the time. If there's anything I should add, please feel free. Bob: No, the question that you asked which I asked you but I do want to emphasize that we were not only working on the specific business but trying to keep our eyes open within the industry and within technical development to see if there were other ways to do it. And ultimately, long after I left the Times, the advent of the Internet and retail distribution, as it were, in the publishing side made it different. I am still sad that on the information side this company did not decide to go forward. Martin: I arrived in 1995 and I can tell you, by then, the information services side, the side that you were in, was well established as an industry. There were big businesses already. We had licenses with these businesses, whether it was Factiva or Reed Elsevier. There were others. There wasn't even any discussion of whether the Times would ever compete with those. Bob: That decision was made, I assume by Walter. Martin: 15 years prior. But it was an interesting opportunity that was potentially missed. Bob: It was. It was one, I have to say, they made some money in the very short run. Meade was willing to make the investment then. Martin: It was pretty visionary of a paper company to do. Meade was a paper company in Ohio. Bob: Which bought the Lexis guys. Martin: Which bought the Lexis guys, but that... Bob: I don't disagree with that. Martin: That was pretty ballsy of them at that time. Bob: They did make it. Through the information industry, I was also...I can't say I was friends with the guy who ran it whose name at the moment escapes me, but with whom I served on the visiting committee libraries at Harvard so I knew these people. I knew the next level pretty well. They did. They did an amazing job, both in software and in investing in the database. And then the Meade Corporation sold it just at the right moment, I think. ...
VIDEO: YES

Jonah Peretti
BIO: YES: Jonah Peretti (born January 1, 1974) is an America...
TRANSCRIPT: Martin Nisenholtz: I'm here in Manhattan with Jonah Peretti on March 7th, 2013. Jonah is founder and CEO of BuzzFeed. First question, 5 to 10 minutes. Just background. How you discovered digital journalism. Jonah Peretti: I've been interested for years in how people share content, ideas. What do people talk about? Why do they talk about those things? Why are there some things that seem awesome that don't go anywhere and other things that seem silly or trivial that get spread to millions of people? I accidentally fell into this when I was a grad student at the MIT Media Lab. Nike had launched this service where you could customize your shoes with a word or phrase. Being a smartass, I tried to customize my shoes with the word, "Sweatshop." Nike wrote back saying it was inappropriate slang and they wouldn't put it on the shoes. I said, "No, it means a shop where factory workers toil under unhealthy conditions. It's been in the dictionary for two years." And then we had this back and forth. At the end, they just said, "Well, look. We reserve the right to not do the shoes." I said, "OK, that's fine. I'll change the ID on the shoes but can you at least send me a picture of the 12 year old Vietnamese girl that stitches them together?" Then they didn't write back after that. That was a few emails back and forth. I sent it to a few friends. Those friends sent it to their friends. If you remember back in those days, this was... Martin: What year? Jonah: This was in...Now I'm forgetting the year. Martin: Roughly. Jonah: I'm extremely bad with chronology. I think it was in 2001. I think it was January of 2001. If you remember back to January in 2001, there were these things called email forwards. Even though email forwards was a completely broken architecture for sharing, people would send things to their whole address book. Sometimes their friend would get it 27 times. Their friend who got it 27 times would often get frustrated that they're getting an email so many times. Today, you'll get the content in your Facebook news feed and it will say, "27 of your friends have shared it," but you'll only see it once. Things have improved since then, but even then, when the mechanism for sharing was broken, people wanted to share. This email got shared to millions of people. I ended up on the Today Show with Katie Couric and a Nike executive debating sweatshop labor, which I knew nothing about, because this email had been shared so widely. Martin: And you were at MIT at the time? Jonah: I was a grad student at MIT. Martin: Grad student at MIT. Were you at the Media Lab? Jonah: I was at the Media Lab. Martin: What were you studying at the time? Did you suddenly go into this or were you interested in this at the time? Jonah: I was studying educational technology. I had previously been a school teacher in New Orleans. I went to MIT to think about how technology could influence and improve learning. Then this email happened and it made me incredibly fascinated with networks. So I started walking around MIT's campus, finding people who were experts on networks. My good friend, who also got obsessed with this, was a guy named Cameron Marlow, who now is the head of science team at Facebook. He built something called Blogdex, which was actually very influential and important, back in those days. It looked at all the links that were being shared on blogs and showed you the most rapidly accelerating links that blogs were sharing. I became good friends with Duncan Watts, who is a mathematical sociologist, who figured out the mathematics of six degrees of separation and small worlds, and then various MIT folks as well. And started to just try to understand, how does this stuff work? How is it that, without a printing press or a broadcast pipe, by sharing something with a few friends, I can reach millions of people? Cameron actually said, "These things are anomalies. You couldn't do it again." So after that I was like, "OK." I wanted to try to prove that I could do it again. After that I made this thing called The New York City Rejection Line. Which was a phone number where, if people wouldn't take no for an answer and they were hitting on you, you could give them a local number. When they called it, it would be an automated rejection message. It had a similar effect. It spread virally and reached tons of people. After that, I did something called Black People Love Us, which was a website that looked like it was a personal website of two super white people named Sally and Johnny who were so proud of having black friends that they made a whole website, with testimonials from their black friends. Both the Rejection Line and Black People Love Us, I did with my sister, Chelsea Peretti, who's a standup comic. She went on to write for Sarah Silverman and “Parks and Recreation” and does standup. But at the time, nobody was trying to make things go viral on the web. YouTube didn't exist. Facebook, Twitter didn't exist. It felt, to me, like there was something new and different, which is that, if you made something really interesting and fun, whether it was humorous, provocative or political, it wasn't clear what it had to be. But there were these things that a person could make in a weekend that would end up spreading to millions of people. That, to me, seemed very interesting. So, I started doing work with political campaigns. I started doing work with non profits. I started doing some consulting with companies all around trying to understand how this stuff works, and why things get shared, and how they get shared. Martin: Email was basically the technology of the day. Jonah: The Nike email forward was an email. That was spread through email. The Rejection Line was a phone number. We actually got voice boxes and we ended up filling a T1 voice line continually from early in the morning to late at night of people calling and hearing the Rejection Line. Black People Love Us was a website and that was a little bit later. That was in 2003, and that started getting shared on blogs and message boards. "The New York Times" wrote a nice profile in Sunday Styles on it. In each successive project, the time for it to spread got shorter. The Nike email was six months before it started to die off. Rejection Line was three, and Black People Love Us was one month. The networks and the ability to share kept getting more and more tightly connected so that media would spread faster. You'd reach more people more quickly, but it would die off more quickly. That was the kind of work I was doing at this non profit in New York called Eyebeam where I was the Director of R&D. There were a lot of artists who worked in my lab. That was sort of my personal work, but I also ran this lab of artists who were doing all kinds of different work. Some were doing robot... Martin: You left MIT in taking this job in [inaudible]. Jonah: Yes. A lot of people don't know the story of Eyebeam. Josh Schachter would come. When he used to work at Morgan Stanley, he'd come and work on Delicious at night from Eyebeam. Jeff Hahn, who did the technology that made those election screens that you see on CNN where you can zoom things around, was working on projects at Eyebeam at night. I was doing these contagious media things. There was a group there called the Graffiti Research Lab that was building all kinds of technology for graffiti. They've been covered by The Times and some other publications widely as well. So, we were sort of activists, artists, hackers. We released everything under open source. We did a project called reBlog that was an RSS reader that let you click a button to reblog things you wanted onto your site, so you could curate a site. That ended up inspiring Tumblr and other services to have this simple thing. It was all totally non-commercial, totally...Because it felt like there was these interesting things you could build on the Web at that time. We had the support of John Johnson, who was the founder of Eyebeam, which allowed us to have this space where we didn't have to worry about generating any revenue. We could just worry about doing things that we thought were worthwhile. Martin: Ken Lerer finds you there or...? Jonah: Ken Lerer calls together a summit to help with his gun control cause. He has John Borthwick invite leaders in the Internet field, the smartest people in New York, who know about technology, who could help with his cause. I was, actually, not one of those smartest people. I was friends with Duncan. Then, Duncan called me and said, "Oh, some rich guy is doing this thing. I'm an academic, I can't really help him. Why don't you come along? He really should be talking to you." I said, "Well, I don't know." Duncan had broken his leg skiing, and he said, "Well, the guy gave me his car, his driver for the evening, so afterwards we can take the car wherever we want." I was like, "Oh, OK. Let's go." We go to this thing, and I'm kind of crashing it. Everyone is pitching different ideas to Kenny about this gun issue. Scott Heiferman was there, Jeff Jarvis is there, both with various other people. Scott's like, "You could create meetups for this cause." Jarvis is like, "You could do blogs." Everyone's talking about their stuff. I just talked a little about the viral things I'd done. Kenny was in a mode where he wanted to work with lots of people, so he was like, "Hey, why don't we try to make something viral about this gun stuff? Why don't we work together on that?" He ended up coming to Eyebeam and seeing these research labs that we had, that would brainstorm ideas. Separate from that, Kenny and I ended up working on this Stop the NRA Campaign, the NRA Blacklist, where there was a list of people that... Martin: It didn't work. Jonah: It worked short-term, not long-term. It resulted in a legislative victory and then the legislative victory was later eroded. But it got a lot of people to sign up for a list. It put pressure on Congress and it resulted in a short-term win. Kenny is still working on the longer term battle. But that's how we worked together. I had never been interested in business, hadn't done anything in business, had also never done anything in journalism. I had friends who were reporters and always like them, because they were curious. Martin: You were a teacher? Jonah: And I was a teacher. Yeah. I was a teacher, and then a technologist, and then a maker of sharable things on the Internet. I had friends, who were reporters, who it seemed like a noble profession and they were curious, thoughtful people who you would have good dinner party conversation with. So I was favorably inclined towards journalists. Doing Rejection Line and Black People Love Us and the Nike email I talked to tons of reporters about those projects. But always reporters who were the most web savvy reporters, who would get...their friend would email them this story, would email them the project. They would see it and get the idea independently, "I should write about this." Martin: So now you worked with him on the NRA thing and he's now partnered up with Arianna [Huffington]. Do you contact him? Does he contact you? How did that... Jonah: We were working together on some things. Then he was like, "Let's do a company together." I was like, "I don't know." He's like, "I know business. You know the Internet. We should do something." We basically agreed to do something but we weren't sure what it was going to be. We were talking about what it might be. Then at some point, he went and met with Arianna. Then he started saying things like, "So, our company with Arianna." I was like, "What?" [laughter] Jonah: He knew I was from a very different world with very different interests, and wasn't a creature of the media world. He knew that he needed someone who understood the web and technology. I ended up flying out and meeting Arianna. I remember we had a 7 AM meeting which, for me, is incredibly early. She was already in a meeting with another group when I woke up, came out of my room in her house and she's already at the table having a full breakfast with like some NGO in LA that was working on an environmental cause or something. I was like, "What?" I don't know if I was the second breakfast. Maybe it was the third or fourth. But she was definitely starting earlier. Next thing I knew, Lori David was there and we were flying to Phil Angelini's rally in Sacramento, which wasn't planned. I came back feeling like, if anything, it would be an adventure. Arianna was incredibly charming and tireless and driven. Then we formed a partnership, also with Andrew Breitbart, who used to work for Arianna. The four of us went into business together. We started hiring a founding team. Then, of course, Roy, who was working with Arianna previously and continued, became a partner at HuffPost too. Martin: We'll drill much more deeply into HuffPost in a minute. I just want to finish the bio. So HuffPost is sold to AOL. Do you go to AOL then? Jonah: No, I didn't. I started BuzzFeed as more of a lab, to try to understand various things I was thinking about, as HuffPost was scaling and on its path and growing, and went from being full-time at Huffington Post to being one day a week at BuzzFeed, and then went to half time BuzzFeed, half time HuffPost. When we sold, I was about one day a week at Huffington Post. So I would go to the operations meetings, which was all the senior managers. I would spend a lot of time emailing and IMing and talking with Paul Barry about product and tech, and spent a fair amount of time talking with Kenny about various things. But I wasn't day to day when we sold. So I considered continuing to advise the HuffPost-AOL entity post-sale. But it seemed like a natural breaking point and I wasn't doing justice to BuzzFeed by also thinking about the issues that were important to HuffPost. There was a lot of overlap, but I realized that it was a lot less overlap than I thought. And that what you think about in the shower and in your down time is one of the most important things, in terms of providing value to a company. It was hard to do that, being involved with two companies. Your subconscious was having to fight over what it thought about. Martin: It's interesting, because we've spoken with a few folks now...Yahoo News was a breakthrough in the mid-nineties. Because it was really the first technology-based news service to take a wire service — it took Reuters — and blast it out there, in a more or less very current and real time way. It quickly became the largest news service on the web. But Huffington Post, I think, was the first news service that really got to scale without much of any original content that was created for another form. Is that correct? Jonah: Yeah. I don't know if anyone else has done it. But we definitely did it. [laughs] I'm trying to think. Martin: I don't think anybody else did do it. Let's assume that they didn't, which means that you guys had to have some kind of insight that allowed you to create something quite large. Was it the share? Does it all go back to sharing? Is that the basis for...Or is there a formula that you think is... Jonah: I ended up taking a side journey into search. One of the things that was disappointing to me was that there wasn't really a way to build a big site on social, when we started Huffington Post. You could get some, but we were pretty...It was word of mouth. There was some sharing. Blogs sent a shockingly little amount of traffic. They were talked about so much. But having all the blogs link to us and talk to us got us to be like a one or two million unique visitor site. It wasn't enough to build a really big publishing entity. The traffic was still largely in search. So we figured out some new things with search. Also, Google changed it. It used to be...If you think of a classic SEO consultant would go to news organizations and say you should create topics pages. You should have every major topic and then you should keep linking to those topic pages and trying to win and get in the top ten search results. Martin: We invented that, right? Jonah: Yeah. You may have invented it. That made a lot of sense for Google during that era, because Google wasn't that fast. Google couldn't catch up, especially when it was purely based on PageRank and inbound links. It couldn't quickly know, "This is a breaking story that everyone's searching for." So Google actually was broken for things like Michael Jackson dying. Or whoever died five years before Michael Jackson. It couldn't quickly index it. So the topics pages made sense. It was like, you searched for the general topic and you land on The New York Times topic page. It has all the articles there. The new ones are at the top. What we discovered was that, when there was some person, place or thing, some noun, that wasn't notable and all of a sudden became notable... That Google was, for the first time, able to quickly react and index that. So like a beauty queen loses her crown. Nobody cares who Miss Wisconsin. But if Miss Wisconsin loses her crown in some sex scandal or something, lots of people search for her name, which was an unknown name the day before and now is a name that's on every television show and that...if you swarm that, you can be the top search result for that. That was something that was new, because of changes in Google, and that nobody really understood and no one was really focused... So there was a period of a couple years where we were able to swarm big stories, in a way that worked really well for the Google ecosystem. Martin: Were you writing stories for the Google ecosystem. There's a difference — it may seem like a nuance at the outset, but it'll relate more to BuzzFeed as we go forward — between this notion of taking what you call a big or important story and sending a fire hose of traffic to it by optimizing it, versus tuning the news creation to this particular distribution channel. Jonah: No, I get what you're saying. Martin: I'm not making a judgment. I'm really not. I'm just saying, this has become a theme in some of this history, which we'll get to in a little bit. Jonah: Search lends itself to looking for where there's demand and filling the demand. The most extreme case is a company called Demand Media. The reason they're called Demand Media is because they noticed that there was lots of demand for certain things. Sometimes long tail demand, like people searched for, "Lemon poppy seed pancakes." Because they've had them once and they want to make them. And there's no search result for it. This was what About.com did before Demand. Martin: That's why I didn't include About. I don't view About as a journalistic institution and I don't view Demand as a journalistic institution. That's why I didn't even include...About did get to scale with native content. But I didn't include them when I talked about your doing it first, because it's not journalism. Jonah: Right. I don't spend very much time thinking about what's journalism and what's not journalism. Not that I think it's bad that there's people who do that. But when you think about something like Heath Ledger dying, Huffington Post would have five people writing a story and seeing what everyone else is writing and seeing every single breaking news. So aggregating from other sources, linking to other sources. A few sentences of original, a link to, "The Washington Post is saying this. The New York Times is saying this. This was just discovered by TMZ." This was discovered by tagging it and continually updating it. Google would look at that page and say, "It's linking to all these authoritative sources and it's constantly changing and getting updated. So it must be a good source for consumers since it's constantly getting new information." It's also tagged with Keith Ledger, because people who aren't that familiar with the actor thought his name was Keith Ledger and were searching for Keith Ledger. So we were number one for people searching for, "Keith Ledger," which is useful, for people who are searching for the wrong thing. It gives them the right thing. We didn't say his name was Keith Ledger in the article. But we brought people there through search. From a user perspective, landing on that page actually was a good experience. You do a Google search. You're like, "Keith Ledger died." You search, "Keith Ledger died." You land on a page and its a page that shows you everything people are saying all over the place, that has commentary and a voice and a perspective and it continually updating. Eventually — I don't know if we had it at that time — Twitter modules and Facebook modules and content coming in from other sources, comments running on the site. So, all of that made a page that Google liked and that consumers liked as this one stop shop to find out all the things that are happening all around. Now, the question that some people ask is, "If you are a news organization and you have five people on the scene and you're doing tons of original reporting and you're writing these stories and collecting things and it costs much more and HuffPost is getting more traffic than you, is that fair?" One example of this, I remember some reporter calling me to ask about this a while ago. It was, The New Yorker did a long scientology story and the HuffPost outranked The New Yorker story in Google. The reporter was like, "Isn't this unfair? Think how much The New Yorker spent on that." But when you think of what a consumer wants. A consumer is in their office. They have a little bit of time between meetings. They heard some buzz about a scientology piece in The New Yorker, they search for it. They get a page that has some bullet points that explains what's in it, a link to it. Like, "You might want to read it." And three or five percent of people are like, "Oh, I actually do want to read this long piece." And other people are like, "Oh, I'm glad I know what it's about. I don't really want to read this. But I'm glad I know what it's about." From a purely algorithmic perspective or purely technical perspective, Google is giving people, in that case, a good consumer experience. But from an economics of journalism perspective, there is a problem, which is that The New Yorker is spending a huge amount of money to produce this long story and they're not getting as much traffic online as Huffington Post, which might have spent two hours on it, or some even shorter amount of time. The time it took for the editor to read it and pull out relevant things. So one question is, what's good for consumers? Then there's this other question of what's good for journalism and how do you build sustainable models for journalism? Martin: I think that's a great place to go next. There are people — I'm not one of them — who would say there was this original sin, in 1995, when The New Yorker, or The New York Times, or whomever you want to talk about, decided, A, that journalism should be free, but even more important, in this case, that fair use and copyright law was OK the way it was, it carried over into a new world, an electronic world just fine. And that links should be fairly shared. I'll just use him as an example, again, not making any kind of value judgment here. But Rupert Murdoch basically is saying, "Absurd for content to be free, absurd for links to be freely available through the social web, because that's also our content. Copyright is fundamentally broken." What do you think of that dynamic, given where journalism is today, in its more traditional incarnation? Jonah: Part of the problem is that people get so rooted in the way something worked in the past, that then all of their thinking about how things should be in the future is to justify the economics of an older business model. It's a historical accident that classifieds were so profitable for newspapers. It may be a historical accident that newspapers had monopolies and could do low quality advertising that wasn't very visible, that still brought in gobs and gobs of money. So just because that's how it was 20 years ago doesn't mean that's how it should be and doesn't mean that online distribution should have the same economics and should follow all the same rules. Just trying to get the web to mimic what print business provided probably isn't the best way of using the web. When you look at what technology companies have built, the technology industry is many times larger than the media industry. From a purely economic perspective, like selling iPads and iPods and computers is a lot better business than selling music even when music was in its heyday. So it depends what you care about. If you care about the economy, you need to zoom out a little bit and look at the bigger picture. If you care about journalism, you need to think, "What does the web give you that you didn't have. Why does someone who lives in Philadelphia have to read the local Philly paper and not everything great being produced all around the country? Why do I have to read a third rate write-up of what Facebook's IPO means because I happen to live in one city and I don't live in a city where they have a good tech writer? I'm forced to read that. Is that better for journalism than the very best people in the world are well read because there's a global network where people can share information and pass things around? So I think that there's a tendency to focus nostalgically on the things that are lost, and not enough focus on, what are these new opportunities? And how do those new opportunities give us more of some of the things we really love about journalism. Martin: As Jeff Bezos says, "The web giveth, the web taketh." Jonah: Yeah, it's true. Martin: It is true. Jonah: [laughs] Martin: [inaudible 0:30:11] close, I think of all time. [laughter] Martin: Look, obviously you know I'm playing devil's advocate here, but I do want to go back to this New Yorker example because it's really a good example. The reality is that a lot of journalistic institutions are in deep trouble. It's very hard for me to see the substantive, high-quality thing that replaces them. I'll give you an example. You mentioned Philadelphia. I'm from Philadelphia, I hate to admit, but I am. "The Inquirer" used to be a very, very good paper, actually. It may still be. I don't want to bias this in any way. All I'm saying is that they've been sold, like 3 or 4 times in the last 10 years. The last time, for pennies on what they were sold for on the dollar before. Tribune company is in bankruptcy. So, Jonah, nobody seems to be able to come up with a model for local journalism so that all of these corrupt state houses have a watchdog in their community. I think your point about the "New Yorker" article...Well, I think "The New Yorker" is going to be just fine. It's part of Condé Nast, and it's a national publication, and it has a global reach. There are other forums that are not going to be just fine — it's part of Condé Nast, it's a national publication and it has a global reach -- there are other forms that are not going to be fine. Jonah: By the way, BuzzFeed just published a 6,000 word piece on scientology. Martin: You took some shit for that, too. Didn't you? Jonah: No, I think you're thinking of something else. Martin: Oh, I am. Yeah. Jonah: [laughs] We take shit for things. But we didn't take shit for that one. [laughs] But it was a piece of former scientologists talking about what some of them were calling a real estate scam that scientology was running. So it is possible to fund that kind of work online. We did it. But to me, I agree. It was a very interesting philosophical question. Should Google...Or now, Facebook is even more relevant. Martin: Twitter is the most relevant. Jonah: Or Twitter. Should they be organized for the good of the consumer and what the consumer likes, or should they be organized for the good of the business models of existing media companies? Or should they be organized according to some higher principle of journalism or what people should receive? Those are three very different things. You would organize what you feature very differently. Martin: But this is a history. John Huey characterized it this way. He said, "Look, it's a timeline. Below the timeline, there's this incredible tide — all the events, the technologies, the things that happened, the invention of the Huffington Post, etc. Above the timeline are these swimmers. There are people who are making decisions and trying to find their way." One theory that a lot of people have thrown out is that the tide is just so powerful that the swimmers are inevitably going to drown — at least some of the swimmers from the old world. Another theory is that, the decisions that I talked about before, the historical decisions, the decision to give content away for free, give links away. The link economy, as Jeff characterizes it. Not go hard at copyright. These were decisions that were made, in the mid to late nineties, early 2000s. I made some of them. Things would be a lot different if they had been made in a different way. That's really what I'm trying to explore with you here. Jonah: In the old school newspaper wars, in the William Randolph Hearst era — I'm not so well versed in this history, but have read a little bit about it — it sounded more similar to what's happening now than what happened 10 or 20 years ago. The way the industry was. People would rewrite each other's stories. It wasn't linking or aggregating. But you send someone to cover the Spanish-American War and then it's in another paper and you're like, "I spent all this money to get this scoop and then someone has a morning edition and can quickly rush out there version of the story." And they write it with more voice. It's not like you can copyright reality. You're reporting on the news. If you have any self-respect about what you're doing as a profession, you want the public to know about what's happening in the world and to be more well-informed and to know what's happening. It's not like you've created a movie and you want to maximize your revenue from the movie through every release window and control the content as much as possible. Once someone knows that a plane has landed on the Hudson, there is no way to tell people, "Hey, no one else is allowed to report that a plane has landed on the Hudson. That is our intellectual property." I don't think it's that someone made some mistake early on. It could have been even worse. It didn't work out so well for the music industry, to sue their own customers. It could have been worst if the newspaper industry had decided that any time someone tried to rewrite their story, they were going to sue them. It's not clear to me that it was about bad decisions. I think the Internet is a massive technology that has changed so many things. It has a certain logic to it. Networks have a different logic, that is counterintuitive to people. The way networks function is still counterintuitive to people. Now that's a primary way that media spreads, it's through networks. Increasingly through social networks, where people are the ones making the decisions about whether to share stuff. That would have been true, even if every piece of premium content was behind a pay wall. It just would have led to more content being created outside of those pay walls, and more rewriting of content hidden behind those pay walls — which is something that's pretty impossible to prevent. Martin: Skipping forward now. Your point about scientology is a really interesting one. We just had the Goldsmith Awards, at Harvard. You basically sit and listen to these six or seven teams of reporters who've gone out and done really important, socially-moving, things. One was a tribute series on fire retardants and the corruption in the chemical industry. Putting that aside, it sounds to me like what you're saying is, a new formula is emerging. A new business model or set of economics are emerging. It might not be the Tribune Company doing those things in the future. It could be BuzzFeed. It could be the Tribune Company. I'm not suggesting it wouldn't be. I'm just saying that you believe that it is possible to create an economic value around which socially important journalism is created. That takes significant investment. Not just rewriting somebody else's work. But putting a team out there for six months? Jonah: Yeah. For sure. Martin: Could you talk about that? What is that? Is it The Huffington Post? Is it BuzzFeed? Is it both? Is it other things? Jonah: I try not to talk about Huffington Post, because I'm not there anymore and I don't know the latest of what's going on there. Martin: Sure. That's fair. Jonah: One of our goals at BuzzFeed is to build a real, sustainable business that generates profits, to build a media company for the social age. There are all these big media companies that, 10 years ago, Time Inc., The New York Times, all these companies were worth $10 billion and were seen as really great businesses. But you haven't really seen that with digital yet. You've seen people build companies that, by old media standards, are fairly modest. I think that's because we're at the beginning of a transitional period and that eventually it should be possible to build much larger, more successful, more profitable companies in the digital space. But you have to be native to digital. You have to have a business model that works for the web and for social. So that is one goal. The reason I start with that is because I think there's some kind of a Zen paradox. Where if you start with journalistic goals, where you say, "My goal is to have great journalism like we used to have," or, "My goal is to have great journalism like the kind that's really expensive or whatever," that it works against the long-term goal of having good journalism, because you end up starting with this assumption that you need a rich billionaire, a non-profit or a public service philanthropic organization to fund it. And people aren't trying to pull their own weight. You end up, at the end of the day, with less resources to invest in journalism. BuzzFeed started where the social web was, which was fun, sharable content. Internet memes and humor and cute animals. We built an audience. We built a business and we built a new model for advertising. And that is what allowed us to hire Ben Smith. That is what allowed Ben Smith to hire all these talented reporters that he's brought on to the point that we were able to have the budget to have people travel with the Romney campaign, have Michael Hastings covering Obama. We were able to do a lot more by building a business that was more than just a narrow vehicle for, "We want to do a certain kind of journalism and reporting." Martin: So it was kind of a reverse mullet strategy? Jonah: [laughs] Yeah. I feel like I've replaced the mullet with the Paris café, which is the idea the nobody wants to go read philosophy by themselves in the library. You want to bring your Sartre to the cafe and you want to have your copy of Le Monde. When you turn to pet the cute animal, it doesn't make you stupid. When you flirt with someone at the next table or gossip about something trivial, it doesn't make you dumb. People are interested in lots of different things. You can be smart, but also have a heart. You can have a heart, but also be interested in something trivial. All of those things can co-exist. So that's where we started, at BuzzFeed. But we realized, looking at our audience...The majority of our audience is 18 to 34, according to ComScore. We never really tried to go after that demographic. But those are the people who are most active on social. Those are the people who are sharing. Those are the people who, for whatever reason, flock to our site. They tend to be very educated. They tend to have high incomes. They tend to live in big cities and be the kind of people that omnivorous about culture and all these different things. That's before Ben Smith arrived. Those are the type of people reading. Those are people who are interested in politics and in business and in sports and in news, and all these other things. They weren't getting it from BuzzFeed. But that audience is hungry for those things. For our audience, it was natural to add those things, to add that and make the site better and grow out ambitions and grow the mix of content. Martin: Talk a little bit about the business model, at this point. Because I think everything you said is really laudable. The thing that I'm a little bit suspicious of, only because it's been 32 years of this up and down stuff is that advertising a solid enough revenue stream to do what you've just described. Tell me why you think that's the case. Jonah: I don't think banner ads are a solid enough basis for it. And just like this shift has happened on the editorial side, towards social distribution of content, the same shift is happening a little bit later, on advertising. Where the leverage you get from massive networks can mean the same piece of creative and the same size media buy can get you much more distribution. It also, from my perspective as someone who didn't grow up in newspapers...The church, state separation is very important. And Ben Smith is very rigorous about it. I agree wholeheartedly that church and state is really important. The thing I don't like about the church, state division, as someone who sits above the divide, is that it can lead to a two tiered system where the journalists are seen as the whole purpose and greatness of everything, and that the people in advertising are seen as a necessary evil that are doing things that, "Well, you kind of have to do, but it kind of sucks. In an ideal world, there would be no advertising." To me, that just seemed a deeply flawed way of thinking. If you think that way, how do the people who work on ad side do good work? You're like, "You're a necessary evil and you're just here to support these journalists." There's no way for them to do good work and there's now way for them to innovate and get the resources they need and to be taken seriously. So we have said, "We have church, state. But we want to avoid conflict between them and set up a situation where both of them can go for it and try to do really great, innovative stuff." So we've developed advertising technology that now is starting to power other sites. Other people are using our technology. We are an advertising solution, not just for BuzzFeed, but for Twitter, for Facebook, for the social web. People are launching content on BuzzFeed and using our social discovery team to push that out to Facebook and Twitter and other platforms. So, the scale is really infinite. The expertise we have, in terms of data and technology about how to make advertising work in a social era is something that gets us into this much bigger market that's beyond just monetizing our site. It's a new approach to advertising and marketing. Martin: It reminds a little...I don't want to be hyperbolic here and I don't mean to be at all. But just in terms of ... it reminds me a little of Google, writ smaller. In other words, Google essentially had a search engine and discovered a kind of native ad format on that search engine and took it out to the world. Jonah: Yeah. The reason that Google AdSense has maintained margins, has been a good business, is because they've had the search engine to bolster it. If we can have a giant, owned and operated hub for social content that also is an ideal place to launch social advertising, then we can extend that out to other sites. That makes what we're doing on other sites more powerful, because we have more data. We have more knowledge. We have a better platform. We have better technology. We can innovate on our own platform and see how to make things work better and then extend that out. So, learning from tech companies is something that media companies need to do more of. Google, obviously, is a very aspirational thing to look at. But some of the stuff that Google has done and Apple has done has been very inspirational to us, in terms of how we run the company and some of the way we organize the company — with every employee having stock options and with lunch for the whole company in our cantina, drinks and snacks — and some of the things that you associate more with startup companies, have had a great effect on what we're able to do, even though we're, in many ways, a media company. Martin: That's interesting. I lost my whole train of thought now. Jonah: That's my goal, to make you lose your train of thought — and anyone who's watching this. Martin: You talked about Google and Apple as models. Do you look at others as models. Is anyone in media, in your mind...They can be small companies, too. Is anyone doing it right at this point? Jonah: I love The New York Times. They have a great site. They have consistently had a great site for many years. The content of The New York Times is great. I read The New York Times every day. The reporting is great. We've learned a lot from partnerships we've done with The Times on how to think about this growing journalistic enterprise that we have at BuzzFeed. There are a lot of other sites that...I love the MemeARandom sites, which is not really the kind of company you're talking about. But for someone in the industry, as a trade publication 2.0, reading MemeARandom and TechMeme and what's the other one? I'm forgetting the name now. MediaGazer. I find really useful. I'm trying to think what other sites I read. Part of it is that things are getting a little less site based. It's more like your Twitter feed and your Facebook feed is what you look at. But then you're like, "Oh, that's a really smart piece by The New Yorker. That's a really smart piece by the Times." The brand still matters. You're discovering it not my directly navigating but in your stream. Martin: How important is Twitter to you, at this point, as a distribution channel? Is it feeding you half your traffic? One percent? Jonah: In raw numbers, it's not that significant. In terms of influence and importance, though, it punches above its weight, as our president says to every small world leader. Martin: So is the main man Facebook? Jonah: Facebook sends much more. Pinterest sends more to us then Twitter. StumbleUpon sends a fair amount. Reddit, very spiky, but sends a fair amount. Email and some of the dark social stuff sends a lot. Martin: It sounds to me like you have, in this Zen way, totally embraced what the Internet is, in order to build something important. Is that characterizing it correctly or not? Jonah: I think so. But it wasn't like I let go of embracing something else. It was easier to embrace the Internet, because I never had another girlfriend. [laughs] Martin: You can't conceive, for example, of charging for BuzzFeed? That would be just antithetical to the whole social philosophy of it, right? You're married to advertising? Jonah: Yeah. I do think that there's lots of interesting new business models emerging and it's hard to know which ones are going to be important. Martin: Do any of them make any sense? Jonah: Like Ben Lerer, who I'm friends with, at Thrill List. Combining media and commerce has worked phenomenally well for him. Could BuzzFeed do that in the future? I don't know — maybe. Social plus media, Mobile plus media, Commerce plus media, there's all these media plus something that seems to be producing things that are more than the sum of their parts, so some of those could lead to whole areas beyond advertising, or just new kinds of advertising that could be sustainable and promising and build a big market. Martin: So I guess you think that we're at the beginning of something? This is not mature, it's almost experimental, still, the whole idea of journalism and digital journalism? Jonah: I think that you had an era where portals were dominant, an era where search was dominant. Now we're at the beginning of an era where social is dominant. So digital feels old and has been around for a while. But social, to me, seems like it has more potential both to create new, interesting kinds of monetization and also to be a friend of original reporting in journalism. Googlebot is dumb and will aggregate the page that has the most keywords, that seems the most relevant to...but it doesn't know that that's not the original piece, or the authoritative piece. Whereas on Twitter, nobody is going to retweet that piece, no-one is going to share that piece. Even the Heath Ledger piece I was mentioning, it's useful to the consumer who does a search and lands on the page, but it's not the most shareable piece of content. It's big, and it's messy, and there's lots of information, and you don't really respond to it in an emotional way, the same way you do something that is cleaner and tells more of a story. People will retweet the Ben Smith scoop or the Hastings scoop. They're not going to retweet the rewrite of it. I think that actually makes the reporters that we've hired...They pull their own weight in terms of traffic because of the social web. Martin: How much of your traffic do you buy? Jonah: We don't buy traffic. Martin: You don't buy any traffic. Jonah: The only traffic we ever buy is R&D for branded content distribution. We have a social discovery team that can buy on Facebook and Twitter and all these other platforms. We will often use our own content when we're testing a new approach or a new idea, not so much to drive traffic but to measure how stuff is working. Martin: Interesting. You don't see any future in arbitrage in social in that way. Jonah: There might be. There's probably more of a future in if you had a paid app or something like that where you could make the arbitrage work. It's harder to make it when it's... Martin: I agree. Is there anything...You're talking not to me but you're talking to... Jonah: I'm mostly just talking to you. Martin: Much harder to. This is an important project for people who are going to thinking about this and writing about this for many years to come. Is there anything that I haven't asked because, obviously, I came prepared with a set of questions but I don't know what I don't know? Jonah: Right, and there's lots of things that I don't know so we're even. [laughs] We're in the midst of what we're building at BuzzFeed so it's hard to know what will hold up historically. The reason that I tend to not write that much or not share too many detailed thoughts is that, it's nice to be able to change your mind. Particularly like a book. Someone's like, "Oh, you should write a book." I know that writing a book would commit me to things in my own mind. I'm not talking about worrying about other people seeing me committed to things. Just in my own mind, you have to find a more rigid theory to be able to write something of that length. One of the keys to building something successful right now is having flexibility and open-mindedness and being humble about you actually know about what you're doing right now. Even when you're like, "Would you charge for it?" It just seems like there's no way we'd ever charge for BuzzFeed. But keeping an open mind to any sort of possibility lets you have better ideas. ...
VIDEO: YES

Mike Perlis
BIO: YES: Michael S. Perlis is an American business executiv...
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

David Pogue
BIO: YES: David Pogue is the founder of Yahoo Tech, having b...
TRANSCRIPT: John: Hello. I'm here in Connecticut with David Pogue of Yahoo. David, why don't you just start off telling us how you ended up where you are? David: Sure. Do you want me to talk to you or to the camera? John: You can talk to me. David: Let's see. My interest was always in magic. I was always a fan of "I dream of Jeannie" and "Bewitched", and I was an amateur magician for many years doing birthday parties and block parties. My own self analysis is that technology is the closest thing we've got. I can take out my phone in San Francisco and change my thermostat here in Connecticut, that's pretty close to magic. I was a Broadway conductor for 10 years out of college. I was a music major. I originally started getting into technology for the purpose of generating sheet music. That was my first interest in buying a computer, printing out beautiful types such sheet music. Over time, my clients for... ...what is that? John: I don't know. That's OK. David: Anyway, I started out as a Broadway conductor right out of college. I did that for 10 years, playing the piano in the pits. I started getting interested in computer software because of the blossoming field of sheet music, types of sheet music. You know what? I'm just going to...that's outside. I can just close this door. John: OK. David: Hey guys? Is something going on with the plumbing? We're recording here. Can you give us a few minutes? Woman: Sure. David: All right, thanks. David: Working on the plumbing. I was a Music major. Then right after I got out of college, I went to New York to work in the theater. I was a piano player, an arranger, and conductor for musicals. I've always loved musicals. People say, "Oh, you're a musician." It's really just a theater musician. I've never been a rocker or whatever. I got interested in computers, because there's a blossoming field of type-settable sheet music software that I wanted to get into. That was really the beginning. Then I was asked to teach people how to use it, and to write about these kinds of programs for computer magazines. Before you know it, I was more in demand as an explainer than as a conductor. John: Which computer magazine did you start with? Who brought you in? David: Well, it originally started in New York. I worked for a little computer club called the New York Mac User Group. Their magazine was called the MacStreet Journal. It was an eight-page xeroxed newsletter. Then that editor, bless his heart, suggested one day that I could actually make money doing this. He suggested I send my clips to Macworld and MacUser, which are big glossy computers... John: That was about when? What year was that? David: 1989. John: '89, OK. David: I wrote for Macworld for 13 years. I am sad to announce that its final printed edition is November 2014. Its run finally ended. I wrote for Macworld for 13 years. Then The Times called in the year 2000, and asked if I'd like to take over the personal technology column. I did that for 13 years. John: That cycles. David: Yeah, exactly. David: So, now, last summer, Yahoo approached me about starting a Consumer Technology site, a presence there. They really impressed me. First of all, they were at the time sort of an underdog. They had a very start-up mentality. Everybody walked around with this.. David: Last summer, Yahoo approached me about starting a new Consumer Technology website. It had a very start-up feel to it. I would hire people I wanted. I would shape it the way I wanted to. It was a kind of freedom I'd never really had. Yahoo is both a huge multibillion dollar corporation, but it also feels like a start-up. All the conversations there center on, "What can we build now?" and "What should we do next?" which is not a conversation you hear in old media that much. John: Yes. You never were a programmer or anything like that. It was really the magic of the sheet music thing. David: Yeah. I was never a computer guy, really. I've never taken a computer apart. I've never programmed seriously. To me, that's my ace in the hole. I represent the people I'm writing for. I come to it as an outsider just like they do. John: Can you think of any Eureka moments over the past 20 years where you have said, "Wow. This is bigger, more important." What moments strike you as far — on your journey of discovery? David: I am old enough to remember the dawn of the Web. Actually, the first time America Online came aboard and I was typing live chat with other people I didn't know, that was a little bit of a mind blower. Then the Web gradually became something for the masses. That, too, really changed the game. I remember two products that gave me chills. One was Steve Jobs first held up the iPhone. I'm like, "That thing has no buttons and no keys. What is he thinking?" Man, they saw so far out that day when they showed the iPhone. That really has changed everything. I mean everything! The touchscreen Smart phone...I mean it's now, who buys radios anymore? Who buys cameras anymore? Who buys newspapers anymore? It's all there. I also remember Apple introducing the MacBook Air, a laptop, because it got rid of the DVD drive and a lot of the jacks. It became something else. It wasn't really a laptop. I was invited to interview Steve Jobs after their presentation and it didn't hit me until I saw it lying on his desk there. It looked like a cookie sheet lying on his desk. It made no lump at all. I was just amazed. To this day, the MacBook Air is my main machine and it has no moving parts, so it never dies. It's an amazing creation. John: Did it ever strike you, as you noted, Mac world is close now to magazine issue. Is that a natural progression? Were you surprised that papers and publications and the old media just.. the transformation has been broad? David: Not surprising. When you look at the big picture of technology, there are certain things that you can see as parts of macro trends, so discs for example. They're all going away. I mean DVDs are hanging on. They're going away. Every kind of disc before them went away. They're going away. Things that are stationary and fixed are going away or minimizing. Everything has to be mobile and movable and battery powered. Things on paper, printed things tend to...I mean I love the Times. I love the people I work with there. I love my time there. But I can't think of a single college kid graduating who gets a home delivery of a newspaper anymore. I mean there were always be a Times, but will it always be printed on newsprint? I'm not sure. John: How about the relationship with your audience? You noted that sitting down typing in AOL chatting. You're a magician. You always played to your audience. What is that transformation brought for you that is far more intimate now than it ever was? David: The amazing thing about writing about technology in the digital age is that it's much more of a performance art than it ever was writing for magazines. When I worked for magazine, I would write something in January and it will come out in the April Issue. I'd forgotten all about it. When I write a post for the Times or for Yahoo, the feedback is instant. I mean the comments start filling up. Definitely, it makes the job harder. It makes the job more exacting because if you got anything wrong, they will tell you. Yeah, it's very much a real time two-way interaction now with readers. John: How about the coverage? Do you have coverage expanding over the years? You always wrote for the user. Is it with the multiplicity of devices? Are you facing even bigger challenges than before? David: My audience by my own choice hasn't changed. The whole idea behind Yahoo tech, for example, is to serve this gigantic audience that's not served by the geek sites. We have a heavy focus on how to in troubleshooting and getting started and setting up. We have a lot of help. We're aimed at people who are not technologists. My mission has never changed, same thing at the Times, same thing in my computer. The scope of technology has, of course, changed. Now, the job is just vast. It's touch screens of every size from tablets to phones to computers, and the software they run and the web services that are changing everyone's lives. I do almost no reviews of PCs anymore, computers. It seems like that category reached its maturity. It's finished evolving. There's really nothing new to write about there. These mobile devices, they never stop. They're flooding in. John: Yeah, and they've got to keep flooding. You would mention the...let me step back and ask this. Your relationship with the companies, has that changed in tech? You started off as a blogger writing, have you seen that relationship with companies change as more journalist, more interest is centered on these companies? In other words, do you feel that they have the opportunity to bypass you now because they speak directly to the audience in the way they didn't before? David: I guess so. The companies still treat the leading reviewers as a group to be managed and fed. I think that the reviews of a product, especially a big one -- an iPhone or a Samsung phone -- I still think they have a big impact. The rise of tech blogs has been very interesting. It used to be Times, Journal, USA Today and Newsweek that got the special treatment. Now, the top blogs are also included in that realm. I'm not sure that the companies themselves have any more credibility in going directly to the consumer that they ever did. John: How about your relationship…How about your relationship among reviewers? Do you talk to other reviewers? What's that relation? Is it competition or camaraderie? David: It's very much camaraderie. We all know each other. We all see each other at the same events. Nobody ever talks about work. No one ever says, “that column you did on the new scanner..” No one does that. It's more like you're talking about the event you're there for. I was just out at Apple for some unveiling and the whole tech reviewer world was there and talking more about the free breakfast than about our work, "Excuse me, we're working here." John: How do you think tech coverage has been over the past 20 years? You've been in and of it, but apart from it because of the review category. David: It's interesting how tech coverage has become a thing. The gadgets you carry have also become a thing. It's amazing when you've praise or denigrate anything made by Apple, Google, Microsoft or Samsung. You hurt people. I mean you hurt them in their core and you get the most...you get hate mail. You get death threats. You get the foulest obscenities. That's something new. People didn't have fights like they had over the breakfast cereal they ate or the brand of car they drove. It never got to be this red state/blue state but it is now, and so this thing about tech criticism has become very important to people in a way it wasn't 20 years ago. It gives you feeling of satisfaction that you bought the right thing or it makes you angry when you hear that you might have bought the wrong thing. People identify, I think, too much with their gadgets. Maybe it's because you invest a lot in it. You don't want to be made a fool. Maybe it's because there's fashion statements now; the phone you carry, the tablet you carry. If somebody says yours isn't good, it's an insult. John: It's interesting that you feel it's much more other types of criticisms. Others don't seem to evoke in the audience that type of reaction. David: That's right and it's strange. What airline do you fly, what fast-food restaurant do you prefer, people don't get quite as uptight about these things. John: When you first started covering technology and think that at that point to say tech would change the world, almost seem like a boast. Now, it has. It's a fact. Did you ever feel your existence was threatened by tech? In other words, the magazine go away, did you see this is existential threat at all to a way of life or you're just too adoptable? David: Did I see this a threat to my life or my career? John: Yeah, to reviewing...I'm trying to change the question around from when I talked to reporters covering it. Did you see this is potentially changing your profession so radically? Some of them say no. David: I think that the changes that I worried about were less the role of a critic. With products coming out so thick and fast, I think somebody out there to sort through it for you is more important than ever. I mean the question I get so often is how am I suppose to keep up? I bought these phones, cameras six months ago and it's obsolete. It's also getting a lot more complicated and there are no manuals. They threw it at you and good luck. I think an explainer role will always be needed. Maybe when my age is elderly and the kids, who grew up knowing touch screens and the internet are our age, maybe then these roles will be less necessary. For the moment, I think this particular job is pretty critical. There was a lot of discussion when I left the Times about whether I was sacrificing prestige, power, or influence. I don't know if that's right. I know my readership is much greater now. I mean five, six, ten times more people read my columns and watch my videos at Yahoo because it's this gigantic media property. I still feel like I'm reaching the people I need to reach and a writer writes to be read, so that's good. John: What do you think about the brand question that as a columnist, as a reviewer, you were your own brand? Often times in big media companies, it's the institution that counts more than the individual. Have you navigated that and how do you see that change? David: A lot of people mentioned this brand thing like you've made a brand. I promise you, it was a complete accident. I never intended that. I never considered that. Basically, my career has been shaped by the phone calls I got so it was the Times who called and said, "Do you want to do this column?" Then after I started there, CBS 48 Hours called and said, "Will you do a profile?" That producer went to CBS Sunday Morning and said, "Would you like to be a correspondent?” Then I started doing talks and I started doing books. It was just because people will ask, "Would you like to…?” and I'm not good at saying no. There's never any conscious effort to build a brand. I did get a sense from the Times that they never liked names getting bigger than the Times. That made them a little nervous. In general, it never bothered each of us. I mean I was very happy to have the Times' brand and the Yahoo's brand now as a platform. What I want to do is write and perform or whatever it is that I do. John: In this industry where there's been more wealth created, where there's been more…The wealth created by this industry is astonishing. Has that ever been fascinating to you? Did that help trigger your own? “Let me take the next step. Let me break the 13-year cycle on this. There's something bigger out there. I can get wealthier.” David: What I do love about this industry is that it is largely a meritocracy. Mark Zuckerberg, God bless him. He deserves it. He had a multibillion dollar idea so he deserves it all. No, I've never been interested in being part of that world in the same way that I love movies and I've always been intrigued about writing screenplays. I'm not really going to do that either because these are extremely cutthroat, extremely difficult fields to win in. So many people want to be the next Mark Zuckerberg but they're never going to be. It's this huge combination of genius, luck, timing and funding, and it all has to come together like a lightning strike. I don't kid myself about ever hoping to tap into that in an inventor sort of way. But there is Pogue's theory of geometrical income. When I was working on Broadway, I was paid a weekly wage to conduct these shows. It became frustratingly aware that I would never get ahead. I would never afford a family. I would never afford to get out of New York City if I was paid a fixed weekly wage. I couldn't see working forever in a system where time equals a fixed amount of money if there was an alternative which is a geometrical income. That's when you strike it big writing a royalty -based product. That was the one conscious money grab I made. I decided to try to start running “How To” books. Then if you do it right, you write once, you're busy for a few months and then you collect for years. I mean it would have been much smarter for me not to choose technology because those books are dead after one year. Even so, they have the...I mean wrote six of the "blah-blah-blah" For Dummies books. We call this the house the Dummies built. Those books did really well. John: As you said, that changes very year. David: Yes, that's right. John: Is there any change in the culture of the companies or the culture of the industry that you've noticed over the last 20 years? By the industry, I mean the tech industry. David: Yeah. It's very funny to watch the Apple-ization of the entire industry. They're all trying to do what Jobs did. Now, every product, there's a press launch in some big venue in New York or California where a rock star comes on at the end and the CEO strut across the stage and invites his lieutenants to do the demos. There's this secrecy thing. Everybody keeps their new products under wraps until the day it's available. They are all just trying to imitate what Apple did. It's pretty funny. Ecosystem thing, there's now Google Ecosystem, Microsoft, Samsung, just like Apple where there's online components but then they want you to use their computer, tablet, phone, watch. It's wild to see them all imitating that model. John: Because they're all obviously seeking monopolization almost. They're trying to create monopoly within their family. David: Yeah, they are. They want to give you velvet handcuffs. They want to keep you tied into their ecosystem. Steve Jobs was furious at Android, the operating system, that as he saw it was a direct ripoff of the iPhones design and I happen to agree. Icons on a black background, it's exactly the same thing. For a long time, everybody thought the way to get successful is just to imitate Apple as much as possible. These days when somebody goes the other direction and they find a truly new way to do something, I'm really impressed. Microsoft has phones too, the Windows phone. Six people own them. They're a completely different design, not little icons on a black screen. They really thought through a fresh, functional, beautiful design. I guess they were too late with it because nobody's buying it. It's sad when someone does something really great and the public doesn't care. John: Does it surprise you that the news industry as such as the big media companies can't innovate or didn't innovate as rapidly as they could have? David: It doesn't surprise me. I do a lot of speaking and a lot of speaking I do is for companies. A lot of what the company's executives are interested in is what's happening in the digital world, what is it about, how do I get into it. Now, decades too late. Corporate entities in general are very slow to recognize, to exploit, to understand the new technologies. It's not just the old media. It's goods and service companies of every size and shape. When you are a successful company, you've been doing things the certain way and that's what made you successful. It would take a very unusual person or leadership to say what we should do now is abandon that what's made us successful and try something unproven. No, they don't do that very easily. They don't do that until they're pushed to the cliff's edge and in many cases it's just too late. John: For instance we've had the HBO and CBS going on this week, I mean is I mean is that...there's another change for you. Particularly for a lover of movies as this plays out, do you see similar disruption across? David: Yes. That writing has been on the wall for 15 years. The world has been telling the cable companies, "We want al a carte channels. We don't want to pay $100 a month for 90 percent of the channels we never watch." The cable company said, "Ha-ha, we're monopoly, you have no choice." Now, we're going to have a choice and the cable companies are not going to like it. It's the exact same story over and over again. John: How do you think journalists have done covering the transitions of the last few decades? David: Journalists, I think, have covered the transitions as reporters they're on the outside and so it's easy to see the mistakes that are being made and the sluggishness to respond to changes that companies are making. I tend to think if they had worked inside for a while, I'm talking about a tech company, for example, it will give them a little bit of a different insight. In other words, it's so easy to be critical until you've been there. Every year, I go to CES, the Consumer Electronic Show, I've been going for years. Every year, I write a very snarky column about what goes on there. It's the size of seven football fields, it's 3,200 tech companies with booths. It's exhausting. It's noisy. They're all trying out the most ridiculous new products, products that a kindergartener could tell you will fail. Don’t even..that is so dumb. For a long time, I was like, "How could anyone be so stupid to pour all these money and man power into a curved television set. A TV set you have to watch with 3D glasses. No, never going to fly." Then this year, it hit me. In every industry, only two out of 10 movies, books, Broadway shows are successful. Restaurants. The others fail but at the time you're making them, you don't know if you’ve got the hit or not. Apple didn't know that the iPad was going to be successful. In fact, everybody criticized it when it was announced but not yet for sale. It was a stupid, dead concept. The bottom line is you have to put out all ten before you discover which two are going to be the hits. I'm a little more understanding of these companies and how they work than I was before. John: The journalists are in a profession where typically people haven’t worked in other fields before they get to journalism. Do you think that...it's almost you saying, to an extent, it would be helpful if they worked elsewhere. You said They're more inside than outside. David: Or if they had been there. It's really interesting to see PR people and journalists switch roles. The journalists would have much more tolerance for PR people and what they're trying to do and vice versa. John: One thing that we all gained advantage from the old media was there was an institutional branding that went up. Now anyone can write reviews. Anyone can start a blog. How do the readers learn to discriminate what's good information, what's bad information in a world there's almost info-besity, where there's too much? David: Well, in the realm of criticism, tech, drama, movies, restaurants, travel, those critics become stars to guide you. You have to learn a critic. For example, there's one critic at the Times who I considered to be wrong every single week and that's a useful data point. Right? I know that I should go to the productions that that person didn't like. In the same way, I don't resent rising stars. It is a meritocracy, it's the American way. If there's some 19-year-old, in fact, there is, there's a kid on YouTube who does tech reviews, he's just a guy with a camcorder. He gets millions of views because he's interesting, he's personable, he says what people want to know. I don't begrudge that at all. If I'm eclipsed by somebody better and more entertaining, that's the way it should be. I'll find something else. The answer to the critic question is yes, you have to learn a certain critic, whether it's an independent or part of a corporation. John: Exactly. You're optimistic. You see this world ahead of us. It still is wide open. David: I am certain that there will always be a need for curated information and this is news, this is publishing and this is criticism. The world will always need something more than a sea of amateur bloggers whom they don't know. In that way, yes, I'm optimistic, but there will be always a need for institutional batch of journalism. John: Thank you very much. ...
VIDEO: YES

Michelle Quinn
BIO: YES: Michelle Quinn is a Business Columnist at the San ...
TRANSCRIPT: John: No. '80-'81. Oh, '90-'91. Michelle: No, I was '90'-91. I graduated in '92. That was a specific California recession. It was a national recession too, but it was the defense industry collapse, or it was downsizing here. It felt like coming out in recessionary times. There weren't a lot of jobs, and the jobs that were around were contract jobs. You were a freelancer, but you, basically, had hours. They probably were violating some labor laws, but I did that for a while. I did that for the Chronicle, the LA Times, and the New York Times during this period. But one thing I did that was a lucky break was that one of my colleagues at Berkeley, John Battelle, was a co-founder of Wired. He was starting Wired and was looking for people to freelance, so I was in the first issue of Wired. I wrote about computer animation and design. It wasn't something I knew a lot about, but I wrote a feature piece about it. At the time, there was just LucasArts. I don't even know there was LucasArts. It was kind of a techie story. That made it possible to then pitch myself as a business reporter, and I got into the "Chronicle" as the Internet, the multimedia reporter. There was no Internet then. Really, people were using the Internet in very...AOL may have just started. There wasn't a beat. I was focused on...There was a hardware person, a software person and then multimedia. I was focused on... John: Multimedia. Michelle: Yeah. Broderbund, Learning Company, CDs, games, maybe Sega and Nintendo. Gaming and learning. That was in '94. As an aside, I was there for two weeks, and the Chronicle went on strike. During this period, or maybe leading up to this period of the strike - the strike was only maybe 10-12 days - some people at the Chronicle started their own publication. Roger McNamee, who's a well-known investor in Silicon Valley, said to me, "Why are you going back to work there? Why don't you just start your own...just keep going. Start your own publication. That's what you should do." I just thought, "Crazy Silicon Valley person." That advice has been repeated multiple times over the years. That kind of person who lives here yelling at a person like me to make a change. During that period, those two years at the Chronicle, the world completely changed. As it has continued to change. Netscape was founded and went public during this period of time. Apple almost destroyed itself. I went and joined the "Mercury News." My reason for doing that was mostly because it felt like all the companies were there. The Mercury News had a serious approach to how to cover Silicon Valley and had been doing it. In San Francisco, we were kind of looking down to the Valley. There weren't companies in the city. I can't think of any. Maybe Broderbund was in Marin. There weren't even companies in the Peninsula. They were in Silicon, down in the Valley. I felt like, if I'm interested, I've got to go there, and go there every day. I was there for 10 years. I was there from 1996 to 2006. Then I left and went to the LA Times for two years. I got laid-off at the LA Times at the end of 2008. I was covering tech there. I was covering hardware, Apple, those kinds of companies. Then I had a bunch of odd jobs. But I worked at Politico for three years, here, covering Silicon Valley for Politico. Then, a year ago I went back to work as a columnist. That's my trajectory. In that period of where I wasn't in journalism I had a couple of jobs outside of journalism, contracting jobs. John: It's interesting that almost tech drew you in as an opportunist. You weren't a programmer. You weren't anything techie in the past. It was just opportunistic that this job's here and I'll work to get that. It's an entry into a broader field. It's an entry into making a living. Michelle: It was definitely an entry into making a living. I wasn't interested in gaming, but I felt like I had to get an interest in gaming because that was my beat. This is what I have to do. It wasn't a natural... But at some point somebody helped me frame what I liked about it, which has helped me through my entire career, which is that I'm interested in, well, the things that you're interested in, how the technology is changing society, how is it changing people, how is it changing work, and who are the people who are behind it? More of a feature-y approach to it or anthropological approach. In the process I've learned how to cover earnings and cover a beat as well. A lot of upsides for me is it's been a living. I'm hoping that I continue to do it. John: You have a unique perspective in many ways because of your hopscotching from different platforms back to them. Talk a little about how you perceived or how going from a magazine, freelancing, going to a metro daily, coming here to a major daily, going to Politico, coming back. Did it make any difference in the journalism you produced based on where you worked? Michelle: It's been a struggle, maybe this is at every publication is...and I felt that too at the Chronicle, what potentially could have been plush times at the Chronicle, at a very personal level, I felt like I was on treadmill of doing the news. Not really... John: Stepping back? Michelle: ...stepping back, ever. That's one reason why I left for the Merc, which I felt like they're like, you're daily should have three or four sources. Your weekend pieces should have... They're very specific. I wanted that a little bit more. But then as I jump back and forth in my career I have that same sensation or experience which is Politico felt very quick and commodity. A lot of what what Politico produces you can't see because you have to be a subscriber for their vertical publications. But most people are reading on their Blackberrys or their iPhones, news that eventually gets to a main site. We were feeding that audience. That was kind of interesting. In the old days how I thought my career would go would be a small paper, bigger paper, bigger paper, and keep going. But what has happened is that I've gone maybe to like Politico has a lot of prestige and buzz, but it felt like it was more like a trade publication. Then I've gone back. Now I'm sort of allegedly a dying old media, but I have a broader platform in some ways, a broader audience, a broader topic matter. It does seem to change a lot. The publication, the medium changes a lot, too. People are mostly reading short bits from here and they want intelligence. News they can use to turn to somebody in a meeting and say, "Did you know Schumer just did x, y, and z?" That's different than a columnist who's going to take you someplace else. I don't know if it's print or mission-driven, because there is a lot of great long form online stuff out there. Sometimes I would write features for Politico and it was fun. And sometimes I like the commodity feeling of just trying to get the news and try to make a difference in somebody's day. What I'm trying to say is I think that every job has been very, very different. Even, like say when l went from the Merc to the LA Times, I had an older view of the LA Times, which was you get time to do things. I jumped there during a period of intense transition and it was much more quicker — we need a lot of content fast and online. It was at the LA Times where I first learned how to use Word Press, which is a blogging platform that a lot of publications use. It has been a little bit... I think my dream of, "I want to be just a magazine writer someday, or long-form," that doesn’t necessarily fit my persona or my working style. John: So this has been fine coming back to this? Michelle: It has been fine. I had to definitely take a lot of criticism from people. I like to go and talk to students, so I was talking to students who were doing some sort of summer program at Stanford, and I was told, "We can't invite you anymore, because we don't invite print publications anymore." I was like, "But Politico prints five days a week and now has a magazine, and the Merc has got this great app and online thing. How do you make those divides when media is trying desperately to erase all those divides?" I would say, "Did I hurt myself by going back to the Mercury News?” That's one thing I tell younger writers, "This idea of the progression has changed. If you are at a general interest paper, but you want really to go into auto writing and you go to an auto trade magazine, that's not necessarily backwards, in a way." I think that those ideas have changed in some way. John: Let me ask you a follow-up question. If you were asked that question from a student, do you feel that difference with the companies you cover? Do they seem to differentiate more now or less now than they used to in your accessibility and whether they deal with you and how they deal with you? Michelle: I think the Mercury News has lost a lot of its ability to... John: Dictate? Michelle: ...dictate what happens here, for better or worse. There's a huge tech press that's very important. Blogs that people don't know about, Online publications that people don't know about outside of here are very important. I'm thinking of Re/code, Mashable, all these companies that are very important to tech coverage, that I read every day, intensely. I think that the old hierarchy is gone, but, at least, the Mercury News, I feel like our calling card is still...The parents and the employees read us, the investors read us, so we still have a way in. John: It's interesting. You think there's still a hierarchy but a different one than like before. Rather than journalists being almost disintermediated, or by-passed it's...? Michelle: I think there's a hierarchy, and that your company and your brand is what's so important. With my brand, Michelle Quinn, yes, that matters. But I don't think that that word you used dis-... John: Disintermediated. Michelle: I don't think that's happened completely. You look at David Pogue. John: Right. Michelle: He's a great brand, but the brand, I think, has gotten lessened once he cut his ties with The New York Times. I feel like the New York Times was his bigger brand, that he could be standing against. I don't know if it changes access at all. I have no idea. But it just seems that his power in the tech industry diminished once he went to Yahoo. I hope I'm not talking out of turn... John: No, no, you're not. Michelle: But there is always talk and just kind of like what I described to you about Roger McNamee, do people leave and start their own? Can you build your own brand? If you leave the Wall Street Journal or the Mercury News, can you stand alone? Can you build that or do you need this other brand that a whole bunch of meaning, which is integrity and an identity? John: To add to that, the amount of time you have to invest in building your own brand now, if that's of interest to you. Be it tweets, be it Facebook posts, be it all these things that classically weren't thought of as reporting the news. Michelle: Right. I'm not sure can you completely do them. I see that some people I follow on Twitter who I feel like who aren't part of a major organization but who are great reporters, who are authorities in their field. I think that they could create their own company or brand on their own. But it would be very niche, I think. I'm not sure how to add to that except that it's a jump that I haven't really wanted to do, only because I like being part of a bigger organization. John: Understandable. You, too, had to make huge transitions, because when we think about it, you began your career with an interest in literature, long-form writing. Yet the drive toward how we write and how we answer that reporting need, now, to some degree, people are coming up to us because of what we put out in 140 characters. Michelle: Right. John: How do you grapple with that? Michelle: I don't feel like I've gotten there yet, in some ways. I Tweet. I follow people, I retweet, but I think the way to do it I'm not there yet. The way to do it is to use Twitter as that platform, or Facebook, or LinkedIn, or wherever you want to post, and engage with people there, particularly, if they engage back with you. It's not because I'm against it. I think it's great. It's just a time factor for me. For example, a few weeks ago, I wrote about Mark Andreessen. He re-tweeted me. He tried to engage. I could see it happening on Twitter. I was like, "I've got to jump in on that" and I didn't. I should've I think, because other people were remarking to me, "Hey, did you see this?" And I didn't. It was just because I was doing something else that day and I missed the moment. I feel like I've been inconsistent as a Twitter journalist in some way. I come in, promote my own stuff a little bit and then disappear for a little while. I don't think that's the way to do it. I think it's more to be part of the conversation. Other tech journalists write about things like Ebola or Ferguson and I don't really understand doing that because it seems like that's not even your area. In a way, they become people who amplify what other people are saying, they’re media people. I don't think I'm there yet. I want to get better at it. John: It's that transition. Look the other transition you've made, or you've lived through, when you began it, newspapers. Your audience...every once in a while you get a letter from someone who read your story and wanted to respond. It'll go through the mail room maybe seven days later you get it. Now when somebody like Andreessenre-tweets, all of a sudden, that's audience, it's palpable, it's reachable, and it can overwhelm you. Is that navigable? Michelle: I've had a view of it as stepping into the stream and stepping out of it, sort of managing myself a little bit through it. If there's a big controversy, I might jump in for a while. It's funny, as a columnist, I've been learning how to be more opinionated or feeling like I can give voice to those opinions. And with Twitter I'm still feeling a little hesitant, like just more careful about how I write a headline to a tweet. In a way, just how I characterize people's tweets. I don't really know why I'm hesitant to drive points home. I've seen a lot of people pay a price, I think. At Politico there's been a bunch of people who have got in trouble. They look back at their tweet history. Particularly at a publication like that, where it's always being accused of being too right or too left, people are looking at those tweet histories more intensely. People are live tweeting debates. They've got the company brand there. This could really be a problem and it has been a problem for some people. It's not just that, I'm thinking that old saying, "You don't want to say anything in public that you are going to regret later," so in a way, I'm a little hesitant. John: Yeah. The other thing you seem to be arguing is the old version of newspaper triage. I have 24 hours in a day. Of these various ways, where do I spend my time? Michelle: I think I should be on Twitter a lot more. Why do I think that? Because I think that's where to get the audience. I don't know if I'm going to get it writing columns at the Merc and re- tweeting. I'm not sure. One level, I think, what do I want? I want an audience. I want to have impact and be talked about. Is it better to find those interesting columns and write, since I've got a good editor who can help shape my ideas. Or do I go on Twitter where I have multiple fights or arguments and promote myself and have a dialogue that then produces a great column or idea. Right now, I'm divided. My colleagues who are on Twitter more, I feel like it's been to their benefit. It has helped their reporting too. I think I should be doing it more. John: When you went back to the Mercury News, you wrote a first column which you talked about how the valley has changed, when you first came here versus now. You talked about a bit of swagger. Has the culture changed? Michelle: The valley or... John: The valley. Not just journalism. The culture you're reporting on. Michelle: Yeah. I think it's changed enormously. In the '90s, where I felt like it was mostly people who lived mostly a middle class life, went to work, and were hoping their invention would work, to the dotcom era. I think that value change became much more money. I think the idea that you would be a tech worker and live in San Francisco, you would have the benefits and the glories of living in a city. You would also get to have the benefits and glories of working in this hot industry. That was not the idea when I left. It's definitely come up as people want it all. I think they should have it all. I think that people's idea of stretching time and money was different. John: The other thing that you mentioned that was different was that, in the '90s, in your column, you said that people saying tech could change the world, which everybody viewed as a boast. Now everybody views it as a fact. Michelle: Right. Did I write that? That's a good sentence. Michelle: That is a good sentence. Maybe what's changed is we know it's true too. It seemed to me, in the '90s, people had this Apple crazy thing, which is you get a bunch of people in a room and go through a deprivation process as you try to create something. The reason why you kept all the people together is the idea that you would change the world. There's a bunch of companies that I wrote about then that did this. Most of them didn't make it. There was those horrible period of months where they were not eating, sleeping, and nearly getting divorced or breaking up. Facebook has been the major change, Twitter and Google, so I think the companies do feel like this is now a given. We are changing the world everyday. If you are Uber or AirBnb you're disrupting an industry. It has happened, where then it just seemed part of the bragging. John: One thing you said earlier, "The difference between now and then, is now there are hoards of journalists covering tech in the valley." When you began, there weren't hoards. It was very rarified. Not rarified. You're covering banking or you're covering tech. It wasn't any bestselling special about tech. Michelle: Right. It was starting to change in the '90s. It would be interesting to talk to somebody that's been there in the '80s. I went to the launch of Windows '95 in Redmond. They had Jay Leno on stage to do the whole thing. It seemed then again, kind of a grasp-y. Tech, yes it's operating systems for PCs but it's Hollywood. Somebody great here is going to bring this to you and show how special this is. I think that was kind of new then in some way, this reaching for that. Now that's pretty common too. But there weren't many journalists there. I met the reporter who covered Tech for the Seattle Times. There were only a small number of people doing it. You go to Facebook announcement and there are maybe several hundred journalists. You think, "Is this industry dying or is this growing?" If you go to City Hall or you walk into any newsroom, any metro newsroom in this country, you're like, "What happened here? Where are the people?" John: Yeah. In one of the interviews earlier this week with a colleague of yours, they said, "One of the problems has been the influx of money and the influence into the valley over the past 20 years, has made it very hard as a journalist to keep your distance." It becomes almost like the same thing as political reporting on a campaign. You're in this bubble. You're in this bubble on Tech. would you... Michelle: I think if you want to have access, that's where it gets to be a problem, much like politics. Basically, we are more manipulated, more controlled than we ever have been. We sit down with a CEO, and the questions are talked about ahead of time. There is a PR person there and they know how to go off the record, they know how to talk a background. They know how to interrupt or change or limit. That wasn't the case a while ago. You would come into a room and you would get all this time with people. I've interviewed the founders of Yahoo and nobody was there and that was in the '90s. I think Tech has been on a learning curve itself and it's got professionals in to help deal with people like me. I don't worry about that question. I worry about the thinking. I guess I do think that what happens here is extraordinary. I’m kind of a booster. Then I wonder if I'm too close to it and if I'm not critical enough. For example, the Times’ iEconomy series about Apple. I think that was kind of an eye opener. Things that had been reported a lot but putting it together was a great thing, and it's a rare thing that's happened here. If you look at business journalism, you probably know this, I think that Matt Richtel was one of the first to win...I think Diana (Henriques) had won a Pulitzer, but I think Matt covering Tech, he did it on his attention deficit. I don't think it's an area that has a lot of rigor in a way. That worries me too. I knew that iEconomy, Matt's pieces, the recognition that they got, the Wall Street Journal’s What They Know series. All these series that have really stood out for being critical, having rigor, and looking at this industry in a critical way. I worry that either I'm not doing it or my colleagues aren't doing it. We're just caught up in the commodity of the day or the latest controversy. -Which the great thing about this area is that something happens every week, that's pretty kind of interesting. John: Here is one riddle that someone posted me. If you have this industry that's in such a sentence, you begin overtime to cover it in a way, like Hollywood as you said. Do we over-cover Apple, because it's more...? Is there a celebrity like approach that we've fallen into as an industry? Because just like Hollywood. The gossip of the moment is what people want to read. You have to swim against the tide on that then. Michelle: You do while you're covering it. Today, you probably saw that Zuckerberg gave $25 million to the CDC Foundation. That guy is very interesting what he's doing philanthropically. There's no way you can criticize that ever. It's just pure good that's happened there. How do you look critically at what Facebook is doing in terms of privacy or I don't know? I feel like we don't... They probably feel like we're on top of them too much, but I do worry about this question. The celebrity thing, I think it's more maybe a problem for companies or publications that get access, where we don't as much. We do get some. We don't get access necessarily to the talk leaders, talking about why do they buy that's like more of a Journal or a New York Times thing. I don't really feel like we need to worry about that. We are free to worry about, to think about the bigger questions and are we doing that enough? So, that's what I don't know. John: Well, here's one for you. If you look back, and you look back at journalism and you look at tech. Were there any eureka moments that occurred to you, "Tomorrow is going to be different than today," when you stopped and you said, "Wait a minute. This seems to be bigger than I thought it would," or has it all been more or less been an even continuum? Michelle: I don't know. I was thinking about that. That's the one question that jumped out at me in your list of questions. I could feel like, "Oh, my..." AOL came out, and I was immediately on it… Even though I am not like a tech... I was probably one of the first people I know that was getting email. I was the first person with AOL. I got a General Magic device, which was lan early precursor to the iPhone. The Mercury News was also early in a big way. People have written a lot about that. So, what happened? Why didn't we get it? I don't know the answers, except that partly we're trained to basically be... I don't know. This sounds so bad. I feel like I came to this because I wanted to write and to report and to tell stories. Not to worry about selling ads or how are we going to get them to make the money? In a way maybe we were kind of babies in some ways. This was a horrible way of putting it so this is my most negative view. Maybe I was kind of like a baby in like sort of a perpetual childhood of like, "I'm just going to do what I do, which is this. OK. There's eBay, Craigslist. We don't sell classifieds anymore. Revenue is going down. All of that stuff is over there and I'm not going to pay any attention to it." I kind of had that approach for awhile. I did a story in '96 for the Merc. I think it was '96, about how people were getting news on their pagers. Of course, they didn't have phones. I signed up for getting tennis scores. I would get who is winning in the US Open. That could have been a moment where I would say, "My stories are going to be on here. People won't get papers. What's this going to mean, the transition getting rid of the printing press?" I didn't see that then. That could have been a moment, and I didn't see it Then I talked to Mark Anndreessen, who I guess he was telling everybody in media like the mid 2000's, "Get rid of your print, just figure out what your online revenue is and just hire from there," but nobody did it. Individuals did it. Politico did it. One of my colleagues, Matt Marshall started VentureBeat . Some individuals or groups of people were able to think that one through but for general interest newspapers, it's so hard. John: Because the legacy revenue was too tough to walk away from. Michelle: Also, there's readers. People do care about that general interest reader, or at least we mostly did. That was the appeal. Like, yeah, you can go work for a new venture or a specific publication, but will the guy in the coffee shop read the story? Probably not. I think that was still an appeal for me too. I think the big thing that happened to me was when I was laid off from the LA Times. That's where I was just like... I wasn't part of the first wave. I wasn't part of the second wave, but I was part of the third wave I think. I was like, "I'm working hard. There's like not even any Fortune 20 companies in LA, and I'm covering some of them. I got laid off. How did that happen?" Then I looked around at the other people who got laid off. They were people who are just phenomenal journalists. I felt "Wait. If it's not personal, then it is just some horrible like the Poseidon Adventure. They're just throwing people out. Maybe there was a decision about me personally, but maybe there wasn't. It's just like bodies." Then I started to feel like everything's changed, because it affected me personally. That's how I sort of felt. Now, I feel like everything's changed. I'm doing this job for now. I probably won't be in the same medium a year or more from now. John: As you look back, how do you think journalism's done covering this? If you look back over 20 years, and if you look back the anthropology, the effects this has had, and how this... How do you think journalism is done covering it, the digital change? Michelle: Well, I think we've been OK in other areas. We've been probably good at talking about music or film and Hollywood's experience as a separate thing, pirating, and how to figure out a pay structure and all that stuff, and what does that mean to studios? I feel like we've done a little bit better looking at other industries, but here I don't feel... I feel like I was either a party to or a victim of what happened. I don't completely understand it as a person in the middle of it. It's really bizarre to have been this much in it and not been able to either cover it effectively or zig when everything else went the other way. That's the weird sensation about being here. I remember when people on my street stopped getting the local paper, people who worked in government or education, local government. I was "How can you not get your local paper? Your boss is going to be in it today." There became this sort of faith, "Well, I'll just hear about it at the office.” “I don't really need to know.” “I’ll read it online." I remember feeling in the mid 2000's, "These people are crazy." Now, I feel, this is how it is. John: This is how it is. It's one of those things. It's like we're watching this meteor come in and stirring up diligently, and never stop to think, "This is going to destroy you. This is going to hit you." Michelle: Right. I think I am hardwired to be kind of positive. I feel like I do believe it when people say, "Oh, there's always going to be something.” I do believe that. It's not all going to be crappy stuff. It's going to be good quality. People's need for information and analysis is still there." I guess I am mostly positive even as the meteor is coming towards me, but I don't know really why. I feel fine about myself but when I do meet people who are teenagers who want to do a career in journalism, I have to think, "Do I encourage them, or do I warn them?" I always pick "encouraging." I do this after wrestling a little about it. I feel like I got lucky because in a way there was this career for people who had kind of a vague idea of what they wanted to do with life, and this career was there. I got lucky. I don't know if that's going to be there for that kind of “human interest” kind of person. John: You say at the same time, "You're hardwired." Is that safe to say, you're optimistic about the future of journalism? Michelle: Yeah, I am. Look at a publication like BuzzFeed. It got its start. It got Ben Smith from Politico. Look at what it’s gone through this past year in terms of growing pains in terms of what it is to have integrity? I just find what's happened there just fascinating and great. Where they are at the end is way better than they were in the beginning. I feel here's a whole new publication that has already broken a lot of stories, will probably improve as a model. I don't know. I guess I'm feeling mostly optimistic about it. I think that if you want to survive, you've got to have ethics and integrity and quality. I think that's where they will go, as they also kind of stroke other things. I haven't really been following VICE as much. I guess I am mostly optimistic that there will be more creation of publications, online publications, or maybe app-only publications. And they will be done by some non-journalists and journalists with the end result will be to make the product better. Or like Rupert Murdoch, you close down the paper. If you really mess up, you just shut it. There's a guy, who's been around for a long time. John: And he walked away. Michelle: He walked away from it, yeah. John: This has been wonderful. It's been helpful. Michelle: I don't know what I would have done if you had told me 20 years ago. I don't know what I would have done. I don't know, because I like the print publications so much. But 20 years ago, I was at the LA Times. They're like, "Oh, man! We've got problems, because all of our readers are like 55." It makes sense that they're all 75 now. John: Absolutely. Look, you can say this disruption was natural. You can say, we should have seen it coming. Many of us did not. My colleagues did a thing saying, "It was like a riptide. The more you fight, the harder you get pushed out." Well, you can make some recoveries, but other recoveries you can't make. It's just exhausting. I like you're an optimist. Michelle: Maybe it's more survival. I need the job. Michelle: I'm just going to keep working in it. John: That's good! Michelle: It's such a great job. When I've not worked in journalism, it's like you're half a person, you're half a woman. You can't be a full human being (without) asking questions. The rest of the world doesn't work like that. John: We have had an incredible license. Michelle: Yes. I still will want that as a working person. John: Excellent! Wonderful! ...
VIDEO: YES

Josh Quittner
BIO: YES: Josh Quittner (born February 12, 1957) is an Ameri...
TRANSCRIPT: John: OK. Start by telling me give me your career path, Josh. Josh: How far back do you want to go? I started in the 1950s. John: Let's start why you got into journalism and then why you segued into tech. Josh: OK. I actually was raised to take over my father's fireplace equipment manufacturing business in the appropriately named Sinking Springs, Pennsylvania and every vacation since I was 13 years old, he would pack me off to toil in his factory so that one day I would be a great boss. I went off to undergraduate school in Iowa, Grinnell, Iowa, and of course, became a rope belt-wearing Marxist. By the time I graduated, there was nothing I wanted to do less than work for my old man. Luckily for me and unluckily for him, he was going bankrupt around that time. There I was, 21 years old, completely liberated from the yoke of oppression, didn't have a clue what I wanted to do. I moved out to Albuquerque, New Mexico, where I had a cousin and I lived on his sofa for a while, relishing my newfound freedom with the vague idea that someday I wanted to be a writer. I went down to the newspaper and filled out an application and they were like, "Thanks, son. Get out of here." Then I did a whole variety of odd jobs for a while, was a delivery boy, worked in a carnival, did all sorts of things. Found my way into a law firm, was a paralegal for a while, thought I might want to be a lawyer. Did Indian water rights law for about three years, and realized that that would be a slow death for me, because I'm very peripatetic and very ADD and the thought of working on one thing forever would have killed me. I met a guy; I answered an ad in the alternative newspaper in Albuquerque. Guy was looking for a comedy writing partner. I called him up, we met, liked him a lot. He was the weekend night police reporter at the Albuquerque Journal. I was like, "That sounds awesome. Like, how do you get a job like that?" He said, "Well, you start by freelancing." He gave me some pointers, he told me who to call. I pitched an idea. Two weeks later, I had my first byline in the Albuquerque Journal. It was, you know how there are life's epiphanies? I just like, I fingered that thing and looked at that thing and there was nothing that felt better in my entire life. All I knew with any certainty was this is what I wanted to do. After having done a half dozen of those, my buddy moved up to the full time night police reporter. He put in a word for me. The city editor said, "I'll take a risk. This is not ever going to lead to a full time job." I got hired. Again, it was that sword in the stone feeling. I mean, I knew that this is who I was and I loved it. I loved it. I loved everything about working at the paper. The fact that they paid me to drive around in this little Jeep listening to three police radios and that they paid me to go out to the scene of the crime before the cops even got there. Then I could walk around and ask stupid questions and everyone had to answer the little man with the reporter's pad. Then I could race back and write my own movie about what happened. Oh, man, I was just in heaven. I was good at it and it was the first thing I was ever good at. I was like a mediocre student and always got into trouble for asking questions and for being a wise guy. Here, all of the things that I got yelled at for were like, it was like perfect training. Even the idea that I would never crack my books until the night before the paper was due, that turned out to be the best reporting of all for a reporter. Right? Like, you just have to learn it really fast, regurgitate it in a sensible way and get on with your life. It was perfect. I loved it, loved it, loved it. After three years there, I had done all that I could do, and I felt like I was no longer learning anything, so I went back East. I went to Columbia; I got my Master's degree. Was going to drop out after a few weeks of that. It felt like fraud to me. It was like, referred to it derisively as the great writers' school. But then I found this wonderful teacher there named Robin Reisig, I don't know if you've ever heard of her. She was like a nun. She was like the Mother Teresa of journalism. She got me into the right classes and everything took off. I worked the Bergen Record while I was here to help put myself through school. Along the way, met one of, her adjunct was a guy named Bob Keeler, who was the state editor at Newsday. Which was a very fine newspaper in those days on Long Island. Making inroads in New York. After I graduated from Columbia, I got hired there. That was a great newspaper. There was a guy there, who I mentioned early, Howie Schneider, who was the heart, soul and lungs of the place. A fantastic journalist. After working for a few years as a crime reporter, I became a general assignment reporter. Hated that, needed the specialization to get ahead. I had always had a PC because my handwriting is so ugly and appalling even I can't read it. I had gotten into trouble like misreading my notes. I learned how to type on that thing very quickly and I worked on it, so I was never afraid of it even though I'm not the slightest bit technical. In fact, I'm pretty much of an enumerate. I was always comfortable with PCs. Howie he saw this whole information super highway thing coming as early as 1990. He was a guy who -- I guess he had seen a speech by a fellow named, Roger Fidler. Josh: I don't know if that name has come up. John: Knight-Ridder, yeah. Josh: Knight-Ridder. Roger traveled around with basically a tablet. Of course, the tablet was like one of Moses' tablets. It probably weighed about 60 pounds. He had this vision of what the world was going to look like and Howie was smitten with it. Howie saw the future and Howie created a job in 1990 on the national desk at News Day, Long Island, New York in Long Island, New York that was called "Information technology." Because of my then three years or four years of service I put in for it, I got the job. The great thing about Newsday in those days is it was rolling in money and it was a very responsible newspaper. Howie was like "Look, this is a great job. I want you go educate yourself. Buy any books you want. Go any place you want. You don't have to do stories. For the next year, educate yourself." Can you imagine that happening today? John: No, I can't. Josh: It was amazing. John: You don't get that license. Josh: It was amazing, and I did just that. I came out here and I talked to people. I talked to everybody. I met amazing people, and then slowly, I started to write stories. Nobody really knew in 1990 what information technology was, least of all, me. I started in the usual way, writing about super computers, chips, and hardware. Nobody read those stories. Every now and then, I would stumble into something that was about people. When Tiananmen Square happened, around that time there was interesting stuff going on with fax machines. People faxing messages and using --anything having to do with the sort of pre-email era would get picked up by the Los Angeles Times/Washington Post news wire. And that was always your goal on the national desk to be disseminated because it was your only ticket out of there Every time I wrote about people, I got rewarded, and every time I wrote about things, I did not. So I was constantly on the lookout for stories about people like "What's going on that has to do with people?" I heard about this place, and I'm sure you've already about it many times, called, "The WELL," which stood for "Whole Earth Electronic Link." It was basically a big massive bulletin board based on a houseboat in Sausalito and it was where all the cool people were hanging out. They were hanging around, in the words of John Perry Barlow, "Blind cave fish" just sort of talking to each other on these bulletin boards and it was fascinating. That blew my mind when I found that place because it was a source of stories, a source of really,really fascinating people. I started to write about that nascent online world and every time I started to write about that I'd get stories picked up and a beautiful thing started to happen. The WELL was connected to the Internet in a very cumbersome command line driven way, but it was connected. After I got comfortable there, I started to move out into the greater internet, and I started to find really amazing stories. I would write these stories for Newsday, but sometimes the stories were so big and sophisticated and sometimes, frankly, not family friendly that I was looking for another outlet. Around that time, another very important guy, Kevin Kelly reached out to me on email. In those days, I was newsdaycom. I had a little dial up account and I registered newsday.com, and I had been writing about computer hackers, which ultimately became a book that my wife and I wrote, but these were pre-Internet hackers. : Kevin said, "I'm writing a book. Some of your notes are really valuable to me, would you mind sharing them?" I said, "Of course." We had an online correspondence. I mean, can you imagine? This is like 91, 92. He said, "We're starting this magazine called, Wired. You should think about pitching ideas." I had a really amazing story around that time about people who were living in these virtual spaces called, MUDs and MOOs. It was just real mind blowing stuff. Again, all command line tech pace. I wrote it for Newsday, but the better part, the adult adult-oriented part I couldn't put in the paper. I pitched it to Wired and they said "This is perfect for us," and so I wrote a piece that they put on the cover called, "Johnny Manhattan Meets The Furry Muckers." Again, it was that same feeling that I had the first time I saw my byline. The first time I actually set foot in a newspaper. The first time I set foot in a police, it was that profound feeling that, "This is right," like I could write for Wired Magazine the way I spoke. I could talk in slang. I could say, "Fuck." I could talk- more importantly-about this amazing thing that was happening that nobody else was covering. Wired, man, that was the right place at the right time. From that point, for the next 10 years, I felt like the first guy in on a Ponzi scheme. Everything I did was on the cover of Wired. People were trying to hire me, it was amazing. Michelle and I, my wife Michelle and I, wrote a book about computer hackers, and that was wildly fun and cool, but this was so long ago. Kevin asked me to do a story about domain names scalping. This was back in the days when in order to register a name on the Internet, and now we're in '93, '94. In order to register a name on the Internet you had to have control of a host computer on the Internet, which was a very rarefied thing, and it was utterly free. You basically just sent a command to a computer in Washington, and the command would register your domain name and boom, you were good to go. The guys at Wired had this amazing idea. Let's see who sees this Internet thing happening. Who understands that this information superhighway that Al Gore was then talking (about), is actually really here, and it's called the Internet, and it's going to change everything. Kevin said, "We want you to do this story." We put an intern on this and we looked at the Fortune 500 and we wanted to see who among the Fortune 500 registered their obvious domain names. Because in those days, lots of kids were doing it, right? A company called ABC, owned, ABC Software. No one had ever heard of it. There was a Fox Software that owned Fox. More interestingly, there was a guy named Adam Curry who was a video disc jockey at MTV and he registered mtv.com, and when he quit, he refused to give the name back. That was in the paper. The guys at Princeton Review, the SAT prep company, had registered stanleykaplan.com. So that if anyone typed stanleykaplan.com, they went to Princeton. These things were being litigated. It was very much of the moment. I wrote a story, I had very young children in those days, and I wrote a story about "mcdonalds.com." McDonald's was not registered by anybody. I thought that would be an interesting test piece. McDonald's, as huge as it was, was also actually very sophisticated. They had something called The McDonald's Hamburger University that people could attend over high- speed phone lines. But they had not registered the domain name. So I thought this would make a great test case. I called them up, was steered to a flack, and she was like, "who are you, what's Wired, what's the Internet, what the hell are you talking about, leave me alone." I wrote this story saying, giving the whole parameters of everything, and I got to the end and said, "I should just register mcdonalds.com." Kevin read the story, said, "We love your story, but we need you to re-write it. You're going to register mcdonalds." Now, re-write the whole story with that. That is going to be the three lines of my news obituary. At the end of the story, I wrote about what it felt like to register "mcdonalds.com," and I solicited people's advice. What should I do with this bitching new domain name? Send your suggestions to ronald@mcdonalds.com. Over the intervening months, I got literally thousands of emails. Again, I think this was '93, '94, I'd have to look it up. What was fascinating is, it was like a message in a bottle. You could see how the Internet was being switched on in certain countries, that it was becoming this cultural thing. First, I got a lot of US email. Then I got UK email. Then I was seeing stuff from the Netherlands. Even well after the story was over, that “thing” was almost an urban legend that people would reach out to me. I got over 1,500 emails in the intervening years. All of them said one of two things. They either said, "Extort as much money as possible from McDonald's," or, put up a website, which in those days was a very new idea, extolling the virtues of vegetarianism. Josh: Even back then, the Internet was like this. John: Then, after Wired, after Newsday, you went to Time. Josh: Right. I was in this really heady thing, like should I go to the Wall Street Journal, should I go to the Los Angeles Times, should I go to the Boston Globe. One day, the phone rings and there's this dude and he says, "you don't know me, I just read your cover story about Penn Jillette in Wired. My name is Walter Isaacson, I run New Media at Time Inc., and I'd really like to meet you." Walter was a real headhunter and he loved technology. I bought a suit, and put my ponytail back and went in to meet the great man at 1271 Avenue of the Americas. When I walked in, this was just such a cool thing. Walter was arguing with his superiors at Time Warner, because he wanted to buy Yahoo, which they could have purchased for $10 million. They were saying, "No no no no no." Walter was another one, like Howie, who saw the future. He just understood what was happening. Walter was looking for a guy to run time.com and I felt like I had just started to become a really good magazine writer, with the Wired stuff, and that was really what I wanted to pursue. We hit it off really, really well. Two weeks later, he puts in the word for me. Jim Gaines calls me from Time Magazine and Jim says, "We want to hire somebody who could write just about the Internet." I come in and he offers me the job. That was great, or it seemed great. Except it wasn't great because it turned out when I was writing for Wired I could speak in my own voice and I could talk to my peers and I was covering a revolution for the revolutionaries. When I went to Time Magazine, I was writing about the revolution for grandma and grandpa. I remember about two weeks after I got there and I had already written a couple of stories, I got a postcard from a guy in Oshkosh, Wisconsin. I knew there was such a place, I used to have Oshkosh overalls, but never thought people actually lived there. This was an avid reader of Time Magazine and he wrote in the crab-scrabbly handwriting of a very old guy. It was, "Dear Mr. Quittner, I have read avidly your story about the Internet and I would like to know what is the Internet and how do I join." I thought "These are my new readers" which kind of bummed me out because in every story I had to waste — Time wrote super-tight and the great thing was the editing was fantastic but a very small news hole and there's no body count in the story so it was always the first thing to be thrown overboard — you always had to waste a paragraph explaining what the Internet was and how you needed a modem and what a modem was. You had to do all that stuff that at Wired they assumed you already knew it and you could just go right to the story. I was very frustrated and after about a year, I felt like this isn't working out and Wired was taking off and they kept saying "come to us," you can come work here, you can start this online thing. I went out secretly. The only person who knew was my wife. I come out to California, I meet Chip Bayers who's getting this thing off the ground. He offers me a job to start what would be Wired.com. The idea was we are going to start a new service that's entirely of the Internet on the Internet. It has no baggage we're going to start from scratch and is just going to be tech news and other news for people who are using dial-up modems and who are on T -1 lines and so forth. I accepted the job. We shook hands on it. I went back to my hotel. I was packing up my stuff. I was very excited. It felt like the right move. I think they said I could move out there if I wanted or stay in New York, it didn't really matter. It was just like this is the new world. Everything was go, go, go. This was '96. Very, very exciting times. Things were just exploding. Money, you saw guys running around South Park with bags of money. There was so much money everywhere. I go back to my hotel I pack up my stuff, I'm about to leave, I practically snap off the light and the phone rings. I answer the phone and it's Walter. Walter says, "Hey Josh how you doing?" He doesn't once say why are you in San Francisco or anything like that. He says, "How are you doing?" I said, "I'm doing great Walter. Good to hear from you." He says, "Yeah, I miss you, we haven't been able to talk much. You know that they made me the editor of Time Magazine about a month and a half ago. The place is a mess and I had to get everything under control. I've been thinking a lot about you and I really want you to be a columnist for Time Magazine. I really want you to write about the Internet in a column in your own voice." He says, "I can't stand how everything is aimed at grandma and grandpa. I want you to write like you. That's why I wanted you to be hired here is I want your voice and we'll call it the Netly News" which was the name of this site that I had started at "Pathfinder", and we'll triple your salary." Oh, man. In perhaps the coolest moment of my life I said, "Walter, this sounds fantastic. Give me five minutes to call my wife. She's the brains of the operation and see what she has to say about it." She said, "Definitely stay at "Time" you don't know where this Wired thing is going to go. It sounds like an ideal job." I did that. I started to write a column and was doing a whole variety of things. I also was running Time.com. They made me managing editor of "News for Pathfinder" and I did a whole variety of things, in those days when everybody was on a dial-up modem. John: Yep. Yep. Then you came out here. Right? Was your next step Business 2.0? Josh: Well, yeah, basically. Time had a magazine called "Time Digital" that was aimed to be Wired for middle America. I talked Walter into trying to make that a real magazine not a controlled circulation magazine. Controlled circulation means that it just gets bundled and sent to the b-list. We did that and we changed the name of the magazine to "On Magazine". I had this idea that we could cover AOL, this was before the merger. We were flirting a lot with AOL in those days. At that point AOL had 22 million subscribers. I said," That's like the same size as Shanghai. We could get fantastic stories. Let's just pitch them on a supplement that just covers AOL like a newspaper might cover Shanghai. Independent and we're going to look for really, really great and interesting stories." We were down there talking to Pittman and had everything all sewn up. We get to work and find out that they had actually acquired us. We still did it and it and that lumbered along a little bit. 9/11 happened and that was the death knell on everything. They pulled the plug on the whole thing. They shut that down and I went back to Time but I had seen Gay Paree and I was like "I'm out of here. What am I going to do next?" I was about to leave and then there was a change of administration and John Huey comes in as the editor-in-chief and I didn't really know him. There was an off-site for Time it was up in Connecticut at some ritzy dump in Connecticut. We were playing poker one night and I was for some reason winning and I was fleecing all of my betters. Huey was standing behind me and he loved that. AOL offered me a job right approximate to that. There was a guy down there at AOL and they were always in those days looking for somebody who could be the connective tissue between AOL and Time Inc. who understood digital. I went down there and I really didn't want to work there. Oh wait, they were offering the job. I went down there and talked to them and they were interested in me. They said, "You've got to tell your boss." I didn't want to tell my immediate boss so I told Huey. Huey said, Well, in his Huey voice. "Well, I don't know if I'd do that it seems kind of troublesome down there." He said, "Would you ever consider working for "Business 2.0"? I said, "No, I think it's a piece of shit but I'd run it. He goes, "Really." He said, "Pull up a chair." He said, "What would you do?" I said, "It's the most boring, egregious blot on humanity." He said, "Well, what would you do?" I said, I'd do this that and the other thing. He said, "All right, I'll tell you what, go"...it was a Friday, he said, "On Monday I want to see a memo. It doesn't have to be long, four or five pages telling me what you'd do." I wrote him a memo, dropped it off Monday and then I went down to AOL actually to seal the deal and meet with the last group of people. They put you in a green room and I was just about to go up to have my final interview with them and my phone rings and it's Huey. Huey says, "Quittner, how would you like to be the editor of Business 2.0?" Josh: I said, "I don't know, let me think about John." I just sat in that interview thinking, this is bullshit and that is going to be a fantastic job. Again, I had that experience. When I came out to San Francisco running this magazine it was in the ashes of 9/11. The magazine was a very cynical magazine that had been started to scoop what money they couldn't stuff into "Fortunes" pockets off the table. When I got there 25 percent of the readership was unemployed. It was very, very different. It allowed me and my team to actually understand what was real. To get in there and look. This was the age of Google getting off the ground, t his is the age of two guys who had a really cool idea who were really smart engineers, who could build something out of nothing without getting massive investment, which was what was previous was a shell game. This was things were really, really getting real. You know as soon as the McKinsey guys go back to Boston and to New York you know it's going to get real. And we saw the advent of social networks and so much other really amazing stuff take off then. John: You never had a eureka moment. You always felt from the beginning, there was never a stop. The world of tomorrow is going to be different than the world today. This was almost an instantaneous or was it continuum? Josh: I wrote a piece for Hot Wired's launch in 1995 before I got to Time, called "The Birth of the Way New Journalism" the idea was, and this was my idea, how is the advent of the web going to change our business?. Josh: If you go back and look at that piece you'll see that I mostly got it right. John: Kudos to you. Josh: The wrong thing I said was that micro-payments would pay for everything. I didn't realize that what micro-payments are is actually those shitty little banner ads. I was fascinated by how the web would change what we would do and how it would give rise to independent voices. How people would be able make a living without being supported by giant publishing companies, blah, blah, blah. John: Did you see the giant publishing companies crumbling in that piece? I mean, how did you...? Josh: Yeah. I think I did predict that which made it a little bit embarrassing when I went to go work for Time but I'm pretty sure there was a line that almost said that verbatim. Josh: It's all over for these guys. John: Well, you didn't follow your own advice. Josh: No, I never do. Josh: Yeah, I love that about me. John: Yeah. No. Look, you came up, here's the riddle, when you started covering it and you were dealing with editors at Time who wanted to speak in a proper voice, everyone always expressed skepticism with the idea tech will change the world. Josh: Right. Oh yeah, it was terrible. John: Now we accept it as a fact. Josh: That's right. John: That's a huge transition. Josh: Yeah. You actually said something to me in your first email which was very funny because it was very similar to the metaphor that I myself had used throughout my life. The metaphor that I have always used was I felt like there are few people who were standing on this hill with a telescope and they're looking out at the horizon and way off in the distance they see this locomotive that says “Internet” across the front. "Wow, look at that locomotive it's just streaming across the horizon and it's headed this way. They're all standing there and they're standing there month after month watching it get closer and closer and closer and closer. Wow, it's right at the bottom of the mountain and it's coming straight up here." They're watching it and they're watching it and boom they all get rolled over. That's what the journalism business was like. We watched it, everybody saw it happening and the people who were covering it would go to their bosses and say, "We're screwed. We're not doing this correctly." What I learned at Time Inc. was it's not because these guys are stupid, just the opposite, they're super smart. They got to their positions of authority by being really, really smart. They weren't picked because they were disruptors, they weren't the class clowns. They weren't the guys who would sleep during class and throw erasers at each other when the teacher's back was turned. They were the best students. They were poorly suited to make some of the aggressive and bold moves that needed to be made. That's one, but even had they done that they would not have succeeded. What was going on in our business, what was going on in the publishing business is classic innovator's dilemma stuff. It was classic disruption. Classic in every way. I mean, these were very successful businesses. I remember being at Newsday saying to Howie, "You know what would be really cool? Let's give away classified advertising for free online. Let's get everybody in the Times Mirror group to do the same thing. We could create this big portal of classified ads. Give it away for free with..." "We can't do that. We can't do that." "Why can't you do that?" It wasn't even Howie that said it. If Craig Newmark had worked for any of these places they would've thrown him out for being a lunatic. You're making tens of millions of dollars. That makes no sense to give that away for free. Josh: It doesn't add up. John: It doesn't. Josh: You constant, even to this day you look at these big publishers and the money is still coming in from print. To me the analogy is like a big fat man who's trying to shift his weight from one canoe into another. That's how they're negotiating really, really, really slowly. Because one false move and they fall into the drink. John: Do you think there's something intrinsic with journalists that made us...? Is it just the innovator's dilemma or is it just what? Journalists are paid to get things right. We are not paid to be a beta environment where we get things wrong, fail, pick ourselves up again. Josh: Yeah. You're never supposed to get anything wrong. John: You're never supposed to get... And yet, innovation, beta is now the word. Josh: Right. John: Try it in beta. Is this something intrinsic to journalism that kept us from innovating in the way we...? Josh: My wife worked on a Pulitzer winning team at news data. She did breast cancer clusters. They were interested in why is the incidence of breast cancer so high on Long Island? They found out that everything that people thought they know about it was completely wrong. There wasn't anything special. They do have a population of affluent women, blah, blah. Point is there's a big problem. Great newspapers like the New York Times, like Newsday in those days, where they saw a problem, when they saw something wrong, they took their smartest minds and they put them on it and they said, "Solve it." It went beyond just reporting. It was like you become the experts and tell us what the solution is. We never did that. We never turned our attention on ourselves until it was too late. It was like we watched ourselves catch fire and just passionately wrote about it. Catch fire in a bad way. John: Right. Is that because of the Chinese wall that this is a business problem not a...? Josh: Yeah. There's also another interesting thing about journalists which is there is real arrogance about what was going on. There was a real head in the sand mentality. Kind of what you said worked, "This thing is going to go away. This is stupid. I want to go back to what I want to do, because what they're doing is pure and what you're doing is not pure. We don't chase the money. We don't care about that. We're just going to stay here. We're going to keep doing this until the bitter end." That's exactly what they got. John: That's exactly what they got. It is as well in any news company. The journalists were on high. Engineers were forgotten. People on the business side, forget it. The hierarchy made it a priesthood. Josh: Yeah. At a technological company, I think I understand that better, because I'm the odd duck. Gee and I are the odd ducks here. The vast majority of the people here are engineers. When you're in engineering, you are the product. It's all about making a product, right? The engineers are the most valuable people. The engineers and the designers, they make the product. They sit there and they write code that actually makes fantastic things happen. That makes magic happen. We're commentary. We're off to the side. We are at a company like this, what engineers were at Time Inc. There are so much arrogance among the reporters and writers at Time. They thought anybody who had anything to do with technology was the guy who fixed your computer. They didn't understand that these guys were building things. That these guys were amazing artists, far more creative than they were. You don't have any appreciation for that when you're in that environment. It's all about being on the product. It's all about working on the product. What you're describing is that mentality. We're the product. We're the talent. Don't tell us what to do. We're what make you money. If we don't do it, you have nothing to sell. That was ultimately debilitating. I would submit that in the end what really happened was something that was virtually unavoidable. If you could back now and know what you knew, you almost couldn't fix it, because it makes no rational sense. You'd have to blow up these businesses that were throwing up hundreds of millions of dollars with the hope that you might figure something out that 10 years from now would save your bacon. It doesn't make any sense. John: That's not wrong. Josh: No. What's happening now is a bunch of guys don't have the skill set to support themselves anymore and they're going out of business. Journalism isn't going out of business, there's great journalism that's being done right now, great independent journalism is being done right now. John: Here's a question. In covering tech, for instance, back in the day, when you started, it was a handful of people. Suddenly now, it's hundreds. Josh: Yeah. Tech is an unhealthy example.. John: Unhealthy in what way? Josh: I think that there's a cadre of technology reporters here that are completely corrupted. It's almost like how in some towns covering the police. A guy who's been covering the police too long... That's a great thing about the New York Times, you don't get too cozy with your sources, because that's very unhealthy. That's corrupting. You start doing things because you're going to get the new iPhone before everybody else. The Times is very aware of that and worked very hard to make sure that didn't happen. Here, left to their own devices, there are guys who make really big livings, really big six figure livings doing nothing but write about Apple. Not only do they do nothing about writing about Apple which is fairly innocuous pursuit, but they're like Pravda. They get the leaks in advance, so everybody has to read them. That allows them to sell advertising at a very, very high rate, because they're so influential. Beyond that, they beat up on people who have dissenting points of view. That's really ugly. It's kind of totalitarian. It's like Stalin or like the Nazis. It's Jackboot behavior. John: Somebody did refer it to me in the past days as being almost akin to political journalism. Tech journalism in this era has become Josh: Highly politicized, John: ...Highly politicized, just like in a political campaign. You're on the bus with the same people. This is so here as well. It's the echo-chamber effect. You're not having the distance to truly report. Josh: I think that's absolutely true. Also, because, in technology in particular, there are so many voices that the really big, powerful entities can pick who they want to cover them, which is really dangerous, too. John: Do you think now are we on the verge of an era where the companies are going to bypass the journalists? In other words, sort of disintermediation. With social networks, I can go directly to customers. Josh: Yeah. Give me a good example of that. I mean I know what you're saying but I haven't found a great example of it. John: I don't know a great example. I just intuit something like that potentially happening. To be sure, the hierarchy of organizations has changed. In that at one point, maybe there were three must-have publications that these firms would talk to. Now, there are maybe 25 that they talk to, but there's still a hierarchy. There is still a club. Josh: Yeah, there's still a hierarchy. By the way, the world was not a healthier place when they were three. John: No. OK. Josh: So, 25 is not a bad number, 25 is probably a pretty good number. I think I can find truth now more readily than I could in 1985. John: That's interesting. Because you know who to follow? Why? Josh: There are bad actors and there are guys that are corrupt and co-opted and will spout the company line, and will organize their Jackboots to attack people who have dissenting points of view. The truth does come out. The truth ultimately has surfaced. The Internet does a very great job of finding the truth, not in the first moments of something necessarily, but ultimately. John: Are readers smarter in being able to discern that? In other words, once upon a time, readers put their trust in brands and the brands were not journalists. There were some journalists who've always been, but the brand was Time Magazine, or the New York Times, or the Washington Post. Now, it's the individuals becoming brands, not the institutions. Do you think the general reader knows who to go to find the "truth?" Josh: No. I think you and I know who the individuals are. What happens now, everything in news right now is about navigating the stream. We're moving from this world of book shape, whether it's a broadsheet, a tabloid, or a magazine, but it had a beginning, a middle, and an end to the endless stream. Our children are learning how to navigate that stream and we're learning if we're still coherent, intelligent, and engaged. We're learning how to navigate that stream, whether it's Twitter or your Facebook feed, or Pinterest, or Flipboard. Everybody is coming to grips with this problem of how to navigate this stream, how to find, how to tune your stream and find the most important stuff. The stuff that's believable. The stuff that's credible. Sometimes, the credible truth finds you in email. Often, it finds you in email, or through sharing on social networks. Humans are doing a pretty good job of separating out the bullshit. Lots of people still are able to find anything to support their stupid whackjob opinion. John: Right. Josh: The birthers. Everybody is active. The conspiracy theorists. The hagiographers. That's a fact. We're never going to solve that. John: No. That's splintering of news sources become more pronounced. I want to reinforce my view, so I will talk to them. There's no serendipity anymore. Josh: I don't agree with "no serendipity anymore." John: OK. Josh: How can there be no serendipity? John: If I pick my news sources so that I'm just being reinforced, my point-of-view these are people who share my world view. I'm not necessarily accidentally going to hear from someone who doesn't share my worldview. Josh: Let's examine that. If you believe as I do that we're moving to the stream based. This world where all information is delivered to you via a stream. You pick your stream. You tune your stream. Virtually, all of them have a form of serendipity that's part of the mechanism. The reason for that is because without serendipity, life is really boring. I'm not going to mention a particular newspaper that I read all the time and when I go to its website it says, "Recommended for you." It recommends that most predictable bunch of bullshit in the world. It knows that I read some technology stories, so it says, "Here's a bunch of technology stories." That's not serendipitous. That's not good recommendation. We're getting much better at programming and designing serendipity into systems. If you look at Twitter for instance, the idea of re-tweets. If I followed Joe, but Joe is re-tweeting from something that I don't even know about, that's where serendipity is going to come in all the time. I think for people who are kind of connoisseurs of this stuff, like you and me perhaps, I'm definitely weighting my twitter feed towards serendipity. I'm following points of view that I normally wouldn't follow. I follow a Palestinian woman, who's rabidly anti-Zionist, anti-Semitic almost, but not. She's not, but she's highly politicized because I never see that point of view. As a Jew and as somebody who's interested in what's going on there, I want to follow that. I will never find that point of view in any mainstream publication. I do that a lot. I've got Jesus freaks and bikers and all sorts of bizarre people in my feed, because I want that. I want that serendipity. That makes me more educated and more aware of the world. I would argue that my media diet is so much more wholesome and balanced than it was when all I had was three newspapers to pick. John: Do you think that's true with the population at large? Josh: No, but I'm an early adopter. I think that my children are going to do that. I think their children will do that. I think that people get more sophisticated about media because they are awash in it. They're completely smothered in it. I should also point out that we're interested in news because we're of a certain age. I know that a lot of people that I work with are the same age as one of my children. Many young people here they will do anything to avoid news. I don't know that's so unusual. I believe ultimately the mechanisms are in place for a much healthier media diet. John: Let's step back and take your example of the engine coming across the sky that I hijacked and polished and used it … And just ask, "How did Journalism do covering this era, this transformed era? How do you think we, as a group, as a subject? Josh: Covering it or responding to it? Two different things. John: OK, let's ask both questions. Josh: Covering it, great. John: OK. We covered it. Great. Josh: We covered it as a cultural phenomenon. When my wife and I wrote a book about those computer hackers that I mentioned earlier, the book came out in '94 or '95. We did a book tour. I remember it was just so wild going across the country and hearing guys in Boston. At Fenway, old baseball announcers trying to sound out a website address, "H-T-T-P colon...was that a semi-colon? Backslash, backslash." Then, they were trying to pronounce the words. We felt this thing that was starting to happen. It was covered. People were riveted by it. In the mid-90s in particular, it was that halcyon era. Everything was great. John: At the same point, some of your colleagues whom I talked to say, "No. We didn't cover it well because we went down past. We ended up covering Apple too much. We didn't talk about the anthropology of it." Josh: That might be the guys who we're talking to. There was a sea change in how technology was covered, too. There were the old guys. When I got there, I thought that this was fish in a barrel, because the old tech reporters, Markoff being the exception, because he was the person who I believed really made the Internet a household word when he started covering the For the most part, technology reporters were these corrupt, bad-dressing guys who would cover hardware in exchange for getting free products. They would get free PCs. They would get free this and free that, free cameras, gadgets. They have no interest in understanding the Internet, no interest in how the world was changing. There was a new class of writers. Thanks to Wired which started to know that nurtured a whole generation of people who wrote the anthropology of it. That was the fun stuff. That was a great stuff. I think that the people who did it did a fantastic job of it. Did everybody do it? No. It was being done. John: Almost everybody is optimistic, but you're rabidly optimistic about journalism in the future. Josh: I am. Journalism is already much better than it was because of the Internet and is going to be better still. John: Do you think that's largely because the distance between the journalists and the audience has shrunk? Josh: Partly, it's more responsive. It's because I can walk out of the streets right now, see a horrible thing happen, pull out my camera, and take a picture of it. Now, we have cameras on everything. We can see everything. Everybody is an eyewitness to everything now. That's not quality journalism, but for notes... John: For notes... Josh: That's fantastic. John: The equivalent of you walking around in Albuquerque before the cops got there. Josh: That's right. There are a billion of us. There are billions of us that are documenting everything. The sense that we're going to make sense of the world after the fact and by the way, after the fact is still super-compressed now. Do you remember when Bin Laden was taken out? We knew that one in seconds, because some dude tweeted it. Now, imagine there are companies around us who are working on signal amplifiers so that they can spot that thing happening in the world before anybody else, and say "Here's this amazing thing that's happening? Let's analyze it." Who are the experts about that thing? Here's who you should be following to make sense of that thing. It's incredible! The access that we have to information now and then as the final draft of history -- Wikipedia. You can say a lot of bad things about Wikipedia. I look at Wikipedia five times a day. It gets the gist of it. I am so much smarter now than I ever was. I don't have to carry that shit around in my brain anymore. The other thing that I love is we live in an age where it's no longer possible to say, "I don't know." John: Everything is knowable. Josh: Everything is knowable! When I was a child, my dad and I would have big political discussions. He was a very learned man. He would be explaining some things to me. I'd ask him with one of my dumb questions. He'd say, "Ha. I don't know the answer to that." Our only recourse at ten o'clock at night was to go up to his library and look in his Encyclopedia Britannica. That was it. If it was not for Encyclopedia Britannica, it didn't exist. Now, it's all knowable. It's fantastic. I'm not only excited about the future of journalism. I'm excited about the future of humanity because of that. Knowledge, as you know being in the knowledge business, that's the greatest thing we can give people. John: It's empowerment. Josh: It is. While you're going to have the birthers and their forged documents, they're still going to have a lot of doubts when faced with the overwhelming evidence to the contrary. That's what the Internet is about. Unless you're in North Korea or China this is a whole other story. John: This has been great. Josh: Good. ...
VIDEO: YES

Evelyn Richards
BIO: YES: Evelyn Richards started in journalism at age 9, wh...
TRANSCRIPT: John: I'm talking today with Evelyn Richards. I'm here in Cambridge and Evelyn is in Palo Alto. After we get into this a bit, we'll switch to a video where we were both in the same room talking, instead of over Skype. Evelyn, thank you for talking today. Can you tell me about your career, can you trace your career arc, how you got into journalism? Evelyn Richards: Yeah, thank you John. I was completely a journalism junkie, and when I was about nine years old I started a neighborhood magazine. Then I worked on my junior high school paper, and I was editor of my high school paper, and I was a correspondent for a local newspaper, and eventually I got my Bachelors and Masters in journalism. I had an interest in math and a minor in math, and so I was never sure how that was going to come together. Of course, I couldn't see into the future. When I was in grad school, I did specialize in economics reporting, so it kind of came together there. My first job was in Elyria, Ohio. I graduated in '75 with my masters, and there weren't any jobs then, because that was the depth of a recession. I took the first job that was offered to me, and I was a City Hall reporter in Elyria, Ohio, which was a really fun and interesting job. Then I suddenly received a phone call from a newspaper out here in the Bay Area that had my resume already, and they had a job covering night police which wasn't very fun, but I knew I wanted to get to California and I took that job. It was very lucky for me, because in a couple years after that the Chicago Tribune bought the paper I was working for, expanded the business department, and suddenly my math and my journalism came together and I became a business reporter. Shortly thereafter, the business editor quit, so I became the business editor. I spent several years, then, covering for this paper in Palo Alto, the beginnings of Silicon Valley. I would say that was in the mid to late 70s. Then in 1981, the San Jose Mercury, I think might have been the first paper in the country or one of the first to start what we now know as these huge business sections on Mondays. They were expanding their staff, and that was a great opportunity for me, so I moved over to the San Jose Mercury covering the computer industry. I spent quite a few years there, just mining this tremendous beat of the growing Valley. It was just a tremendous time to be a reporter. I started the first computing section, I started the weekend section with computing. I started the venture capitalist survey, creating all these forms that venture capitalists could fill out about their investments which has grown into a huge national survey now. It's run by Coopers or Price Waterhouse or somebody. They eventually bought it out. Then I became the technology editor, so I was really in the early days of the Valley. One of my first interviews with Steve Jobs was about his dress code and the fact that you could wear Birkenstocks to work at Apple. Gee, that was so revolutionary, so I guess they always thought different. Then, I did a fair amount of international reporting and some investigative reporting, and I eventually left the Mercury to go to Stanford, came back and then I went to the Washington Post to be the national technology writer. I had a bureau out here in Silicon Valley, opened a bureau for them in Silicon Valley. John: That was about what year, Evelyn? What year was that? Evelyn: That was 1988. I spent a few years writing about the emerging tech issues from the business side and policy side. It was when Al Gore was first talking about the information superhighway and commercializing what had been a military network to become a commercial network. It was, like I said, the beginning of the tech rise. It was also a challenging time, because '88 was still the tail end of the mid-80s recession. IBM was headed down too, and Apple was laying people off and you couldn't really see where the future was going to be. Then I moved overseas. I kept an affiliation somewhat with the Post but I moved to Japan with my husband. I worked with the Nihon Keizai Shimbun which is a Japanese newspaper kind of like the Wall Street Journal with an English-language edition that I worked on. When I was at the Mercury, I had covered a fair amount about Japan, trade wars, and I had been to Japan quite a bit, so it was a wonderful move and there were great people working there. It was just a really fun time to be inside a Japanese news organization and see how their journalism was very, very different from what American journalism was like. Evelyn: Then, just to wrap it up, I moved back to the Palo Alto area. I went back to the Mercury, that was in '96. I was an assistant business editor and that was just the time that Apple was bringing Steve Jobs back. Since I had covered Apple all those years from the late 70s, all the way until I went to Japan — that was more than 10 years I jumped back into that story for a while as a reporter. Then I moved on to another job at the Mercury which was the editor of a team of reporters who covered the Valley in a way that was more anthropological. Since the Mercury had a huge staff at that time, we had the luxury of doing some non-beat reporting and we created a team of four or five reporters who tried to look at some issues in the Valley that were created because of the tech boom. I think we were some of the first people who looked at the income gap that's of course in the news now, and the impact of money. We did a huge series, a five-part series called "The Cost of Living in Silicon Valley", meaning a double meaning there with "Cost" and the toll it took on people's lives. We commissioned some surveys to be done, and we analyzed the income trends and the wealth trends, and the opposite of the wealth trends. I think we did some kind of pioneering work on some of the issues that had to do with the impact of technology on our lives. Then, after that, I moved into another editing role that was outside of tech, that had to do with more international reporting. Then I left the Mercury and have been doing other things since. John: Since you left the Mercury, what are some of the other things you have been doing? Evelyn: Oh. Well, I left the Mercury saying that I wanted to become more involved in education, and so I started out tutoring, and I've been tutoring writing on and off to children since then. More recently I've had a small job in the journalism program at the high school in Palo Alto working with students there to improve their writing and reporting skills. John: When you talk to me about the work you did in the 2000s at the Mercury, and your reporting, what are some of the huge changes you've seen in the Valley, and in the area? I mean, your coverage has been there for over 20 years. Is it primarily the wealth effect or what other things have you seen personally in the Valley as far as tech goes? As far as tech and its impact on the community? Evelyn: Well, tech went from being just an industry to being like everything here. Everybody's life is touched by how well or poorly the large tech companies are doing, so it's just become completely pervasive. Not just here, but in lots of parts of the country. John: Right. How about, try to talk about some of the changes in tech journalism in those years? Because you went from being-- you were there at the beginning when it was almost a local beat technology because of the growth of the Valley and it's become this huge beat. Was it collegial in the beginning, competitive at the end? What's the arc of tech journalism coverage that you've seen? Evelyn: Well of course, in a lot of ways it was easier for us in the early days. I shouldn't say easy. Easier in a different way. Easier for us to get closer, to get a unique story, but harder to get information probably, because information just wasn't flowing out everywhere. You had to really use your reporting skills and your interpersonal skills to get information. Now, I guess the information gathering part of it might be somewhat easier because there is so much out there. Of course, you have to check everything, but it's harder to get a unique angle now because there's so many sources. John: Yeah, and there's so many reporters now? Evelyn: That's what I mean, so many sources of news. John: The Mercury News, while you were there, was long known as one of the innovative spots in journalism. They had money at that time, you had people in the past like Roger Fidler and people like that. Were you involved in that, or was that almost a separate part of Knight Ridder, were you on board or were you separate from the reporters? Evelyn: I personally wasn’t involved. I think some people might have been, but I was away from the Mercury from '88 to '96, which was kind of a key period. I think that some people were consulted, but I was not in that. I did do a rotation in SiliconValley.com, which was our website in that operation for a while, after I came back to the Mercury so I could become familiar with it. I wouldn't say I was consulted and at that point they were even in a separate building. John: They were even in a separate building? Evelyn: At that point they were, yeah. John: That's interesting. When you work at the Post, did they ever brainstorm with you? Evelyn: No. John: It was more of a journalistic assignment, not a business assignment? Evelyn: Yes. John: OK. A lot of times, you hear news outlets being, news media being criticized because they didn't innovate fast enough. There was something in the news media, be it the Chinese wall between business and news, be it journalists paid to write. Be it whatever in the newsroom, who were criticized for not having an innovative enough in that period. What do you think? What's your take on that? Evelyn: I don't necessarily agree with that. I feel like every industry was caught up in trying to figure out how to evolve to an online world. From banking, to insurance, to car manufacturing, everybody I think the news media was just one of them and everybody had stumbles. I don't feel like we were in some way supposed to figure it out any better than anybody else. No because we weren't a technology-based industry at all. I don't really feel like we should say that the news industry was more clumsy than anybody else. John: OK, OK. How about, you also were there for another transition, the beginnings of a transition. When we began in this business, sure they were journalism stars, but the institution was always meant to occupy a higher ground than we as individuals. We were meant to supplement. We moved into an era, probably over the last 15 years, where followings become audiences, and what were once stars become brands. Did you ever notice that transition, did you ever feel that? What do you have to say about that? Evelyn: I guess I never totally thought about that either because there were always columnists. The New York Times had its famous columnist, always. The Des Moines Register had Donald Kaul, and Herb Caen was at the San Francisco Chronicle, so I think there were always personalities within a local market that drove the news decisions at those papers. I'm sure at the Chronicle they were always saying "What is Herb going to write tomorrow?" I'm sure that was always part of it, and so now maybe they are more national brands because it's online. I'm not a huge blog reader because I'm a traditional journalist and I don't necessarily trust the credentials or even more whether the blog writers have any conflicts of interest, what I would consider conflict of interest. Whereas in the newspapers, I knew that there were standards that stood behind the people, that underlined what they did. I guess I always feel like news was partly personality driven. On air, certainly too. John: Do you think some of those traditional ways that you had, because you're a more traditional journalist, you believe that the brand was a filter. You knew the person was going to have the following standards if they were going to report for the Chronicle, or for the networks, anything else. You think it's harder to navigate now? Evelyn: Yes. John: As far as all the information columns? Evelyn: Well as a reader, as a consumer of news, absolutely. Because you don't know what TechCrunch brand stands for, for example. Evelyn: The simple answer would be no. I wasn't thinking about how the news business was going to be changed. Because you've got to think, too, when I stopped reporting in '91, it was a little too early to maybe think about that. Over the years that I was reporting, I would say I was reporting the tech side and I was also reporting the business side. I was more of a business person than the tech person. I would hear people...I would say one wake-up moment for me was maybe in around 1990 when I went to visit Project Xanadu with a guy named Ted Nelson. John: Remind me. What was Project Xanadu? Evelyn: It was a bunch of guys here who were, they coined the word, or they were doing hypertext. It was Ted Nelson, who was a real, true visionary. He said that at some point in the not-too-distant future, you're going to be able to log on your computer and get onto the card catalog of any... Any library in the world, or anything. I couldn't believe it. But, see, somebody like John Markoff might have believed it, because I wasn't so much into the tech side of it. I remember hearing, like, "Oh, you're going to be able to make a phone call from the middle of the desert, walking across a desert." I'm like, . I had my journalism skepticism, OK? But, if I would have stepped back and thought about the march of technology and how all the pieces were coming together, but they weren't coming together in a Eureka way. There was stuff happening in telecom with satellites and with packet switching with optical fibers and with everything to do with the telecom side of it. Then there were huge advances in storage, starting with disk storage way back in the '60s. Which was absolutely critical to the march of technology forward. The semiconductor advances. Absolutely indispensable when you look back on it. The software, HTML and the whole operating systems and browsers and all of those pieces. If you look at that now it doesn't look like a Eureka thing. Every single piece had a place. It all was this huge mosaic, so to speak, that had to come together before the Internet and then these subsequent advances. Here I am thinking more about the business things. If you look back on that, too, I look back and I see, yeah, there were some things. There, I saw a little bit more. For example, the internationalization. To me, that was always a big thing. When I saw Taiwan coming up. When I saw Korea, through Samsung, changing, slowly the Chinese getting more, all those things were equally critical to getting the ubiquitous technology that we have today, because that affected the manufacturing cost and the labor piece of it. I sensed that globalization pretty early. Similarly, the personality piece of it, the return of Steve Jobs. I sensed that, too. I could tell, that...I should say, before that, none of us ever suspected that Apple would be where it is today, bigger than IBM. IBM was it. Yet, when Steve Jobs came back there was just something that you could kind of feel. If you think of the industry and the interplay of those two companies, IBM, and then IBM partnering with Apple in the early '90s... Which was unheard of, because they had been this little tiny upstart and this huge behemoth. Then, IBM practically falling apart. They had to bring in Lou Gerstner. He was like, "Oh, my God. How am I going to repair this company?" Now, they're like the two titans. They just formed another deal. If you look at the evolution of that, there were some turning points there that you could also see. Without Apple, I don't know where we'd be in terms of the whole Internet revolution and the visions that they had. Their ability to do some amazing software work, their ability to figure out the manufacturing piece of it, the marketing piece of it, and set the standard, really, for everybody. There were also some regulatory things, that were key, with the anti- trust laws going away. Which enabled big carriers to have the money to lay the optical fibers and to do the satellite stuff. Of course, satellite technology -- amazing. Even things like gyroscopic technology to be able to hold things, little things you never think of. They all had to come together. I don't think that you can look back and say there was a Eureka moment. There were so many moving pieces, and there still are, that it's only in hindsight that you can see some of the inflection points. As a journalist, I lost touch with some of the technological advances which were always going on. First of all, it wasn't so much my focus. But, secondly, we were so caught up in writing about the companies and who's coming and going and even the horrible recession. I remember Bob Noyce saying in the mid '80s when we had the horrible recession something like "There's no bright spot on the horizon. There's nothing coming down. This is it." You're so caught up in the economics of the moment that you're not thinking about what's going on in the labs or how the little pieces are going to fit together. John: You used a wonderful example to say “its like laying a mosaic,” like being a painter with pointillism. It you’re working that close to the points, you’re not able to step back enough to see how all the points necessarily combine. Evelyn: I used that word because that was what the browser was first called. John: Let's talk a bit about that mosaic and the fascination, the characters involved, the Apple, the whole personality coming to the business of it. Do you think over time we turn from the anthropology that you were directed about the valley at one point into chasing more down the personality-driven coverage, putting it back on top? Evelyn: It's always been personality-driven. No, I don't think there was a big switch. I mean if you look at how other industries were covered before tech, there was always emphasis on the people at the top. What we tried to do is not necessarily look at the people at the top because really so many people make up a company or make an innovation. I didn't feel that it was fair to always be focusing on the CEOs. That's just not my way of looking at life. John: Fair. Stepping back, from a remove, how do you think journalism did covering this whole digital transition? Evelyn: You mean the digital transition of journalism or the digital transition of the world? John: Let's say the world first. Evelyn: We did OK. Let me think about that for a minute. If I put together everything I would read over those years from trade journals to mainstream media to broadcast media, we covered a lot of bases. You're in the middle of it. There was a mix of minutia stuff like in the trade journals and the step-back pieces that maybe the Journal would do or that we would do or occasionally Time Magazine would do or something. I think that was the appropriate mix. I don't think there was any...there were times when people like John (Markoff) or people at Fortune or elsewhere would go out and say, "Here's how the future looks." I remember some of those pieces like in Wired, a great magazine in its time. My husband gave me this before I left. This is the 1965 version of Electronics Illustrated where they first talked about the integrated circuit. My husband claims — this is when he was in high school — that he could see that the future was going to be amazing, that this was going to change so much. Of course, he wouldn't have been able to see and it was the same for us. We did our best to lay out what the future could be and of course you can’t see exactly. But people were pretty much on the right track. If we go back and look at some of John Markoff’s stuff, he was totally on the right track and he was early on about what the Internet was going to be able to do. He was early on computer security, which is a huge issue now. All of us in the world are in the same boat about being vulnerable to some computer security issues. He was raising that flag a long time ago. If you were to go back, we covered a lot of the bases if you're looking at the totality of what all reporting was. As far as how it changed journalism, I don't think we were reporting on ourselves. John: Should we have? Evelyn: I don't think journalists should be out there like...I mean I don't think most people in the world care about journalists or what journalists do, other than getting them the information. It would have been like, "Who cares?" I do think that the entire world is tech jobs now and things have changed so fundamentally. We used to talk about the tech business as X-percent of the economy, and now it's the entire economy. No job has been untouched, and so now it's an entirely different thing covering tech because you're covering everything. So it's different. John: I don't think we saw it becoming everything. Evelyn: No, I don't think we did, but certain reporters could see it more than others. I do think that if you look back and you look at some of the trade journals, they were out there. If you talked to Ted Nelson at Xanadu, they were definitely out there with the vision. There were visionaries out there who could paint it better. I don't think at the Mercury, we would do that so much, but other people were doing it. It's important to look at the whole picture of everybody who's out there reporting. John: Now, it goes back to that mosaic example, many of us were too close and so we're able to step back. Some did and some didn't. Evelyn: We stepped back more...I stepped back more in a way of looking at economy and workplace lifestyle, that thing, and more technology’s impact on society, whereas other people like John Markoff focused more on where's the tech going. We had different ways in looking at things. John: The thing that many people say is that what we all underestimated was the speed of the transition between the early '80s and now, how tech became everything. Evelyn: That could be. John: None of us really anticipated Moore’s law and change. Evelyn: That's the other thing, too. I mean living out here...you heard about Moore’s Law your whole life. You got to remember that as a journalist you're trying to be skeptical. You're not going to go in there and buy Moore’s Law and paint this picture of how everything's going to be because then you'd feel like you're drinking the Kool Aid. You don't want to say this: “There's going to be this Internet that's going to do all this stuff” because then you're buying their line. You purposely didn't do that. If you're blaming us, it's partly because we were being our skeptical selves. I would have felt like a sap if I would have written some article about how Intel's microprocessors were going to get so much faster and they were going to be able to do this and this. And I would have felt like, "Gee, where's my skepticism?" You did that, but you did it in moderation or you did it with a lot of “but” graphs in there, “to-be-sure” paragraphs. Like I said, if you look, there was that in the trades, in Wired, and some of the other magazines. That was out there, but we didn't necessarily in the daily papers feel like that was our place. John: That's a fair point, absolutely a fair point. If you look forward, are you optimistic or pessimistic about the future of journalism? Evelyn: I'm a pessimist at heart, but I'm pretty optimistic. John: Why? Evelyn: Because, like I mentioned before, there are a lot of ideas bubbling up. The money side of it is the hard part. I do feel sad when I see the traditional journalism publications shrinking like I know the Times has and other publications, so that does worry me. That does worry me, but I hope that over time people will see that quality matters. So I guess I’m kind of mixed. John: What do you feel about citizen journalism as a replacement, substitute, or alternative to what is described as professional? Evelyn: I'm not so hot on that. I see citizen journalism as feeding into, as being the sources, for the professional journalist. John: Not really the replacement for, yeah. Evelyn: That's what would help anyway. It's great as a journalist to be able to have all these eyes and ears out there, but then you have to be the filter. John: Yeah, and you have to know who's feeding you. Evelyn: Then you have to trust that over time the consumers will understand the difference. Do you think that's happening? John: A number of people I've talked to say that jury is out because what they see a need for it to happen. The evidence of a more discriminating consumer is sort of scant thus far. People have cut down on their information flows, but they haven't... The worry is that information, this small bit of information they're getting, is reinforcing their prejudices or their news judgment not challenging them. I want to hear from people who agree with me. That's some of the worry that cutting it down (your information results). You're reinforcing, you're not widening the voices you hear. If I said... Evelyn: Was that any different then? John: Perhaps. I don't know. Evelyn: Yeah, I don't know either. John: Time will tell. As you said correctly, you still pick out some of the bylines you want to read. If that's not any different, then fair enough. Evelyn: I don't really know. I don't think we have any choice but to wait and see what happens, and then to make sure that the professional journalism organizations are supported financially. I think a lot of foundations are stepping forward. John: I hope that's a sustainability that we have to see. Evelyn: Yeah, it's expensive. John: Yeah, we'll see. Well, thank you very much. Evelyn: Thank you. ...
VIDEO: YES

Ken Richieri
BIO: YES: Kenneth A. Richieri became general counsel of The ...
TRANSCRIPT: Martin Nisenholtz: We are here on February 28th, 2013 with Ken Richieri, who is the general counsel of The New York Times Company and past general counsel for New York Times Digital. Let's start with something that just broke in the news and then go back. The AP/Meltwater suit. First, could you just describe the suit and tell us why the Times decided to back the AP in this case? Second, if you could, I'd like you to contrast it from a copyright perspective to two other news services, the Huffington Post and Google News. We never sued Google News or the Huffington Post. These guys must be doing something materially different. Or we just simply made a mistake in not going after those two. Ken Richieri: We haven't sued Meltwater. All we did was put a brief in in support of AP. Martin: OK, got it. Ken: Meltwater is an interesting company. They're basically in the media monitoring space. In so doing, they and their competitors supplanted a longstanding industry that used to do this in the analog world, the clipping services. Most of the other competitors, like Burrelles, that I think is now a different name, as they've migrated to the Web, they've kept their licenses. They still pay for the content that they distribute to their client. Meltwater does not. Meltwater takes its content by scraping articles on the Web and then delivering it to its clients. The issue really comes down to one of fair use. They maintain that they're not taking too much of each article and that they're within the limits of fair use for various reasons. There's a big case in England that they just lost, a huge case. England has a much more constricted view of fair use. That put them a little bit on the defensive. That's what caused the AP to sue them here. Martin: Could we talk about fair use a little bit as a legal concept? It seems to me that it's a common thread through the whole history of this era. Ken: It absolutely is. Particularly in a world starting in the '80s with the famous Berne Convention, where the formalities of copyright were done away with, copyright, taken literally and expanded to everything as it now is, is a very limiting doctrine. For example, it used to be to get a copyright, you had to actually register your work. Remember that little C in the circle? That's what that was all about. If you felt something was worthwhile, you paid a registration fee, you'd send a copy to the registrar of copyrights, who would send it to the Library of Congress for their deposit copy, and you'd have the copyright. But now all that is gone. A lot of people still do that. They just like the art of that. In fact, if you're taking notes on my conversation, those notes are copyrighted the minute they are fixed in a tangible medium. Everything is copyrighted. If you don't have some concept of fair use, it's like an engine without grease. It would just bind up. The system wouldn't work. Fair use is a concept that says, "Yes, people have ownership in these expressive works. But others, under certain circumstances, can make use of them. A fair use." Martin: How did that concept extend to the Web? It seems to me that much of the Web is based on the idea of fair use, Ken: That's right. The Web wouldn't be possible without a robust application of fair use. As you know, since we've worked together a long time, I came to copyright law through an odd direction. I came through a First Amendment background. Most copyright lawyers, their whole world has been representing owners, studios, and authors, and licensing things. I came in a different way. I've always had a more expansive view of fair use anyway. As a result, I think it was actually easier for me to transition to the world that the Web creates. Martin: Is that a good thing? Ken: Yeah, I think it's a good thing. I think it's a very good thing. First of all, a couple of things on fair use. The Web didn't change the underlying rules. The rules of fair use and the considerations are the same, but the applications are totally different because of what the technology enables. What it does is, it puts a lot of challenges and stress on the rules of fair use. Just take a simple example. It's not going to be exactly legally correct, but I'll use it as an example. Let's say basically in concept, fair use says, "If I make a copy of a record on my reel-to-reel tape deck and I give a copy to my friend, that's OK. Or I use it in my house. that's OK because the use of friends is different from a commercial use." Let's say that's the general rule. That's fine, but what happens when something like Facebook comes along and lets you have "friends" numbering in the hundreds of thousands? What does that do to that rule? In many ways like that, the Web has put pressure on the concept of fair use. Most of it has been to expand fair use. I believe that's good, I believe it's good for the country, I believe it's good for creators of conten,; I believe it's good for everybody. I also think it has limits. If we go back to the Meltwater case, essentially their business model is to take AP articles, to sell those AP articles to their customers and to get money for that. And not to give the AP any money. That's a great freaking business model, but at its heart it's not fair. Martin: OK. Is it fair then for The Huffington Post to put a small excerpt on a page with a link, to create what is known at The Huffington Post as a B page, which has the author's picture and a little bit more content, and in essence monetize those B pages through advertising? Why is that not... Ken: You're getting a couple things confused in there. I think The Huffington Post, I pay much less attention to them now then I used to. In their earlier iteration, came a lot closer to the line and probably went over the line in some ways. You could say they built their business on infringement and they pulled back as they got bigger. What you're talking about isn't really fair use in copyright. It's their interesting way of trading on people's reputations and trademark. Because what you're saying is, "They'll have a piece on somebody. Then there will be a flat page about a person with a bio. Almost as if they have a relationship with The Huffington Post. When they wouldn't know The Huffington Post if they tripped over them in the dark." That's not really a copyright issue. But I see why you raise it. There's a similarity. Certainly, the web enables many devices, technologies, and applications that can create an appearance of a relationship and allow you to monetize that relationship when none existed. It allows you to extract value away from the person who, on some cosmic level, deserves it, to that site. Absolutely, that happens. Martin: I guess the other question has to do with the value itself. In other words, the notion that folks like Jeff Jarvis have put forward is this notion of the link economy. Google News is a great example of that. Where freely available links across the web lead to greater page views on the part of content providers, which are monetized through advertising. The question is, in a world where advertising is becoming less and less valuable to the providers, do you view that as something that will change? Ken: It's already changed. First of all, I think Jeff Jarvis is kind of interesting, but he's beaten that same drum for like a decade. He's gotten a little boring on that. I would start at the source. You asked me, what's the difference between Meltwater and Google News. One of the things is, I call it the consent of the governed. You can opt out of Google News. If we didn't want to be there, we can opt out. We can opt out of Google News while remaining in Google search. So it seems to me right there, that's a different animal. I can decide if those links that Google News are sending me are worth it. If I can monetize them or if I want them for distribution. I can also decide not to. In the Meltwater case, and I'm going to get the number wrong. This just came out in the case. I don't know if it's right or wrong. It's just one of the parties is alleging, AP is alleging, that the click through rate is something on the order of a hundredth of a percent. So they're getting no clicks. Whatever value is in the extracts that Meltwater is providing is all that the customer needs. There is no value back. As long as there's the ability to opt out, hey obey robots.txt, I'm totally in favor of the link economy. What's going to put pressure on that, as a theory, is what you're saying. Advertising in a world of infinite supply is increasingly difficult, particularly for these small sites. There is not going to be a fair exchange. If you remember in the early days, we used to put full content, as an experiment, on things like AOL and Yahoo. That's going to be harder and harder to make sense of after a while, given where advertising is going. I think. Martin: I'm not asking you to put words in his mouth, but Rupert Murdoch has been quite aggressive, in terms of Google News, and believes that his content, his links, are worth something. You're right. He and others can just simply leave. But his pitch is, "Pay us." That you would view, I assume, as simply a marketplace issue, correct? Ken: Yeah. One of two things could cause that to happen. One is a European perspective, where there's a much stricter limit on fair use, and the search engine needs to pay. So there'll be some sort of rights collective. That's the direction they're moving. The other would be an American perspective, would be competition. What's keeping Rupert Murdoch and his papers, as well as us, from getting paid by Google is the fact that Google has like an 80 percent market share in search. If there were four different search engines, you could see a situation where some would bid for you to be in or not. They would pay you to be in. They would pay for those links. Martin: Didn't the European newspapers, at least in some countries, just come to an agreement with Google, where they are being paid for their links? I believe they did. Ken: What happens in Europe, law is not as developed in Europe. There's not a plaintiffs bar and strange things happen. What that means is that you'll get the Dutch papers or the Belgian papers will sue Google. They will win a ruling that says, basically, Google search can't index papers. Then somewhere something happens. But they're still indexing the papers and nobody really knows. Martin: I thought that Google was paying them a fee. Ken: They might be. But if that's true, that's because there's a difference in law, as I said. Fair use is much more constricted. One of the differences between American law and European law is, we have the first amendment and they don't. A lot of fair use is really first amendment ground. It's grounded in speech. It's a constraint on owners. It's a pro-speech thing. So, in Europe, you have a much smaller hole for fair us. In America you can't copyright headlines. It's pretty well established. In Europe you probably can. The Meltwater case that they lost in Britain was because there's a very small hole for fair use. But absolutely, something is happening Europe. Recently, we had in France, the French papers hassled Google. The next thing you know, Google put $80 or $60 million into some sort of fund, which is going to teach papers how to monetize search better, or something like that. Only the French can come up with a result like that. It's outside the legal system. I don't know how it works, but it's there. So clearly they're doing something. The question is, is that going to wash back on these shores or not. I think in some way it's going to. Martin: That leads to the question of why the FTC and other regulators seem to have decided that Google's rapid domination of the digital advertising world is perfectly OK. Do you have a view of that? Ken: There's two different things I think we need to thread apart. One is their domination of the advertising world and one is their domination of the search world. The advertising world, it's a little more difficult to explain. The Justice Department and the FTC definitely allowed Google to move from its dominance in CPC ads to a dominance in display ads. Apparently based on an argument that they were totally different markets. That was an analysis conducted under traditional anti-trust principals that other people might have differed with. That's one thing. The recent investigation that was dropped, that was Google's search. The investigation into Google's search. Remember earlier I said how the law has a tough time catching up with technology? Under traditional antitrust rules, it's really tough to mount a case against somebody who's not charging anything for its product. It just doesn't work. As a doctrinal thing, it doesn't work. So whenever they come to Google, Google's response is, "My competition is a click away." Martin: Which is true. Ken: Which is true! And that's what collapsed it. I know the FTC got a lot of shit for it, but I think they were right in this. You can't bring a case until you have a good answer to that question. They're saying, "People are choosing us. Go talk to them." That worked. Martin: Look, part of the issue that we face today is that, from the 1970s on, from the first point at which an article became a digital file to now, we've seen a fairly substantial change in the economics of journalism and in particular, of newspaper publishing. But I would argue, all journalism. Some of it is papered over by cable and the affiliate fees, in the case of a company like CNN or subsidies from the entertainment side of the broadcast business. But in essence, the journalism business has become much, much, much tougher. People look for reasons why that has happened. One of the dominant things that people have been saying over the last year is, "Well, if these journalistic, companies had only charged the consumer at the outset of the web, we would be in a different place right now." Do you have a view of that? Ken: I don't believe that. First of all, the fact that cable TV companies and cable systems are now very profitable and great is not the same thing as saying, "In 1953, NBC should have started a cable system." In 1953, if they'd gone to cable, they would have lost their shirt. The market wasn't ready for it. So I don't think you can just time trip it and move back. Everything has a place in time. In the end, The Times did it about right. Maybe it was serendipity. Maybe it was the fact that you're a genius. I don't know. Martin: I think it's the latter. Ken: I know you do. But in the beginning, we exploited the one thing that the web really gave us. The Times had this odd problem. We had this great, hugely well known brand, that most of the world just knew by reputation and episodic interaction. We got out there in front of tens and tens of millions of people. We expanded our audience in ways that were unimaginable even a decade before. Now we're turning to monetize that more directly. That's a very natural evolution. I think we actually did it right. Martin: That was totally our thinking from the outset. But I still think that, as Mark Thompson said this week, we're far from out of the woods. The Times is certainly, in a sense, in the leading position among many journalistic institutions. So I think the next thing that people do, hence my questions about Google, is to say, "Look, they've taken all of this information, aggregated it, and if it's not Google it's someone else..." To your point about Meltwater... Ken: In a sense, if you just take the American news industry. The American news industry, we were like 80/20, most of it was 90/10, with 90 percent of it being subsidized by ads. That's what subsidized the delivery of your news, for many, many, many years. What has deeply hurt the American news industry is not that the articles are now digital and can be copied and distributed. It's that the link between advertising and that content is irrevocably broken. In some cosmic sense, the advertising has gone online and has gone to Google. [laughs] People are accessing information through Google. It is not wrong and makes a lot of sense if there's some way to link back up the providers of information to where the advertising has gone, which is monetized through search in some way. We once met a guy. I can't remember his name, but I remember he worked for Forbes. He said a very interesting thing, which has stuck with me ever since, which was, "The day that Google put ad results on the search page, as opposed to the content page, that game changed radically." That's very true. I don't know how you get to getting users having a piece of that action. But that would not seem to be an unfair thing. It would be a game changer and introduce a lot of stability into the news industry. But I don't know how you get there. Martin: One interesting thing, going all the way back, and since you were here at that time you might have some thoughts about it, I think you were here when we did the in-perpetuity deal with Nexus, is that, at least in that era, we seem to have entered that B2B space and decided, for whatever reason, that it was not for us. As a result, companies like Reed Elsevier have come up. Or Wolters Kluwer. And they're very big companies. We had that business. Why don't you think we pursued it? Ken: First, for the record, the in-perpetuity with Meade was signed on Ken's first day at The New York Times. When I came to work there was nobody in the office. There was a note saying, "We'll see you at 12." It turned out, everybody had been up all night papering this deal and finishing it. Which is actually very funny. Martin: It is funny. Ken: It is funny. I think the reason they did it was because they had tried the information bank for a while. They couldn't see their way, given they had a very limited site, to anything but trouble and expense, in building a digital business. So when Meade, which was actually a paper company with a vision, Meade was a paper company in Ohio, said, "We will take that on and build that." We said, "Great." Instead of having costs, all we're going to have is revenue. Martin: When was your first day? Ken: It was January 31st, 1983. That was the first day. 30 years ago. That agreement, its term was forever. Martin: Do you remember when The Information Bank was founded? Ken: The Information Bank? No, I do not. I think it was in the late sixties. Martin: Bob November will remember. Ken: Yeah. Sixties and seventies. But that grew out of The Times index and The Times microfilm stuff. It grew out of that. Yes, we were uniquely positioned. We had, call it B2B or whatever, the institutional entry into the libraries and things like that. We definitely could have built on that, to be in a position where LexisNexis is today. Absolutely. It could have happened. Martin: What about the 24-hour product? There was that as well. At one point, that went to DOW Jones news retrieval. When I say the 24-hour product, I simply mean today's paper. There was a separate set of agreements for that window. Ken: Today's paper? Martin: Yeah. The current, 24-hour paper. Back in the eighties. Ken: Oh, back in the eighties. This is a little off-topic, but I'll explain this to you. It's like that old Meat Loaf song. "Waiting for the end of time, it seemed like a good idea at the moment." And now he's praying for the end of time. He got the girl, but it wasn't what he wanted. Same thing with LexisNexis, with Meade. We got forever. But at a certain period of time, fairly soon, within a decade, we said, "OK, we're getting a lot of money, but this is bad. Suddenly competitors are on the table. We're leaving a lot of money on the table." The LexisNexis deal had carved out the 24 window and left it to us. This was something that I actually did so I'll use the "I" word. What I did was, I approached DOW Jones and licensed The Times to them for 24 hours. I wasn't looking to get money from DOW Jones, that wasn't the point. The point was to put a marker down and to tell, they had turned into LexisNexis. To tell LexisNexis that whatever they had from The Times wasn't as valuable as they thought, because I was going to exploit the hell out of this 24-hour window. And make that contract less valuable to them. It was the beginning of that marker. What happened was, we got lucky. We had launched that campaign. That campaign had gone about two years. There was a lot of angst over in... Martin: So now we've got these very profitable, very lucrative agreements with companies like LexisNexis and DOW Jones. Ken: Factiva. Martin: Factiva. Ken: ProQuest. Martin: AOL comes along, in 1992 or '93 and says, "Please create a service for us. We'll pay you some money for that." I hadn't arrived yet, but we created something called @Times. @Times was just an entertainment product. My understanding was that, the reason we created it in such a constrained way was that we did not want to offer AOL anything comprehensive at the time. I then came, the following year, early in 1995 and ran into the same issue. That the folks who were running the news service and archive, were deeply afraid that we, on the web, were going to cannibalize their business. Actually, there was a significant corporate fight over that. Arthur intervened. We prevailed, in the sense that we could publish The Times. But somebody literally had to be there at like six o'clock in the morning to press the button. Because we couldn't publish it when it was actually available the night before. More importantly, we couldn't really build a very robust search facility. Yet again, we're now looking at...can you provide a little bit of... Ken: Sure. Two things. One, that's very different from the LexisNexis we were talking about before. What you're discussing is totally, let me just say, self-inflicted. Because at that time, the LexisNexis deal had died. Reed Elsevier had purchased LexisNexis, we'd substantially rewritten the license agreement with them. And we had reserved to ourselves, clearly, unequivocally, the consumer space. In the agreements, we had defined library and business space restrictively and basically said, "Consumer is everything else." So there was no question, like in the deal you're describing with AOL, if we wanted to do it, we could have done anything we wanted with them. So what you're talking about really is not a contractual issue, it's not a legal issue. It's merely what happens in a corporate sometimes, when you have an entrenched, bureaucracy isn't right, but you have an entrenched interest that are responsible for a good, solid revenue stream. They have a lot of money, because they have. And you're an upstart. You're trying to say, "I know you've got the money now. But I can build a bigger business. We can cannibalize ourselves, maybe a little bit. But I'm telling you, this is bigger. This has bigger potential then that." You had a hard time getting heard and we lost some precious years. Eventually we came around to it, but we definitely lost years. At that time, when it's a land grab, time is money. You want to get out there with your flag and start planting it wherever you see that brown stuff on the ground and it turns out to be oil. Yeah, we lost, but that was totally self-inflicted. No third party made us do that. Martin: OK. The final question relates, a little bit, to the present and future. Do you see the legal regimen changing as the crisis deepens, not necessarily at The Times, but in journalism in general, what will the legal and regulatory framework look like, in your view? Ken: I'm not sure I know. But let me say a couple things. First of all, on these and many topics, the EU and The United States are on completely different planets. In an analog world you can do that, but you can't in a digital world. They get mushed together. So that is one very interesting thing that's happening. When you opened the conversation, if Google is going to be paying French publishers $80 million. What are we, chopped liver? Why can't we devise a way to get some of that? There's going to be that kind of movement. There's going to be a lot of pressure on a legislative scheme. But one thing that legislatures can't get around is the first amendment. We have that and they don't. In a funny way, that may hinder some solutions here. Because the solutions in Europe, a lot of the ones that we've talked about, they've been negotiated solutions. But they've been negotiated against a backdrop where both sides think they've got something to lose. Right now, the search engines feel they pretty much are invulnerable, legally, under any threats. There's no real need for them to negotiate. But we are definitely seeing a shift away from advertising. What all the implication of that are I don't know. But it wouldn't surprise me if, in some way, all that needs to happen is the search engines need to think they need to compete for quality if some kind of way. I don't know if we can get there. Martin: At this point, Google is so dominant. Ken: I know. That's a difficulty. Martin: I don't think anybody quite knows where Yahoo is going to head. Obviously, we still have Microsoft out there. Ken: You have other exchanges. Is it impossible to think that in one of these closed environments, like Facebook or something like that, that a publisher could get something for giving Facebook added entre, added ability to move its stuff around in its network. Martin: No, it's not. It's not impossible at all. Ken: All you need is a sense of competition and a sense of creativity, and things would break down. Martin: Yes and no. I think part of a problem with the Web is that it's just very hard to control. Ken: Oh, absolutely. Martin: That's part of the reason why I don't think that it had anything to do with "information wants to be free" or anything like that. First of all, that's a bastardization of something that somebody said. In any event, I think it has to do with the fact that the Web is just very, very stateless, global, and seamless. You're introducing friction into a system that doesn't like friction. We'll see where that ends up. Hopefully, it will end up in a good place. Thanks, Ken. Ken: That's it? Martin: Look, you're the lawyer. As you can tell, I've done some thinking about some of the global questions, but if there's an area of the law or regulation that I haven't touched on deeply enough that you think is very relevant to this history or the future, please feel free. We have plenty of time. Ken: The only thing I would add, I think you're definitely right that the key is fair use. Although it's in the Copyright Act, the real core driving force behind that concept is the First Amendment. It's not an accident that we invented the Web, that we grew the Web, that it grew here first, because it is about expression. As you said, it's that freedom and that inability to constrain itself. It naturally happens in that environment. I do think the First Amendment and fair use ought to get their due along with Al Gore as the being creators of the Internet. [laughs] They're a big part of it. The other thing I would say is that just because the people who want to put gates down and say there's no such thing as fair use and whatever, they're clearly not right. That has no future on the Web. The same thing is true for people who say, "Whatever I do with your content, it's fair." Merely because the technology allows me to make a copy seamlessly and then allows me to monetize that copy through a third person, that doesn't make it fair. That just makes it doable. There need to be a balance struck in the middle. The question was, why did we agree to do the amicus brief in the Meltwater case? It's because I actually felt that wasn't fair. It's a very non-legal sense. That arrangement, where AP did all the work and literally got nothing, that didn't make any sense. Maybe a good deal for Meltwater, but it wasn't fair to AP. And it really wasn't fair for the web as a whole. It's not good for practices like that to get enshrined and to get accepted. That's the other thing that's interesting about the web and the law. The web is very democratic. So law generally comes from the top down. Judges, people have a fight. There's some kind of big case, like the Sony-Betamax case, that says what fair use in VCR means. What does it mean? On the web, fair use is being set by what millions of people are doing. For example, we create work so we are a copyright owner, and we use work, so fair use, we're copyright users. So we try to be very balanced. We've always advised the newsroom that you can't just take pictures from the web. You can't just go to Facebook and take a photo. We've abandoned that advice. Basically, my view at this point is that, there's a consent of the governed going on. People are putting those photos up with the expectations that people are gonna take them. They want them to be taken. That's what they're there for. They have changed the basic rules about how people should approach photos in those social environments. The rule isn't made by a court. It's made by how people are actually using stuff and what they're doing. Martin: I don't want to put words in his mouth, but I think that Fred Wilson has argued pretty vociferously that the copyright situation is way, millions of people are, to your point, breaking the law every day. Ken: Fair use is an elastic concept. All I'm saying is that they're just expanding fair use. They've expanded what's fair use. Basically, this whole country's in gridlock and copyright law is in gridlock. The only way copyright law is going to change is by things like I just described to you. The change doesn't need an enactment. The one elastic part of copyright law is fair use. So that just gets stretched and reinterpreted by what people are doing on the web. That's very healthy. Martin: Something like Meltwater is an attempt to at least put some boundaries on that. Ken: That's right, some boundary, particularly when it's commercial. Martin: But it doesn't sound to me like you in any way blame copyright law or fair use for the crisis that journalism is in. Ken: Absolutely not, no. I think, at it's core, fair use is an extremely very good thing. Martin: Part of the theme here, Ken, to be very transparent, is that, as my colleague up at Harvard, John Huey, says, we've got the tide and we've got the swimmers. The tide are things like all the technologies, and swimmers are the guys and gals who are making the decisions throughout this. A lot of people, I think, think that certain decisions were made, and that's influenced the business. If we had just made the decisions differently, we would be in a different place. Ken: I couldn't agree with that less. Martin: I couldn't either. I believe it's the tide. Ken: It's the tide. No question. Martin: I think there's this huge tsunami. Ken: That's right. Martin: You don't want to put yourself in the position where therefore nothing matters. It's a very interesting dynamic between this huge set of advances that have disrupted what we might term quality or institutional journalism and the people who, over the last 40 years, have made these decisions which may in some cases have moved it along a little faster or slowed it up a little bit. [laughs] But at the end of the day, it seems to me that it's... Ken: It's the tide. No, absolutely. Martin: It's the tide! Ken: It is, absolutely. No question. With the Web and the scale of the Web, it's the tide. You can see it playing out on a daily basis, which is why it's so interesting. ...
VIDEO: YES

Tony Ridder
BIO: YES: Tony Ridder served as the chairman of the board an...
TRANSCRIPT: Martin: Martin Nisenholtz and Paul Sagan are here with Tony Ridder in beautiful Pebble Beach on April 8th, 2013. Why don't I start with a general question, Tony. I started my career in 1979. I started, actually, working at NYU on a Teletex project. It quickly came to my attention that Knight Ridder was working on videotex. You go back to the history of the industry. Knight Ridder was there at every turn with some of the most innovative stuff going. Can you talk about the very early days and why Knight Ridder pursued these projects...particularly the Viewtron project, which comes up over and over again as a seminal, beginning event in the interactive industry. Tony Ridder: Even though the videotex project didn't work out, I can't take credit or the blame for it. It was really somebody by the name of Hal Jurgensmeyer, who had been general manager of the Miami Herald and then he was the senior vice president of Knight Ridder. I think, more than anybody else, it was his baby. I was then the publisher of the San Jose Mercury News. I thought it was really exciting. I thought it was going to be bigger than it turned out to be. I was always very much in favor of what they were doing. Hal was my boss. I reported to him. He would talk to me about it, but it was his vision. Martin: Right. So you were out here at that time, and... Tony: I was out here. I didn't move to Miami until February of 1986. Martin: OK. Tony: Then when I did, it was not doing well. I went on the executive committee of the company and they were already talking about how we do get out of this thing? The next phase, I was very much involved in that. Martin: Right. Do you think, just in general, because obviously Knight Ridder wasn't alone here. Times Mirror had a major videotex project called Gateway... Tony: Right. We were both doing basically the same thing. Martin: Yeah. But both of them were very large projects and they both came to an end, and I actually worked on both of them. For whatever set of reasons, and we can all speculate on why it happened, they didn't work. Do you think it cooled, the newspaper industry's desire to invest in this area for a while? It seemed like everybody retreated after the videotex era. Tony: I don't know the answer to that. I do know in our case I was critical of the fact that they were doing it in Miami. Just because our headquarters were in Miami, it was clear to me that San Jose...if we want to really understand if something like this can work, why are we not doing it in San Jose? The answer was, well, because we're down in Miami. I said that's not a very good reason as far as I'm concerned. This is the kind of place where if it's going to work anywhere it'd work here. Why don't we try it here? Why try it in a place that's not very technologically savvy? Although people in Miami said, when we moved to San Jose, said, well, we're just as good as any other part of the country. But they were not technologically savvy. I thought that was part of the problem. But even if it had been in San Jose I don't know if it would have worked because it was expensive. Martin: It was a tortoise and the hare thing, too. I think the theory was that the TV set and the telephone network existed. You just needed to put some coding technology to join them. The PC was so nascent, but the PC was like a tortoise. It just kept growing and finally AOL caught on. OK, so fast forward a little bit to the early '90s and now you're running the company. Mercury Center, one of the truly innovative, really, I think the first... I think you joined with AOL at that point, right? Tony: We joined AOL. We were the first customer of Netscape. But what happened is that Jim Batten was then the chairman and CEO, I was the president, and Jim and I talked about this. I appointed a committee to try I mean, of some really smart, young people, to come up with some really breakthrough ideas. One of them being an electronic, second generation of the videotex where we could use the dialup service and...because it was clear, even though this is '92, I think, and it was about six years after we had shut down videotex that there was really something there. There wasn't Internet available at that point, but there was AOL, and so we became a customer of AOL. I'd been the publisher of the San Jose Mercury News, Bob Ingle was my editor. Bob Ingle loved electronic systems. Before he was the editor of the San Jose Mercury News he had been in charge of the installation of the system in the Miami Herald newsroom. He drove the system of the Miami Herald, the front end system, and he loved that stuff. He was playing with it all the time, he would talk a lot about it. He was on the committee and he was, I asked him to lead that part of it. He loved it. It was a natural for him. Even though he was a very good editor he had a strong interest in that. And so Bob really took the lead, and this time we weren't going to make the same mistake. We were going to do it in San Jose, start in San Jose. Paul: Can you speak about the vision of what you thought the product would do? How did you think about it in terms of the newspaper product, the 24 hour cycle versus the once a day cycle and all the things that cable news promised? Tony: I think that we thought it would be the newspaper in live form. Not just putting up the newspaper, but it would be the newspaper in live form, and we would offer these other services that we would have, a retrievable service so that people could access past copies of the Mercury News, and that they could search for other kinds of information. It was clear back then that the world was moving in that direction even though the Internet was not actually available. Because we were the first customer of Netscape. Paul: So the prior stuff was all walled garden. Only AOL and Mercury Center, it was a closed world. Tony: But it was clear that the Internet was coming. The Internet was there, but it was clear there was going to be a better way of doing it than a dial up service. Martin: But you charged a fee at that point, I think. I think you charged a fee for the service, initially. For the first service. Yeah. Tony: Yes. Well because you had to pay for the dialup service. Martin: For the dialup service, right. Paul: And as I recall it had tens of thousands, some number of subscribers. It was a real thing then. It was not just a test. It caught on. Tony: It was, yes. But then when Netscape came along and when we could go up on the Internet... It's interesting, when you look back on it now. People were saying, well, 'These newspaper guys never saw this coming.' I used to say, 'We are not going to be a buggy whip company. We are not going to miss this wave. There's something here and we're going to be part of it. We're not going to worry about making money for some period of time. We're going to get on top of this thing.' But even though we spent all this money, we never really... Martin: We'll get into that in a second. One of the interesting stories that we've read and I assume it's true, is that when you took over the company, one of the people in the newsroom asked you what kept you up at night. You talked about classified advertising, which was very prescient at the time, but it was looked at, in the newsroom, as, "Why would that keep him..." As a low end worry. It turned out to be exactly the right worry. Maybe there's something in that story. Tony: As you know, as you both do from being in the business, newsrooms get criticized for being liberal. But newsrooms are the most conservative organizations anywhere. They are so hidebound. The editor of the [inaudible 10:54] wrote a book. I was a quote in the book. I would have an editors meeting at least once a year. I would always talk to the editors and ask for all their questions. That was one of the questions. It was like 1994 1995. 'What keeps you up?' I said, "Electronic classified. I think it could really make a big difference to our business." What they really wanted me to say, I guess, was that we don't spend enough money on journalism or something. It was clear to me that people were going to figure out how to deliver classified in an electronic form. We were going to do it too. But that was going to eat away at this great business that the newspaper industry had, with classified advertising in print form. Martin: The first thing I recall, when I joined the company, The Times Company, the following year, was something called Career Path. Russ Lewis, from The Times side, joined this consortium. Tony: I used to meet with Russ. [laughs] Martin: Right. And I remember that's when I first met you. It didn't work. It just fell apart of its own weight. I guess the reason is that companies just couldn't work together? Tony: I think the problem was that we were all very independent. We might have belonged to the Bureau of Advertising, we might have all been part of the ANPA and Newspaper Association of America. But we did our own thing. I would talk to Russ and Arthur and my counterparts in other companies. We were all friendly. Career Path was the first time we had to give up something to make it work. The New York Times had their ideas of how to do things. We had ours. Trying to get everybody to work together just didn't work. We had The Tribune Company. There were like eight companies. Martin: At least eight. Paul: JVs are hard. Tony: What? Paul: JVs are very hard. Tony: We tried other things. We had new... Martin: New Century Network, which also failed. Tony: What finally happened... I don't know if I'm getting ahead of you here. Martin: No, you're right on. Tony: What finally happened is, John Madigan, from the Tribune Company, called me and said, 'Tony...' As we talked about, we really screwed this up. If it's going to work, it can't just be Knight Ridder. It can't just be New York Times. We've got to do it as an industry, to get enough impact, to have a national footprint. Madigan called me and said, 'Tony, what do you think about just the two of us going in and buying Career Builder. Let's not get anybody else involved. Just the two of us.' I said, 'Maybe we ought to have Gannett in there. They are the biggest.' We were the second biggest newspaper company, in terms of our footprint, our circulation, our size. Tribune was third. As a company, The New York Times was about the same as Knight Ridder, but they had other things back then. But just pure newspapers. We talked about Gannett. He said, 'But Tony, I'm afraid we'll be heading down the path of what didn't work before. This way, just you and I. We can cut out everybody else. Just if you and I can agree, that's all it takes to get things done.' So that's what we did. But then it became clear... I can't remember the timing. It was like a year later, we bought another company. You may know the... Martin: Headhunter, I think. Tony: Yes. Then we decided that it would be wise to bring Gannett in. But by then, we had it working. We had a structure. It wasn't going to be like Career Path. Instead of trying to start a company, we bought a going company. We had good management. They were getting good compensation. That was all working well. It was a real business. So we brought Gannett in, as a partner. Martin: That worked. Both in terms of the jobs, as well as Cars.com, which was the Classified Ventures piece. Tony: Right. So what we did was, we had six people. We had the management. I think it really turned out that Jack Fuller and Gary Watson and I, Gary Watson from Gannett, and then I did it from Knight Ridder and then the three guys that were running the systems. So there'd be six of us, and we'd meet and that's sort of how it went. Martin: So what's interesting about that to me is that it worked, and yet it wasn't enough. It wasn't enough to overcome the downward spiral, and I'm just wondering why? Tony: Well, it was just a part of it. You know, the problem with the downward spiral is that even though that worked, and you would know this better than I would, but I think that Career Builder is the biggest today. I mean Monster was the biggest back...they were our primary competition... Martin: Yeah, back then, yeah. Tony: ...but they're the biggest today. But the problem is that, you know, to get results from Career Builder costs, I don't know, 15 percent of what it used to cost to get it in the print ad, so we were undercutting our business. But we always said from the start, even though this was really kind of created a lot of internal tension, but I always said, 'Don't worry about eating our seed corn. We're going to build the best Internet company we can, and it's going to mean we're going to take business away from the print.' But that was very difficult to do. And publishers would say, 'All right, Tony, that's easy for you to say, but you're putting pressure on me to perform, and I've got more revenue from the print.' But that was always a tension in our business is that, you know that we were always...we were trying to run a public company where we had...we were being compared to Gannett and Tribune and New York Times, and we had profit pressure. And, you know, I would say, 'Let's build up the Internet business as big as we can. Let's devote the resources to it.' But within the newspapers... Martin: So let me add that one of the things I mentioned to Paul on the way down was, you know and it's probably was never possible but was there a moment when you thought to yourself, 'Maybe we should take this private so we can make this transformation?' because as you say, as long as you're managing to the street you don't have the flexibility to make the investments necessary and certainly not to cannibalize your own business? Tony: Well, and we talked about...what was popular back then was tracking stocks. Martin: Yeah, which we were doing. Tony: What? Martin: NYTD was created to be a tracking stock. Tony: Yes. All right. So we were headed in that direction, and we had permission from the board. We were going to do it, but then I think that...you know, I retired six years ago, and I can't remember the dates as well, because it's now about 12 years ago, but I think what happened is then we went into the downturn the end of 2001, and we kind of shelved the tracking idea. Martin: It was April 14th, 2000 in case you're looking for the date [laughs] . Tony: But we were going that way. Paul: He remembers it well. Martin: I remember it very well. Tony: And the board, we had all these internal debates with the board. But, yeah, then so we sort of just pushed that aside, and sort of muddled through that downturn, which was pretty severe, and that's when we really got hit on the employment classified side. Martin: Right. Well that was a cyclical...that was a recession that we never really came back from after that. Tony: Yeah, and it was interesting how people thought...which we didn't, but so many people thought that, "Oh, that was just a passing fad," but we never thought it...I'm sure you never thought it was either, because there was enough there. It was just that there was...people sort of lost their sense of reality, and they didn't worry about making money or when they were going to get to making money. I mean it was just an unreal time, but there was something that was really there that wasn't just going to go away, that's for sure. Paul: And you were living in that, and you made the comment about running a business in Silicon Valley and watching an experiment in Miami, the wrong place, and we've talked to a lot of people, and one of the themes that's emerged is just how important it was to have engineers and be an engineering based company that succeeds. You look at Yahoo, which even might say it lost its way as an engineering company and certainly Google, and Facebook, and Twitter, and on and on. How did you think about that living in Silicon Valley and seeing what was going on and trying to morph the newspaper business into a tech company? Did you think it could be done by grafting engineers in? I mean you certainly had some of the most visionary people in the media business working for you. Tony: Well, I mean, my thinking was despite people saying, like Jack Wells, "You know it's all about Tony Ridder wants to come out and play golf at Cypress Point here in California, or whatever, but it was trying to get the top people in the company, like the top corporate people, the top 15 or so, to really understand the mindset of how people in Silicon Valley look at things and to have the ability even though we were set up out there with...you know, we later called it Knight Ridder Digital. I forgot what we were calling it back then. Maybe you know, but we had people there, but yet we were sort of...the power was down in Miami, and so we wanted to be able to attract people and have them out there, and have people sort of think the way they do. So when we went out there in 1998 we went out and met with all these companies. We tried to get inside their head about how they do things, and we took all the people doing all the corporate stuff and tried to immerse them in the kind of thinking that people have out there, which I thought would make a difference. Martin: But I think Paul's point, and what we keep hearing over and over again, which is an interesting...there's an interesting paradox inside of it is, the people who create innovation in the Valley, and to some extent now in all the centers of innovation, including New York, are people who really understand the engineering. They don't necessarily have to be trained computer scientists. Sometimes they're high school students [laughs]. I mean, I interviewed Matt Mullenweg this morning who founded WordPress as a freshman at the University of Texas. He was a philosophy major. But they understand code. They understand. And the newspaper industry, the media industry in general — let's not pick on newspapers magazines, television — just never really understood how to incorporate these talents into their lead...not just their companies, but their leadership processes. And yet when you talk to people in the...particularly in the journalism business they'll say, 'Well, we're not tech companies. This isn't Facebook. We are a news company. Obviously the people who run the company need to be news people.' So that's the tension that I think we're hearing over and over again when we do these interviews, the tension between technology innovation and sticking to your knitting as a news company. Tony: Well, I mean I think that trying to...I mean you sort of look at what's happened to Microsoft when they get big, kind of corporate, profit-driven. If you're a smart PhD from Stanford, let's say, do you want to work for a big company like that, or...? So even though Knight Ridder — and back then Mercury News was a really good newspaper, and it was sort of an exciting place, but if you were a really smart guy, and you are thinking, 'Should I try to...' there was so much money available. Martin: There still is. Tony: Yeah. Martin: Yeah. Tony: So do you want to try to work within Knight Ridder and try to build a business within Knight Ridder or do you want to try to do it...because you know there are a lot of kind of old crusty people like Tony Ridder there, and they...or do you...this way you can do your own thing, and you can get money, and you're not bound by...you know, Knight Ridder worries about making money, and New York Times, and all these other companies. Why not just do our own thing and have our own company and not be part of a bigger company? I mean we don't want to go work for GE or some company like that. We want to do it within our own. And when you go back to the history of Intel, you know Intel, they ended up with Fairchild. They went around looking for all kinds of money. They couldn't get it. They finally got their money, and they started Fairchild Semiconductor, and then once they were established they went out and started Intel. But those same guys first started out in Fairchild because that's the only place they could get the money, but had they been able to get the money early on, they probably never would have gone to Fairchild, and it would just have started out as Intel, I think. Paul: You had a lab that did engineering in Boulder. Tony: Right. Paul: Talk about that in relation to these other things that we talked about, or if there was no relation how did that operate? Tony: Well, there was. There was a guy by the name of Roger Fidler. I mean this got involved in the Samsung/Apple lawsuit. And Roger Fidler had sort of come up through the graphic side of the business, and he'd come out of the Detroit Free Press. Did you want more Diet Coke, or water, or anything like that? Martin: No, we're great. Thanks. Paul: No. Tony: And by the way, Tony, we talked to Roger so we know who he is and what the story is, but... Paul: And we've seen that there's a film that was produced that showed sort of the vision of the iPad. Tony: I'll give you my side of the story, which is maybe a little different from his. He was very independent, very smart. We set up this information design lab in Boulder, because that's where he wanted to go. Roger was a great promoter, may still be a great promoter. He came up with this idea for what he called a flat panel, which is really just a tablet. It was basically the sort of thing we're talking about. In 1995, or '94, we were starting to get going with our Internet operation in San Jose. Ingle was building it up. Ingle and Roger Fidler couldn't stand each other. The trouble that Fidler had is that it was dependent on flat panels being available. I said, 'We're not going to go into the business of manufacturing these things. We don't have the ability to do all that stuff. We don't have a retail way of selling this stuff. We don't have a company to make them. What we are...We'll develop this software. We'll provide it, but we need these things.' Roger said, 'I think they'll be fairly prevalent within about five years,' or something like that. At the same time, the Internet was now available. We already were up with Netscape. I said, 'I think what we need to do, Roger, I think it's a really good idea...' He was traveling around the world giving these speeches. It was really exciting. I said, 'What we now need to do is we need to spend to a lot of money building up our Internet business. That's were our focus is going to be. You're a really talented guy. I would like you to take your staff, move them out to San Jose and be part of that operation. We'll keep this thing going. When the flat panel comes along...' 'I'm not going to San Jose. I'm not working for Bob Ingle.' Ingle, by the way, was not the easiest guy to work for. He said, 'No, I'm staying here.' I said, 'No, you're not. It's not going to exist here. We're putting it all together. It doesn't make sense to have it in Boulder when we got this going out there.' That's how it all fell apart. It is interesting how it turned out to be the same. It wasn't just five years from '94. It was, when did the iPad come out? Martin: 2010, I think. Tony: Yeah. It was really like 15 or 16 years. Paul: It was a classic example of overestimating the short term impact and underestimating the long term, right? It wasn't five years, but 15 years later it was way bigger. Tony: I've thought a lot about that. The problem is that Apple had a retail operation. They had the manufacturing smarts. Paul: It's a whole other business. Tony: What? Paul: It's a whole other business. Tony: We didn't have that kind of stuff. If we had waited, Apple would have come along...They wouldn't have needed us for that. We might have been fighting over patents, and stuff like that. That's my side of that. Martin: Getting back to the nub of this, which we talked about just a couple of minutes ago with respect to the engineering, it sounds to me like what you're saying is the entrepreneurial side introduces a natural, creative destruction into the technology business, which now, of course, touches on journalism. What we then hear back from that is...OK, what that probably means is more traditional journalistic institutions can continue to exist, but they really need to change. They really need to reduce their costs in particular. You hear this over and over again, this same theme of cost reduction. The problem with that, when you talk to a lot of the folks on the journalism side, is that when you reduce the cost to a certain extent it's not the same journalism anymore. Tony: I think it's a terrible dilemma. I don't have the answer to it. I think the New York Times, Wall Street Journal, they can survive. If it's so much more efficient, [inaudible 35:19] says, 'None of my children read a print newspaper anymore. The problem is that you guys are trying to deliver it in print.' I would say the problem was advertising. We had a great business. It was not exactly a monopoly. Just take the San Jose Mercury News, if you wanted to hire somebody back in the '80s and '90s, far and away the best place to advertise was San Jose Mercury News employment classified section. It was true with automotive. It was true with all kinds of things. We had a great business, but there was a more efficient way to do it. That's to deliver it electronically. If you could do it electronically, you didn't have to go through the newspaper. You could use Monster. You could use Autobytel. You could use all these different services. You could then get in. It's self defeating to keep cutting the quality of what you're selling, as then your circulation goes down. You've got to cut your costs. You've got to stay at least profitable enough to pay the bills. I think it's a terrible dilemma because of revenue...From the time we sold Knight Ridder in 2006, I'd say within two quarters of that, the revenue in the industry declined. In the fourth quarter of '06 it declined. It's never stopped declining. It's never stopped declining. At some point it's got to get flat. Ad revenue's gone from 50 billion in 2006 to last year, I think it was like 22 billion. What do you do if you're a newspaper, like the San Jose Mercury News, and you've lost 60 percent of your revenue? You can't just keep your costs up there. I worry about the New York Times because they...I love the New York Times, but, you know, it's not as much as it used to be, in my opinion. I mean, much meaning there's just not as much depth there, it feels to me, anyway. Martin: Well, I think the answer that is given, put the Times and the Journal aside, but in the more local space is that you have to go right down to the business basics and really size the cost structure to the ability to produce revenue. In other words, you take it back to a time when you didn't have these big newsrooms, and a lot of folks would argue that with user generated content now and other forms of input you can do a whole lot more with a different set of processes. That's the other side of the argument. Tony: And you have to sell the content. Martin: And you have to sell the content. Tony: I mean it can't just be an ad model. It has to be a combination of circulation revenue and ad revenue. Martin: Well, I think you guys were the first ones to go free in the newspaper industry. Maybe Nando was before you, but I don't think so. You were the first major newspaper entity to go free. Tony: Free on the Web. Martin: Free on the Web, right, and I assume you did that for the same reason... Tony: We had big debates internally about that, by the way. Martin: But we all did it for the same reason. We needed to build an audience. Paul: And you did it at the Times, and I did it at Time. Martin: Right. But, you know, there's now a lot of second guessing on that, you know. How do you feel about that? Tony: I don't think that was the wrong...I don't think that was a bad decision, because we had to build up a big enough audience so we had something to sell, and I don't know if we would have built up that audience absent that, but I think that now the time has come that we can't just rely on that kind of revenue. And I think it really...you know if you have...if you're in a market like Wichita, Kansas, which is one of ours, or Oklahoma City, or Tulsa, or any of those kind of isolated markets, and markets where people really identify with the market and this is sort of been Walter Hussman's thing in Little Rock, and it's what Buffett's talking about. I think if you have a place like Duluth, Minnesota where I grew up, and people really care about Duluth, and they don't move in and out much. They're just there. They care about the local high school sports. People that don't even have children there go to the high school sports or hockey games, or whatever. And they would pay for it. But I don't know what you would do in markets like San Jose where people don't really identify with San Jose. They're just there. They love living there and working there, but that's a much tougher thing. They don't care, necessarily. There are people who care about the high school sports, but that model is very different. But I think in Omaha, where Buffett now owns a paper, it's crazy now to sell the content. And I feel the same way about the New York Times Company. And I've felt that way for some time, and I've said that to Arthur. 'I think it's just...you've got unique content,' and this if before he started doing it. 'And I don't understand why you're not selling it, because where else can you get New York Times content?' Martin: Well, it's turned out to be successful. I think, again, the issue that not just the New York Times and not just the newspaper industry faces, but the whole Internet media industry, is the notion about kind of falling knife on the advertising side, and so overcoming that is a difficult...no matter how much you charge for the content you still need to have the advertising stream kick in, otherwise you're selling a high class newsletter, basically. Tony: Right. But, you know, if you're in Omaha, I think there'll always be a business for that kind of newspaper, and if you force people to pay for the content on the Web, then...or do it like the New York Times model, which is if you pay for the print you get it free on the Web, but if you don't pay for it on the print, you've got to pay for it on the Web. That to me, if I were still a CEO of Knight Ridder that would be our model, I think. But it'd be much tougher in Philadelphia than it would be in Kansas City or Wichita, I think. Martin: So getting back to the history of Knight Ridder, at one point I guess you didn't have an A/B stock structure, right? You were just out there exposed. Tony: No, we did. Martin: Oh, you did. Tony: We did not. Martin: You did not, right. You did not. So there was a hedge fund guy or something like that that come in. What was the...what's the story of that? Tony: OK, well, what happened was...we only had one class of stock, and Gannett had one class of stock, and I think, basically we were the only two companies that were in that position. So we had three shareholders that were large shareholders, but the one that was the largest was a...he was part of T. Rowe Price, but it was called something else, but it was owned by T. Rowe Price. And he was...so he said, 'I think you should sell.' I mean he had talked to me over some period of time, and I kept putting him off. And our second largest shareholder thought we should have a recap. Are you familiar with recap? Martin: Mm hmm. Tony: What I mean by that? Yes. And just borrow a lot of money and buy back a lot of stock, and then we had a third largest shareholder. And all together they added up to about 35 percent, 40 percent. And so, you know, finally they got together, and they finally, all three of them, thought we should sell the company, but we had a provision that if we were sold and we would have to have a...that it would require 80 percent of the shareholders to approve it, which meant that we were pretty well protected, I mean, to get 80 percent, if we're fighting it. But we looked at the business, and we had been losing even though our numbers, our total ad revenue, our total revenue numbers, ad revenue numbers, we were going about the same as the industry. There was no difference. And even though we had a lot of cash flow I mean we were generating like 600 million dollars year all of our revenue growth, plus some, was coming from the Internet, and it was masking the overall, because we weren't breaking them out separately. So our print revenue had been declining since really the early 2000s. And so we talked about what kind of a story do we have to tell to the advertisers? I don't mean the advertisers. I mean the shareholders. 'Stick with us because things are about to get much better.' And I didn't believe it, and I felt we'd end up with a big fight with these guys, and we'd could hang in there sort of like the New York Times has hung in there. But I asked my senior people how they felt about it, and they just didn't see...I mean there wasn't one person that thought, 'Boy, you know, we're just going to go through a little downturn here for a year or two,' and so we decided not to fight it. But I think we could have fought and won, but it just would have just been dragged on. And, you know whereas Arthur and the Sulzberger's could just say, 'Go to hell. We've got two classes,' we'd be constantly going through that, and what would happen in the meantime? Did we think...if the business isn't really growing what's going to happen throughout all that? Do you save [inaudible 47:53] the employees? And I knew McClatchy was really eager to buy it, and they were a really quality company like we were. They had two classes of stock so it seemed like a good outcome, and they were the only people that bid for it. Nobody else bid for it. So that seemed like a good outcome, but that was really painful. But I did recommend to the board that we sell it. When the board saying...tell me we want you to sell, I did, and my senior management team all agreed with me to a person. So there wasn't anybody on the senior management team that said, 'This is the wrong thing to do.' Paul: That's a, I would say, probably a pretty rare brutally honest look by the management team at its own future. I think generally management teams are pretty good at convincing themselves they'll work their way out of it. Why do you think you were able to take such a clearheaded look at that, pointing the team could, too? Tony: Well, I think because one thing when Sherman came to me I said, 'Look, why don't you go after Gannett? They're the same as we are. They're no different than we are. Go after them.' 'Well, because they're big enough to buy you, and you're not big enough to buy them.' And I said, 'Well, go after somebody else.' 'I mean where are we going to go? We can't go to the New York Times Company.' He was a big shareholder in the New York Times Company, by the way. 'We can't go to McClatchy. I mean all these other companies...I mean you and Gannett are the only two, really.' The Tribune had this kind of funny deal, because they had the McCormick Trust, they had the ESOP. They weren't in the same position we were, because whereas we had a really broad base shareholder thing. So you know, I think that it just didn't look like...you know, it looked like we'd just keep fighting with these guys, and where would this all lead? And we ended up voting and they can't...the company's not sold, but when you're going through all that, it's really destructive to the employees, the company. I mean it seemed like just a bad outcome, and it seemed like McClatchy was a good outcome. But it was really painful, personally, for me. Martin: Last question that I have, we have this metaphor that we use to kind of describe the whole history, which has to do with the swimmers and the tide, and the tide is basically the march of technology and entrepreneurship, and the swimmers are the folks making the decisions, people like you, throughout the history. Tony: What do you call it, the tide and the tremors? Martin: And the swimmers. Tony: Oh, swimmers. Yes, yes, yes, OK. Martin: And I guess the question is, even if you have a bunch of Olympic swimmers [laughs] , the tide is so hard, they're probably not going to make it, and you know, it just seems sometimes...and Knight Ridder was probably a pretty good example of this...that this was kind of almost inevitable, that no matter what decisions anybody made, the technology was just going to overwhelm, the tide was going to overwhelm, these people who are trying to swim through it. Tony: Yes. Martin: Is that true, do you think? Tony: I do think it's true, and I mean I...we didn't see, and I didn't see, what was going to change this trend. And as I said, if you look at the print, if you go back and take out the Internet and look at the print and what this long slow decline that we were in starting in 2000, and that it was going down, and so when we'd get together as a group, including with the publishers, what is going to change the print? Is the print...is there...can anybody figure out how we're going to...if this is the trend line in the print, what's going to change that print line? And nobody could see what was going to do it, but I do think if you know that you have these guys...if you have one class of stock, and you know that you're sort of unprotected, you maybe look at things differently than if you know that you could just tell them to go jump in the lake. But I don't...it's been six and half years since we sold the company, and other than the availability of the iPad, there isn't anything that's really changed in the industry. I mean it's not like two years after we sold it somebody finally figured out... Paul: Found the Fountain of Youth. Tony: What? Paul: They didn't find the Fountain of Youth right after you left. Tony: And they're still wrestling with sort of the same kind of stuff that we wrestled with for a long time. Martin: Yeah, I think one of the things that's happening, that the Newhouse folks have taken the New Orleans paper as an example down to three days, and people are experimenting and things like that. Tony: They're doing Cleveland now. Martin: Cleveland, yeah. Tony: They're going to do it in Cleveland. People must say, 'That must make you feel good that you got out when you did.' It does not make me feel at all good that it's come to this, because I think it's incredibly sad for the country, because most newspapers have to cut back. It's the only way they can survive. And as a result in Monterrey, in San Jose, wherever you go, the citizens of these communities are not getting the kind of newspaper they deserve, and the politicians are able to do a lot of stuff they couldn't do before and there's...our watchdog role is really diminished across the country, and it's not getting any better. It's diminishing even more. ...
VIDEO: YES

Tom Rogers
BIO: YES: Thomas "Tom" Rogers is President and CEO of TiVo I...
TRANSCRIPT: Martin Nisenholtz: It's April 5th. We're in New York. Martin Nisenholtz is interviewing Tom Rogers on the MSNBC deal. Tom, let's start. Let's go back to the MSNBC formation. One of the things that we've learned I'm not sure you were aware of this or not or whether it's even true, but we've learned it from interviewing the folks at CNN is that, initially, Bill Gates wanted to do the deal with CNN. Is that something that you recall? Did you know about that or not? Tom Rogers: I would say that Microsoft and CNN were having conversations at the time about how they might work together. We had had some contact with Microsoft. We felt that if they were interested in that kind of alliance, NBC could create a better opportunity for Microsoft to move forward in the media space than CNN could. We put together an approach to Microsoft. I remember that Andy Lack, then president of NBC News, and myself sat down with Bill Gates and basically pitched him on the assets and strengths of NBC and how a partnership between Microsoft and NBC might be put together. Obviously we were successful in getting him to think that we were a better way to go than CNN. Martin: Why did you want to work with Microsoft? Tom: There were two things that really drove that. One was, it was clear that we needed to have a broader catalyst for driving into new media. We had a number of Internet investments. NBC had been very aggressive, more aggressive than the other networks in driving into cable and cable news, and then international channel development. Our next great frontier was new media and the Internet frontier. We looked at Microsoft as a partner with a substantial amount of Internet traffic, a substantial amount of financial resource, and a substantial ambition to move forward in the media in some way. We were always about finding the right partners that could catalyze our involvements in a new area better. That was one. Two, we very much were looking to take a cable channel asset we had, which had been started as "America's Talking," and had been the vehicle through which retransmission consent, when it was initiated, was essentially paid for by cable operators; meaning, when retransmission consent as an FCC policy began, I made the decision, as head on NBC Cable at the time, that we were not likely to get direct cash payments for our broadcast station and network assets, but that the cable industry would be amenable to using a cable channel as consideration in the form of distribution and distribution fee payments. We had created a vehicle called "America's Talking" that had served as our mechanism to negotiate with the cable operators. At the time we crafted that channel, we devised a channel description that cable operators agreed to that gave us flexibility in terms of the balance of news and talk that could be produced on the channel. It certainly gave us a vehicle around which we could have a discussion about creating a more full fledged news channel. We had created CNBC and a business news channel, but had not had a general news platform. We knew that Microsoft was interested in that very platform because of the discussions they had had with CNN. We put this forward as a way they could have it and own 50 percent of it, and we would bring the full resources of NBC News to it. We were also looking for a partner that could help us fund and develop a broad news channel. The third piece of this was that we were very interested in how traditional news and Internet news could be fused into a single franchise where the two could be strengthened by some joint undertaking. The brand would stand for both forms of news. A viewer or user would be able to benefit by being able to go back and forth and understand how the two pieces fit together. That was the most revolutionary part. That was the part that probably, of the various elements and putting this together, was the rockiest, but that was very much the formative thinking around it. Martin: One of the things that keeps coming up in our conversations is this notion that news organizations just didn't really understand the technology. It sounds to me like part of your rationale was meant to solve that problem. Tom: We were being pretty ambitious. We were doing two things at once bringing a broadcast network operation into cable news, which, in and of itself, in the mid '90s, was a heavy lift; and making sure that the likes of a Tom Brokaw, Brian Williams, Tim Russert at the time were indicating their support and enthusiasm for it so we could get the spirit of the news organization behind it. At that point, CNN was developed enough and credible enough that people understood that getting a shot at a cable news vehicle was a good thing. Martin: But, to be clear, Fox had not yet launched. Tom: Fox had not yet launched. CNBC was about six years old. CNBC, in its inception within NBC, had had a much rockier road in terms of a cultural embrace. Here was an opportunity, one, to do that, at the same time do it with a partner, which was a somewhat different undertaking. We were the managing partner of the cable side, Microsoft was the managing partner of the Internet side, yet there was a great deal of operational discussion about how the two could be fused to strengthen both sides of the news equation. There were a lot of new elements here. Cable news was new. A highly produced Internet news franchise was new. Fusing the two was certainly new. There was a very ambitious lift to take place at once, all within the umbrella of a brand new partnership. Martin: Fair to say too ambitious, maybe, in retrospect? Tom: I would say that MSNBC developed into a major brand for a long time. I don't know the latest ratings now, but with the traffic from MSN, was the leading news site in terms of traffic for a great deal of time, with what was a very well regarded breadth of content. I think it certainly achieved an awful lot of metrics there that were signs of real success. The cable news side certain got the cultural embrace from NBC News, which was successful. It took longer for the ratings to come about. MSNBC obviously has morphed over the years into something different than it was originally anticipated, and was able to establish NBC News as the leading network in cable news between a business news franchise and a general news and talk franchise. The piece that was the most difficult was how do you fuse those two under a single brand. Not simply applying the brand to both that was achieved successfully, and the brand had a great deal of recognition but strengthen both sides by the fact that both new media, Internet news elements existed and cable news elements existed under a single umbrella. That part had some interesting attempts. I think it's fair to say that that was the part that was the slowest to come about. And then, past my time because I left NBC in 1999, essentially four years or so after it launched, there were enough friction that I think developed between the Microsoft and NBC partnership that the kind of things that you would need to really bring about how a television franchise and an Internet news franchise could strengthen each other by a close working relationship. That friction, from what I understand, got in the way of that really developing. A lot of those initial plans were abandoned. Both sides worked to develop the strength of their own within their own medium, and both continued to be reasonably successful at doing that. But the notion of a fused cable news and Internet news franchise symbiotically existing to strengthen each other through the interactivity one would constantly have between the two pieces never fully came to fruition. Martin: Let's talk about the business model for just a moment. I remember very distinctly in that era that for the first time, newspapers were colliding directly with cable operators and broadcasters and entrepreneurs like the Yahoo folks. We were all thrown into this one world wide web environment at once. Some of us had histories of charging for content. Others of us had histories of having subsidies, the cable folks, and others were pure broadcast folks with advertising alone. Did you ever think about at the time the idea that it might be a good idea to charge for the service given that there were no cable subsidies? In other words, you were committing to a one revenue stream business. As a cable guy, you must have thought, "Don't like this as much as cable," to be blunt. Tom: The dual revenue stream model that cable had in the subscriber fees that we had won for MSNBC through the retransmission consent negotiations gave us a great deal of confidence that ultimately that was a very strong business model. We had seen it develop in CNBC. We were owners of other cable channels. It was clear by the mid '90s that was a really powerful business model. It's only become more so. Our view was that it was going to take a much longer period of time for the business model around Internet news to develop. Microsoft had a much more aggressive vision of how quickly that would come about. I think that when they signed up for the deal, they expected the near term economic return to be much more favorable to them than it ended up being. That didn't really disappoint our expectations. I think it did disappoint their expectations, how much longer that model took to develop. No, we didn't really consider charging a subscription fee. Our view was that the strength of the MSNBC franchise would come from the breadth of its availability and access as a television and Internet based news source that one could come to at any time for any breaking news, for analysis and commentary across almost any subject. Our goal there was for it to complement and strengthen by its association with the cable news side, which we had a great deal of confidence in the economic model. Our view of that deal and how the deal was structured was clearly driven off of our optimistic view of cable, very long term view of what it would take for the Internet. Microsoft had a very bullish, near term view of the Internet. They were not as enraptured by what the cable economics might look like. Those disappointed expectations had something to do with the souring of the relationship with MSNBC. Ultimately, years later, that partnership dissolved. Martin: As someone very famous once said, "It's easy to connect the dots looking backwards." That's fine. With that caveat, do you think it was a mistake for the industry to embrace this broadcast model, this free model, at the outset? Would it have been a different industry had that not happened? Had people, more or less, not in any kind of collusive way, but just in the natural scheme of business, said, "This is an Internet site that's going to cost a lot of money to create over time. We think we need to have more than one revenue stream." Tom: Yes and no. I think that there were clearly opportunities to create some subscription elements in the magazine industry, for instance. The idea that the exact same content was put up for free for magazines that required subscriptions or newsstand sales. There wasn't any particular means by which you could financially benefit by providing the same content on a free basis. There were ways that one could have created stronger communities that either drove higher ad sales or select sources of information that might be more available on a subscription basis. There was a lot of not very well thought out thinking for many parts of the media industry when it came to how that could be implemented. If you're specifically talking about MSNBC, NBC News existed as a single source of support of information. It was advertising only where the model was "get it out as broadly as possible." Cable allowed us to perfect that model some by virtue of its dual revenue stream, but Internet advertising only was consistent with the core nature of how the broadcast news model had developed. I think that what was not necessarily thought through as well as it could have been is that the major source of support for broadcast news on television came with some players willing to put some pretty big bucks behind that franchise, which you saw on the "Today" show and "Nightly News" and other places where you'd see major investments in advertising on news. The way the Internet side was sold was "take any advertiser that will come." No deal was too small. You know the whole story of ratcheting down the CPMs of Internet news and information. There probably should have been far more care given to how much value is being delivered to the core advertisers, limiting one's rights to be able to promote and advertise against this whole new audience that was being brought in. Not devalue it by essentially subjecting it to a whole different set of dynamics in a totally lower priced advertising marketplace, but figuring out a way to be more patient about how the guys with the big bucks who were supporting big news, big names, big shows, big personalities could be brought in on an exclusive basis to the big audiences that they'd be happy to have reached and paid for if it had been part of their broader package that they were uniquely getting by virtue of the fact that they were television advertisers. I think that that piece of it probably was not as well thought through as it should have been. Martin: Part of the promise of that joint venture, as I remember it, was that by bridging to cable...It was very early. It was a narrowband world, a desktop world, no smart phones. A lot of the monitors on desktops weren't even in color. But it was visionary in the sense that you had the promise of bringing video to the web in a news context. How do you feel, in retrospect, about that? Did it develop in a way you thought it would, or has it not developed in a meaningful way? Interestingly, now that you're with TiVo, it's an interesting platform to look not only backwards at MSNBC but look forward as well. Tom: The guts of our pitch to Microsoft in terms of how their ambitions and vision for how the Internet was going to develop and the assets that NBC had had an awful lot to do with the exploitation of video on the web. In fact, one of the key things that I remember Andy Lack and myself pitching to Bill Gates was this enormous archive going back to 1948 of every major news event that had occurred that NBC news had the video for. We were willing to provide the Internet rights for that video to be exploited in an MSNBC online context. The constant renewal of additional news sources from NBC news, from CNBC, from MSNBC could be a phenomenal way of organizing on demand, more personalized news content that would make news and information in video form far more usable for the viewer than its broad broadcast done over the network. Martin: That hasn't developed even to this day. Tom: No. I would say that that was not given attention the way it should have, even though it was a core part of the initial thrust. Part of that was business model. Part of it was, is the advertising support for it there? Part of it was, is that ahead of where the marketplace is? It is a little more confounding that today, with the comfort level that people have in organizing their own news packages and more personalized views of what is going on, it is not a whole lot easier to take a vast video resource that includes what's going on and then context and background based on archival information that can give you an immediate context for anything that's breaking news. This is what has already happened. Putting it all together and packaging it more easily. We certainly view what TiVo is doing today, which is, how do you get people the best of what's out there when you have infinite content choice and putting it together in a highly personalized way. Part of what we deliver but part of the issue is, the great banks of news and information content haven't yet been organized in an on demand fashion that can take full advantage of the technology that people like us have. Martin: It's interesting. I'm renting an apartment in Cambridge. I have Internet access, but I didn't subscribe to cable just because it's very temporary and I'm not there that much. I went onto the web and I thought, "I'm going to find an on demand news source that I can just look at." There's nothing there because, I guess, the cable relationships preclude that and, for whatever reason, the broadcasters haven't re purposed to...Their relationships may preclude it as well. There's just no Internet news at this point that you can pull up on demand. Tom: The individual news sites have embedded video in an awful lot of their stories, both some that have cable or broadcast franchises and those that don't. What they don't have is the ability to easily pull out your areas of interest, put that together in your own personalized broadcast, and be able to create your own news show from, if the archive's big enough, a single source or, more importantly, from multiple sources. That really has not yet developed. What we see at TiVo, all video is going "get any content you want on demand wherever you want it, whenever you want it." The metadata tagging along with the retrieval capability will certainly happen so that what I just described and what was a key part of that MSNBC vision will certainly come to light. But you're right, it is not there for the consumer in any kind of easy form today. Martin: When will it be? Do you have a clue? Tom: I see where we are today. Everything about customizing and personalizing the experience and what we do today. We probably deliver for a TiVo customer seven, eight million pieces of entertainment content that ranges across everything. The ability to customize and personalize that is all about the metadata you have that tags it what it is, what category, what does it relate to, and then what your own personal interests are and, increasingly, your social network's interests as a form of recommendation. You pull all of that together to present a unique dashboard just for that user of what they would care about. I think we're seeing our ability to perfect that ingestion and massaging of the data in a way that you could really put together that highly personalized video news content in the next few years. That won't be a foreign concept. Martin: Do you think that gets provided by entrepreneurs, by existing incumbent players, or both? Tom: To make it broadly available, you're going to need probably an existing player who's providing software throughout the cable world like we are, to weave that through the bowels of some pretty difficult plumbing that cable operators have to make that broadly available. My guess is, there'll be some entrepreneurs in there that help in some way to facilitate some piece of the chain. Undoubtedly, it will require the great providers of video, news, and information and their deep archives to be part of that, as well. I imagine it will pull from all those sectors. Martin: The last question before we quit. My colleague, John Huey, has this metaphor. If you go back 30 years, there's this very, let's say, vicious tide that begins to take shape with the development of digital and certainly with the big bang of the web. Then there are the swimmers who have to navigate their way. The news industry is not, in general, in great shape. I'm talking about the institutional news industry. Can you identify any single decision or set of decisions that you think might have changed the course of that tide, in retrospect? In other words, was this an inevitable tide that was going to bring down these swimmers, or could the individual swimmers have controlled the tide a little bit better? Tom: You mean the force of... Martin: The force of technology is the tide. In other words, it's this inexorable, almost a force of nature occurring to what is a traditional institutional journalism process. Whether that process is at a broadcast network or at a cable company or at a newspaper or magazine, it's this notion of Internet protocol seeping in. The idea in the newspaper industry. The things like Craig's List come about. Craig Newmark didn't come in to disrupt the newspaper industry. He just wanted to sell couches in San Francisco to his friends. He wanted to create a platform to sell couches. It's this almost drive by shooting, not to mix metaphors, that occurs. Tom: I don't think there's any doubt that when you look at...Having been in both the print industry, the video industry, and the more broadly new technology industries, and you look at how each have handled the onslaught of technology, or the wave as you say, the video world has handled it much better than the print world. By virtue of that, it's hard to say that individual players individual companies making decisions differently or industries making decisions differently can affect how the tides play out. Martin: Can you be a little more specific? How did the video industry...? Aside from the fact that there's a cable infrastructure that locks people into that today. 10 years from now, we could be sitting here, and that would be a thing of the past. What specifically do you mean? Tom: Broadcast network viewing has gone through all the erosion, in some instances more the erosion, than print has, but the model's been able to be sustained through figuring out different ways to exploit the creation of content, be there sister cable channels, video on demand windows, over the top aggregators, or other ways that the notion of technology is going to provide new and different ways for people to access content. The fact that that exists in and of itself doesn't mean that the model for the players providing that content has to be destroyed. I'd be the first to admit that broadcast and cable players have made some missteps, haven't moved as quickly as they should, and right now have their own set of threats from how quickly over the top might develop and a la carte programming access and some other things which could provide much more serious threats to their models than anything that has developed so far. Over the last 15 years or so, they have managed that transition incredibly better than the print side did. I would argue there were a lot of things that might have been done differently, that might have changed the ability of the print model to grow with technology as opposed to have been so undermined from it. Martin: Can you think of one or two things? I think it would be very interesting to get your thoughts about what one or two of those things might have been, given that you ran PriMedia, which was a print. Tom: One of the obvious ones, which is a bit of a head scratcher today, is that getting magazines to a form that can be easily digested, conveniently digested in digital form was a much bigger struggle than it should have been. iPads have been around for a while now, which arguably finally created the best way for a digital transition to something that takes advantage of publications that are heavy with imagery. The magazine industry created something called Next Issue. I find almost no magazine subscriber is aware of what "Next Issue" is, yet it is owned by Time, Condé Nast, Hearst, Meredith, and others. All the great magazines are available at a monthly subscription price that gives unbelievable convenience to the subscriber to be able to enjoy a magazine experience that's unparalleled from anything the magazine industry has previously developed. You don't know about it. You don't hear about it. It's a good model. It looks like it's a subscription based model that helps these guys, that preserves the advertising. It gets rid of all the overhead paper, distribution, and the excess newsstand sales cost that gets them out of unprofitable subscriptions and turns it into profitable subscriptions. Yet here's an industry that still doesn't seem to be able to embrace that digital future. That's a very different approach than the video guys, who certainly aren't models of always high speed action, but certainly have been able to stay enough ahead of technological change to not have their models so fully undermined. ...
VIDEO: YES

Brent Schlender
BIO: YES: Brent Schlender, 60 years old, is a writer, editor...
TRANSCRIPT: John: I'm here in San Mateo with my old colleague, Brent Schlender and we're going to talk about journalism and the digital disruption and the last 20 or so years. Brent, let me start off by going through the arc of your career, how you got into journalism, and now into covering technology. Brent: OK. Well, it all starts really back in college when I was...I really didn't go to school intending to become a journalist. I studied English Literature primarily. I originally went because I thought I wanted to be a pediatrician, but did not do well in chemistry. Anyway, I just found that literature was easy and I had a knack for it. That's what I studied, but one of the things I wanted to do, as I started getting a little more ambitious about, "What do you do with literature? You become a professor or you do research in literature." I had this idea of, because I was interested and always had been interested, in things technological of using computers to analyze literary style. I decided, "This may just be a completely stupid idea. I'd better take some computer science." I took some computer science courses. I didn't get a full minor in it, but I took a lot of computer science courses. John: You programmed? You did... Brent: I did Fortran and Basic...not Basic, but Cobol, and designed databases. That's what I had a real flare for was relational databases. This was before Oracle, and even the relational databases that IBM was selling at that time, but they were teaching this in universities. This was back in the mid-'70s. I also had a night job. I was a computer operator -- they called them back then -- for a bank in Lawrence, Kansas, where the University of Kansas is. Every night from midnight until about four, I would do the daily processing of all the transactions for four different banks on those big mainframe computers. I learned how to do that, and got more familiar with the steps, the infrastructure of computing back then. All the programming we did was on mainframes at the university. It was this arms-length thing that you did when you worked with computers back then. I understood it. As soon as you take the programming classes, it ceases to be so intimidating, because you realize it is a language in a way. But it's a language of logic more than a language of words. If you can define a problem and figure out the steps required to solve it, that's what a program is. It's fun. I like that kind of mental challenge. I didn't get anywhere with my idea of parsing language with it, because I was an undergraduate, and that would have been for like a Ph.D. program. I did that, and it was fun. I'd had friends who were computer geeks, so it was part of my milieu back then. They weren't foreign to me. When I got out of the undergraduate degree, my English professors, I was very lucky I had some that I got to be pretty close to. They all said, "You do not want to be a professor. Don't be a professor. This is, talk about a dead-end career." "You have an outgoing personality, you write fast. You write nice stuff fast, quickly, so why don't you go to the journalism school and get a master's degree in journalism?" I said, "Journalism? That's not an academic, that's not a real discipline." I said, "I'll think about it," and I laid off for a year and ran a Kinko's in Lawrence. Then got bored, realized then that I was, no way would I ever be a decent businessman. I went and enrolled in the Graduate School of Business. Unfortunately, those old English professors had friends there, so they paid attention to me when I joined. Very fortunately, for me, right after, right during the very first year of what was a two year program, I was picked to be the summer intern at the Wall Street Journal. They picked, generally took one person every year from the University of Kansas Journalism School. I went to Dallas and worked that summer with John Huey and some other people that were pretty memorable. That was for just three months, but it was a wonderful experience because, hey, what did I know about business? I didn't know anything about business. But, in fact, I was of the generation that, business was really kind of evil. I went, "What in the world, why do I want to do this? Maybe I should write about them as the enemy." I don't know. But as soon as you get to the Journal, it's all about discipline at the Journal, about doing things well, doing them right and being independent about it. They basically throw you in the deep end and see if you can swim. That's the quickest way for them to find out if you're going to be able to teach yourself what you need to learn to write about business, because you have, basically, it's learning. I did OK that first summer. Went back to school and school was not very much fun after that because it was really kind of a heady experience to do what they asked us to do. I don't know, I went back and hoped that they would say, "Why don't you quit graduate school and come to work for us." I just didn't get the call, yet, right away. I continued to do a lot of work on the side for the Kansas City. It's called the Star now. It was the Times. It was the morning bigger paper then. They've all merged. That was actually a very good experience doing that and going to school at the same time and just learning more about the details. Because like I said, I wasn't, I had not intended to be a journalist at all. I needed to learn some of the basics, like how you interview somebody. Anyway, I was fortunate that I made a good impression during that internship. The following spring, they had an opening and they called me up and they said, "Are you willing to drop out of school and come to work here?" And so I did. That's how I got into journalism. A long story. John: But how did you get, how did you go from, you had the interest in tech from, obviously, what you said about the literature, undergrad. How did you go from, we both know at the Journal there are beats. There wasn't technology per se in Dallas. How did you gravitate toward that? Brent: Well, actually, there was tech, now, too, in Dallas. John: What? Brent: Yeah, Dallas was a really good bureau, actually. Dallas was a great bureau, because it had airlines. John: Airlines? Brent: It was responsible for, basically, the home building industry because there were three or four large, national home building companies that were based there. The savings and loan industry was huge in Texas so there was a lot of banking there. A lot of banking in Texas, too. The oil business was there so we all had to know about oil. We had to know a lot about oil and gas just to work there. On top of all that, there was Texas Instruments, which was in Dallas, and there's Tandy Corporation, which was really one of the first big PC companies in Forth Worth. Down in San Antonio was an interesting company called Data Point that was kind of like Digital Equipment Corporation. It was a mini computer maker, but it also had some early ideas about possibly making something that's more like a personal computer. They also had some corruption in the finance part of that, which I wrote about. That eventually brought the company down. In Denver, there was a company called Storage Technology that was basically the largest manufacturer of what they call storage subsystems which were basically big, gigantic disc drive systems or mainframes and mini computers. There were numerous other technology companies in the southwest. Nobody in the bureau really wanted to write about the technology companies because they were intimidated by trying to understand what the nuances of both the technologies and their businesses were. Nobody really wanted it. I was very interested in this because I'd worked on them. I wasn't scared of writing about them. It was still considered a secondary industry in Dallas. My first real job was to write about airlines, right about the time that American Airlines moved to Dallas. We had American and Southwest and something called Texas International. We had Braniff, which went bankrupt -- the very first airline that ever went bankrupt. I wrote about all this stuff for the first year. Then I kept saying, "You know, we really need to have somebody focus on all these tech companies because this stuff is getting interesting." Tandy, they started out with leather tooling kits for people. There's somebody very intelligent over there who realized these personal computer type things that are beginning to emerge...this is like in 1979 when I got there. Tandy, actually, was the largest maker of personal computers for a while. John: TRS80s? Brent: We didn't have them in the bureau. We still used Olivetti typewriters. It's still typewriters and faxes and teletype machines. We had a teletype operator that we would write our stories up and she would punch them and send them to New York. It was really backward back then. You can see why people were a little intimidated with this notion of computing, because they just didn't have any personal contact with it. But, it was beginning to bubble up. I just said, "Somebody's got to follow this stuff. I think maybe you ought to have me do it because at least I know what this stuff is and what it can do, and I think it's going to be an interesting business." They started asking me to do that, but it still was not considered a full-time thing, so I was still somewhat responsible for airlines, although Bill Carley was in New York and he was the lead airline guy. That was good because then I didn't have to have full responsibility. It worked pretty well. It was during that time I thought, "Gee, I really would like to get out to California," because I was aware of Apple, I was aware of Intel. While I was working in Dallas, the IBM PC came out, and I rushed right out the first day to buy one. I bought one at the local Business Land store there, one of the first in Dallas, and brought it home. I didn't know what I was going to do with it, but I knew I wanted to have one. Again, fooling with it. So I did. It was not a really satisfying experience, really, to begin with. At least, I had it and I could start tinkering with it. I didn't even put Microsoft's operating system in, I put in something called CPM, which was the other operating system that they put in there. Just because it was older and a little more proven and there was a game that I wanted to play that was available for CPM. I did that. Then everybody thought, "Man, he's a real geek." I programmed it to when I was out of town, because I traveled a lot for the Journal, I programmed it to have a screen flash, "Alarm System Armed, Alarm System Armed,” because we had problems in my neighborhood with burglars. Funniest thing that happened was about a year later, they had assigned me, I started writing about Central America because it was something everybody in Dallas, if they stayed there long enough, would cycle through and get their first taste of being a foreign correspondent. That went really well for me. I did that for a while. It was completely different from high tech, but it was really fascinating and interesting. It was where I met my wife. She's from Nicaragua. At any rate, I would go on those trips down there. I got burglarized once when I was in Central America, and they stole my suits, they stole my microwave oven, they stole my stereo and my speakers, they stole my underwear, but they left the computer. John: That was then. Brent: Yeah, that was then. That just shows that, yeah, maybe I was a little ahead of my time thinking that that was valuable. At any rate, I wrote a lot about high tech stuff. I met Jack Kilby, the other inventor of the microchip. I bet both of them, Robert Noyce, out here. They both had tremendous respect for each other. It's kind of like Charles Darwin, and I can't remember the name of the other guy. Two people who came up with the same idea at the same time. These guys were much more dignified toward each other and respectful. I just knew that if I'm going to write about business this probably would be the best thing for me because I understand this stuff far better than most people in journalism. I didn't know anything about trade magazines. I'm sure they were full of people who knew a lot about it. In the mainstream, national publications nobody knew much of anything about it. I knew there was an opportunity here. However, I liked this foreign correspondence stuff. I was hoping to move with you guys over to Europe. John: Over to Brussels, yeah. Brent: For some reason, I will never know the real back story behind this because I was told, "Yeah, that's a real possibility," and then suddenly I get a call that said, "Would you like to move to Hong Kong?" This was like wow. We'd just gotten married, literally. The day I found this out my wife found out she was pregnant. I didn't know how to say no. I said, "I guess Europe's out, huh?" "No, the job we're offering you. Why don't you take this one?" She comes home, finds out the pregnancy test she's pregnant. Well, we're moving to Hong Kong. John: When it rains it pours. Brent: The state of mind we would have been in if we had moved there without her being pregnant is we would have loved it because we would have rambled all over Asia and explored it all and seen it all. Imagine showing up in Hong Kong having morning sickness. That's what she dealt with. It was a little tough, and it wasn't quite what we had in mind. Still, great experience. After a year and a half, I could tell this is not really working. This is not as interesting a job as what I had before. Then we had a management change over there, and I didn't really particularly like the new boss. I just started making noise to people I knew back in the US. They moved me first to Los Angeles, basically put me in a holding pattern to get me into San Francisco because everyone knew that's what I wanted to do. Everyone knew I knew about computers, and it was really beginning to heat up there. The problem was they had a management change there, too, so that had to be sorted out. Anyway, I was in LA for 11 months, and then they moved us up here. From then on, I was the guy that wrote about Silicon Valley. Now they have 7 or 11 or I can't remember how many people. It was just me for three or four years. It was exhausting because everything was exploding back then. This was 1985 through 1989. This is when Bill Gates became a billionaire, this is when Steve Jobs was kicked out of Apple, this is when Intel basically crushed the rest of the semiconductor industry, this is when there was this great fear that Japanese semiconductor makers were going to wipe out all the memory chip makers. IBM was tangling with Bill Gates. AT&T was a big player in computing back then, too. Sun Microsystems emerged. All these things happened. Sun was the company that got to a billion dollars in revenue faster than any other industrial company in history. That happened during this period of time. All these things were happening. It was just like spot news, all tech, all day long, every week. I didn't have time to write very many feature stories. John: Tell me this, in the midst of all that going on in the late '80s and late '90s, was there a eureka moment for you in the sense that the world of tomorrow is going to be different than the world of today? Brent: That? I had that long before. John: Long before that? Brent: Yeah, that was really when IBM PC came out when I realized. I had been paying attention to what Tandy had done and was very interested in personal computers. I'd read about Apple. I didn't have an Apple computer. The Mac wasn't out yet. It was the Apple II had just come out in '79. This is about the time I went to work there. I just hadn't gotten around to buying one. Then I heard about the IBM one. Typical me, I just waited for that. Instantly, I could tell that there's so much investment going into this. I learned enough about business by then to recognize an up and coming business when I saw one. I understood the dynamics of Moore's Law very early and was fascinated by the escalator effect of that very, very early. John: Did you think that escalator effect would also transform society as a whole that quickly? Brent: All you had to do was look at the numbers. It was doubling every 18 months. That's exponential growth. That means in five years, it's 20 times bigger. It's 20 times the performance. That means it costs 1/20th. What costs a dollar costs a nickel in four years. This is a different kind of economic phenomenon than we've ever seen. Journalism beat that much basic economics into me that I understood that and I thought, "There's something that's going to happen here." The other thing that was going on...and this is something that I've actually written about obliquely a lot since way back then. It was basically the beneficiary of technology generally starts -- because it's so expensive, at least to first develop it - - starts with the government or the military. They're the only ones that can afford something that's been invented that's truly new and costs a lot to make. If there is a predictable reduction in cost, it inevitably will move from there to big business, from there to medium sized business and smaller business, and from there to being within the means of consumers if it can be designed into a product that made sense to consumers. That's a different kind of ingenuity to figure out what is appropriate for each of these levels. It's hard. That, conceptually, is as hard as it is to make the technology improve like that, to figure out how to put it to use. That, to me, was fascinating, figuring out how you can put these chips to use doing something other than guiding a missile. Once companies had these big mainframes, then they needed to start rethinking how they do their accounting and how they count stuff. Then, after a while, they began to look at the data, and they could see trends and dynamics in their business that they could never see before. That, in turn, changes the businesses and the way they work. That's fascinating to me, too. John: Did you see it potentially affecting the way of journalism, the way you tell stories? The craft that you were practicing, did you see it as potentially changing that, too? Brent: What I knew was I couldn't wait to get better tools that these guys are making so it's a very selfish thing. I remember when I was in Central America I finally got this little Tandy... John: TRS80. Brent: ...portable -- yeah, trash 80 -- little thing with a cup modem thing that even worked down there. Until then, I had to stay up until 1:00 in the morning to use the hotel's teletype machine to punch a tape to send a story in all capital letters to New York. Only after I got that was I able to just...I wasn't able to print it out because we didn't have printers, but I was able to write something on this little computer, stay in my room, stick the cups on the phone, dial it up, and send it in, and it was in much cleaner form and easier and quicker for the editors to deal with. It was a revelation to do that. Because of my inclination, I pushed it far more, probably, than anybody at the journal initially because it was perfect and I wasn't afraid of it. It didn't surprise me a bit that after the PC came along -- even after Apple II -- but mostly after the PC came along because publishers began to think, "Maybe I need to experiment with these.” A lot of publications would have people that were intrigued by this and could see there was potential here. Back then, too, especially in magazines, it was a little different. They had dedicated computer systems before newspapers did because the frequency of publication. It was easier to design a technology that replicated what they did. As I used to tell people, our deadlines are on the calendar not on the watch. They were actually a little bit ahead with computers but not with personal computers. Newspapers were the ones that really jumped on personal computers. Once that happened and journalists started using it, I think that made a big difference because it made people who worked for newspapers, they were actually customers of these companies. They were PC users. They were amongst the very first PC users that pushed them hard and that relied upon them. I remember when we got them at the journal and got these weird AT&T things with an orange screen, which I liked. I thought the orange screen was nice. I just remember we didn't have those at the Kansas City paper when I was working there. We didn't have anything remotely like that. It was just IBM Selectrics there. Once you become a consumer of the technology, it makes you more interested in it. In fact, I think it's created, in some ways, blind spots for a lot of journalists because they're so caught up in what the technology will do for them that they lose sight of the bigger picture. All they care about stuff that they can use. What was really going on was far broader and more systemic than just journalists getting better tools. There was a groundswell of interest in personal computers as soon as journalists were using them themselves. They looked at them as a consumer would look at them or as a user would look at them. That was a really good thing because it demystified things more quickly. You just heard about it more. It's both good and bad. I think they lost sight of the larger industry or the larger potential and where it really was going to be leading because they're so caught up in what it does for them, but it still was good. John: To a great extent, at that point, you were the ideal journalists covering tech. They were the focus of these companies, in a way, because you got their message out. Not you personally, but people covering tech got their message out. Brent: I was fascinated by the game they were playing. I was just as fascinated by how do you make this stuff. It's an ongoing race and you have to eat your own young. This incredible metabolism that this business has to have because of that escalator effect. For me, it meant there's a perpetual motion machine so there's always something to write about because something's always changing. It's not like Wrigley's gum. They still make spearmint, they still make juicy fruit and they made it 120 years ago. John: This was change or die. Brent: Yeah, and it's eat your young, too. It took a different kind of personality. There was a certain revolutionary aspect to it, especially the personal computer stuff as they were beginning to drive this into the hands of individuals. Jobs, in particular, was able to capture the zeitgeist of that in that famous Apple 1984 ad. It really drove home the point that Apple's trying to put the power of computing into the hands of the individual. It was a zeitgeist message and it was important. But what Bill Gates recognized is that this architecture that he had come up with that was standardized between his software and Intel's microprocessor chips could subsume anything that anybody ever called a computer before. It was a much bigger ambition. It could do what super computers did if you designed it right. It could do what mainframes did. That's where the money was. If you could standardize it, you could make the escalator effect move even faster. Nobody's wasting money on product development. We're all building the same thing. Gates caught on to the real business potential of this escalator effect if you could standardize it. Jobs just missed this. He was so idealistic about putting great tools in the hands of individuals that he just missed it, missed that part. John: Here you are. You're caught in this. You and your colleagues are caught in this ever-evolving, faster paced world. You're both fascinated and seduced. How did you keep your skepticism? Brent: How do I...? John: How do you keep your skepticism? Brent: That's a good question. Skepticism. It isn't that much skepticism because these people really were trying to invent the future, basically. They were trying to design a business that didn't yet exist and trying to design the infrastructure for things that don't yet happen. In a sense, they live in the future. What's here and now isn't relevant. What they're working on is what they hope will be here. Yeah, it doesn't exist, but it's what they want to make. It's really easy to maybe exaggerate a little bit where you're going to be by here. John Sculley was a perfect example of this, of somebody who got so caught up in the vision-thing that he was describing absurd things. Whereas others made promises they couldn't keep, not quite like that, not like Sculley's pie-in-the -sky scenarios. They would promise more than they could deliver. There are a lot of great sayings in Silicon Valley. One is "Don't mistake a clear view for a short distance." You can imagine what this will do, what this technology will do, when the chips can do this and the disc drives can hold this much and it costs this much. Each one of those things has to happen before you can put it all together. Then you've got to make sure it doesn't break something that you already have that you're relying upon. There's all this backward compatibility stuff that you have to preserve if you don't want to harm your existing customers. John: Here are two questions. They're linked questions. I'll ask the first one first. One of the changes you've lived through in covering tech and covering the Valley and covering this transition is the difference between you and your audience, the distance between you and your audience. When you start off, every once in a while a letter would come in the mail from some reader asking X. We came in through email at one point asking X. It was a closer connection. Now you're on networks asking X. How has that changed your job? Brent: I'm not as good a person to ask about that because ever since I lost my hearing almost 10 years ago I haven't been as active in journalism. I've written a few big things and I tried writing some columns for a while, but it's a handicap that's hard to deal with as a typical journalist. I've just found other ways to do what I do that aren't so time sensitive and aren't tied to a big publication so much. I don't know. I always took criticism or comments from readers really seriously, because in the early days, they had to work to get it to us. It's just like my mother's handwritten letters were special. My dad now since email...and they're really special, too, because I never dreamed he would learn to use email because he's 90 so that's a bad example. As it's gotten more immediate, it's gotten -- I don't know how to say this -- it becomes more noisy, more like noise. What's really changed isn't so much the medium of whether it's email or written letter or a postcard or a text or that. What's changed is that the people who write to you are playing to the audience, too. They're playing to your audience and they're trying to use their comments about what you say or their criticisms of you to try to talk to your audience, too. There's a certain amount of grandstanding to it that makes it less personally meaningful as interpersonal communications. It's just showing off a lot. In a way, I can understand it because why are we so lucky to be the ones that get the ink? Hopefully, we earned it. What do they do to have the right to comment to it? Nothing. They just submitted something. They didn't even have to put their name on it. It cheapens the quality of the communication. That I don't like and I keep telling people maybe I'm just too old for this because I don't have thick enough skin to just ignore that. It bothers me. I don't like it. On the other hand, I realize that it's being a prima donna to say that I'm the only one that has the soapbox. I don't know. There's a cultural change that's happened, too. John: Another of the changes, you might say, is in the relationship between technology companies and journalists. At one point, the journalists who covered tech were the main pipeline to the wider audience. Now, to some people they're feeling disintermediated, that they're bypassed. They're going direct to the audience and not through the journalist. Brent: I think it depends on who the audience is. One of the reasons it was so great to work for the Wall Street Journal or Fortune is that we were considered to be a pipeline of information to the investing public. Public corporations, the most important thing for them is to create a good impression of the prospects as an investment vehicle. Of course, they wanted to talk to us because other investors tended to read our publications. The thing is that technology back when I started, those are the customers, too. The customers were the corporations. Even after the first big surge of personal computing, it very quickly became clear that it was corporations that were buying most of the PCs. The personal computer -- the P stands for personal -- was really just a tiny fraction of the overall market. This really accelerated over time up until about 2000. Basically, the PC architecture insinuated itself into every kind of computing you could think of -- ATMs, cash register, factory floors, every airline in the world uses PCs for booking reservations. That's where the numbers were. When people talk about the 750 million PCs operating out there in the US, that's where they are, most of them. But this is where things began to change around 2000. As the consumer became a more profound component of the purchasing power for what we call technology, the dynamics of everything changed. Now, it's more important to sell to people and have them buy your stuff than to drive your stock price. What you really need is you need to ride this incredible potential growth curve that this shift from 25 million potential customers with corporations to 6 billion people. There's a huge curve ahead there. The more you begin to sell to that, it doesn't matter. It's going to grow so fast that your stock is going to take care of itself. They don't have to care about investors so much. What they really care about is winning the word of mouth war so that if there's going to be another equivalent of a PC standard set that they get it so that they can ride that escalator. It's a different game. Where the money comes from is now consumers for a lot of these things. Not all of it, but for a lot of it. When the volume hits a certain point, that's what drives how the component suppliers define their business. Then what we're having, instead of having the US Air Force pushing the leading edge of technology we're having smart phone users, and that's what's driving really big advances in things. Now, it's different, very, very, very, very different. I've talked to Bill Gates about this. What's going to happen when Moore's Law flames out and we really do hit the smallest feature size possible and the escalator just stops? He says, "I don't like to think about that." John: Let me get this. Brent: Oh, thanks. That's what we've seen here. It's happened a few times in history where something comes along that has a multiplicative effect economically in really broad ways. Steam power was one of them. Domesticated plants and animals was one of them. There aren't that many, but every once in a while one hits. It pushes both humanity and the economic creative power forward in huge surges. Then, at a certain point, it hits its limit and then something else has to come along. John: Let's step back a minute. You were in the midst of the scrum. How do you think journalism at large did at covering this? Brent: I don't know. Like I said a while back, one of the problems is that it's just too easy to think of...As things get more consumer-like, the product gets more consumer-like, it gets easier and easier to get caught up in what it does for you personally. That makes it hard for you to be very objective about what this really means either as a technology or as a business ploy or whatever. You're just so caught up. You want that sapphire glass screen so bad that if it doesn't have it, this phone sucks. That's not a service to people for you to tell them what you want. It's more of a service for you to tell them what is possible. Why is it possible? Why is it not possible? What's a reasonable thing to expect here? Why is there resistance against adding this kind of capability to this? Why is Google dangerous? Why does Facebook feel it's OK to conduct psychological experiments on their users? Things like that are easy to just not ask because you're really more concerned about what you can do with it. That happens a lot, more with the hardware stuff than the software. My biggest issue right now is it's the cacophony factor. There are so many voices out there, and there's an echo chamber effect, too. It's like this cacophonous echo chamber. Everybody wants to try to say something every day of significance when, as fast as things move...it doesn't move that fast. There are certain watersheds and milestones. Like Steve Jobs used to say, you can only connect the dots in hindsight. If you're smart, you might connect them going forward but even Steve didn't claim to do that. Sometimes you just have to let things play out to really fully grasp what they mean when they get out there into the hands of the people that actually use them. It's very easy to criticize impulsively and there's a lot of pressure for people to make judgments and statements because they have to make something newsworthy, there has to be some newsworthiness. John: Yeah. Brent: To me, it gets to be noise and that's the one thing I regret a little bit about it because it's hard to stand out in that noise and help people see something. I remember, at Fortune, one of the things we always talked about was what really is our purpose? It was a magazine, we don’t come out every day. We had a website, but we're not very good at that. I always would argue, I said, "We're supposed to do one of two things. We're supposed to tell people either how we got here or where it's likely that we're going. This point is either an endpoint or a beginning point." That's what we did. That's our service to people, to give them some sense of how we got here and that there may be lessons for the future from that, or maybe it's just a good story. Looking forward, you've got to be careful about that, because we don't know. That's why I'd much rather write the how-we-got-here story, than predict, because you can always get egg on your face if you predict. John: One last question. Given that about this point, looking forward, looking back, I'm going to ask with all the noise out there, are you optimistic or pessimistic about journalism as a craft going forward? Brent: I'm both. There's more opportunity for people to express themselves than ever before. But, it's harder to find an audience, a significant audience than it's ever been before. It's hard for established brands just to hang onto their volume. It is really splintered. I guess that means you don't have as much power as before. That's regrettable if you've had power and you're used to it. What I worry about is we live in this winner- take-all-world now. It seems like. In a way, Microsoft set the tone for this with the PC standard. And it has become considered to be conventional wisdom now that there can only be one big winner. That's what every struggle is for and that is going to be true in most industries. It's true in Hollywood, and in pop culture, and music. It seems true. I don't think it's true. But, I think it's a little scary to think that all you can do is win or lose, and then there are only a few winners. That worries me a little bit. I like the way it was, best, probably in the '90s, when things were still, in journalism I'm talking about now, where we were still feeling our way into what this was going to be and what it's going to be like, because you have tremendous potential. It's wonderful. I use it all day long. I still don't think it's found its legs yet, completely. I thought print was really good back then and kind ofreached its zenith. I look at TV now, and TV to me is, I'm talking about dramatic TV, it's the golden age for television now. There is better storytelling on TV than in the movie theaters. It's a different kind of storytelling. They've finally figured it out that a TV series is an incredibly rich medium to build high-quality digital drama. It really is. You can develop characters. You can do things you can't do in movies. It's wonderful. I hope something like that happens with this digital media because words are still important and people still like to communicate in words. Writing is really good because it nails down ideas. It doesn't freeze them, but it gets them down so you can hold them and examine them. John: Tangible. Brent: Yeah, and it's an important thing. That's better than just looking at a clip, oh isn't this drawing cool. The world is a complicated place and sometimes words are the only way you can understand it. John: Yeah. Excellent. That's a perfect endpoint because that's where we all began, words. Brent: Yeah. I'm not that pessimistic. I just think it's going to take a little while for...and it's going to be people younger than me who figure this out because it's going to take some time and they're going to have build their own reputations. I was really lucky. It was like nobody quite knew this was going to be like this. I was very lucky too, in that I worked at a time when people who were really significant only had to deal with maybe a half a dozen publications. If you could build a good relationship with one of these key people, it would pay off in much better stories and you build trust, you build a personal relationship. Not that you're trying to satisfy them but that they know you're going to be fair. Its not gotcha journalism.That was what I'm most proud of is being able to build these one-on-one relationships, where there's mutual respect. We both recognize what our jobs are and they respect what we're trying to do and we respect what they're trying to do. That's harder to do when you never meet them. John: Yeah. Absolutely right. Well, excellent. Thank you very much. ...
VIDEO: YES

Eric Schmidt
BIO: YES: Eric Schmidt (born April 27, 1955) is an American ...
TRANSCRIPT: Martin: We're here with Eric Schmidt at Google on April 1, 2013. Eric, we've talked to quite a few people, but most of the folks we've talked to Arthur Sulzberger, Don Graham came to this collision through journalism. They were journalists first or they were running or part of journalistic organizations first and then digital came upon them. You came to it from a very, very different place. You were one of the first employees at Sun and then CEO of Novell and of course CEO of Google. When did it first occur to you that the technology was really going to have a profound impact on journalism? Eric: I think when Google News was invented. It was the first time we saw that a simple tool that could literally aggregate common stories could be so useful and that people would be so worried about it. Because everyone saw the same thing, which was that a lot of news gathering was really aggregation. It wasn't the hardcore reporting that we always celebrate. Martin: OK. Google News happens and the next thing that begins to occur is that there's a schism in the thinking of the industry. On the one side are folks who are very open to Google News and open to the idea of aggregation. On the other, and I won't mention any names... John: Well you were one of those. Martin: And I was one of those, right. But there are folks who believe that you're fundamentally violating if not violating copyright, certainly extending the spirit of fair use. Can you just comment on that schism and how... Eric: On the legal matter, this has been tested many times and we were clearly on the right. Our argument about Google News at the time, which is still true, is that we send a great deal of traffic to the websites. We don't ourselves make copies of the stuff. We actually take the customer who's on Google anyway and we send them to your site. The problem of course is that when the customer comes to your site you don't necessarily get the same amount of money that you did when they purchased your print subscription or your print newspaper. But the fact of the matter is there's both a legal principle but also as a traffic outcome we were pretty happy with we were doing. We thought that we were helping newspapers. Martin: And in part you were also helping to monetize the traffic as well. Eric: But our monetization on Google News was essentially zero. We did in fact have a set of advertising products that you could use as a newspaper, indeed the New York Times and others did that. But the fact of the matter is, we were helped by the fact that we never got around to running ads against Google News. Because no one could say well we were somehow making money from Google News, because we were not. Martin: Right, yeah. John: Google is obviously about a lot of things other than news. You have many other interests and strategic matters of importance. Long before Google News you surely realized that the business model around traditional journalism was being disrupted by advertising issues, which they had been built around. Was Google News in any way because if you take the view that Google News can be very benign to the news business, was it in any way a reaction to that? Or was it strictly aimed at the consumer? Eric: Google News was a simple, straightforward innovation. A particular engineer on his own decided to write a product that would aggregate news and organize it this way. To give you an example of how new this was, I remember giving a presentation about it as we announced it at Northwestern in Chicago. Afterward one of the questions was, what bias does your newspaper have? I said, none. It's computers. But I thought to check and I went back to the office and I sat down with the engineer and I said, "I just want to make sure that there's no bias, no liberal or political bias," and he said, "No, none of that." Engineers have a way of answering questions precisely where you know they're not completely covering the answer. So I suspected, are there any other kind of biases? And he said, "Yes," and I said, "What?" "Cricket." I said, "Cricket?" and he said, "Yes. I love cricket." I said, "You put in a boost for cricket in Google News," he said, "Absolutely." That explains why we saw so many cricket stories. We have since fixed that. John: Could we back just a little bit before we get too deeply into the whole issue of news, just go back to your beginnings at Google and what the business model was when you arrived, what you found, and how it progressed through the whole paid search advertising part of the business. Eric: Google today is pretty much the same as it has been since I've been here. Since 2001 the majority, 97, 98% of our revenue comes from ads of one kind or another. These little ads that come along with our search results which are targeted to what you were looking for, people auction and people click on them and we make a lot of money from that and we do it globally and it works extremely well. That's not changed very much and I don't think it will change very much in the next while. Martin: OK. Do you mind if I go back to Google News? John: No, no. Martin: OK. Let's fast forward three or four years, maybe a little longer than that, five years. It's now 2006 or '7 and I look, I don't want to ascribe any reason or motivation for your having come visited us at the Times, but I got the sense that you at that point did realize that either Google could be helpful in moving the digital journalism world along, or you felt that there was some problem with the business model that you could be helpful with. What motivated that series of interactions? Eric: After Google went public Google News became quite successful from a traffic perspective and there was a lot of press coverage about how Google was going to take over whole industries. Many fears, largely unfounded in my view. But we did an analysis at that point about the structure of the industry, what was possible, what we should do. It was pretty clear to me that there was going to be a problem. It was by then that I began to understand that the core problems of the news industry, which have to do with declining circulation, classifieds, lack of value in the print advertising. The things that are now well established. A few of us talked about how we could fix this. The idea was to partner more closely with the leading institutions to try to figure out how to get better monetization, better discussion and so forth. I'm not sure it was particularly successful but it was an attempt by me and others to build bridges. I remember giving a series of speeches including one essentially at a newspapers' association where I gave a speech and I was followed by the person who attacked us unmercilessly. The tension between Google and the newspaper industry was extremely high because the newspaper industry, in my view incorrectly, saw us as causing all of their problems. I should say, by the way, that is the typical reaction to an established industry in favor of innovation. If you study innovation, this cycle where the first one is denial, the second one is lawsuits, the third one is acceptance, and then the fourth one is figuring out how to deal with the future, is a common cycle in technology driven innovation. Martin: Where are we now? Not to fast forward too far because we have a lot of ground to cover but you brought it up. Eric: The single best thing that's occurred was the announcement of the iPad and then the competitor products that are Android tablets and the perception within the industry that you could make money on tablets. It's important to remember that in 2006, 2007 iPad did not exist. Mobile phones in the form of the iPhone were just coming out and people were talking about it by 2008. When the iPad and then its successors came along the newspaper industry finally saw a device that they could actually do what they would like to do on it, which is to sell very high quality information and charge for it. I would, at that point, use that as an example not only in our defense, but also to try to explain to people that there is a future. It is being painted in front of you. You need to get your act together. Martin: I want to explore. I remember, about the same time that you came to see us, Marisa was talking about the living story. The notion there was that all of the content that was being created for newspaper websites, much of it, was essentially being re purposed from print publications. I think the point that she was trying to make is that Internet, web based media have their own character. First of all, do you agree with that? Do you think that the industry hasn't innovated enough, in terms of the actual construction of the story? If so, why do you think that has happened? Eric: I think there's a very simple explanation. The industry has no engineers. Martin: That's because you hire them all Eric. [laughs] I won't editorialize but we can't hire. John: Well it's not the first time that it's been suggested that it meant... Eric: I am just laying out the facts. You cannot innovate and build new products without engineers in your field. If you don't have them, you have to find somebody who does and partner with them in some clever way. John: You have to be committed to investing in them. Eric: The fact of the matter is that the industry, which is under extreme financial pressure, was unable to do that. I'm sure many people, including yourself, wanted to do this but you were unable to do it. For whatever reasons, you could not do it. You cannot build new products without engineers. So in the case of the living story, for example, an idea that Marisa pushed which I liked a lot. We did various demonstrations about how to do that. There are engineers. To continue the timeline, it's actually important to say that I think we roughly know what the future's going to look like. That future will be what you think of as newspapers largely on very sophisticated tablets in the future. With very sophisticated knowledge mechanisms to see what you know, what you've already read, you're logged in and so forth. With very sophisticated advertising products. Those products are not going to be made by the newspaper companies. They're going to be made by new entrepreneurs who will build those products on top of the tablets and other things. There'll be some kind of way in which the revenue is shared. John: Is it largely an open question who's likely to own those products that you describe? Eric: If you think about newspapers and the other companies, they were always a compromise between editorial and distribution. The writers are very, very talented and extraordinarily great at what they do, the reporters and so forth. That function will continue. The core problem that the Internet has is it has attacked, if you will, the union of the distribution and the editorial. In the same way that the major media companies have the problem that they do a tremendous amount of work but they also have captive distribution channels. Those captive distribution channels, which primarily include cable and cable feeds, all of those things are being disrupted by the fact that people are online all the time. They're not consuming it through the same channels. It is the same problem and we will see. The fact of the matter is that the engineers are going to have to get paid. There will be a new set of start ups, of which there is a number that have come out, which attempt to do news reading and news aggregation. Maybe some of them will ultimately become the dominate players there. John: Have you seen any? Go ahead. Martin: I just want to go down this engineering route a little bit because I think that, sitting here in 2013, some newspaper companies really have developed modest, I'd call them, engineering capability. The question for me at this stage is what is the relationship of the engineering side to the editorial side? Let's just talk about the product function that's kind of in the middle. These are very editorially driven operations. In your view, should the engineering side be running product in support of...? How, in your conception, would the engineering side interact with the editorial side? I guess that's the simplest way to ask the question. Eric: Well, this is not how engineers think, because engineers always think they're in charge. A reasonable answer is that engineers are going to try to build a great platform and some set of editorial people will appreciate how tremendous the authoring environment is. How amazing the navigation is. There's a deeper problem on the engineering side. We know how to do navigation and aggregation extremely well. If you look at the monetization, it's not as good as the model that it's replacing. This is a core problem. The general term in the industry is we're going from analog dollars to cents. As long as that transition is occurring with deletion of revenue, it's a huge problem for the existing institutions. It's a problem for music. It's a problem for movies. It's a problem for video. It's a problem for newspapers. It's a problem of all media. There are some countries where this is not true. Germany, for example, makes money and the British newspapers make money. For example, the French ones are under great pressure. We put together a program to try to help them. Here in the U.S. they're under great pressure. There's evidence that employment has decreased by 30% from its high. Circulation has been declining a couple percent every year for roughly 15 or 20 years. So these are sort of core business problems that are not going to go away anywhere soon. John: So there are a lot of myths that have surrounded this passage. Some of them around central issues like paid content versus free content. The concept of original sin, of which some people accuse Martin and me. An original sinner for pushing to give away the New York Times content for free. Is there anything, in your view, that could have made any significant difference? Not to an individual company, but to the... Eric: Most of the arguments that I've heard are based on emotion, not rational analysis. So it's helpful to start doing the math. The fact of the matter is that in an always connected world, the audience of three, four, five billion, they're not going to be paywall subscribers. If they're going to see your content, they're going to do it for free. You'll have to come up with an advertising model that supports that. Ideally, working with Google and others. As we develop better advertising models, better targeted, there will be more money in that space. If your goal, as an editorial institution, is to cover everyone it's not going to be paywall based. It's important that this is your decision, not anyone else's. You've got a choice of whether you want to use a paywall or not. A reasonable prediction is organizations who had good subscription models, which include all of the major media institutions, will substitute those for paywalls. It's a reasonable presumption. Why? They have strong subscribers. They understand how to run that business. It's consistent with their model and a good choice. So over the last few years, Google has offered a series of products, especially in the last year, that allow you to make very straightforward pay walls. We make it easy for the money to work. That's a good step. But I would offer two examples, in the United States of companies which were new, Politico and Huffington Post, which ultimately chose a free model. They chose a free model supported by advertising. One way to phrase the disruption problem is, the real disruption that's going on is over the newspaper subscription. Historically, companies fail to move from one economic model to another. A reasonable presumption, and with success, by the way, is that the media companies will largely be pay wall based. Again, Rupert Murdoch famously talked about this as the only answer and was way out in front. And probably for the right reasons. Because he had a strong model. He understood what he was doing. But that's not going to reach five billion people. It's not going to happen. John: I follow the logic of your argument. The two examples you gave, Politico and HuffPo, there is some skepticism, even in your own ranks, with people we've talked to today, of just how profitable those models ultimately are. Eric: All I can say is we have two examples of companies which are doing well. In Huffington Post, they created a value that was reportedly at least $300 million of value. That would seem to be real money. Congratulations to Arianna. With the Politico folks, they use a hybrid model, as well as they have various things involving television. John: They even have print. Eric: They have limited print. To me, both of those are examples of entrepreneurship in an industry which has had essentially none. Just to hammer on this question about the way innovation works, entrepreneurs always come out of left field. They always come from the place you don't expect. They always see the world a little bit differently. What's happening in the media industry is those entrepreneurs are reinventing it. It doesn't mean that the existing institutions are wrong or so forth. But it does present a competitive business challenge to those that people need to respond to. John: There's no questionable, whether they're profitable or not, that they're successful disruptors. They have successfully disrupted the business model. Eric: It's easier if I give it to you in a historical context. The problem, in 2008 and 2009, when I came to visit The New York Times, is we didn't have tablets. We didn't have Huffington Post. We did not have Politico as examples. We had no examples. So there was a period of time, between 2005 and 2008, where the Internet was ascendant, Google was ascendant. These models were beginning to come out. But the entrepreneurs had not built the alternatives yet. Today, when my friends in the media industry talk to me about these things, I simply point out these examples. I say, "These are examples that you can learn from." Indeed they are. John: Could you walk us through the history of not only Google, but some of the aggregators? The history of your skirmishes with the established media industry, over fair use and copyright? How that evolved for you and where you think it is today. Is that settled law and settled issue? Eric: I'm not enough of an expert on these matters to give you the exact, full answer. I can tell you that, in The United States, there are no issues, with respect to fair use and what we're doing now. We've had a set of trademark fights, which we win. The US law is very settled. John: So Europe, that's hotter? Eric: In Europe, the copyright laws are different. The fair use laws are different. But so far, we've been winning pretty much everything there too. John: Can you just go back. Not looking at it so much from a legal point of view, but from a cultural point of view. Because it speaks to the same point you've been making about denial, lawsuits and then... Eric: Acceptance and innovation. John: That was a big part of the process here, around that issue as well, right? Or was it just shock, denial? Eric: I'll let others speak, as to their reactions. From our perspective, what we did is, we provided a tremendous services to end users. That service was used by many millions of people and we sent lots of traffic to the newspapers. Martin: Looking forward a little bit, can you talk about Google Now and what you think that portends? It seems to me to be a very direct and relevant engine for all kinds of content, not just traditional journalism. It seems like it could be an avenue for a certain kind of journalistic content, as well. Eric: It's too early to know how Google Now will be shaped by the technology. Right now, what Google Now does is, it attempts to show you what it thinks is relevant to you, using some new artificial intelligence techniques that Google has adopted. It's highly personalized. You need to opt in. You need to tell it to do its thing. For example, it has figure out where my home is, where my office is. It tells me how long, it gets me from the home to the office. Useful things like that. We'll see how broadly such targeting is useful. There's evidence that, properly done, AI technique could not only give me information that's reverent, but could also give me things which are relevant about the future. We've seen a pattern that, when there's a problem in India, we see the same pattern two days later, so we're giving you a heads up. You could imagine those kinds of scenarios, eventually. Martin: There's an evolving landscape, where you have these hyper personalized services, coupled with social curation. Where a lot of the valuable stuff I get now, I get from services like news.me and Twitter. These are more serendipitous. Let me just put it that way. Eric: It's worth looking at a spectrum. Let's start with the classic newspaper, which is highly curated. The benefit of that newspaper, and I love newspapers and read them in print, not even on tablets. I'm actually a real subscriber. When you finish the paper, you have a great satisfaction of knowing that you know all you're supposed to know. If you read the paper religiously, you have a real sense of what's going on globally. For people who are curious and have a fixed amount of time, especially if they're commuting, in transit, on an airplane, they're great. There's another generation of people who get most of their news from, let's just call it Twitter. This behavior does not make a lot of sense to me, as a person. But I know it makes a lot of sense to them. What they do is, they're scanning all the time. They follow a certain set of people who are following other things. Think of that as an expansion of a network. That is a viable alternative to the curated newspaper, as long as it's reasonably comprehensive. You'll get pretty much the same outcome. Because you've got the reporters, if you will, who are reporting on Twitter. And you're following the reporters. That's another aggregation model. The third model is going to be these hyper sophisticated personal tools that will take RSS feeds, other blogs, other kinds of information and Twitter information and make it hyper personalized. Again, as long as they have some element of curation involved with them they're going to be fine. It's going to be a long time before computers can do all of the curation perfectly. There's going to be a hybrid model, where the computers help the curators. But curation is important. A classic example is in music. There's literally an explosion of music, because there's no boundaries anymore. But people still go to curators to organize who are the top music artists and so on. Martin: Do you view these as generationally defined? Do you think it's possible that people will use all of them? Eric: Again, the lessons form innovation are that innovation comes from elsewhere and innovation is typically a youth movement. Because they don't have the same human patterns and they have free time. They're not busy with other things. I'm quite alarmed at the drop off of watching television from young people. The statistics about, for example, television news and the age and demographic of people who watch the news that I watch is quite disturbing. There seems to be whole new generation of people, I can't quite figure out how they get their news. The evidence may be that they get it through obsessively watching Twitter people or stories being [indecipherable 26:28] each other or other social networking things. That's fine, as long as it's comprehensive and there's an investigative component. The biggest issue in this whole discussion, which we've not made, has been the loss of funding for investigative reporting, the deep kind of investigative reporting. Once the economics were laid bare, the fact of the matter is, newspapers were unable to support the kind of deep investigative reporting that's needed in a democracy. Martin: There's still a reasonable amount of that going on. Eric: But not, for example, in the cities of California. It's absolutely true that we have a gazillion people covering what the White House is up to, maybe too many. But I can tell you we have far too few people covering the excesses and inappropriate behavior of our political leadership in cities and states around the country. John: Do you think that there's a role for...First of all, there's been a tension there, between the established journalism business and the funding of investigative reporting for a long time. It's a much exacerbated problem now. Do you think there's a role for data in leading the way to this sort of investigative reporting? We were having a discussion with another Google person today. We were suggesting that in some ways, almost like Google Traffic, there are ways to look at public expenditures through a data lens and say, "This is very inefficient. There's a big red line around this school district. That's where you should go investigate." Eric: The general answer, from Google's perspective, is that more transparency and more information generally available is always the right answer. In a democracy, people watch. They watch when things get out of whack. Much of the waste that exists in our society is because people are very inefficient. Our government is designed to be inefficient, because of the way the lobbying works, the special privileges, earmarks, and so forth and so on. I don't know if that's a solvable problem, but it's clearly a better maneuver to have all that information in public. John: My theory is that when it goes from red to deep purple, it's probably more than inefficiency, it's probably theft, fraud and corruption. Eric: That may be true. But it's extraordinarily easy for large organizations to be inefficient. John: True, but investigative reporting, as it exists today and as it exists traditionally, is very inefficient. It relies on somebody tells somebody thing. Eric: I'm not the expert on this. But I will tell you that, when you look at the consequences of all this, aside from the careers of people and the loss of historical value, there is a real cost in the loss of investigative reporting. There's just not as much money going into it. These things are expensive. That's true of foreign bureaus and so fourth. We always complain that Americans don't really know what's going on. Perhaps they're not curious enough, but they also don't have as much of it in front of them as they do in, for example, Europe. Martin: Is part of the problem, perhaps, that a lot of the reporting and editing processes are still being done with tools and technologies that are really, in some ways, centuries old? That we should be able to create an infrastructure for, maybe even an individual reporter, to go out and do his or her job much more efficiently? Eric: I think that those are all tactics. The fact of the matter is that with there's a couple of things that have happened that are important. The first is everyone has a cell phone, so everyone's a reporter, everyone's a paparazzi, everyone's posting information. The second thing is that there are lots of tools that allow you to express what you see, especially if you're outraged. Whether it's blogs or Facebook and Google+ or Twitter or what have you. There's no barrier, now, to let's say it a different way. The democratization of the Internet has led to the democratization of information, which has also led to the democratization of reporting. The problems you have are not tools related or so forth. They have to do with how the system then works. An example would be that as evil manipulator could make up a fact or distort the truth and this is of course known as spin in polite circles but you could imagine a big ruckus where some statement is made which is false. People who should be more skeptical are insufficiently skeptical. They believe it, they get outraged, and society moves forward. I worry about anchoring, where the way people work is that they tend to believe the first thing they hear. What's happened now is that people who have money and who want to manipulate outcomes simply race to anchor the facts. 'Did you know that, did you know that?' We're going through some kind of a sophistication transition where we've gone from trusting everything to not being able to trust most of our sources of information. I worry that during this period a lot of the fabric and culture of our country gets lost or that the essential goodness of this gets lost. Because specific and, in my view, evil behavior advances one side without showing the other. I am personally tired of being told one half of the story. Tell me the other half, too. Then I'll decide. John: Can you take off your Google hat for just a moment and take off from that point? You're a very wealthy, very powerful man who's shown a lot of intellectual interest in politics and journalism. You're close to people like Steve Coll, who's now in a position to do something really good for journalism and journalistic education and bring it into the future. We've seen some non economic models out there, like the Sandlers and ProPublica. We've seen Mike Bloomberg who, for whatever reason, is willing to have a $500 million news organization attached to a proprietary data business. It's a pretty straight, honorable news organization. Big in searches and audience. Do you favor, personally, Eric Schmidt, the idea of wealthy, powerful, interested people getting involved in non economic models to fund quality journalism in the interest of democracy? John: I'm always in favor of more journalism and in particular, more investigative journalism done by the kind of quality that we've been losing. My personal favorite is the situation where you've got a business that throws off enough cash, that that cash can then be used to do non economic things. The reason is that that's an industrially stable structure for a long time. With individuals, the problem is they run out of money or they change their minds. John: So that could be a Bloomberg then? Eric: For example, the Bloomberg model is a very good one. I'm very impressed and proud of Mike for doing that. There should be more of that. If you go back to The Washington Post, The Washington Post is tied to an education company. Martin: I think Kim is trying to capture you. Eric: One more second. Yeah, I'll be down in a few minutes. Thanks, Kim. John: Unfortunately, then the education company got into trouble. Eric: The fact of the matter is, these are important social goods. The best case of these important social goods is that they become good and viable businesses, through better advertising and platform technology, which we would hope to do over time. A second best choice, in my view, is that they're allied with companies where there are synergies of one coming to the other. And a strong cash flow. Obviously, more philanthropy is always good, in this case. John: Is there an example of the second one that comes to your mind? Eric: I think Bloomberg is a classic example. There are clearly synergies between the business reporting he's doing and so forth. Martin: That's very close. John: You can make the case that a piece of breaking news obtained ahead of anybody else in that environment can actually be a value to the subscriber. They can make money off of it. They're traders. Eric: But again, I want to observe that these are models which are paywall models. The other thing that you haven't talked about is the success of magazines. We're focused on newspapers, but in fact, a number of magazines are doing quite well. A classic example is "The Economist." Another one is "Vanity Fair." My own prediction of what's going to happen is that as the economics get harder and harder, we're going to see bizarrely new forms of these sorts of things. The most obvious one is going to be celebrities that sponsor news. Think of it as the Jay Z News, if you will. Now, he's not proposed this. I'm just making that up. It makes sense to me that with this obsession that Americans have with celebrity, and it's very deep for reasons that have always been confusing to me. The fact of the matter is that people will follow what celebrities do. They certainly do it on Twitter and they certainly do it in... John: By the way, no magazine comes anywhere close to making as much money as "People Magazine." There's no magazine that's... Eric: An example would be "People Magazine." That is a very positive example. John: It's a duel income stream magazine. Eric: But the fact of the matter is we do have magazines which are roughly weekly or monthly formats that are doing really quite well. John: That still work. Martin: Going back to the business model for just a moment, one of the things that Google has done a great job of, I think, is in making the advertising markets, certainly a big piece of the advertising market online, much more efficient. I guess, with your acquisition of DoubleClick and your move from search based ad formats to display formats, you've really done a great job in rolling up or beginning to roll up that programmatic part of the business. That, in a funny way, without ascribing any intention or anything like that, overlaying science across this huge audience of Internet users just kind of makes the intermediary a kind of, almost irrelevant in the sense that you... Eric: But this intermediation is a characteristic of the Internet. It's been true for a long time. Martin: Can we talk about the endgame of that? Where do you think that goes, or... If the classic position of media was to aggregate an audience and be the proxy for this science and now there is no need for that proxy, I think, look if I were to read Arthur's interview to you, I think what he would be saying is more and more of the dependency is going to be on the user. The users are just simply going to have to pay for quality journalism. Eric: In the first place, I agree that the pricing will increase because you have to pay for the work. I'm not an expert on the economics of the structure, but I will tell you that what the Internet does is it rewards the ends at the expense of the middle in distribution. It's clear to me, for example, that the next generation of famous writers and reporters might have no income from their writing that's news related, but they might have tremendous income from writing books, public appearances, sponsorships and so forth. That's money that goes directly to them and not to the overhead of their employer. Similarly, the end user will have more ways to consumer information. They can choose to use a paywall or they can decide not to sign up and get, presumably, lesser quality news that's available to them for free. For many people, that may be sufficient. But the fact of the matter is that the value transitions, if you will, to the end points, to the actual incredibly creative people that do this work, and to the end user, who has these incredibly powerful tools for aggregation. And it puts pressure on the middle. That's no different, and that's been true for a long time. ...
VIDEO: YES

Chris Schroeder
BIO: YES: Christopher M. Schroeder is a Washington D.C. and ...
TRANSCRIPT: Martin: OK, we're here in Washington on April 4, 2013 with Chris Schroeder. Chris, why don't you start by giving us just a 5 to 10 minute history of your experience with when you had the first realization that journalism and the Internet were coming together and colliding. Chris: Well colliding, or, I think, complement each other at the time. It's just depending on how you think back on it overall. But I was of the generation where I can remember being in business school, the first students started using Prodigy. At first, my reaction to it was why in god's name would anybody be using anything like this? Then also you stop and you look at it and you play with it a little bit and you say, "Oh my god, for the first time in my life I've got the opportunity to see any piece of information anywhere at any given time." I was a very heavy user of AOL and some of the other things that came out at that point. Again, you asked yourself, with all the complexities that existed then of telephone access and that kind of a thing, you really began to pull on a thread and say to yourself, what would the world be like if you could actually get access to anything at any time, just because it's there at your fingertips overall. I was always a big news consumer. I'd worked in the government, I've known many reporters and editors and it was part of my daily experience. I'm also old enough to have read six newspapers every morning, that kind of a thing. But to have this epiphany where at some point, somehow you knew you were you were going to be able to get anything at your fingertips at any time, I think, was the clear revolution. Martin: And when was that? What year? Chris: 1992 was probably the first time I saw Prodigy. AOL obviously came five years later, whatever it was. Then I joined the Washington Post Company around 1996 or 1997, I can't remember. They had a B2B business that had news as a part of it. Martin: '96 or '97? Chris: Yeah. Martin: OK. Chris. Yeah. Because what I could tell you is, at the time, the company that I ran before WashingtonPost.com was a company called Legislate which was a B2B online service for regulation and information. Part of the competitive edge was they put a lot of human beings to it to fix it. But they also had a news service. But literally the year that I started with it was the year that Thomas was launched. Where they put literally all of the documents for free. In many respects I was also on the front lines of what it means to run a business. We were getting $1500 to $5000 a client or whatever it was, and all of a sudden half of what we offered was now available for free. I had a really big epiphany, not only what it meant in terms of the ramifications of having access to the information the way I was describing it before, but also what it could mean to a business if you're thinking about what makes you unique or distinct when people have so many alternatives at your fingertips. Martin: Great. Then you arrived at the Post when? Chris: The company Legislate was '96, and that was probably when, I was starting business development...Let me think about this for a second. So I did business development for the Washington Post at first around '96. I guess I took over Legislate maybe '98. I guess that makes sense. Martin: And the Post owned Legislate. Chris: They owned a large chunk of Legislate, yeah. Martin: Yeah, OK. When did you start working for Washington Post Newsweek Interactive? Chris: We sold Legislate in two parts to Congressional Quarterly here in town and to a company that did state business overall. This was right before the bubble blew. My instincts are my wife and I were ready to go out to California, this was the time to do it. But at this point is was the early days of having WashingtonPost.com and Newsweek.com on the Internet as opposed to the exchange and these closed systems that have been tried before. There were very, very early days, very little revenue. Alan Spoon and Don Graham called me in after the sale of Legislate and said this is an interesting time where we need a lot of new thinking. You've just been on the front line of a vision of this. Would you like to help us figure it out? Martin: OK, so the Post went live on the web in '96, I think. I guess Ralph Turkowitz was running something called Digital Ink? Chris: Digital Ink was originally and I think right before Ralph's time was a, they had a partnership with AT&T Digital. I don't know if you guys have done this as well, Martin, but it was more of a closed system kind of thing. Ralph I think was really responsible for not only pushing people to think about getting on the web but helping to put it there. Martin: Right. Alan talked about that era quite extensively. So then Alan brings you in to run WPNI. Chris: '99. Martin: What exists at that point? Chris: It was a little bit of chaos at that point. In the environment of the Internet, generally speaking, were people putting a lot of resources to things. We must have been 4 or 500 people. It was a large cost structure that we had. We were in a bit of a tizzy, because you guys were talking about going public, with your own division at that time. So there was a lot of understanding, "What are these guys going to be like when they have resources? What are they going to be like when they have access to equity, which means that they can hire a different kind of a talent pool?" Within us, there was a very interesting two fold strategic challenge that was being wrestled all over the map, culturally as much as substantively. The first was, should we be a newspaper online or focus on the news online, from The Washington Post side of it? Or should be "the great local portal," almost the AOL of local? Could we bring together everybody within the Washington market to come into one place? We would help run it and raise it and be a definitive one stop shop. This was a very big strategic debate, with a lot of emotion, as you can imagine, around it. The second one was Newsweek. Newsweek.com was a very interesting site, was the larger of the two sites. Obviously had a national, international, audience. But the connection between The Washington Post newspaper and Newsweek, as a magazine, was not a well oiled machine, shall we say. [laughs] The cultural issues there were profound. What ended up happening, frankly, is I stepped in. I inherited a business development thing in process. We ended up partnering with MSNBC for Newsweek. Martin: One of the first things I remember in talking to you was, you were particularly unhappy, and others were as well but you were the most vocal, about the AP. One of the things that we've found is that this notion of the wires going direct to consumers, through Yahoo News, in particular, but in other contexts as well. Excite, others. Really disrupted the natural order of things. The AP, which had been formed by newspapers, was now, in a sense, competing with them. Can you talk about what you were thinking then? Chris: There's no question, I had a view of it at the time. I don't remember. It's interesting that you remember one of our first exchanges about it. There were two kinds of things that were going on at the time. In a lot of respects, honestly Martin, this may be thinking in hindsight. But at the time, I do believe I still felt that there were two things that were going to happen at some point. And we needed to think about how we were going to participate and what might be inevitable. I don't know if you remember. There was this company of incredibly smart guys, out on the west coast. It was a company called Octopus, or something. But there was a group that was effectively doing what Twitter became. Not in terms of micro blogging, but in terms of being able, for any of us, to find any article from any place at any time, overall. Most of us who looked at it at this time said, "Oh my God. I don't want to be on the same page at The New York Times. I don't want people choosing The New York Times." All of us had a mentality that said, "The Washington Post is The Washington Post. The New York Times is The New York Times. We'll duke it out in the market. We'll help each other in any way we can. But the idea that users can control it..." This was one thing that was very troubling. As a complement to that, and within the context of this, here is AP, who we all pay for, we all funded this thing. It was there to be a service for us. All of a sudden, it was going to be, effectively, a platform of taking out the breaking side of the news aspect, in particular, of what we had. To me, it was the resources of being able to aggregate breaking stuff. Because I knew quite early one, and it's obviously proven out, that breaking news is a commodity. If you remember, I pushed very early for video. This would be a wonderful resource of basic video, for which we could do value add and make it more interesting. But in these early days, in particular, when we were getting our sea legs, the idea that the very group we were effectively funding and it was supposed to be the resource to us, building some direct to consumer platform at the time, I didn't quite understand why that made sense. Paul: But at the same time, Reuters went and just licensed. Because they didn't have the co op constraints that AP did. So they and Yahoo really unleashed this. Chris: And again, I don't think this is revisionist history to say. I had a series of very early epiphanies, very quickly when I came to Washington Post, as I'm sure you did, Martin, at The New York Times, with what you were doing at The Times as well. Which is that breaking news was going to be a commodity. One of the crystal clear things was, the tragic things, like the planes hitting the towers. The idea that I'd beat The New York Times on that was irrelevant. Within seconds, it was going to be up. Reuters, of course, plays in that. You knew what was coming. The question was more of a sense of navigation, of how it should fit in, who should be doing what to whom. Paul: But you thought, if that became table stakes, then you could differentiate and still win somehow? Chris: To take it a step further, I felt that there would be no way to win without differentiating. If you did not have a core sense of what dynamic is, it's a wonderfully powerful question and I think it's still very poignant today. At one point, you had to say to yourself, if breaking news, as an example, which used to be the coin of the realm, in many respects, in the newspaper era, was now becoming something you had to do, then you had to ask yourself not only what were you doing unique, value added, or some kind of perspective that you had before. But all of us found that we were competing, this was a very tough cultural thing, with good enough. I used to have this debate all the time with the guys. For all intents and purposes, there's nothing like Bob Woodward reporting on the White House. But honestly, there are lots of people now reporting on the White House. He might have that extra thing. There may be one thing that's interesting about it. But the idea that it's always that much better than so many other things that are coming, it would bristle you. I'm sure you saw this at the The New York Times. There's a sense, at The New York Times, that, "We are The New York Times. We are the definer of quality." There was some cultural feeling that, "You are the Washington Post. You are the definer of quality." In many respects, that could be true. In many respects, I think it arguably was true. But in many respects, it was becoming less and less true. When the good enough, in fact, was viewed by people as good enough. Paul: So the audience really did vote that they didn't care about a lot better than good enough? Chris: It depended on what audience you were talking about and to what kind of given issues. I can remember, as an example, in the couple of hours after September 11th, people cared a tremendous amount of what was right or what was wrong. So in that instance, as a contextual aspect of breaking news, that mattered a great deal. People again, weren't thinking, and I don't think, think now, "Would I pay more or less for it?" But they certainly put a value on it. People want to know what's really going on. The idea that we were the arbiters of truth, or the sole arbiters of truth, of course, was clearly not the case quite early. Martin: Let's continue with the history. You guys decided to create this separate operation. Were you looking at us? Did you just decide to do that early? I can't remember, Chris. Can you go through when WPNI was created over in Arlington? Chris: Yes. By the time I got there, that ship had sailed. It struck me as a no brainer. Candidly, I would not have considered joining it had that not been done. Martin: Why? Chris: Because it was very clear to me, and it was very forward thinking of Don and your guys also to think about this, that something so new is happening that would be not only interesting and require a certain sense of looking at the world differently for what it was. But in many respects, was going to have to wrestle existing cultures, existing business models and existing criteria. I'd had this experience in Legislate and other things. There's a tremendous amount of cultural weight around the great institution of our newspapers. At one level, being off over there meant that you were almost making that more so. But that trade off, as compared to having the ability to run very quickly, to think differently about stuff, try to get the shuttle diplomacy right when you had to, I think, was paramount. We would have been dead in the water otherwise. Martin: You went much further then we did, creating your own newsroom. Chris: We did. Martin: Why don't you talk about creating your own newsroom, when you have 600 people at The Washington Post. Chris: It's a little bit like, "What do you mean by 'is'?" We had a newsroom, but the newsroom was not, with the exception of videography, doing a lot of unique reporting. I should say that again. Videography and some of the entertainment stuff. There was a view that, in particular with younger audiences and new people doing new things in Washington, we could contribute to the cause. The idea that there was somebody at The Washington Post covering the White House and we had somebody covering the White House was not the case. There was not a whole lot of duplication. Martin: OK. That's an important clarification. Chris: Yeah, it's very important to understand it. One of the first things that I did when I got there, which was controversial at the time and I have to tell you that, in many respects, it was a paean to the challenges we're talking about. I elevated Doug Fever to be the editor of the newspaper. Doug was a wonderful guy and worked very hard, but has, among other things, absolutely unquestioned newspaper editorial chops and confidence. So that is, to the degree that we would experiment in things that were outside the parameters of the classic newspaper reporting, people knew that this was going to be OK with Doug. Because not only was he going to be a great communicator with them, but that he had unquestioned instincts about what it was we were going to do. Martin: Did you ever question the free model, at that point? Or was it just simply a given in your mind? Chris: Absolute given. Martin: Why? Chris: Because I felt, at the time, that as we were getting our sea legs in an environment of free, and to the thing we were talking about before about being good enough. We needed to hone in what was going to be our unique value proposition before we had any chance of building an enterprise that people would pay for. The idea that, because we were The Washington Post or because The Washington Post could charge, by the way, 25 cents they were proud of for 30 years. The idea that in that environment we would want to clip the wings of our growth was something that I was deeply concerned about. I don't know if you remember this, but one of the first times you and I were on a panel, someone had turned to you and said, "Would you ever consider charging?" Even at that time, you'd said, "We're wrestling with all sorts of different things. We should think about it." I turned to you and smiled. I said, "I think The New York Times is so good, you should charge $1000 a person. You should just do that. $10,000, Martin. Go for it." Because I wanted to take everything else in the mean time. And I obviously was being tongue in cheek. But it illustrates a little bit what my view was at the time. Martin: In retrospect, clearly whatever we were doing at The Times and whatever you were doing at The Post led to very interesting businesses. But they're not huge. They're not at the scale of some of the really meaningful businesses on the Internet. We have this metaphor called the swimmers and the tide. There's the tide, which is the tide of technology and companies. And the swimmers are the people who are making the decisions. My question for you is that, in retrospect, thinking about your own experience, because you had a separate operation and a separate team, did you go far enough, in trying to innovate? Or do you feel that you did everything you could have done? Chris: No. Not even close. Are you kidding? Jesus Christ. Did you? Martin: I'll do this a separate interview. Chris: [laughs] You can ask them, dear God no. There was a cultural view and a resource view. A lot of people talk, in reflection, about how much money operations like yours and mine burned over periods of time and this kind of thing. But the point of fact is, compared to the great technology companies, overall, and the quality of talent, we didn't spend an angstrom of what they did. What happens is, you get into this funny circle. I can remember, candidly, a repeated pissing match, there's no other way to call it, with a lovely guy otherwise. Who was running business development in The Post. He kept coming to me. He said, "We are not a technology company. We will never be a technology company. We will never attract technology capabilities. Let's focus on what we do well." My reaction then was my reaction now, "There's something to that." We know that there's some things that should be core. We should think about our differentiation. But dear God, it's not going to be long before we're all going to say that we're all technology companies. If we're going to simply step back and say, "We're going to concede this to the rest of the world and not think about innovation, for its sake," we will be prescribed by definition to be a small business. The argument I used to make to the board of directors is, "That's fine." We became $100 million plus revenue business, more profitable than other, larger enterprises. But is that what you want to do? Is that the way you want to think about it? Is that the way you want to think about it? Is that your ambition? In a lot of respects this becomes a cultural discussion as much as it becomes an execution or deployment of resources discussion. Martin: It was interesting because I think the most important statement that Eric Schmidt made when we interviewed him was that innovation was not happening at the same level in the traditional businesses, whether they are newspapers or broadcasters or whomever... Chris: Anything. Martin: I'm not picking on newspapers here,. Because they just lack engineers. That engineers are the engines of innovation on the web. Chris: And you couldn't attract the caliber of engineers, even if you were wiling to. And what I would say to you in complement to that, and this is true not only of the news businesses you say, but it's a cultural thing. The lack of engineers or the attraction of engineers is a decision that is transcendental to that tactical observation. To put it in another way, think about it for a second, how many companies could any of us name right now could literally stare themselves in the mirror and say, "The core of our business, the way we're doing it now, is going to go away. It could be a year from now. It could be 10 years from now. Doesn't matter." How many businesses have pivoted from that realization with all the cultural ramifications and everything else? Candidly, I can think of two. IBM at one point said, "Seventy two percent of our revenue is in mainframes, and within 18 months, or whatever it was, we're going to get out of 72 percent of our revenue." But in the history of American businesses, Intel did probably the same. How many? Martin: That's an even more radical one, getting out of memory. Chris: How many? I can't name a whole lot. So this conundrum... Martin: Reed Hastings, in a more current incarnation. Chris: Yeah, OK. That's a good one. I agree with that. But the point I am making is a broader one, which is we wrestled that conundrum at a cultural level as much as in an execution level. The not thinking as yourself as innovator, forget even as a technology company. Not thinking of yourself and putting a value on innovation and, in fact, even believing you will be out innovated by others and you need to figure out how to play in those ecosystems. May have been right or it may have been wrong, but it has an inevitability that came with it. Martin: One of the things that came up when we spoke with Tim Landon was the classified business, needless to say. And that was a very, very important business for the Washington Post, much more so than the New York Times. Talk about that journey of trying to wrestle with...That's truly an Innovator's Dilemma. You've got this cash cow and it's going to disappear. What did you do about that? Chris: I remember, periodically, Martin, I'm sure because of the way you guys are structured, maybe even once a year, I would be trotted out to talk to the entire newspaper. There would be hundreds of people, operators as well as the journalists. I was just going to talk about what was going on. Nothing too elaborate. One of the...maybe the second one I did. I really can't remember. I asked people in the audience how many of them used Craigslist. And seven hands went up and I thought to myself, "We're in trouble." Because, again, it is both an Innovator's Dilemma, but it's also a cultural dilemma for which you're saying to yourself here is this thing that is coming out there that is allowing people to do very, very powerful things. How are you going to think about it? And I can't remember what percent of our revenue, what percent of the profits, but it was quite significant obviously for the classifieds at that time. But there are two ways to think about that thing, maybe three ways. One way and the easiest end of it is it's going to come. It's going to take us out. Now let's get to plan B, right? That's one way to look at it. Another way to look at it is to say to yourself, "Well, look, I think at the end of the day, there are things which we can do which are unique here that are easier, faster, cheaper, more efficient." Which starts with the premise of appreciating that, in the end of the day, is it or is it not better to find a job online than it is in offline. And with that you can make decisions. We are either going to aggregate and try to build something that's better than everybody else because that's the only way to do it. We're going to build it ourselves. But you have to be able to say at the end of the day one, it simply is better to do the classified experience in an interactive experience than it ever was in print. You have to be able to concede that. And then secondly, what can you bring to the table to make it better, easier, faster, cheaper, more beautiful, more efficient to the audiences who you care about? We had a hard time answering those two basic propositions. Martin: To be fair, we created CareerPath. That failed under its own weight. But then, the Tribune, pretty much with Tim's pushing, created CareerBuilder. We didn't join that effort, and I don't think you did either, did you? Chris: No, we invested in it. We had our own. We used CareerBuilder...I'm getting old because I don't remember. I remember we used it for auto and some classifieds, maybe real estate at that time. We certainly did not with jobs. We stayed totally independent with jobs. Martin: Right, so CareerBuilder was just jobs. Cars.com, which they also created, was part of that venture... Chris: Yes, Cars.com is where we invested all of our money and CareerBuilder we stepped out of. That's right. I'm sorry. That's exactly right. Martin: We're stepping into kind of the next phase which is this view that what the Internet relentlessly does is it verticalizes and it destroys the intermediary. Now the industry has had this success with CareerBuilder. It was a major success. With Cars.com. And I think Tim's view was that the industry's major failing is that it didn't continue to kind of rinse and repeat, stamp out these verticals in all of the other... Chris: I think Tim's got a point there. I remember one board meeting some of folks said the future of the newspaper is going to be vertical. So I used to pick up the newspaper at the board meetings and, "You see every section I'm holding. Well, I'm going to show you every article I'm holding article not section and then five competitors, 10 competitors whatever is in each of those." So disaggregation verticalization, I think, was clear. You had think about are you going to be effectively a holding company, a bunch of verticals which you may be able to offer some aggregation among them. But I guess... Martin: I guess what I'm trying to ask you, Chris, is that as the business leader at WPNI, why...Either you didn't have the visibility to go forward with that plan, but why didn't you join with the other newspapers, the other regional newspapers, to create more of these verticals? Was it because you just felt that was an ungovernable... Chris: Yes. I would say there were a couple of things. In some respects, and I think this is a credit to Don's vision, in particularly, the fact that we were given a fair amount of...actually not inconsequential amount of capital to go after jobs in and of itself. And I don't know if you remember, we actually licensed our product to Cox and others, so we started toying with even other revenue streams that might come from this. We had that. But on the other hand, this auto business you had over here, which was more of an aggregate kind of a play, there was a little bit of a sense of let's see what's going on. Everyone, and I mean without exception, was highly suspicious, rightly so, of consortium. There was a general sense that, at the end of the day, herding our cats with all of our ambitions. Most of the enterprises were, at least within their local market, monopolies of a certain kind. That it was just going to be very, very difficult. There was an argument that was made about going into the aggregate, which goes back into what we were talking about before in terms of technology that never played out well, which goes something like this. We need to do more of this. In fact, Chris, we should even think about taking what was then called WashingtonJobs and putting it in CareerBuilder or joining CareerBuilder because we, again, will not become technology players. We will not become innovative players. Only something of that scale, with that kind of caliber, thinking nationally, globally, whatever, will. OK, that's actually... I always found that a very compelling debate as I wrestled with this stuff. It's not that I summarily rejected it every stretch of the imagination. But no one took it to the next step, which is, how is it going to be at that level, governed in a way, managed in a way, incentives put into place by which this was going to stand toe to toe with Monster.com and other things that were coming in terms of innovation? I think Hillary did a hell of a job of really pushing that theme and trying to make that thing the best it ever could be, but I had no illusion in visiting some of those board meetings and other stuff even as an observer that this was going to go toe to toe with the guys who were doing what they were doing in Silicon Valley or Chicago or what have you. Martin: Did you want to add? Paul: Keep going. Martin: So now you're...The dotcom bust happens, but you continue to manage the business until when, Chris? When did you leave? Chris: I left, I guess it was around 2004 and then I went over to corporate for a year to do other things... Martin: Why did you leave the business? Chris: At the end of the day, I think part of it's personal. You're an interpreneur, entrepreneur. The way things were structured there, it was a wonderful platform for "intreprenertia," meaning that you had enough there that was your own. But at the end of the day, you and I may have even come up with this lingo together. We certainly talked about it from time to time. It's hard to be running a business and trying to fight the battles of innovation and think about new ideas in a world where you have complete responsibility and negotiated authority. I spent probably 20 or 30 percent of my time shuttling diplomacy with certainly the business side and sometimes the editorial side of the newspaper and Newsweek. That just made it a challenge. In and of itself, I think anybody who didn't want to do their own thing taking advantage of these worlds was going to break off in any event. I think that was really a driver from a personal standpoint. I think at some point, you knew these things were going to have to come together at some point and a decision had to be made culturally about how they were going to think about it. We had a very big moment, which I'm sure that you've heard about, which we'd been wrestling in different forms about whether or not the Washington...put Newsweek aside for a moment...the Washington Post could be a national or global player or whether or not it should really be unbelievably hyper focus, local, local, local, which is what the newspaper was. I think there was a very clear marking point one summer when it was just made very clear by senior management this was going to be a hyper local enterprise, despite the fact that 85 percent of our audience was coming national, anyways; despite that I was actually making more profit in Europe than the Herald Tribune was making at that time, despite we had one person over there. The feeling was if you go off there, you're galavanting against too many bigger competitors with too many bigger resources, and we have to do that. I think a few of us on the editorial side and the business side said that's wonderful and I get it. There's logic to it. But those issues, it was time to do something different. Martin: Let's talk a little bit about your post Post incarnation because this notion of verticals plays out in the next stage of your career. Chris: Yeah. Martin: Talk about why you went to was it Choice Media at the time? Chris: Which became HealthCentral.com. The thesis that I had...what ended up happening is I spent a year working with Don, just kind of stopping and reflecting and advising him on the board for some transition. Martin: And Caroline Little is now running... Chris: Caroline, who was my number two, who was just unbelievably wonderful, took over. I was sort of like an advisor to her. But mostly what I did, I have to tell you, hopefully it was of some value to Don, but it turned my life around in a different way. Don effectively said, it was his idea, "Go over to the future. Go to Japan, go to Korea, go to Finland and immerse for a few weeks on what's going on. Come back to me and tell me what you're seeing about these people where broadband is tenfold the average weight of broadband we had at the time and, of course, the early revolution of mobile." I went over there on these incredibly long, tenacious trips where I met everyone from poobahs in big companies, like Samsung, down to the kids. I'd go with college kids to the, in those days, retail stores where they're buying stuff. I saw social networks four years before Facebook. It just changed my entire look at how the world was going and where things were moving out and the ability of people to find what they want when and how they want to find it on their terms. And it complemented... Probably the ah ha moment that I could keep wrestling with back at the Washington Post and Newsweek days was that, from the earliest days, even before Google really kicked in for us, 85 percent of our traffic was coming at the article page level. We spent so many fucking...so much time wrestling with what our home page looked like and who's going to be on the home page and everything else, and yet the data was always there, all throughout my tenure, that people want what they want when and how they want it and they're going to find it on their terms and eventually share it. And yet, we could not psychologically get around that. Everything that I saw in these expansive broadband worlds was clearly this was going to be everything. This was a total side and way to reflect it, I'd start asking questions. You and I used to talk about this at the time, we'd ask ourselves, if the Internet came first, would anybody every invented an interruptive 30 second spot? Of course not. I'm asking people even today if Netflix came first, would anyone have invented the bundle or the cable model? Once you have a hyper ability to find, what you want when you want to have it, everything changes. I asked myself, as part of this, and when I started talking to venture capital people is "OK, so how does this play out in the world of what must be hyper verticality? Even then I have to tell you, I wasn't thinking farther down because I thought to myself, if we could start breaking up a series of new media companies, I think probably some of this was why you bought About.com, was this idea that you have these multiple verticals overall and you could build almost a holding company of them but you could... Martin: All at the article level. Chris: All at the article level and in those days, social network was just starting so we thought about SEO, yada yada yada. What I learned, we went to health because quite frankly, at the end of the day, nobody Google's health. You Google symptoms, you Google a very specific...It's the ultimate vertical. It's the ultimate test case in a lot of respects of what you and I have been talking about and thinking about in this outcome. We went after this to make this hyper vertical, 50 site very, very condition, by condition, wellness by wellness kind of a thing, and soon discovered that that was right and it did fine, but it wasn't vertical enough. Because what you start understanding is that type 1 diabetes isn't vertical enough, that there are a million people with type1 diabetes but they're coming at it in different times in different stages with different questions and different experiences. This is when we started to realize that the whole emphasis of our business, which needed technology to solve it, was going to be about longtail search and longtail explorations, detailed explorations of you and I as the vertical and not the categories of vertical. That was really the aha moment in the progress of what we did there. Martin: How did that play out technically? Chris: We did a lot of tripping over ourselves. There were a lot of things out there that were highly competitive, that we're thinking about this in different ways. We finally found...It wasn't, at that point, it was kind of a fire sale. It wasn't much of a company but some very, very interesting technology that was helping us to aggregate the content that we had based on longtail searches. We had this ability through the algorithms that we acquired in this little company and we did a tremendous amount of work to do it, to be able to effectively play more. We stopped caring. The first year, all we thought was why About.com was ranking better than us in Diabetes or WebMD is ranking with us in Diabetes. We spent tremendous amount of time, deep into the day to find out what most people were looking at at different segments about it. We would match that to not only the needs of the exchanges of content that people have but what advertisers were advertising to, and we built this broader platform by which we could take the content we were creating already but have it more honed and presented both from a search perspective and a delivery perspective to those needs. I could tell you that the idea was a right idea and I think we ended up becoming a decent company because of it. Someone's going to become a great company because of this in the next iteration. Our technology was not there. Other technologies, we will, I think, figure that out to a different level. Martin: One of the themes that we've also been hearing from a lot of people is that this article level notion has played out in a, as you say, hyper vertical context of me. Twitter is really the company now truly aggregating at scale these articles for me conditioned by my network of folks whom I follow. Is Twitter the next great news company, in a way? Let's fast forward a little bit for a few minutes. Given all of your experience, both as an entrepreneur and as an intrapreneur CEO in two very different contexts, what do you think comes next for journalists? Chris: It's obviously the $64,000 question that everybody keeps thinking about, wrestling. Let me step back as a side for which...I've never in my life, in any industry that I can think of, seen so much agonizing hand wringing emotion about a distribution mechanism. How many articles are talking about this thing is going to save journalism? Or this is going to save newspapers or the print must not go away or Oh my God, it's so terrible that I won't be able to touch this kind of thing? As opposed to really focusing on what to me is the central question, which is a two fold question for which we've been talking a lot about here, which is what do you offer someone that makes their life better, easier, faster, cheaper, more beautiful and efficient than the way that they're doing? Secondly, at the end of the day, what can you do to be able to serve up to them the kind of insight that they wanted and a great cacophony of what's happening. As a corollary to the second part of it and this to me is another irony overall, there is value in really deep reporting, right? There's so much information out there at the skim surface. Again, back to my thesis of breaking news is a total commodity, the fact of the matter is I think 90 percent of the "journalism" that's being created today is kind of commoditized, too. It's in these 750 word stuff that people bang out in a day. I'd even talked to journalist friends of mine and say that most of these companies cannot think at all about what they can do three months from now and the three months it takes and the complexity we have either by using a combination of big data or just hard old school reporting to be able to give people these aha moments that they can't get anywhere else that can help them make their lives or make better kinds of decisions in what they have to do. That's kind of on the content journalistic side. What Twitter's onto and I still don't think they have it nailed but they have it there. I don't know how you use Twitter but I've been using Twitter for years as my...I don't use a reader. Everyone is hand wringing now at the death of Google Reader. I haven't used a reader in two years because Twitter, at the end of the day, facilitates my ability to choose people I respect and to see what they read. I know what I'm interested in, I know what I'm looking for, and yet when I know that Martin is there, if you put a link up to something that's out there already, it's going to be something I care a great deal about for no other reason that I know you care about it overall. You've given me the serendipity aspect that I used to get from wading through a newspaper or skimming a website overall. The world's my oyster. It's an unbelievably powerful thing. My view is, without any hard answer to the question overall, is that there's still a content aspect over this and with all the complexity of these issues that we are facing and what we're going through, I think data is going to be playing as great a role in surfacing the issues here as it is the writing itself. I think reporting is very important, but I think so much of the platform of access is going to be very, very powerful. I think Twitter is probably the closest to do that. It's very interesting to me from a business model perspective that for all...In many respects, and you blow this out of the water, Martin. You may feel different. I think you've always understood this better than I have, but for all of the power that has been put into digital delivery of advertising in multiple different channels overall. There's great sophistication there and there's [indecipherable] analytics, we wrestle with the commoditization of advertising or we're making our lives better or not, why in this day and age is Facebook still showing me those shitty ads when they know more about me than my wife does? There's all this kind of stuff on the delivery of it, but to me, the most sloppy, funny question is, there's been almost zero innovation on ad product in my lifetime. We honestly are talking about 30 second spots in front of three minute videos. How can that make sense? People say, "Well, it works." What do you mean it fucking works? It's annoyance. Why are we doing this? Martin: I do think that AdWords initially was a major innovation. Chris: Oh, I'm sorry. I'm really just talking about the additional...There's no question that that changed everything in a way and whatever. The reason why I'm going a little bit down this rabbit hole is so you have to say to yourself, "What are the components that matter and then how are you going to pay for it?" I guess what I'm saying at the end of the day is I think there's a whole series of opportunities that we've not yet scratched the surface on on models that are going to be very powerful. In a way, you guys are visionaries on this, but I think the time has come. I think that people are going to be willing to pay for that which is unusual and unique at a greater and greater way than they might've in the last five years. Martin: Yeah, which returns to your original point about the product maturing, the audience maturing to a point where it's differentiated at some level. Chris: You know what my biggest epiphany was back in Japan and Korea and Finland? I went to these places with an assumption. I've not been there in years. I went and I've never been to Finland. I went to these places with an assumption that I was going to be going to the Jetsons. These are these great tech societies. Oh my God. Lights are going to be flashing anywhere and everywhere I go, there's going to be people running around and everything else. I was so prepared to see everything that I saw completely was shocked to see almost nothing. What I mean by that was that the technology had become like water. It had become like a utility. People simply assumed it. It was embedded in their lives and that's happening now here. It's assumed. When you have that, you can call it maturity or you can call it as part of your indigenous behaviors. Once you accept that as a given and know that's only going to be more so over time as a proliferation of smartphones, where computing capacity's going to increase to so many people, then you start asking yourself things like, "What is an awesome news product for a world of five billion smartphones?" Then you start asking very different kinds of questions, both in terms of what is the editorial content, how you can utilize data, and what the business model is? Martin: Most business people asking those questions continue to be entrepreneurs. Chris: And we're back to the earliest part of this conversation all over again. Therefore, you can almost pre ordain what the future will look like for existing journalistic organizations. Martin: Before we close, I want to get your perspective on other theme that's come up. That is, that the news business isn't one business. Many people have said, "Look..." Even newspapers isn't one business. It's a very local business that guys like Warren Buffet are investing in now. It's a national global business, which is where the New York Times and the Wall Street Journal sit. It's also a regional business. I think probably the Washington Post has a foot in both worlds but is still pretty much from a business perspective, regional, but that's where the... Chris: Local. Martin: ...Boston Globe is. Regional local. I don't mean small local. I mean more regional in the sense that Washington is a big region. Those are targeted as the newspapers that are most at risk because they're neither local enough to be truly, truly differentiated for people down at he local level but nor do they have national global scale. What happens to those communities? What happens to Boston, Philadelphia? Or is there a business model that you can see out there that evolves? Chris: I'm not sure if I'm answering your question. I've not seen any version yet online heavily focused locally. With the exception, I guess, when you think about things like Yelp. You can make an argument that that is a platform to locality, with the exception of that, but this idea of something for local, on local's term, and Lord knows, the 500 attempts at hyper local that has really had a bear of a chance. Because I think that at the end of the day, it really boils down to that very basic question we talked about five times here, which is are you making somebody's life really better? We can make intellectual arguments as to why this matters or why it should matter, and we can rage against the gods, but at the end of the day, if you cannot articulate why, in all the resources at our fingertips today and in the cacophony that is caused, that you're breaking through on that kind of a thing, it doesn't really matter. Martin: I don't want to get into a debate. I think the pushback on that is that it's really more of a business model issue than a differentiated value issue. Chris: That's fair but how can you not have a business model issue if you don't have a product definition issue? I can't disaggregate them. I do hear that a lot and that is as pushback [indecipherable] and I always think it's a distinction without a distinction. Martin: I think Tim's answer to that question is that you have to...He's working in this area, Tim Landen, that is. You have to break it right down to the most basic, basic business. For him, that's a very small business. He and I may agree or disagree, but whether at the level that he's addressing the market, you can actually have enough oversight of a large city's City Hall business environment to play the civic role that journalism is supposed to play in society, is an open question. Chris: Couple observations. One is there's no question it's an open question. I can tell you that when I talk to my venture capital friends on the west coast. I'm sure you've had similar conversations. They look at this stuff like this and they say it's a non profit. If anything, Godspeed. I'm happy to sit on the boards of these non profits and give them all the advice but don't even think about it as a business. That's one kind of a construct. The second kind of a construct, which is interesting. You sort of almost said it parenthetically, but I think it's important, which is about the size of these businesses. Look, the fact of the matter is our friend at Blodget has a very nice business with a very impactful business and may even sell at good multiples at some point, but you saw the speculation on his revenue size. He has significant impact in what he's built. You may even be involved. I can't remember. Martin: He was interviewed by us and he's an extremely articulate and optimistic fellow, but he's not working local journalism. Chris: The point that I'm making is, he's at the national level with a niche, with a very good product, with a differentiating product sometimes, and it's a $12 million business. Profitable. More profitable than most newspapers. The other hangup is, is size for size sake what we're talking about? Are we talking about adequate businesses that have returns? At the end of the day, in any case, if you're not answering why this product is worth my time, the business model stuff, it become, I think, a laziness. Honestly. I could be wrong. I think people get very lazy. There is no business model like wash their hands and they go back to the conventional things they thought about before. There's no innovation in thinking about that because that there is a prescribed momentum behind it. Whereas other people are saying, "You know something? There's something very powerful out there. Maybe it's not going to be a billion dollar business but it's going to be a profitable business. Who knows what will come because we don't know what's going to come in the next 10 years. That would be the only maybe framework by which I would keep pushing this with others who are thinking about that issue. Martin: Paul, anything more? Paul Sagan: You've done a great job telling the story, so let me ask you a really difficult looking back question. It's like a classic business question about it would be, given that the opportunities particularly in more local news, which is where newspapers look like small businesses, would you like to have, as you described, could start them today? These companies were big. They still are fairly large, so these little businesses just don't move the needle for them. Given that and given how tough the tide has been, should be have [indecipherable] , put us on, whether it was Time [?] Made, the New York Times or Washington Post have gone the other way and said almost run them the way Larry Tish ran CBS, which was "I'm not spending on all those things. I'm going to milk this current business" because the landing ramp is always longer than people think. You should optimize the cash flow and not persuade yourself [crosstalk]. Chris: I think there's a real argument to say that that's what the industry in fact did. I think today, we're at a point where people are wrestling... Paul: By under investing. Chris: By under investing and frankly, this is a whole, longer kind of a conversation. A lot of people, at the end of the day, thought they could manage the timing of this, that things would transition when they transition. We'd be in the strongest possible position and we wanted to have our cake and eat it, too, which is we're going to have a great print business, which by the way, was going from a very large business to a moderately large business but still relatively large and losing its ass to a business that was 10 or 15 percent of the size of the first business but had an opportunity to be profitable. There was a psychological challenge that I think people were continuing to wrestle and that kind of stuff. The second thing, and you must've had a hundred conversations like this, but I had a huge aha moment with a big time Warner executive when I was running Washington Post and Newsweek about this very question about how do you invest and how you think about it at the time? This was looking forward not looking back. We had a long conversation about where stuff was going and behavior. Should we invest everything else? At the end of the lunch, the guy turned to me and said, "You know, man, look. I know you're right. I know there's something here. I know we have to figure it out. I have kids. I see what they do." He looked over my shoulder and said, "Man, I just hope it happens after I retire." I think there was a lot of that in this industry, in terms of we're going to have to manage to this. It's going to be somebody else's problem. It's not our core business. We get up in the morning, we go to bed at night. What is our core business? I can remember someone saying to me once said, "Look, it's possible that classified...That will never sell." I forget what the number...I'm going to make it the numbers up, but maybe jobs, revenue that this enterprise was $100 million, whatever and it dropped to 50. It was also because there was a recession going on, lots of different factors. We've seen the cycles before. I remember that executive saying to me from another institution saying, "Look. It's possible we'll never be 100 again, but you can assure me it won't." I would suggest what you said they could've done or could we think over in hindsight? Was in fact very much exactly what we were doing. I'm not saying had we done otherwise, we'd been in a significantly different place either. I actually think that's not something to revise. I think that's actually something that occurred. Paul: That's really what happened in lots of little pieces. Chris: I think so. Paul: Going back to one of the other things you talked about, which was the ability to spend enough or even be a tech company. We talked to Roger Fidler. In some ways, Knight Ridder was one of the earliest, most innovative and one of the first to lose against the tide. At their peak, the budget for their lab at Boulder...They effectively built the prototype of what became the iPad 25 years later, was $1 million. That won't even buy you lunch in a tech company. There's just no way to play the game from where they stand. Chris: It's always easy in hindsight to look back and come to that conclusion. I can only tell you without being a student of history, I surely did not think it then, and I'm not sure I'm convinced of that now. I do think that it is incredibly hard to my earlier observation about companies who face core challenges to the core of their business to do otherwise. It can happen to people who are cold and analytic enough to start thinking about things in a different way. Martin: The interesting thing about Intel and Andy Grove is that he really...To use an overused word, I'm sorry but pivoted out of DRAMs into processing on a dime, pretty much. Paul: The difference was, I would argue they had the existential moment. They knew that business was dead, and I don't think newspapers and magazines have, for a very long time, confronted that they actually their business was going to end rapidly. Intel did. Their business was being...It was simply going away. Chris: So was Classifieds. Paul: Again, from a basic human being, forget about what you're feeling about the culture of a place and how you think about...How could you search for a job one time on online and not say to yourself what was going to happen over here, particularly when you had someone doing it at scale for free? Martin: By the way Chris, I was in many meetings even prior to your running WPNI in '96, '97 when very senior people in the newspaper industry sat around a table and said, "Not me. The CEO was...This business is going away." They had that same epiphany but where I was headed, just for moment is that half a dozen...Maybe not that many, but certainly a good handful of people whom we've interviewed and most of them on the tech side have said, "If the news industry would just simply recognize that its future is digital and get out of print, it would be a very, very good thing." I happen to disagree with that, but in a funny way, that's kind of the ultimate discipline to your point. Is that what you're suggesting that they should've done at a certain point in time? Basically just close the presses and said, "Even though these things are churning out hundreds of millions of dollars in cash flow." How could they do that? There is no way to finance the business without supporting the core. [laughs] Do you know what I'm saying? Chris: Yeah. Martin: The reality of it is it doesn't make any sense. Paul: That's the dilemma. Chris: That is the dilemma but forgive me. 72 percent of IBM's revenue, if I remember the number. You can remember this, but if I remember it correctly, it was in mainframe computing and they got out in two years. Paul: But they didn't. The mainframe is still the core of their company. Chris: Fair enough, but they were able to pivot, forgive the word, enough to be able to service it. That was something. To which, I guess there a couple of things that I would say on that. One is, the idea that there was huge cash flow associated now with the kinds of losses that these institutions are having is a whole different kind of a conversation in and of itself. There was a time when what you said, particularly in the area you were describing, in which that dilemma was particularly profound. Martin: That was the year that it had to have happened in. Otherwise it would be too late. Chris: Very, very quickly thereafter it became very, very clear that this was going to be a less large enterprise losing a boatload of money, so you say to yourself, "You're funding those losses versus funding what it was that you're going to do overall." Finally, a lot of us didn't talk about it necessarily a lot of the time did studies particularly of audiences under 35 who would say at a mass number, not a plurality but a majority who would say, "I wouldn't take a subscription to a newspaper if you delivered it to me for free." Now I don't know what kind of Pearl Harbor needs to get hit for one to say the game is really now, it's not going to be 10 years from now, 20 years from now, that we can manage to, but it's here before us, by which you have to make some experiments. I actually fall into the camp of shutting off the printing presses and I'm comfortable with the idea that you could run a smaller business and that we become larger another day with a sense of good innovation about it overall. But I will also confess in saying that that it's also a sloppy answer, it's like a gratuitous thing. Because part and parcel with that must still become, OK, well enough, but at the end of the day is your product any different than anything else? It's all well and good to say I'm going to do that because it's going to save cost, but it doesn't answer the more sophisticated, important questions. OK, but what are you offering which is so much better, easier, faster, cheaper than everybody else? What is your business model or what innovation are you bringing to your business model to make it or alternative [?] revenue streams, however you want to think about it, to take it to the other places. From a user perspective and what I think is going to be an inevitability perspective, I think the printing it's about chronic pain towards potential death versus extremely acute pain for a fight for another day. That's the way I look at it. But I also believe very, very firmly it's a sloppy analysis on my part. You can't just say the act of cutting that cost structure out and taking the one time hit is what's going to save your business. You have to think about what is it that you're offering in that new environment that's more powerful? Martin: I think that is the nub of this, and it comes out fairly clearly, actually, in every interview is that the difference in opinion between the more traditional folks who believe that fairly expensive journalistic process is that differentiator versus folks who believe that some combination of user generated content, curation, an extremely light version of the old world is quote, to use your term, "good enough" which I think is actually Christianson's term, but putting that aside. The two... [crosstalk] Chris: Maybe. Martin: Well, it doesn't matter. Chris: I can't remember what I had for breakfast this morning. Martin: That's really the nub of this to some extent. [crosstalk] Chris: Why do you think they think it's one or the other? Forgive me, this is a corollary question. Why do they assume that the print mechanism is a gating factor of whether or not you do serious in depth reporting or not? [crosstalk] Martin: Nobody thinks that anymore. The nub of this is that the kind of journalism that is created to ensure a healthy democracy involves a certain process. That process involves a lot of people. It's simply not good enough to say, "a curate user generated content. Curate all of these sources. Don't produce what is produced elsewhere because other people are doing it." That's the argument. That's the fundamental argument. The traditionalists would say the end game for that argument is... In fact, David Carr in a sense did this with his illustration of cutting out everything that was being aggregated. There was nothing left. Would say, "without that more traditional journalistic process, the Twitters of the world will have no content other than people's opinions." That's the argument they use. [crosstalk] Chris: I understand the algebra of it. For me to speak personally it falls under the hand wringing oh my God, the sky is falling aspects of this. In many respects the sky is falling around us without us thinking about why that it is. I don't disagree. This is kind of what I said before. I believe that not only as a great country, a great world out there, that there is a requirement in the journalistic process which is profound and unique. In afflicts the comfortable and comforts the afflicted. That has a value from the societal perspective. I also crazily believe it also has a business value and opportunity into it. I believe that in the era that we're in right now, there's a huge opportunity to disrupt. With that as one, but not the only premise of what can happen overall, the very fact that so many people are saying at the end of the day, that that's no longer valued, is I think dead wrong. I think that a lot of people get into the kind of hand wringing aspect to this as opposed to thinking, "fair enough, if I'm in an environment where I don't have to spend a freaking dime on any distribution, and I now have an ability to reach corners of the world that I could never reach before, possibly for pennies a pop." How many people are thinking about the fact of the matter that in this world of five billion Smartphones, immersion markets all of a sudden can have the ability to get news anywhere, anytime, and all over? Nobody thinks that way. Even the television guys think about the emerging markets in an MSO model. There's things that are happening out there from a marketing and technology perspective that can bring to bear more than enough profit to be able to address this thing overall. It is in one part an absence of imagination, one part hand wringing, and one part still trying to jam the square peg of the past in the round hole of the future to come up with the answers that are there. Maybe I'm just wrong, because I tell you people much smarter than I am have invested a lot of money and lost a lot of money, and just think I'm dead wrong. It's a non profit forever, NPR is the only thing possible. I just don't believe it. I don't believe it at all. ...
VIDEO: YES

Doc Searls
BIO: YES: David "Doc" Searls (born July 29, 1947), co-author...
TRANSCRIPT: Martin: If we could start with a five-minute bio. Doc: It's funny. My favorite Dorothy Parker line is that she prefers the company of younger men because their stories are shorter. I've accumulated a lot of stories, so I actually began, in a way in journalism. I wrote for my high school paper, my college paper. I was involved in sports to the degree that I reported on that and ran the scoreboard at my college, college's football games, and stuff like that. After I successfully fought the draft, which was what you did during the Vietnam War, and if you are part of the class of people that didn't believe in the war and all that. But that was a source of journalistic impulse as well, on my part, because I wrote a lot about that at the time. Not much of it made publication, but one of my first jobs is at a newspaper, a suburban newspaper in New Jersey. I had a lot of fun doing that. It was an incredibly formative experience that is no different than almost everybody else's kind of cub reporter. I did it all, including setting type. There were three or four parts to the letterpress process. When different parts of it when on strike, which they did because this was New Jersey, right? The linotype operators would go on strike. It was called stereo. I didn't know what stereo was short for, but something longer. The guys that poured massive amounts of lead into the large vats, those guys, or the press operators went on strike, then we would operate these different things. That was fun, too. All of it obsolete today, but it was instructive. I was also a photographer. I did a lot of photography. I'm still a photographer and I got my start doing newspaper photography, reporting on accidents and ball games and the rest of it. I ran, in that chain of papers, which is now gone, one of the outer suburban local papers, in West Milford, New Jersey, which is where Greenwood Lake is. From there, I went to work for a... Jeez, that was during the office of economic opportunity period when there was still The Great Society and all that stuff. One of the outfits I did reporting on hired me on, to do community organizing. I did not do very well at what Barack Obama wrote a book about, community organizing in Chicago. But even there I was involved in starting, unsuccessfully, a local nonprofit radio station. Then I went to work for an actual radio station. I did news reporting there. In which, among other things, I developed a weird, arcane skill, which is the ability to look at a newspaper and, on the fly, write an on-air story, just by paraphrasing what I was reading. I just switched the words around. I don't know why I developed a skill for that. But often it was close to deadline I'd just pick up the paper, hold it flat so it wouldn't crinkle and just, instead of... "Three people were killed in an accident. An accident in which three people were killed took place in West Milford," or something like that. From there, I stayed in radio, in New Jersey, then in North Carolina. I really, a certain point — this is an important thing, in respect to the Internet — I found myself in, let's say 1977 so I would have been about 30 years old, with a wife, two small kids, living outside Durham and Chapel Hill, North Carolina, out of a job. The radio station I worked for was having hard times. The consulting practice that I had going, where I wrote a lot of advertising copy for people, because I was a pretty good writer. The newspapers, there were only a few of them. The one in Durham, the one in Chapel Hill had just gone out of business. They were way ahead of their time in that respect. It was a daily in Chapel Hill. And the News and Observer in Raleigh. None of them were hiring. Because the Internet did not exist at that time, my scope of employment opportunities in journalism were geographic. Unless I was going to move somewhere else. And I had no means to do that. I didn't have any money. When two of my listeners at the radio station, where I was still telling jokes on the air, because that was what I started doing when we couldn't sell advertising at the radio station. I made up ads for things that didn't exist and I created this character which somebody else called Dr. Dave. The fossil remnant of which is the nickname, Doc. My real name is David. I didn't give myself that nickname, either. Just somebody said, "Doctor Dave will be on in five minutes." That also involved improvisation, by the way. I'd just go on and tell jokes. It was weird, kind of a Robin Williams thing. And also leveraging an unfulfilled and probably luckily avoided ambition to be a stand-up comedian at one point. I wanted to do that. But I decided not to, because I had a wife and two small kids and it was a not a smart thing to do either. But anyway, two listeners who knew that I could write copy approached me to start an advertising agency. Their names were Hodskins and Simone. So that became Hodskins, Simone and Searls. Hodskins, Simone and Searls — very long story very short — became, over time, one of the top, if not the top, high-tech advertising agencies in Silicon Valley. We moved from North Carolina to Silicon Valley. Martin: What year was that? Doc: 1985. We started the agency in '78 and were successful enough by '84 that we opened a new office out there. I came out in '85. We won a whole lot of business. For the next 15 years, my name was on a building in Palo Alto. I got a lot of experience dealing with... Actually, I met Dave Winer, who you're also interviewing, in 1982. He won't remember that. But I did, because I went to his booth that he and his brother were running, I think in 1983, in Atlanta, Georgia, at a ComDex there. And saw his outliner program and was blown away by it. And still am. I'm still blown away by outlining and its implications. Many years later Dave and I became good friends, but back then I was just aware of what he was doing and thought it was amazing. There were many others like that, that I knew over the years. But I never gave up writing. I still did freelancing, from time to time. Martin: Just to be clear. Were you the creative head of this agency? Doc: I was the co-creative director. The three original guys were the business guy, the art guy and the copy guy. I was the copy guy. Ray Simone was the art guy. And David ran the business, very ably. He was a terrific manager. Ray was a terrific creative director. At a certain point, I realized that I was better at dealing... I loved relating to these companies. I didn't like the level at which we engaged them as an advertising agency or as a PR agency. Martin: Who were your clients between 1985 and... I mean, pick two or three. Doc: Sun Microsystems, parts of Apple, Logitech, Symantec, several in Europe, Grouple, Xena Theta Systems, Hitachi Semiconductor. A lot of smaller ones that have come and gone. There was a printer company called Data South, in North Carolina, that was amazing. But I went to a lot of the conferences. I got to know Esther Dyson pretty well. And Tim O'Reilly, who would be great for you to talk to, as well. Just a whole bunch of them. And became involved in the industry. That was, even while I was covering it... It's interesting. If you go back, I have a section at Searls.com called Reality 2.0, which is where I put articles I wrote that nobody would publish. Because I couldn't find anybody to publish them. I had been approached by PC Week and a couple of other publications to write for them. In every case, they turned me down after I submitted what I wanted to do. Martin: Why? Doc: For the most part, those publications were outsourced house organs for their advertisers, quite honestly. I wanted to be able to say what the hell I pleased. I wanted to be funny or just irreverent, when I needed to be. It just didn't fit the mold. Jay Rosen talks about this. There is a language. There are formalities. There are protocols. There is a typical approach to the way a given publication sounds. I've met a bunch of people who worked, say, for Newsweek or Time. There was this template. "This is how we sound. This is our style. We shouldn't know it's you writing it, even though you're one of the three or four names in the byline at the bottom." It's the Time Magazine sound, the Newsweek sound. The New York Times is probably the same way, though it's a little looser in that respect. With the exception of Linux Journal, which approached me in 1996... I was involved in the founding of it, actually, in 1994. The publisher, a good friend named Phil Hughes. I've actually never been asked to write for anybody. It's an interesting thing to me. It's weird. Martin: I think my colleague Tom Friedman referred to you as one of the most important technology writers out there. That's a pretty good endorsement. Doc: I really appreciated Tom saying that. I think I'm good. But I'm not standard. I have the same problem in journalism that Dave has had among programmers. Which is, he's his own guy. I'm my own guy. I don't really fit any of these templates. But I'm not bothered by that. I'm really not. It's not a complaint. It's an observation. I take a very long view. Your concern with history here, and my feeling about the history of journalism in the Internet era is very early. We're still in the Cambrian explosion period. I'm really into geology. I think we've been in the Pre-Cambrian and the early Phanerozoic and now we're kind of in the middle of the Cambrian explosion. Everything's an experiment at this point. The trilobites are trying their best to survive. The horseshoe crabs may carry on. Martin: I forgot to do one of my main jobs, which is to say we're here (in New York) on March 7th, 2013, interviewing Doc Searls. Doc: Excuse me. Martin: So you're running this agency in Silicon Valley, from 1985 until 2000. You said 15 years so I just did the math. Doc: It lived from 1978 to 1998. It was acquired in 1998 by Publicis, a big company from France that's acquired a lot of advertising agencies. It was one of the Silicon Valley agencies they acquired. By that time I was on the board, but I was fairly inactive. We would send business each other's way. We decided to make it just an advertising agency, rather than advertising and PR agency. I had already spun off the Searls Group as not so much the PR, but the marketing side of that. I turned the Searls Group itself into much more of a pure consultancy. I was dealing with people higher up in companies. Because almost without exception, the marketing communications directors, the people who were in charge of advertising and PR had no power. I'd much rather deal with the CEOs or the top IT CIO type people, though they weren't called CIOs back then. That's a more current term. But I wanted to deal with the people who were actually in charge. That consultancy still exists. I still make money doing that. Martin: At some point in that era, late '90s you must have partnered with your co-writers to do Cluetrain. Why don't you explain what that was, because I think a lot of our viewers want to know. And how that came about? Doc: The Cluetrain Manifesto was born of the common frustrations that four guys had with what became of the promise of the Internet in its earliest years. I date the Internet that we know now and that I think will exist for the fullness of time to 1995. 1995 was when the perfect storm of ISPs, dial-up access, the graphical browser especially, that was the biggest thing, domain names for sale... All of those things together made it possible for anybody to publish, for anybody to run their own radio station, for anybody to run their own TV station, for anybody to do what the hell they pleased in a space that we'd never seen before, that put all of us at zero distance from everybody else. It didn't matter where we were in the world. At something close to no cost at all, anybody could communicate with anybody. Anybody could run their own printing press, as it were. To me that was just fundamental. That's where Dave and I were in absolute agreement. And a lot of other people were. By 1996 I had become friends with Chris Locke, who was one of the founding figures in the net that we know now. He worked on Meckler Web with Alan Meckler. Is it Alan Meckler? Martin: Yes. Doc: Yeah. Alan Meckler. And Chris was more than anybody I knew, really an absolute uncompromising iconoclast. I once joked about Chris that he never crossed a bridge he didn't burn. He would bite any hand that fed him, usually with good cause and sometimes just for fun. And was just a fabulous writer. An enviably good writer. He and I became friends through a retreat that was really seminal, that Jerry Michalski held in King of Prussia, Pennsylvania in August of '96. A lot of other, since then, important people were also there. But Chris and I just bonded over giving shit to whoever we felt like giving shit to, because they deserved it. We developed a relationship where we'd talk to each other on the phone every few days about all the things that we thought were stupid at that time. This is in '97-98. In late '98 we were pretty alarmed that here was the promise of the Internet and all the big money was going into recreating the old offline world, online. Let's make a mall. Let's make a retail operation. Let's build some enclosure and put a bunch of stuff in there, where we're the only way to get into that. It seemed to us, that's silly. The Internet is for everybody. It makes that kind of thing obsolete. In our conversations, Chris at one point said, "I'd like to bring David Weinberger into this." It turns out, he was having the same kind of conversations with David Weinberger. I knew David from his commentaries at NPR, but I didn't know him otherwise. Chris was in Boulder, Colorado. I was in the Bay Area, and David was in Boston. The three of us got to talking on the phone and decided we need to publish something. I don't know whether it was caused by this or not, but one of the factors that led into it was that all three of us made our money selling our consulting time to companies of various kinds largely for marketing. We shared war stories about the kinds of clients we had and how we would select them. Or, de-select them as the case may be. At one point I said, well you know my technique is I have what I think of as the logic of marketing. Which is markets are conversations, conversation is fire, and therefore marketing is arson or should be arson. If you want to set a fire, I'm your guy. If you don't, go have somebody else go write your press releases. I think it was Chris who said, why don't we test that thesis? Let's just put something up. It may have been David who said that. For whatever reason, we decided let's put something up. Chris at that time brought in saying we need somebody more technical than any of us. Even though all three of us are fairly technical in different ways. But somebody who's really good at doing a website and was of a similar mind. He brought in Rick Levine who happened to live also in Boulder and worked for Sun Microsystems at that time, and was an expert in Pearl and other kinds of code. Rick joined the conversation. It was the four of us, and we decided to make it a manifesto because that worked for Marx, and have 95 theses because that worked for Luther. The name Cluetrain came along when one of us related an old Silicon Valley epitaph that said, the clue train stopped there four times a day for 10 years and they never took delivery. One of us said, well why don't we see if that domain name's taken. I looked it up, saw it wasn't taken, bought it on the spot for 75 bucks. That's where the name Cluetrain came from. There wasn't much more thought that went into it besides that. It was just like, "sounds good. Let's do it." As of today, the word Cluetrain is tweeted many times a day. It appears according to Google Books in one new book a day. An average of well over 9,000 books that have the word Cluetrain in it. We created a neologism with that. When it went up in March or April of '99, Chris I think had the longest list of subscribers to his irregular kind of newsletter called "Entropy Gradient Reversals," or EGR. David had a list too, and he had an online pub called "JOHO: Journal of the Hyperlinked Organization." I had a much smaller list at that time of just friends. It got picked up by Tom Petzinger in his column in "The Wall Street Journal." He interviewed Chris, and I think he talked to me and David, too. But Chris was the star, and he got the little wood cut head shot on the front page of the business section of the Journal. In one day, my emails went from 15 a day to hundreds. It caught fire. It absolutely caught fire. Martin: We all have our interpretations of what this notion of markets as conversations means and how it relates to our business. But, can you characterize how you think it relates to journalism? Doc: Yes. Before we get to journalism I'd like to say that an interesting thing that happened with Cluetrain is that the most quoted line was the first one which was markets are conversations. I've often felt that it's been totally misunderstood. It was basically, as Jakob Nielsen who's the usability king told me later, and I hadn't realized it. He said you guys defected from marketing and took sides with markets against marketing. He said, you spoke in the second person voice to marketing from the position of customers. Martin: Well, Nielsen's sort of the anti-banner guy going back... Doc: All the way, yeah. Martin: Going back before... Doc: Before there were banners. Martin: We've witnessed this struggle of supporting journalism through more traditional forms of advertising and trying to keep Humpty Dumpty together. But before we get there, you were saying... Doc: Well Humpty Dumpty will be put kept together, or brought back together, when markets really are conversations. There are a lot of journalists. Myself, Dave, Jay Rosen, Jeff Jarvis, others who have endorsed that from the beginning and have wanted the big organizations to do that, and want the new ones to do that. What happened was the marketers picked it up and said, marketing is a conversation, and it was with themselves for the most part. It's crazy, but it didn't do what we wanted it to do. But the most important clue, and it even says so. The first clue we had, the thing that really galvanized this I believe...David and Chris and Rick may say differently: "All stories are true." Chris, who's a really brilliant graphics guy by the way. He's not only a great writer, he's got an awesome graphics sense. He put out a little .gif, a little .gif that said, "We are not seats or eyeballs or end users or consumers. We are human beings, and our reach extends your grasp. Deal with it." As soon as I got that and as the other two guys got that, it was like that's it. We'll just build the "Cluetrain Manifesto" around that. That .gif went in the "Cluetrain Manifesto" above kind of a super headline that said, but in small type, if there's only one clue to get this year, that was 1999, this is it. Forget eyeballs and so forth. Then there was this thing of people of Earth and a bunch of other stuff. Below that, the "Cluetrain Manifesto" first thesis "Markets Are Conversations." Most of the rest of the 95 are packing material quite frankly. The first 10 or 15 were the important ones. To me, one of the most important one was "Hyperlinks subvert hierarchy," which is David Weinbeger's. David and Chris actually wrote most of them, and wrote most of the manifesto as well. But what happened was that because that was a little .gif, and it was not easy to quote, it couldn't be copied and pasted. I think that was a mistake. That was one mistake that we made was not making that copy and pastable. I've felt ever since that this line, "Our reach, exceeds your grasp, deal with it," is still not true. Our reach, meaning us the consumers of news, our reach is still not exceeding the grasp of those that are still the mandarins of making the news. That's just in journalism, but it's also true in retailing. It's true in lots of categories. My ambition since then has been making that alpha clue true. We can go into that later if we want. But as for the markets are conversations thing, I've felt from the start that there needs to be a symbiosis between the readers of news and the writers of news. The people who consume journalism should be also the people who produce journalism. There should be a virtuous cycle between them that has within it new formalisms, new protocols, new techniques. New lots of stuff, without letting go of the old. I don't think we're ever going to not print stuff. I don't think we're ever not going to broadcast stuff. I don't think we're ever not going to have an environment that self selects the best and puts them in positions of being the primary sources of authoritative reporting and commenting, and the rest of it. Martin: Well that's critical. We just had the Goldsmith Awards at the Shorenstein Center. It's very, I have to say, inspiring to hear the stories of these investigative reporters who go out and spend sometimes six, eight months, longer, really drilling into huge and grave injustices in society. They need the time and the space to do that. They need to earn a living while they're doing it. The wonderful thing about an institution like "The Times" or "The Chicago Tribune" is that they allow for that to happen. The question I guess a lot of folks are asking is, OK if the advertising business is essentially dissolving in some respects in front of these folks, how is that going to continue over time? Doc: Wow, this is a big one. Here's the thing, and this is what I've been working on. I think that the advertising business does not dissolve. I think it transforms. The advertising business is already not only partly dissolved, but it's sort of mated and produced a weirdly hybrid offspring. Its mated with direct marketing, which the old Madison Avenue advertising, which we now call brand advertising, would never have touched with a 10 foot pole. There's a thicker Chinese Wall between Madison Avenue and everything else in advertising, especially direct marketing. Getting personal with people. You don't get personal with people if you're doing brand advertising. You're putting your name and your logo on a building, and you are broadcasting a well thought out and honest and convincing image of your company to the world. That was a very mature discipline that I think recently has been disrespected, honestly. I think it will always be here, and it will have a resurgence once we realize how important it was and still is. I think that will have a huge second life in newspapers and magazines and so forth. It's still having its first life in magazines like "Vogue" and "Brides." Those where the advertising is a big part of the editorial. It was never disrespected there. But what's happened is that direct marketing found in the Internet something it was never able to do very well with direct mail and all the other media that were there before the Internet. Which was, we can do big data analytics with this. We can get really personal. We can get totally personal with you. It has mutated into a virus, I mean a horrible virus that we have right now. That's probably the best way of putting it. Where our privacy is absolutely invaded to a degree that should cause great offense, and has actually only caused great offense with the "What They Know" series at "The Wall Street Journal." I would love to put in a plug right now for a Pulitzer. Julia Angwin and her people there, she's on leave right now writing a book about this. Martin: She was recently at the Shorenstein Center. Doc: She's awesome. What she started there, just focusing on what they know and why they know it, is a proper journalistic response to the invasive viruses and spores that are tracking cookies, and tracking beacons, and tracking pixels, and other things that are keeping track of us in order to give us better advertising of give us a better experience. Which is, from the consumer's side, absolute bullshit. To the degree that it succeeds, and it does. It supports Google, it supports Facebook, it supports a lot of other things. Martin: Does it support journalism? Doc: It doesn't support journalism. I mean, I shouldn't say. It does to some degree, and that's arguable. Martin: Maybe to some degree. Doc: But I don't know. I mean, I'm assuming that much. But it does support some worthy things. I think in the way that it was done say on Google search in the first place where it's always over in the margin on the right. You could ignore it. The white space had some grey in it, and those are useful results. If you don't get them on the left, fine. OK. But when it's the equivalent of -- on the street when you leave a store, somebody plants something on your body and follows you where you're going -- then sends you messages later that are highly personalized but have what Nixon called plausible deniability. Because, well it's not really you. It's some number we have on you. It's not really personal, but it's optimized for you personally. Bullshit. It's bad manners. The manners are horrible. It's the manners that were developed in direct marketing over many years when they were smoking their own exhaust and talking to themselves about what was good data and what was bad that created an industry with companies like Axiom, which by the way has been a client of mine, and they did pay me and didn't listen. They get a lot of money for having something like 1,000 data points on 300,000,000 human beings. We're already by the way, a lot of data's given up by say, your hunting license, other things. Those things have been given to Axiom and other companies like that for a long time. But it was mostly harmless, and those places did have some ethics about them. But there has always been in the direct marketing business, a missing ethical gene. The frontier for advertising right now is the ethical one. I think journalism can help a great deal with that. Martin: How? Well, Julia is helping, perhaps. Doc: Julia's one, but that whole thing has been a voice in the wilderness for some time. It started in July 30 of 2010. I wrote a piece at that time for my blog that said this is a turning point. This is when it turns around. Amara's Law says we overestimate the short term and underestimate the long. I very much overestimated in the short term and underestimated in the long on that one. Because I am sure that that was the turning point. But it's just going to take time. But in the meantime, I think two things are going to happen. One is, "The people formerly known as the audience," which is Jeff Jarvis's term, and I think maybe also Dan Gillmor's. Dan Gilmore has readers who know more than I do. The imperatives that arise from those facts in journalism will seep further into the discipline and inform its processes inevitably and better. I think, for example, in "The New York Times" and other major papers, we're going to find something better than comments. For example, "The Wall Street Journal," everybody has their CMS, their Content Management System. It used to be ATEX, or whatever the hell that company was and nobody could change it. Well now it's something else and they can't change it, and can't even think about it. But they will get replaced by something where for example, I picked up the "Times" this morning. There's a piece in there where New York is called the capital of consumerism or something like that. I thought, based on what? What the hell does that mean? Like it's a fact? This is the capital of consumerism. What is consumerism? What do you mean by that? I'd want to put a footnote on that and go to, here's a web page that says you know... [laughs] Excuse me. Why I've called it that. But it's presented as a kind of fact. This is on the front of the business page, and it's a small nit on my part. But rather than doing the powerless thing, the old powerless thing I'm going to go on and say where do you get off saying this is about that? No. Let's debug that a little bit. Or let's leave it open for debugging. Especially if this becomes, this is the paper of record. Let's have a process here whereby offhanded statements like that, or claims in some cases, can be substantiated. I think if there are processes in place whereby a common understanding can arise, rather than as it is now powerless put backs can be issued or partisan statements can be issued as well, we'll get somewhere. One of the things I love about my blog is that I can actually have a dialogue with my readers. I put up something a few days ago about advertising on the net. Actually in particular about Facebook. I think it was yesterday. Knowing that Facebook is going to come out with a whole new advertising something. In which I pointed out that for me at least, their advertising's horrible. Martin: Yeah, I read it. Doc: You read it. Martin: I think there was somebody who noted that he'd been married for 25 years, and he's been getting ads for divorce attorneys and things like that. Doc: I know, it's insane. You know what's happened is some scamming company's bought everybody 60 and up. If you're 60 and up, you're getting these shitty ads. The interesting thing is it isn't what that's about. One of the responses was, well why don't you just run AdBlocker? I wrote back in the comments and said well in fact I do. Three days ago I wrote a piece about how I do that. But in this case I turn it off every once in awhile, or I maintain one browser that's clean, as it were. I'm not running any ad blocking or any tracking blocking so I can see what other people see. Or the kind of things other people see. The guy wrote back, he said cool, that's great. Rather than you were wrong and I'm going to retreat back over to where I was in my subordinate position as just nothing more than a reader. What I see modeled on my blog, and I've seen for a long time, is not only just a place, but a way that the heuristics of common understanding are facilitated with much greater efficiency and efficacy than what we have now. Where you have the tablet that's etched and handed out by the Moses of the world from on high, and you can't even mark it up with graffiti. You can kind of scratch something in the sand over here and hope that somebody reads it. That's cool stuff. But again, I see that as very early. We'll have that in the long run. I think in the course of that, we'll get better advertising. I want to just, if we go deeper into advertising, I see a division coming again between the direct marketing kind of advertising and brand advertising. Brand advertising living forever being what it is and doing what it does better, while the direct marketing stuff gets in the short term punished for its offenses and improved into something that will work better than it does now. But I think that that will not be direct marketing as much as what in my new book I call the intention economy. With intention, where the actual intentions of you and me are heard rather than ignored. Which is what we have right now. Martin: One of the interesting themes that has come-up is this notion that there is a tide and there are swimmers. . Essentially, the tide is advanced technologies, institutions, whatever, businesses. Then there are the swimmers. The swimmers are the people who are making decisions inside many of these places. Doc: That's a good metaphor. I like it. Martin: Yeah, I do too. Whatever you may think about the future of journalism, right now we have the Tribune Company trying to emerge from bankruptcy. Things are not great with respect to the traditional institutional journalism. It's very much a question of which institutions will survive and how they'll survive. The question has arisen, are we where we are because it was inevitable, or are we where we are because some people made terrible decisions? I think the one that gets brought up most often is this notion of free versus pay in the news space. You talked about 1995 being a seminal year, That was the year when CNN and Yahoo! News, and the next year "The New York Times" with all due respect, came out with essentially free websites. I have my perspective, I'm not going to proffer it here of course. Doc: I don't even know what it is at this point. I'd love to talk to you about it. Martin: I just would love to get your perspective on A, the question of kind of determinism. I don't want to overuse that word. But you know, this notion that what is had to be because it was a tide so strong that the swimmers just simply were meant to drown. Or, whether decisions like the free versus pay one would have altered that history. Doc: Well, I think looking at it in almost geological terms. I don't think it's so much that a comet hit the earth and the dinosaurs died. It's more like we had a big climate change. The climate change was in the long run I think, a good one because it was a second environment alongside the old one. The old environment was a purely physical one. The new one was a virtual one. It has its own infrastructure which is protocols, and not just wires and accounts. Which is how it appears to us. The Internet appears to most of us as a cable bill. But it's not. The Internet is protocols. TCPIP is a protocol that allows data to be sent on a best efforts basis between any two points in the world at no cost. This is something the phone and cable companies never would have invented. Which is one reason why leaving them in charge of it is a very bad idea. It was invented by a bunch of geeks for their own convenience. And it proved to be not only a good thing, it turned into this whole environment, a second world that coexists with the physical one. It's a virtual world whereby I can take this phone, which is not just a phone. It's a computer that has an Internet connection. I can be in touch with my wife in France, or friends in China, or any other place with almost no effort. No more effort than it takes to call somebody down the hall. That was unthinkable before that. How many times when we were growing up did you hear, "Can you be quiet, I'm on long distance." There is no long distance. Long distance is gone. Whenever there's a climate change, there's these two climates next to each other. There's the physical climate that's affected by the virtual climate. The virtual climate is well, we're going to have atmosphere now, and we're going to have something like ground. There will be tectonic movements on it. There's something like mantle and plates, but maybe not, and we don't know because it just formed. We're still trying to understand it, and we don't yet. For example, the term infrastructure, which is very interesting to me, only came into common use starting in 1960. It is a field of infinite importance, and yet it is not a field of study at any university. It's a subject of study within many fields, but it's not understood. We have an infrastructure which is the Internet, and it's protocol based. It's not based on wires. It's not based on what we can see or can hook up, or even the WiFi that this hooks up to now. That's just a conveyance that's handy at this moment in history. But, the protocol will not go away. That is a fact in the world, any more than gravity will go away. We're coping with that. I think what happened for journalism was it put it on a second fling in addition to the first fling. Somebody said this at a journalistic gathering. I loved it, which is I have a great idea. What do you say we go into Canada and we cut down entire forests and pulp them up, and roll them up to flat sheets, and print on them, and distribute this to people and charge them for it, and pay for it by advertising. Do this by the millions. Wouldn't this be a great idea? We'll call it the newspaper business. Well nobody would ever do that anew in 1995. But it was an incumbent business, and it was quite good. It will probably remain an incumbent business as long as it's not hard to produce pulp and the rest of it. But it was challenged by this second environment which is well, information wants to be free. But value wants to be paid for. That was the problem with the information wants to be free imperative. Yeah, but my old friend Don who's a hard core free software and open source advocate, and is running the best stuff on advertising right now by the way. Don said way back in the 90s, information doesn't want to be free. Information wants to be $6.95. Based on that, my corollary, which is value wants to be paid for. I think people want to pay for value. This is why it was weird that in the Napster era, which lasted what, a year or something like that? Or two years? Everybody's saying wow, wait a minute. Now all music is nothing. All music is totally free. Then Apple comes along and says wait a minute, we've got a system here. It's going to be 99 cents. Billions of things sell for 99 cents. Does that mean it's the end of that? Or that Apple's going to be the only one in that business? No. Apple's going to be disrupted too. That was an experiment that proved out in a period of time. But is that going to continue proving in the fullness of time when there's real competition for that? Not just from Amazon or whoever, but from anybody? Is that going to be the final way things go? I remember a conversation at the Syndicate Conference that you and Jeff Jarvis and I had just before you were going to announce the first pay wall that "The New York Times" was going to do. You related it briefly in the conversations between circulation and editorial and other parts of "The Times" on how are we going to do this? You came up with an experiment. It came and it went. There's another experiment going on now. I'm not subscribing online, and I wrote a thing about that because I don't like being told it's only 99 cents for the next four weeks when in fact I want to be a subscriber until the end of time. I'd rather pay for it a different way, and there's too many different deals. Doing it the University deal, which is only online. When I really want to get the physical paper as well and I want to be able to turn it on and off when I travel, and maybe have it delivered in some cases to the hotel that I'm at, because I like having it delivered. I have some ideas on how to do that. I've written to people and nobody wants to hear them. But that's OK. They'll learn, and there's a learning process that's going on there. But it's early. It's really, really early. We need these experiments. To me, the interim tragedy is that while "The Times" I think has emerged as even more than it ever was before, the major paper in the world. I mean, there's nothing close. I mean it's just so good compared to everything else. A lot of other papers have suffered. The "San Jose Mercury News," which was my paper in Silicon Valley, and was a great, great paper. Martin: It was very early, by the way. Knight Ridder was, this keeps coming up experimenting over and over. Knight Ridder was very aggressive in the videotex era. Doc: Yeah. Martin: It then starts this lab in Boulder, Colorado where Roger Fiddler envisions tablets. It then creates Mercury Center, the first real journalistic operation on the Web. And yet, it doesn't become successful. Doc: It's such a sad case. I remember, I think it was "The Dallas Star" or "The Houston Chronicle," one of those. At the same time as they were experimenting with smart things over here, the lawyers are saying we're going to sue people that linked to us. I don't know who that was, but there were the ironies that were abounding at the same time. I remember when the Mercury News went through that. I thought guys, you have so many great reporters and great beat reporters. It wasn't just Dan Gilmore who was the first in the tech field doing this. But there was Brad [inaudible 52:03] writing on rock and roll and performances in the South Bay. Radio, he was like the authority on radio. A guy named [inaudible 52:17] . I forget his first name, writing for the Oakland paper was another one. All these guys got either drummed out or some other thing. Dan has gone through three or four blogs. His original blog should still be at the Mercury Centre, but many of the papers, they'd set something up, and then adopt some new CMS and blow away all the old stuff. We even did it at the Linux Journal. We had one of the most popular sites for — I forget what it was — Linux sources, or something like that. We changed to a new, our own home brew, CMS and we blew up on every — 404d — every link that came in. I think it's just because somebody didn't know what we were doing, quite honestly. Well we didn't value that. Martin: We did that at one point in time, too. It was dumb. We've got to conclude. I just wanted to give you an opportunity...Obviously, if I haven't gone down a road that you want to go down for the next couple of minutes, anything related to what we've been discussing. Doc: A couple things. One is, we didn't touch on blogs that much. I think what Dave invented with Really Simple Syndication and you and the guys at The Times and other papers adopted. Technorati came along around that time, had blog search, which was...For a lot of us who are writers, we could all become Benjamin Franklin. To me, he was the first blogger. Maybe Samuel Pepys was, but it was really Franklin with Poor Richard's Almanack, it was kind of the first blogger, in a way. It was this self-published good, and the best blogs are really good, and became really worthy publications on their own. Given the love of culture for fashion, blogs kind of got sidelined. They're still there. I still blog. Twitter, which I remember Dave got me to adopt. He said, "This is important. Do that." He made me do it. He made me blog. On the one hand, Twitter is a great way to notify people that you've just blogged something, but it was a closed system that has no history. It's like radio was. It's snow on the water. To me, journalism is about persistence. It's about common wisdom in a durable way. I think where it will go is where I said it would go in the first place, which is, with newspapers, people will pay for the news and get the olds for free. To me, what The Times should do, what all the other papers should do is charge people for the news and have them give away the olds. I think charging for archives is a mistake. Huge mistake. It should be in the public domain after a certain period of time. The papers and magazines should understand the importance of the public domain and how much gets built on that, and just read everything Larry Lessig has ever written about that. Or Jamie Boyle, who's written about the public domain out of Duke. Knowing what's valuable now and ought to be free...Give away some of the news but I have no problem with a pay wall for most of it, honestly. I never have. But I do have a problem with a pay wall around the archives. I think that's a mistake, or even having an additional pay wall only for subscribers or some other thing like that. Put advertising on that old stuff, but put it in a form where it can be found. In so many places, it's so terribly maintained. If I look up my name, for example, in the Mercury News and it appeared a number of times, I can't find it. It's gone. What happened? I don't know and I don't have enough energy to go find out. That's not a vanity thing I'm just using word stream that I know they ought to have, but isn't there because for whatever reason, they don't value it, or they want to charge for it. In Santa Barbara, where I technically live, but where I'm not there most of the time, but the paper there, the whole damn thing is behind a pay wall. It's a sad thing, because it's marginalized the city. It's marginalized the paper itself. I think that's a mistake, but I think it's also, in the long run, we'll have evolution and we'll find out what the right thing to do is. ...
VIDEO: YES

Michael Sippey
BIO: YES: Michael Sippey was formerly vice president of prod...
TRANSCRIPT: John: It's April 2nd. We're at Twitter headquarters on Market Street in San Francisco. Speaking with Michael Sippey and Chloe Sladden, who are taking a few minutes out from their hard at work jobs of creating product. Martin: Why don't we start by, I guess either one of you or both of you talk about the development of Twitter, just for the sake of the historical record, how it was developed and how it got to be where it is today. In just a few minutes, if you can, just take us through a quick history. Michael: Sure. You want to take that? Chloe: I can take that. Michael: I can kick that off. Twitter was started in 2006. It was actually a side project in a company called Odeo. They were building podcasting software. It was essentially started by three folks at Odeo Jack Dorsey, Biz Stone and Evan Williams. Jack had the insight and interest in using SMS and text networks to keep people connected throughout the day. They started essentially a service for you could text to one number. Anybody that was on the service would get that text message. It was a text rebroadcasting. It was a great mechanism for keeping up with people that you knew while they were out and about. It was designed from the beginning to be a mobile service and allow people to connect using their cell phones, using SMS. The product evolved over the years to include a Web UI, so that you could actually sign in on the Desktop Web and follow friends. They built a follow model so that you could follow individual people. It essentially grew over time, both on the Web and in mobile, to have additional features around replying to people, around favoriting tweets, around having conversations, and at replies, mentions and hashtags into the glorious, cacophonous service that it is today. Martin: Mike, when did it occur? I remember when it started. It wasn't immediately obvious that this would turn into a real media platform. When did that start to happen? What were some of the first intersections between media and the Twitter service? Michael: I wasn't at Twitter at the time. As I look back, I was an early user of the service. I started using it in 2006. Some of my first memories of when it actually started to shift from personal sharing and status updates was when people started to share links. When it became not only just a text service, but you were using it on Desktop Web and it became a content discovery vehicle of people using it for, "Hey, have you seen this article, have you seen this picture, have you seen this video?" That behavior started to spring up. We recently just launched a feature on Twitter to download your entire tweet archive. I've pulled down my tweet archive all the way back to 2006. Some of the early ones are funny. You go through and you see this shift happening. In the beginning, it was just very short status messages. "Here's where I am, here's what I'm doing." Then you start to see links being shared. You start to see conversations happening, more at replies, more conversations between people. I think that link sharing was really the first thing that really started to transition it to being a real media platform, because of the nature of the service and of instant delivery of content and commentary around URL. I think that is when it actually started to pivot into being more than just the status update service. Chloe: One of the most interesting elements about Twitter's development I think is that it has been public from the get go. It has been this space of experimentation. It's public. It's conversational. It's real time. Some of the earliest users who started to truly experiment with that were journalists. I was working at a news organization at the time before I joined Twitter, Current TV, which was trying to innovate around news. To me, there was a breakthrough moment around the 2008 elections when we were trying to figure out how do we bring the audience into the experience of the election? We looked at Facebook. We looked at Tumblr. We looked at all these different sources out there. What if we just worked off of our own blog? We saw that Twitter was public. We didn't need to even talk to the founders to be able to look at the data and see what stories were arising. The fact that you could pull the data, see what the world was thinking or saying, we did this around Obama's acceptance speech. Just said, "Well, maybe there will be 50 tweets." There were thousands of tweets giving us this totally different point of view on how the US was reacting to that acceptance speech. It was such an experimental space. You could see, and you still see today, it's one of our big points or efforts is to keep preserving this concept of Twitter as a canvas for creative people to experiment with. In those early days, some of the most interesting experiments were around the election, were around news, were around breaking news. Journalists were leading a lot of that experimentation. The digital teams at newsrooms were starting to play with that in early ways. From the get go, I think it was fascinating to see just people try to shape Twitter. That was a big part of Twitter's early story is, what is Twitter? It was left up to the users to shape in many ways. Martin: Well, it had very open APIs at the time, too. Michael: Yeah. Martin: You guys had. Michael: You could discover content. You could share content. You could build an entire ecosystem around it. Chloe: That, by the way, was such a radical notion in the media. That's radical. It took me a year to retrain my mind once I joined Twitter to be like, "We're not top, down. This is a bottoms up experience. Removing controls and structure can be incredibly empowering and allow our product to develop." That was coming from a media background my whole life. That was very different. Martin: Although you've put a lot more controls and structure in it. Chloe: Yes, as Twitter grows up, it has to pick paths, I think. The DNA of the company, the DNA of how the product formed, which is hopefully still there in many ways and informs, is something for you to talk about. That was a really important origin story that I think is a big part of Twitter. Michael: Yeah. John: You came from Current TV. Where were you? Michael: I was at Six Apart, which was a blogging platform provider. I ran product at Six Apart for a long time. John: Oh, that's interesting. Michael: Yeah, involved in that, helped essentially build Moveable Type and Typepad, and was involved in the early RSS efforts. John: We have a lot of your compatriots. Michael: Yes. Martin: Is that where you ran into Dick, at FeedBurner? Michael: Yeah, I ran into Dick. I knew Dick before FeedBurner, actually. We met through mutual friends in early, I call it Web 0.9 days, through the conference circuit. I knew him when he did Spyonit and then knew him when he did FeedBurner. We did a bunch of integration between Typepad and FeedBurner when I was in Six Apart. That's how I got to know Dick. John: Before you have to go, since we're on the subject, let's talk just a little bit more about Twitter as a tool in an election, in electoral politics and in campaigns. As I mentioned to you earlier, one of our fellow fellows was a social media director for the Obama campaign. Another one was a reporter for CNN. The two of them inhabit a world that just didn't exist a few years ago in terms of the campaign process and the focus on not just social media, but Twitter, specifically Twitter. Where is Twitter going? What's next? You're moving fast. It's moving fast and Michael Slaby has said, "If the GOP tries to imitate what we did, it won't work because we won't be there when this is moving." Where is it moving to? What is Twitter going to become? Chloe: That's a great question. We're looking at seven or eight key elections coming up just in the next year that will all help shape Twitter. We have a German election, Australian election, Japan. Twitter as a company has a presence, a huge presence around the world. We just went through a US election and that definitely established new best practices. It brought the news cycle into a tighter time frame. It was much more conversational. I think that's what makes it so fascinating that it's not just a... John: What do you think about it? Because we know how the reporters think about it and we know a little bit about how the campaign thinks about it. How do you think about it? Chloe: I think about it on a couple of different levels. One, it allows journalists to have a much more organic back and forth conversation with their subjects. The cycle is just made... The story is evolving minute by minute. That's a different topography for journalists to navigate than I'm going to get my statements. I'm going to publish my article in the morning. We'll see what the responses are... Martin: Blogging really... Chloe: It's part of a continuum. It's part of a continuum, but now I do think timing, the timing makes it a radical difference. It's a huge shift from I'm going to put my blog post up. Blog posts are part of the process, obviously. But now, you've moved news from the morning newspaper, then there was TV and you could break in late at night. Now, you've got blogs. Now, you've got Twitter sharing news as it happens. Blogging does that to but we are literally getting fragments of stories or snippets of stories which adds a whole other challenge and opportunity for new and journalism. To say, how do we tell stories as they happen, responsibly and effectively? Martin: I have to say, I shouldn't editorialize here, but I'd love to comment about this. As someone who has done a lot of interviews, I just can't stand Twitter. Because the reporters that cover you try to do so in 140 characters or less. They take oftentimes what you say completely out of context. It's gotcha journalism on such a steroidal...I think it has a corrosive effect on... Chloe: What's driving that, do you think? Is that journalism or is that the medium. Martin: I think it's the medium. John: The medium. Having said that, I just want to say, Martin, you're an avid Tweeter at every conference and every meeting. You're the first one on the board. Martin: I love Twitter and I use Twitter extensively... John: He's Mr. Twitter. Martin: I just don't like to be the subject of journalistic tweets because I think part of it has to do with...What you said before is the velocity and the need to break through is so great right now that any kind of statement that you make that has the least bit of controversy and can be taken out and just broadcast is. And I... John: One way to look at it... Martin: Just let me finish, John. It reminds me of the "We didn't build that" phrase in the last campaign. It got tweeted and tweeted and tweeted. You didn't build that. I'm sorry. What do you think of that? How do you feel that, or don't you agree? Michael: I think actually what you're getting out is some of the underlying economics of the media business, especially in online, which is driving not with the Times, but with the vast majority of everybody else, they have to drive page views. If you look at the dashboards that all of the newsrooms are using to essentially watch real time traffic. Each of the individual bloggers or journalists is incented on driving traffic to their stories. So they're going to use the mechanisms that they have to drive traffic to their stories, right? They're going to pull out, in order to drive as many pages, because they're incented and paid on a bonus structure to actually drive traffic like that... Martin: That's very key. That's really key. Michael: Yeah. It's really key. Essentially, that drives how you write headlines. That drives what you're going to pull out and push in social media. That drives... I don't think that's actually because of Twitter. I think that's because of the economics of what's happening with online. John: It's also because of the DNA of journalists because if you look at a traditional magazine layout, a magazine has a story and in that story, it has a series of things called pulled quotes, which are quotes which, after you've read the story and edited it for a month or a week or a day, you pull them out and you put them there and those are designed to capture attention. Chloe: To catch your attention. John: Now, you have instant pull quotes, and they're disembodied from the rest of the... Michael: The rest of the context. Yeah. Martin: That's the point. John: You have Martin Nisenholtz who feels that he can't be understood in 140 characters, and that's probably entirely fair. [laughter] Martin: But John Huey can be. John: No, no. I don't give interviews anymore. The question becomes does it ultimately free expression or does it ultimately retard expression so that everyone, if you know you're sitting there being interviewed by somebody who is tweeting... Chloe: How do you balance it out? John: Do you not say anything that's quotable? You just drown out. Everything you say becomes anodyne. Chloe: Which is not a good situation to be in. I do hope that... John: None of this is your fault. [inaudible 0:14:37] was very good. Chloe: Do you think the follower model will help counteract that high sugar sort of environment we're in? Like reputation. I follow lots of journalists and reputation. I look at the follower count. It's not perfect but it gives me a sense of, day in day out, are you going to report stories that are meaningfully told? Do you take me through this whole new, brave new world with a lot of complexity and a lot of unknown, do you guide me effectively? That's what I'm going to look for in a journalist I follow. Hopefully, the time... John: That's your personal filter. Do you think others have that personal filter? Chloe: That has a lot to do with our education system and how people are brought up thinking about how to use news and other tools... John: Human nature. Chloe: Yeah. Of course, people have totally different tastes. That's why Twitter is so unique to each person and who they follow. John: Here's a question that I wonder about, being the parent of some 20 something kids who read...The reports that they don't read are highly exaggerated, they do read. However, they do get a tremendous amount of their information from either Twitter or Facebook in the case of my kids, so their filters are their friends or the people they follow on these 140 account. Although, I get the impression that what you're saying that it's more the case of a referral system that takes them to other places. Chloe: Yeah, hopefully. John: When we look ahead at these coming generations, which is one of the things that the journalism business is trying to do it's trying to figure out how these generations are going to evolve as consumers of information do you have any theories as people who... I mean, you're vendors to all of us, but you're vendors to them in a big way. Michael: In a big way. Chloe: I'm sorry. I do have to go because I'm ten minutes late for my next meeting. Sorry. I would love to stay. This is fascinating. You'll get lots more. Nice to see you again. Have fun. Michael: Here's my general theory. I think it's context dependent. You have, and we look at this because we serve... That's good an empty chair without Chloe sitting next to me. Because we deliver to mobile phones, tablets, desktop web, we see different behavior on different platforms. What's interesting is that, if you're using your phone throughout the day, it's snacking behavior. If you're using a tablet, in the evening, sitting on the couch, it's a little bit more meal behavior. It you're using a desktop and you're at work, it's definitely much more active...You're searching. You're in a lean forward mode of engaging. The news business needs to adjust to that, which is a very user centric model. It's not instead of, we have the inverted pyramid, we have the story, we're going to deliver the story to you in a bunch of different ways. It's being respectful of the user, what their context is, and how the reader actually wants to consume information at different points throughout the day. John: In other words, if you're hunkered down at your desktop, you're much more likely to go somewhere deep, to download. Michael: Download, engage. Whether it's infographic or interactive stuff... John: Or a long form. Michael: Long form. John: Or video and links. Whereas, if you're on your phone, you're just looking for the quick hit, a sugar high. Michael: I don't know if it's a sugar high. We can agree to disagree on the characterization. But it's a different experience. I always come back to...There are 24 hours in day. People can't really multi task. You have a limited amount of time that you can spend on individual pieces of information. You're competing against, essentially, one tap away whether it's another, different kind of news site, or whether it's information and status from your friends, or whether it's Angry Birds. John: First of all, that explanation you just gave makes me feel, personally, a lot better, because that's how I interact with Twitter. I thought maybe it was just an old person not knowing how to do it. So everyone does it. I feel better. To get back to your point, how can the news business react to that? How do you target that? Michael: I don't really know how the news business is going to react to that. I can tell you that, what we see with Twitter users is that these are both incredibly connected information consumption devices. But they're also great sharing devices. That is what has been really interesting about Twitter. It's enabled people to share what's happening around them, in real time, in a public way. The news business could take advantage of that in a way that it hasn't yet. Whether that's like Chloe did, with Current, in 2008, looking at the aggregate sentiment of what people are talking about around a particular event, or whether it's diving in for a multi perspective point of view on what's happening in a particular place at a particular time. We tell this story all the time. When the plane went down on the Hudson, the most interesting photo was the one tweeted by the guy on the ferry. He had 400 followers at the time. He did not have distribution. This is the big difference between what happened with blogging and what happened with Twitter. The viral mechanics are built into the platform which is not the case in traditional web publishing or in blogging. Martin: One of the themes that has come through the entire series of interviews is this notion that what the web has done is disintermediated a whole range of industries, but in journalism in particular, it creates a direct connection between the reporter, or in some cases just the user, many cases, most cases, just the user and the audience. In the case of Facebook, it's a vast network of friends. In the case of Twitter, it's much more of a broadcast context. One of the things that's happening is that Twitter is re aggregating what was or what is a very fragmented environment. It's creating its own broadcast network, in a sense could be replacing every other network, in some very extreme contexts. When you think about it like that, how do you think about the product development side to support...It sounds to me like a good business model. How do you create a product, going forward, that supports that, and supports the content ecosystem at the same time? Because as this thing is fragmented out, the underlying economics have largely died. In particular, if you could talk about that in a mobile context, because you guys are a mobile first kind of company. That would be very helpful. Sorry for the long question. Michael: No, that's fine. The metaphor that we use often, and Dick talks about this a bunch, is the global town square. We are, essentially, where people come to find out about what's happening in the world. It's where you come to see your friends. It's where you come to share what's happening, it's where you come to hear the crazy guy on the soap box or whisper to your friend about the crazy guy on the soap box. It's come to get entertained, or find out about great things to learn to buy or rent or whatever. It's a really great metaphor. It's a platform. Like a town square, you walk in. You know what to do when you get there. You can see wherever you are. You can see what's happening there. It's necessarily a good thing for the public to understand, this is the center of the town. This is where the conversation happens. The piece that is for us is that when you have these devices and they're connected everywhere, you can actually truly have it be global. People can share from wherever they are and consume from wherever they are. But it necessarily means that you have a constrained palette. What we're trying to do, from a discovery perspective, is make sure that we can take all the signals that we have about a user their history of interactions with Twitter, what their interests are, who they follow, their location and their history of interacting with the product, to deliver them content that they're interested in when they're searching, when they're using Discover, when they're looking for accounts to follow. Martin: And people that they're interested in. Michael: And the people they're interested in. The second thing is, when you actually find a tweet that you want to engage with and you tap in to look at that tweet, we want to present the best representation of the content that's behind that tweet, right there in the tweet, directly for the user. Martin: One thing you haven't done, unlike Facebook, is reorder the newsfeed. Michael: Correct. John: Why? Michael: A foundational piece of Twitter is that it's real time. We think that it's a very simple organizing principle to do reverse chronological order. It's something that people understand. We started to play with that a little bit, in the Discover tab, essentially starting to reorder some things, based on relevance. But your home timeline is a very simple metaphor. It's reverse chronological order of the people that you follow. We found that to be a really powerful way for people to understand Twitter. John: Would you finish the thought you were saying about learning to present the underlying content. Michael: Yeah. We want to present the underlying content. John: What did you mean by that? Michael: We have a platform that publishers and developers user, called Twitter cards, which allow them to...Any time someone shares a link, if a publisher or developer opts into this program, we can go crawl that link, pull out metadata about the content that's on that URL and present it to the user under the control of the publisher or the developer. They can choose, A, whether to show it, B, what to show. What headline to show, what pull quote to show, what photo to show, what call to action to show. John: The publisher can... Michael: Yep. The publisher can decide to do that. We're working all the time to make that more capable so that you get, essentially, a slice of the experience while you're inside Twitter and you let the publisher or developer have control over where does the user go when they tap, what do they see when they tap, and be able to track their behavior through that. John: This may have been a better question for your now missing colleague. Michael: Yeah. That empty chair. John: I'll ask you anyway. I get the sense, from my previous life and from listening to what you're saying now, that Twitter is, as it grows up, as Chloe says, formalizing relations much more with established content companies and established publishers. To what end? I understand what's in it for the publisher. What's in it for Twitter? Michael: What's in it for Twitter is a great experience for our users. They want to talk about the things that they're seeing and interacting off of Twitter. They want to talk about the Olympics. They want to talk about what they're watching on television. They want to talk about the news. They want to talk about the content that they're experience off of Twitter. So, we want to enable that behavior. We want to make it really simple, so that when I start talking about what I'm reading in The Times or what I'm watching on CNN, when you actually see, when my followers look at my tweets, they can engage with the content that's from The Times or from CNN. John: I also get the impression that there are widely varying degrees of intelligence of use of Twitter by traditional publishers or broadcasters. Some are doing some very smart things. Some are doing some things that are the equivalent of broadcasting to Mars. Am I right or wrong about that? Michael: Different folks are on different levels of sophistication. I think that's fair to say. John: What would be a smart use of it? What would be a less than optimal use? Michael: The folks that are smart are actually using it in a way that is natural to Twitter. The things that are great about Twitter are that it is public, it's open, it's conversation and it's real time. I'll give you an example of something that I've loved over the past couple weeks. The NCAA from March Madness account has been tweeting out real time, not only just tweets from the games you could follow March Madness and essentially follow what's happening with the games. They were doing it in a way that was not just about scores. They had a tone of voice to them. They felt like a human was actually writing them, with the excitement of someone that loves college basketball. And they were including real time video clips. Ten seconds after something happened, they were able to take a video clip and attach it to a tweet. So I could be on my phone, be following March Madness and see what happened with the Duke game and get a clip of what happened right there which happened to me on Sunday. That's how I found out about Ware breaking his leg, was in a tweet. John: That's NCAA, so that's probably Turner, right? Michael: Yeah. John: Turner is doing that. What would be an example of a less efficient, misguided use? Michael: An unfortunate use is when you're essentially sharing what I called undifferentiated content. If you're only sharing your headlines and links back to your articles, your Twitter feed becomes just a re broadcasting of your home page over your RSS feed. That's not an efficient and effective use of Twitter. I can go get that content anywhere else. If that were the only thing that an individual publication were doing, it's much more effective for me to just go to their website. It's just not as conversational. It's not native to the platform. Martin: Let's return to the reverse chron portion again. I want to drill a little deeper into that. It's very simple. But the issue with it, to some extent, is that the signal to noise ratio remains pretty high. Or at least it can be pretty high. It depends on how many followers you have and how you curate those followers and how much spam. There's just a lot going on there. The question is, can you envision not to replace that as the principal visual cue that Twitter has, but an alternate taxonomy where it's more channelized, where you get to create something a little bit more, what a friend of mine calls the interest graph, rather than the real time chronological graph feed. Can you imagine that? Michael: Yeah, I can imagine that. We have some of that. Some of that is happening in the product today. A lot of our power users will use lists to essentially segment. I do it, like these are my sports accounts that I follow, these are my music accounts, these are my tech accounts. I'm into contemporary arts, so these are my art nerds that I follow. Martin: I don't think many people even know that they can do that. Michael: Yeah, so that's something that we're looking at how do we actually make that more discoverable and better references to that in the product? John: I agree with that. Michael: You create lists. If you're on Desktop Web, whenever you're on a user's profile page, you can add to a list. If you use Twitter for Android, you can do that as well. John: That's what I have discovered is the biggest problem with Twitter. You get used to it as a mobile platform and you forget that you have to adjust it on the desktop... Michael: On the desktop. John: ...To make it really work. Michael: Working on some of those things. Martin: Yeah, that's true. Michael: Working on some of those things. Martin: Hey, Sippey, what's your timing like? Do you have some more time? Michael: I've got about five more minutes. Martin: Perfect. Michael: Cool. Martin: Cool. OK. Getting back to this notion of this huge aggregation point, you guys kind of behave like a common carrier in the sense that people publish into the platform, you don't really care that much what the content is, or at least that's my sense. I'm not sure how you feel about obscenity and stuff like that. But can you imagine a point where you would change that notion or you would begin to, for lack of a better word, censor certain areas of content? My sense is that Twitter is very, you use the word open. Michael: Yeah. Very open. Very open. We're not going to prevent people from publishing into the platform. There are some obvious places where we have to avoid child pornography and hate speech. There are some things where we...As you can see from our history, we go to the ends of the Earth to defend our users and their rights to publish. What I want to make sure that was as you're coming on Twitter that you're finding great content for you. You may not see if, unless you're explicitly following them, if you're searching for something, like you may see the best tweets about that particular topic. We spend a lot of time and investment in our search and relevance infrastructure to make sure that, if you're searching for a particular topic, you're finding the best tweets about that particular topic. Still being able to do, to look at the real time stream of everything that's happening on it. But the default view is to find the best tweets on it, which are typically going to come from people that have a few more followers and have some history on the platform, because there's more social engagement on them. That happens, but it doesn't mean, I can go follow anybody on the platform as long as they haven't protected their account, I can go follow them. That's the beauty of Twitter is that kind of open nature for publishing. We have, there are pockets of users that you, in your day to day life, will never see because they have their own social graphs and their own networks and they're talking about things that you don't talk about. It's a great thing to go find those pockets of users and to see what's happening there. Martin: Let's end on the business model. You guys, I think, just announced or somehow got announced that you were way ahead of your plan in terms of revenues, which is great. You seem to be the first ones to have really cracked the code on mobile advertising. Am I right about that? Michael: I don't know if we're the first ones to crack the code. What I'll say is that, so because...the thing that we've done, and this was before my time and I'll give credit to the team that was here at the time. When the decisions were made around Twitter's ad products, they were really smart decisions, which is, we're going to make them primitives of the existing product. The ad unit will be a tweet. When you get a lot of engagement on that tweet, just like you have native engagement on the product, that's where the value is. People are using our advertising products to help drive distribution of typically content and engagement that they're already doing on the platform. Our ad products are around promoted tweets, promoted accounts and promoted trends. Those are all things that exist natively on the platform and they're all things that are... Because Twitter was built from the ground up as a mobile first product in a mobile first platform, they work well there. Because a tweet is 140 characters, it works really well on the screen. That ad product works well there. That's just a testament to the decisions that were made around, "This is how we're going to do advertising on Twitter. We're going to essentially put unobtrusive ads that people like into their stream that are just like the rest of the content on Twitter." The people that are good at advertising on Twitter are typically the people that are good at Twitter, which is great because it's self reinforcing. ...
VIDEO: YES

Chloe Sladden
BIO: YES: Chloe Sladden was vice president of media at Twitt...
TRANSCRIPT: John: It's April 2nd. We're at Twitter headquarters on Market Street in San Francisco. Speaking with Michael Sippey and Chloe Sladden, who are taking a few minutes out from their hard at work jobs of creating product. Martin: Why don't we start by, I guess either one of you or both of you talk about the development of Twitter, just for the sake of the historical record, how it was developed and how it got to be where it is today. In just a few minutes, if you can, just take us through a quick history. Michael: Sure. You want to take that? Chloe: I can take that. Michael: I can kick that off. Twitter was started in 2006. It was actually a side project in a company called Odeo. They were building podcasting software. It was essentially started by three folks at Odeo Jack Dorsey, Biz Stone and Evan Williams. Jack had the insight and interest in using SMS and text networks to keep people connected throughout the day. They started essentially a service for you could text to one number. Anybody that was on the service would get that text message. It was a text rebroadcasting. It was a great mechanism for keeping up with people that you knew while they were out and about. It was designed from the beginning to be a mobile service and allow people to connect using their cell phones, using SMS. The product evolved over the years to include a Web UI, so that you could actually sign in on the Desktop Web and follow friends. They built a follow model so that you could follow individual people. It essentially grew over time, both on the Web and in mobile, to have additional features around replying to people, around favoriting tweets, around having conversations, and at replies, mentions and hashtags into the glorious, cacophonous service that it is today. Martin: Mike, when did it occur? I remember when it started. It wasn't immediately obvious that this would turn into a real media platform. When did that start to happen? What were some of the first intersections between media and the Twitter service? Michael: I wasn't at Twitter at the time. As I look back, I was an early user of the service. I started using it in 2006. Some of my first memories of when it actually started to shift from personal sharing and status updates was when people started to share links. When it became not only just a text service, but you were using it on Desktop Web and it became a content discovery vehicle of people using it for, "Hey, have you seen this article, have you seen this picture, have you seen this video?" That behavior started to spring up. We recently just launched a feature on Twitter to download your entire tweet archive. I've pulled down my tweet archive all the way back to 2006. Some of the early ones are funny. You go through and you see this shift happening. In the beginning, it was just very short status messages. "Here's where I am, here's what I'm doing." Then you start to see links being shared. You start to see conversations happening, more at replies, more conversations between people. I think that link sharing was really the first thing that really started to transition it to being a real media platform, because of the nature of the service and of instant delivery of content and commentary around URL. I think that is when it actually started to pivot into being more than just the status update service. Chloe: One of the most interesting elements about Twitter's development I think is that it has been public from the get go. It has been this space of experimentation. It's public. It's conversational. It's real time. Some of the earliest users who started to truly experiment with that were journalists. I was working at a news organization at the time before I joined Twitter, Current TV, which was trying to innovate around news. To me, there was a breakthrough moment around the 2008 elections when we were trying to figure out how do we bring the audience into the experience of the election? We looked at Facebook. We looked at Tumblr. We looked at all these different sources out there. What if we just worked off of our own blog? We saw that Twitter was public. We didn't need to even talk to the founders to be able to look at the data and see what stories were arising. The fact that you could pull the data, see what the world was thinking or saying, we did this around Obama's acceptance speech. Just said, "Well, maybe there will be 50 tweets." There were thousands of tweets giving us this totally different point of view on how the US was reacting to that acceptance speech. It was such an experimental space. You could see, and you still see today, it's one of our big points or efforts is to keep preserving this concept of Twitter as a canvas for creative people to experiment with. In those early days, some of the most interesting experiments were around the election, were around news, were around breaking news. Journalists were leading a lot of that experimentation. The digital teams at newsrooms were starting to play with that in early ways. From the get go, I think it was fascinating to see just people try to shape Twitter. That was a big part of Twitter's early story is, what is Twitter? It was left up to the users to shape in many ways. Martin: Well, it had very open APIs at the time, too. Michael: Yeah. Martin: You guys had. Michael: You could discover content. You could share content. You could build an entire ecosystem around it. Chloe: That, by the way, was such a radical notion in the media. That's radical. It took me a year to retrain my mind once I joined Twitter to be like, "We're not top, down. This is a bottoms up experience. Removing controls and structure can be incredibly empowering and allow our product to develop." That was coming from a media background my whole life. That was very different. Martin: Although you've put a lot more controls and structure in it. Chloe: Yes, as Twitter grows up, it has to pick paths, I think. The DNA of the company, the DNA of how the product formed, which is hopefully still there in many ways and informs, is something for you to talk about. That was a really important origin story that I think is a big part of Twitter. Michael: Yeah. John: You came from Current TV. Where were you? Michael: I was at Six Apart, which was a blogging platform provider. I ran product at Six Apart for a long time. John: Oh, that's interesting. Michael: Yeah, involved in that, helped essentially build Moveable Type and Typepad, and was involved in the early RSS efforts. John: We have a lot of your compatriots. Michael: Yes. Martin: Is that where you ran into Dick, at FeedBurner? Michael: Yeah, I ran into Dick. I knew Dick before FeedBurner, actually. We met through mutual friends in early, I call it Web 0.9 days, through the conference circuit. I knew him when he did Spyonit and then knew him when he did FeedBurner. We did a bunch of integration between Typepad and FeedBurner when I was in Six Apart. That's how I got to know Dick. John: Before you have to go, since we're on the subject, let's talk just a little bit more about Twitter as a tool in an election, in electoral politics and in campaigns. As I mentioned to you earlier, one of our fellow fellows was a social media director for the Obama campaign. Another one was a reporter for CNN. The two of them inhabit a world that just didn't exist a few years ago in terms of the campaign process and the focus on not just social media, but Twitter, specifically Twitter. Where is Twitter going? What's next? You're moving fast. It's moving fast and Michael Slaby has said, "If the GOP tries to imitate what we did, it won't work because we won't be there when this is moving." Where is it moving to? What is Twitter going to become? Chloe: That's a great question. We're looking at seven or eight key elections coming up just in the next year that will all help shape Twitter. We have a German election, Australian election, Japan. Twitter as a company has a presence, a huge presence around the world. We just went through a US election and that definitely established new best practices. It brought the news cycle into a tighter time frame. It was much more conversational. I think that's what makes it so fascinating that it's not just a... John: What do you think about it? Because we know how the reporters think about it and we know a little bit about how the campaign thinks about it. How do you think about it? Chloe: I think about it on a couple of different levels. One, it allows journalists to have a much more organic back and forth conversation with their subjects. The cycle is just made... The story is evolving minute by minute. That's a different topography for journalists to navigate than I'm going to get my statements. I'm going to publish my article in the morning. We'll see what the responses are... Martin: Blogging really... Chloe: It's part of a continuum. It's part of a continuum, but now I do think timing, the timing makes it a radical difference. It's a huge shift from I'm going to put my blog post up. Blog posts are part of the process, obviously. But now, you've moved news from the morning newspaper, then there was TV and you could break in late at night. Now, you've got blogs. Now, you've got Twitter sharing news as it happens. Blogging does that to but we are literally getting fragments of stories or snippets of stories which adds a whole other challenge and opportunity for new and journalism. To say, how do we tell stories as they happen, responsibly and effectively? Martin: I have to say, I shouldn't editorialize here, but I'd love to comment about this. As someone who has done a lot of interviews, I just can't stand Twitter. Because the reporters that cover you try to do so in 140 characters or less. They take oftentimes what you say completely out of context. It's gotcha journalism on such a steroidal...I think it has a corrosive effect on... Chloe: What's driving that, do you think? Is that journalism or is that the medium. Martin: I think it's the medium. John: The medium. Having said that, I just want to say, Martin, you're an avid Tweeter at every conference and every meeting. You're the first one on the board. Martin: I love Twitter and I use Twitter extensively... John: He's Mr. Twitter. Martin: I just don't like to be the subject of journalistic tweets because I think part of it has to do with...What you said before is the velocity and the need to break through is so great right now that any kind of statement that you make that has the least bit of controversy and can be taken out and just broadcast is. And I... John: One way to look at it... Martin: Just let me finish, John. It reminds me of the "We didn't build that" phrase in the last campaign. It got tweeted and tweeted and tweeted. You didn't build that. I'm sorry. What do you think of that? How do you feel that, or don't you agree? Michael: I think actually what you're getting out is some of the underlying economics of the media business, especially in online, which is driving not with the Times, but with the vast majority of everybody else, they have to drive page views. If you look at the dashboards that all of the newsrooms are using to essentially watch real time traffic. Each of the individual bloggers or journalists is incented on driving traffic to their stories. So they're going to use the mechanisms that they have to drive traffic to their stories, right? They're going to pull out, in order to drive as many pages, because they're incented and paid on a bonus structure to actually drive traffic like that... Martin: That's very key. That's really key. Michael: Yeah. It's really key. Essentially, that drives how you write headlines. That drives what you're going to pull out and push in social media. That drives... I don't think that's actually because of Twitter. I think that's because of the economics of what's happening with online. John: It's also because of the DNA of journalists because if you look at a traditional magazine layout, a magazine has a story and in that story, it has a series of things called pulled quotes, which are quotes which, after you've read the story and edited it for a month or a week or a day, you pull them out and you put them there and those are designed to capture attention. Chloe: To catch your attention. John: Now, you have instant pull quotes, and they're disembodied from the rest of the... Michael: The rest of the context. Yeah. Martin: That's the point. John: You have Martin Nisenholtz who feels that he can't be understood in 140 characters, and that's probably entirely fair. [laughter] Martin: But John Huey can be. John: No, no. I don't give interviews anymore. The question becomes does it ultimately free expression or does it ultimately retard expression so that everyone, if you know you're sitting there being interviewed by somebody who is tweeting... Chloe: How do you balance it out? John: Do you not say anything that's quotable? You just drown out. Everything you say becomes anodyne. Chloe: Which is not a good situation to be in. I do hope that... John: None of this is your fault. [inaudible 0:14:37] was very good. Chloe: Do you think the follower model will help counteract that high sugar sort of environment we're in? Like reputation. I follow lots of journalists and reputation. I look at the follower count. It's not perfect but it gives me a sense of, day in day out, are you going to report stories that are meaningfully told? Do you take me through this whole new, brave new world with a lot of complexity and a lot of unknown, do you guide me effectively? That's what I'm going to look for in a journalist I follow. Hopefully, the time... John: That's your personal filter. Do you think others have that personal filter? Chloe: That has a lot to do with our education system and how people are brought up thinking about how to use news and other tools... John: Human nature. Chloe: Yeah. Of course, people have totally different tastes. That's why Twitter is so unique to each person and who they follow. John: Here's a question that I wonder about, being the parent of some 20 something kids who read...The reports that they don't read are highly exaggerated, they do read. However, they do get a tremendous amount of their information from either Twitter or Facebook in the case of my kids, so their filters are their friends or the people they follow on these 140 account. Although, I get the impression that what you're saying that it's more the case of a referral system that takes them to other places. Chloe: Yeah, hopefully. John: When we look ahead at these coming generations, which is one of the things that the journalism business is trying to do it's trying to figure out how these generations are going to evolve as consumers of information do you have any theories as people who... I mean, you're vendors to all of us, but you're vendors to them in a big way. Michael: In a big way. Chloe: I'm sorry. I do have to go because I'm ten minutes late for my next meeting. Sorry. I would love to stay. This is fascinating. You'll get lots more. Nice to see you again. Have fun. Michael: Here's my general theory. I think it's context dependent. You have, and we look at this because we serve... That's good an empty chair without Chloe sitting next to me. Because we deliver to mobile phones, tablets, desktop web, we see different behavior on different platforms. What's interesting is that, if you're using your phone throughout the day, it's snacking behavior. If you're using a tablet, in the evening, sitting on the couch, it's a little bit more meal behavior. It you're using a desktop and you're at work, it's definitely much more active...You're searching. You're in a lean forward mode of engaging. The news business needs to adjust to that, which is a very user centric model. It's not instead of, we have the inverted pyramid, we have the story, we're going to deliver the story to you in a bunch of different ways. It's being respectful of the user, what their context is, and how the reader actually wants to consume information at different points throughout the day. John: In other words, if you're hunkered down at your desktop, you're much more likely to go somewhere deep, to download. Michael: Download, engage. Whether it's infographic or interactive stuff... John: Or a long form. Michael: Long form. John: Or video and links. Whereas, if you're on your phone, you're just looking for the quick hit, a sugar high. Michael: I don't know if it's a sugar high. We can agree to disagree on the characterization. But it's a different experience. I always come back to...There are 24 hours in day. People can't really multi task. You have a limited amount of time that you can spend on individual pieces of information. You're competing against, essentially, one tap away whether it's another, different kind of news site, or whether it's information and status from your friends, or whether it's Angry Birds. John: First of all, that explanation you just gave makes me feel, personally, a lot better, because that's how I interact with Twitter. I thought maybe it was just an old person not knowing how to do it. So everyone does it. I feel better. To get back to your point, how can the news business react to that? How do you target that? Michael: I don't really know how the news business is going to react to that. I can tell you that, what we see with Twitter users is that these are both incredibly connected information consumption devices. But they're also great sharing devices. That is what has been really interesting about Twitter. It's enabled people to share what's happening around them, in real time, in a public way. The news business could take advantage of that in a way that it hasn't yet. Whether that's like Chloe did, with Current, in 2008, looking at the aggregate sentiment of what people are talking about around a particular event, or whether it's diving in for a multi perspective point of view on what's happening in a particular place at a particular time. We tell this story all the time. When the plane went down on the Hudson, the most interesting photo was the one tweeted by the guy on the ferry. He had 400 followers at the time. He did not have distribution. This is the big difference between what happened with blogging and what happened with Twitter. The viral mechanics are built into the platform which is not the case in traditional web publishing or in blogging. Martin: One of the themes that has come through the entire series of interviews is this notion that what the web has done is disintermediated a whole range of industries, but in journalism in particular, it creates a direct connection between the reporter, or in some cases just the user, many cases, most cases, just the user and the audience. In the case of Facebook, it's a vast network of friends. In the case of Twitter, it's much more of a broadcast context. One of the things that's happening is that Twitter is re aggregating what was or what is a very fragmented environment. It's creating its own broadcast network, in a sense could be replacing every other network, in some very extreme contexts. When you think about it like that, how do you think about the product development side to support...It sounds to me like a good business model. How do you create a product, going forward, that supports that, and supports the content ecosystem at the same time? Because as this thing is fragmented out, the underlying economics have largely died. In particular, if you could talk about that in a mobile context, because you guys are a mobile first kind of company. That would be very helpful. Sorry for the long question. Michael: No, that's fine. The metaphor that we use often, and Dick talks about this a bunch, is the global town square. We are, essentially, where people come to find out about what's happening in the world. It's where you come to see your friends. It's where you come to share what's happening, it's where you come to hear the crazy guy on the soap box or whisper to your friend about the crazy guy on the soap box. It's come to get entertained, or find out about great things to learn to buy or rent or whatever. It's a really great metaphor. It's a platform. Like a town square, you walk in. You know what to do when you get there. You can see wherever you are. You can see what's happening there. It's necessarily a good thing for the public to understand, this is the center of the town. This is where the conversation happens. The piece that is for us is that when you have these devices and they're connected everywhere, you can actually truly have it be global. People can share from wherever they are and consume from wherever they are. But it necessarily means that you have a constrained palette. What we're trying to do, from a discovery perspective, is make sure that we can take all the signals that we have about a user their history of interactions with Twitter, what their interests are, who they follow, their location and their history of interacting with the product, to deliver them content that they're interested in when they're searching, when they're using Discover, when they're looking for accounts to follow. Martin: And people that they're interested in. Michael: And the people they're interested in. The second thing is, when you actually find a tweet that you want to engage with and you tap in to look at that tweet, we want to present the best representation of the content that's behind that tweet, right there in the tweet, directly for the user. Martin: One thing you haven't done, unlike Facebook, is reorder the newsfeed. Michael: Correct. John: Why? Michael: A foundational piece of Twitter is that it's real time. We think that it's a very simple organizing principle to do reverse chronological order. It's something that people understand. We started to play with that a little bit, in the Discover tab, essentially starting to reorder some things, based on relevance. But your home timeline is a very simple metaphor. It's reverse chronological order of the people that you follow. We found that to be a really powerful way for people to understand Twitter. John: Would you finish the thought you were saying about learning to present the underlying content. Michael: Yeah. We want to present the underlying content. John: What did you mean by that? Michael: We have a platform that publishers and developers user, called Twitter cards, which allow them to...Any time someone shares a link, if a publisher or developer opts into this program, we can go crawl that link, pull out metadata about the content that's on that URL and present it to the user under the control of the publisher or the developer. They can choose, A, whether to show it, B, what to show. What headline to show, what pull quote to show, what photo to show, what call to action to show. John: The publisher can... Michael: Yep. The publisher can decide to do that. We're working all the time to make that more capable so that you get, essentially, a slice of the experience while you're inside Twitter and you let the publisher or developer have control over where does the user go when they tap, what do they see when they tap, and be able to track their behavior through that. John: This may have been a better question for your now missing colleague. Michael: Yeah. That empty chair. John: I'll ask you anyway. I get the sense, from my previous life and from listening to what you're saying now, that Twitter is, as it grows up, as Chloe says, formalizing relations much more with established content companies and established publishers. To what end? I understand what's in it for the publisher. What's in it for Twitter? Michael: What's in it for Twitter is a great experience for our users. They want to talk about the things that they're seeing and interacting off of Twitter. They want to talk about the Olympics. They want to talk about what they're watching on television. They want to talk about the news. They want to talk about the content that they're experience off of Twitter. So, we want to enable that behavior. We want to make it really simple, so that when I start talking about what I'm reading in The Times or what I'm watching on CNN, when you actually see, when my followers look at my tweets, they can engage with the content that's from The Times or from CNN. John: I also get the impression that there are widely varying degrees of intelligence of use of Twitter by traditional publishers or broadcasters. Some are doing some very smart things. Some are doing some things that are the equivalent of broadcasting to Mars. Am I right or wrong about that? Michael: Different folks are on different levels of sophistication. I think that's fair to say. John: What would be a smart use of it? What would be a less than optimal use? Michael: The folks that are smart are actually using it in a way that is natural to Twitter. The things that are great about Twitter are that it is public, it's open, it's conversation and it's real time. I'll give you an example of something that I've loved over the past couple weeks. The NCAA from March Madness account has been tweeting out real time, not only just tweets from the games you could follow March Madness and essentially follow what's happening with the games. They were doing it in a way that was not just about scores. They had a tone of voice to them. They felt like a human was actually writing them, with the excitement of someone that loves college basketball. And they were including real time video clips. Ten seconds after something happened, they were able to take a video clip and attach it to a tweet. So I could be on my phone, be following March Madness and see what happened with the Duke game and get a clip of what happened right there which happened to me on Sunday. That's how I found out about Ware breaking his leg, was in a tweet. John: That's NCAA, so that's probably Turner, right? Michael: Yeah. John: Turner is doing that. What would be an example of a less efficient, misguided use? Michael: An unfortunate use is when you're essentially sharing what I called undifferentiated content. If you're only sharing your headlines and links back to your articles, your Twitter feed becomes just a re broadcasting of your home page over your RSS feed. That's not an efficient and effective use of Twitter. I can go get that content anywhere else. If that were the only thing that an individual publication were doing, it's much more effective for me to just go to their website. It's just not as conversational. It's not native to the platform. Martin: Let's return to the reverse chron portion again. I want to drill a little deeper into that. It's very simple. But the issue with it, to some extent, is that the signal to noise ratio remains pretty high. Or at least it can be pretty high. It depends on how many followers you have and how you curate those followers and how much spam. There's just a lot going on there. The question is, can you envision not to replace that as the principal visual cue that Twitter has, but an alternate taxonomy where it's more channelized, where you get to create something a little bit more, what a friend of mine calls the interest graph, rather than the real time chronological graph feed. Can you imagine that? Michael: Yeah, I can imagine that. We have some of that. Some of that is happening in the product today. A lot of our power users will use lists to essentially segment. I do it, like these are my sports accounts that I follow, these are my music accounts, these are my tech accounts. I'm into contemporary arts, so these are my art nerds that I follow. Martin: I don't think many people even know that they can do that. Michael: Yeah, so that's something that we're looking at how do we actually make that more discoverable and better references to that in the product? John: I agree with that. Michael: You create lists. If you're on Desktop Web, whenever you're on a user's profile page, you can add to a list. If you use Twitter for Android, you can do that as well. John: That's what I have discovered is the biggest problem with Twitter. You get used to it as a mobile platform and you forget that you have to adjust it on the desktop... Michael: On the desktop. John: ...To make it really work. Michael: Working on some of those things. Martin: Yeah, that's true. Michael: Working on some of those things. Martin: Hey, Sippey, what's your timing like? Do you have some more time? Michael: I've got about five more minutes. Martin: Perfect. Michael: Cool. Martin: Cool. OK. Getting back to this notion of this huge aggregation point, you guys kind of behave like a common carrier in the sense that people publish into the platform, you don't really care that much what the content is, or at least that's my sense. I'm not sure how you feel about obscenity and stuff like that. But can you imagine a point where you would change that notion or you would begin to, for lack of a better word, censor certain areas of content? My sense is that Twitter is very, you use the word open. Michael: Yeah. Very open. Very open. We're not going to prevent people from publishing into the platform. There are some obvious places where we have to avoid child pornography and hate speech. There are some things where we...As you can see from our history, we go to the ends of the Earth to defend our users and their rights to publish. What I want to make sure that was as you're coming on Twitter that you're finding great content for you. You may not see if, unless you're explicitly following them, if you're searching for something, like you may see the best tweets about that particular topic. We spend a lot of time and investment in our search and relevance infrastructure to make sure that, if you're searching for a particular topic, you're finding the best tweets about that particular topic. Still being able to do, to look at the real time stream of everything that's happening on it. But the default view is to find the best tweets on it, which are typically going to come from people that have a few more followers and have some history on the platform, because there's more social engagement on them. That happens, but it doesn't mean, I can go follow anybody on the platform as long as they haven't protected their account, I can go follow them. That's the beauty of Twitter is that kind of open nature for publishing. We have, there are pockets of users that you, in your day to day life, will never see because they have their own social graphs and their own networks and they're talking about things that you don't talk about. It's a great thing to go find those pockets of users and to see what's happening there. Martin: Let's end on the business model. You guys, I think, just announced or somehow got announced that you were way ahead of your plan in terms of revenues, which is great. You seem to be the first ones to have really cracked the code on mobile advertising. Am I right about that? Michael: I don't know if we're the first ones to crack the code. What I'll say is that, so because...the thing that we've done, and this was before my time and I'll give credit to the team that was here at the time. When the decisions were made around Twitter's ad products, they were really smart decisions, which is, we're going to make them primitives of the existing product. The ad unit will be a tweet. When you get a lot of engagement on that tweet, just like you have native engagement on the product, that's where the value is. People are using our advertising products to help drive distribution of typically content and engagement that they're already doing on the platform. Our ad products are around promoted tweets, promoted accounts and promoted trends. Those are all things that exist natively on the platform and they're all things that are... Because Twitter was built from the ground up as a mobile first product in a mobile first platform, they work well there. Because a tweet is 140 characters, it works really well on the screen. That ad product works well there. That's just a testament to the decisions that were made around, "This is how we're going to do advertising on Twitter. We're going to essentially put unobtrusive ads that people like into their stream that are just like the rest of the content on Twitter." The people that are good at advertising on Twitter are typically the people that are good at Twitter, which is great because it's self reinforcing. ...
VIDEO: YES

Justin Smith
BIO: YES: Justin B. Smith is CEO of Bloomberg Media Group, a...
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. ...
VIDEO: YES

Martin Sorrell
BIO: YES: Sir Martin Sorrell (born 14 February 1945, London,...
TRANSCRIPT: Randall Rothenberg: Martin, thank you for joining us. Martin Sorrell: Pleasure, Randy. I say that before. Whether I'll say it after is another question. Randall: Hopefully, it will be. Martin: It will be. Randall: I'll reflect... Martin: I assure it will be wonderful. Randall: "Riptide," as we were just speaking, is an oral history of the Internet and journalism and trying to rip out the past in full. Martin: "Riptide" suggests that all of us are being engulfed by this, doesn't it? Randall: In fact, that is one of the questions I want to ask. The project uses the metaphor "riptide" to describe a process that's pulled traditional news organizations further and further out to sea. Martin: Yeah. Randall: One of the first questions that we wanted to ask you is, as you look back, is there anything that news organizations in particular... Martin: News organizations? Randall: News organizations. Martin: By that, you mean TV news, newspaper news, and magazine news? Randall: Yeah. I would take news organizations to be broadly the non-fiction media business. Martin: Because so far, the media that have been most affected have been newspapers by, let's say, disintermediation or by the digital revolution, whatever you want to call it, by Google, or whatever. So TV news, magazines probably less so, but there are signs that free to air television, if you look at the latest Nielson data for the last year or so, particularly amongst the young, that their circulation, their viewership, is declining quite sharply. In fact it's very reminiscent of the stuff I used to see: The "Washington Post" circulation data, particularly amongst younger people, even pre-Google. I mean talk about PG and PG, pre- and post-Google, a decline in readership. I think some of the stuff you're starting to see in television, free to air television, if not mirrors it, is trending that way. But it... Randall: Do you think the causes are the same? Is it purely a function of much, much, much more supply of content chasing... Martin: Supply of content and devices, changes in devices, obviously, tablets, and smartphones. If you go to fast growth markets, what others call emerging markets, what you see is the mobile phone and now the smartphone taking share from the PC. In the Western markets, we went from analog to PC to mobile. In the faster growth markets, like a Brazil or Russia, India and China, Africa, you've skipped the PC almost entirely. You see now the PC manufacturers coming under pressure. Today we're going to hear whether Dell, Michael Dell buys back Dell. But if he fails to sell out it's because they think that the prospects for PCs, and you see it with PC software with Microsoft or whatever, the demand for PC devices and PC software is diminishing. But is there anything they could have done? I think there are three things that we've always talked about. One is that you should pay for content, the paywalls. People used to laugh at us 5, 10, 15 years ago when we said if you have valuable content, you own valuable content, you should charge for it, and consumers will be willing to pay for valuable content. Now news is a commodity. The faster you get it, the better it is. Whether people would have been prepared to pay for faster release is one thing. But there are brands. I go to the BBC website because I trust the brand at two levels. One is I trust it because of its editorial independence. The second thing is I trust it because it will not mislead me in terms of the quality of what it does and the quality of its journalism. Would I pay for the BBC? Yes, I would pay. One thing was paywalls. Randall: Well you do pay for the BBC, in that case... Martin: Yeah. Well I pay a funding license, yes. But if I'm now looking at my iPad, I don't have to. I'm doing... Randall: Right. But you still do it. That's an interesting point, because you have a choice, yet you still choose to pay. Martin: Yeah. Yeah. One thing was paywall. Second thing was consolidation. That the industry was too fragmented. The third thing was that if we want to maintain professional journalism, you have to pay for it. In other words if you were a professional journalist, which you are, at least in part, would I be willing to pay to hear what Randy Rothenberg says about things? The answer's probably yes. If not, and I think you're worth preserving, or the state thinks you're worth preserving, then they should subsidize. You did get that. For example, I always remember two things. One is that, I think it was the FCC in America did talk about, at one stage, getting a fund together to invest in the legacy media that was most threatened by the Internet, newspapers, for example. The second thing was that television stations in Australia were given subsidies, effectively by giving fees back for what they paid for bandwidth or whatever it is they paid for. They were given money back because they were suffering so much from the digital revolution. I think there were things that you could have done to ameliorate it. But I was always struck, I think the most powerful quote I can remember is Jeff Zucker's quote where he said, "Analog dimes into digital pennies." Nobody, to my knowledge, has managed to navigate, to change the engines on the airplane while it's flying. To navigate successfully from an established model, a legacy model of newspapers and news, to a digital model. As profitably as they used to when they were felling trees and distributing newspapers. Randall: Do you think, as you look at the main news organizations...keep in mind when mentioning the phrase news organizations, is there anything that you can see them doing now? We have the benefit of hindsight. What could they conceivably implement now that might save them? Martin: Well it's very difficult, because...I do think, if you think about Google and you think about Sergey and Larry, at the heart of what they're doing, what are they doing? Of course they, when Eric was CEO, I think it was much broader organization. I think under Larry it's become more focused, if you like. But if you thought about what was their principal operating principle, it would be disintermediation of established business models and providing you and I as consumers with a cheaper alternative, a better-value alternative. We used to have to contend with the tyranny of distance. If I traveled to New York, I wouldn't know which hotel rooms were free and the prices. I would have to telephone them all up on a land line or I'd have to journey around to find out. Now, literally with a click, and somebody can tell me, I can put in my likes and my preferences and I get it instantly. Inherent in the digital revolution is benefits, productivity benefits, and price value benefits for you and as I consumers. In a way, I think this is an industrial revolution that probably, for legacy companies, is very difficult to deal with. If I look at WPP, for example, if I took the last 13 years since the turn of the century, our business has become a third fast growth markets and a third digital. The fast growth markets did exist in 2000, but they were, instead of being a third, let's stay 10 or 12 percent. Today, both of those activities account for roughly half the company. Randall: We've seen that the real impact of Google and of the Internet generally is providing access to information that once was closed. Most existing companies and most industries profit by having a, I think this was Ronald Coase's Nobel prize, by basically being able to close off or own the access to certain information. Martin: If you remember, I struggled with economics at Cambridge. Those supply demand models, they used to have a couple of things, which are actually very important in the context of the development of WPP. First was free trade, so you didn't have any tariff barriers or other things, and the world got freer in terms of trade. There's still tariffs and protections and trade agreements, et cetera. But, essentially, it's a freer world than it was when we started WPP in 1985. The second thing is perfect flow of information. That there were no blockages. What the Internet has done, what Google and Twitter and Facebook and Instagram and everybody else has done, has enabled a freer and faster flow of information, which has empowered you and I as consumers, to a degree. You referred to these closed models. People traded in our ignorance or lack of understanding or lack of knowledge. Now it's very difficult...you can talk about transparency. In fact, we worry that we've gone too far. PRISM and the NSA and all this stuff worries us that maybe it's too open and that it's too transparent, that the pendulum might have swung too far. But basically, it enables the supply and demand model. You could argue (it allows) capitalism to function much more effectively and much more efficiently than it did before. Randall: Yes, it was those two things. It was trade and asymmetry as it became more symmetrical, information asymmetries became more symmetrical. Martin: Yes, that's right. Randall: When did you first realize this? Martin: Well, I was thinking about...well, I don't know if I realized this, but when did I first think of...I think it dates to when I saw those people with satellite phones that you...I didn't have a mobile. I used to have to get out on the motorway in the U.K. and go into one of those red boxes and put, I think, four pennies in, or three pennies in, press button A, and if I couldn't get through I'd press button B and got my money back. If I got through...the phone would go, somebody would pick up the line, you'd press A and you'd lose your money - well, not lose your money, but to pay your money. If they didn't, you'd press B and get your money back. I don't know how we coped. I mean I know that when I went up to Manchester by car we'd stop off at the service station halfway up the M1, or whatever it was, and spend half an hour catching up on what had happened. And then I saw these people with bat...not bat phones, because they were enormous, right? They'd be in the jungle somewhere with these great clunky great things with a satellite dish, or whatever it is, or they'd have the first mobile phones, which were these bricks that they used to carry on with their ear. It's a bit like having an iPad to your ear, or whatever it is at the moment, but very clunky. I think that's the first time that I really started to think about what the implications are. Randall: This is late '80s? Martin: Yes, it would be late '80s, early '90s. It was really with the growth of Vodaphone, actually, when Chris Gent started Vodaphone. If you remember, Vodaphone came out of...it was a fragmenting of a company. I'm trying to remember who it was who took the Vodaphone license, the wireless license, and started up. It was a famous industrialist in the U.K., and then Chris Gent took it and built it by acquisition. I think it was probably, to be fair, with the rise of Vodaphone, and AT&T, let's say, in the United States, and as they started to negotiate and navigate the mobile, the growth of mobile, because I think that was where we first started to play with it. I mean you could go back further and when I graduated from business school in '68, and I went to Glendinning Associates. I had worked on the basic programming language with those big mainframe GE computers, and I remember I irritated my first employer enormously, because he asked me to do a very simple programming, and I was useless at that. I wasn't a software engineer by any means. And I got it into a continuous loop and the machine was outside his door so the machine just kept on spitting out the same information for about two hours. And he came out of his office in a fury, who is this idiot who had left the machine on all the time? I mean you could date back to that. You started to think about the impact of computers. Randall: A different context, though, because when you and I first met... Martin: '85. I would say the late '80s you began to think about it, because you started to see the...I think the mobile revolution is when we started, really, to think hard about it, and then that was accelerated enormously by the founding and development of Google, the fact that kids could drop out of...well, Microsoft, I guess, actually - Gates and Microsoft. Randall: Do you remember when you saw your first banner ad? Martin: Oh, I can't remember the date. I mean I don't think I was really...I think that the biggest impact was the mobile revolution, actually. I think that sort of was where you started to think about what was the implication for productivity and behavior of what was the beginning of a digital revolution. Randall: Which is interesting because in a way that started very early. Martin: Yes. Randall: I remember when I was living in London and seeing all these people walking around with big mobile phones and joking about it, and then, of course, the PC thing happened and the Internet, and you kind of forgot about mobile, but in fact, that's... Martin: And now it's superseded it. Randall: Right. Martin: Because it was the development of clunky handsets. Now we've got smart headsets or handsets which revolutionized it. I think, obviously, the PCs accelerated it, PC software accelerated it, display ads, banner ads, all accelerated it, but if you said to me, "What was the first time that you really thought about the big changes?" it was the fact that you didn't have to go to a callbox or to a landline, that you could be totally mobile and talk to people and receive messages, and I think that was the first. Randall: You mentioned Google several times. Martin: World's most valuable company when you strip out the cash, more valuable than Apple. Randall: Well, it's unless...what's the word...naturally be more valuable, because it's effectively less hardware intensive. Martin: Yes, I mean I'm jealous of their revenue per head. We have in one way or another 165,000 people. If I strip out the associates it's 115,000 people, and our revenues now are around 17 billion, and they're more than double that, and I can't remember how many people they've got. I think they've probably got about 25,000 people, including Motorola. Motorola added about twelve and a half thousand. Randall: Yes, something like that, especially if you strip away those who...if you just focus on the core business, the revenue business, it's even more... Martin: The search business... Randall: ...jealousy... Martin: ...magical...and margins, as well. Fantastic. Randall: You once famously described them as a, "frenemy." Martin: Yes. Randall: I think that was at a Google Zeitgeist conference as I remember. Martin: Yes, and it was a woman called Lauren Reese who was on our...is the daughter of a hedge fund manager, Rick Reese, who was a well-known media fund manager who I met through several transactions, and it was his daughter who was on our MBA fellowship program. And she said to me before the Zeitgeist or something, she said to me, "You think about Google as a, 'frenemy', as a friend or enemy," or as a, "froe," because at the Zeitgeist Conference it was Nikesh Arora who said to me, "You could call it a, 'froe.'" But whatever it is, it was meant to...were they there to disintermediate us or were they there to work with us? I mean you'd seen this at Yahoo, to be fair. The guy before Terry Semel, who famously... Randall: Was that Tim Koogle? Martin: That was Tim Koogle, who ironically, Koogle, Google, Yahoo, etc....Tim Koogle went directly to our clients and attempted to cut out the poor old middlemen. Randall: Right. Martin: Terry Semel came in at Yahoo and deliberately...I remember his first act...in fact, that's how I first met Linda Robinson. Linda Robinson had me to dinner with Terry and several other people to talk about how Yahoo was not going to do that. They were going to reverse that policy and work with agencies to build their business. Randall: Can you...I'd love to... Martin: Marissa...interestingly, Marissa is going through the same process of thinking about how she should go about it. Randall: Well, I'd love to do a deep dive back into that time, because I was writing about the business... I was leaving journalism at the time, but writing about the business, hanging out at Wired, and one of the things that those early Internet companies were saying at the time was that they had no choice because the advertising agencies weren't willing to pay attention to them. They were too new, too untested. So they had to... Martin: I think that's fair. I think that's fair because, if you think about it at that time, the message was far more important than the medium. I don't know whether it's Marshall McLuhan or Vance Packard. I said it was Vance Packard and somebody corrected me and said it was Marshall McLuhan. Randall: No, it was Marshall McLuhan. Martin: Marshall McLuhan. So, McLuhan and the medium and the message, people running advertising agencies believed that the be-all, the end-all was the creative part of it, the Don Draper Mad Men part of it. We were Mad Men and it wasn't about technology. And, more importantly, at that time, it wasn't about media. The media department sort of... Actually, Mad Men, when the media director gets upset that he's not a partner that was actually a fairly accurate... Randall: That captures a real cultural piece of the... Randall: ...advertising culture ... Martin: Absolutely. It was the suits and the creative department and maybe the planners. The planners got in there, as well. But it certainly wasn't the media people. They were sort of traders. Rather like in investment banks in the old days. The traders used to be the second-class citizens and the relationship people, the IBD, the investment banking division, was at the pinnacle. Those were the guys who generated the fees. Of course, it's now the reverse. In a way, we've mirrored that. Randall: I'm really interested in that. Martin: And the media people were not... They didn't get the corner offices. They didn't get the salary increases. They didn't get the incentives. They didn't get the Ferraris. They were... By the way, in new business presentations, it was all about the suits, the planning and the creative. If there was any time at the end, you might have something about the media plan. And then you got these Dennis Holtz, you remember, Michael Kasan, Westin International eventually bought by IPG. He was the first. Then you had the Gross brothers in France with Carat and you had the Rodaise family in Spain. You had Chris Ingram with CIA, which we ended up buying. Now, they've all been absorbed. Even Aegis now, which was Carat, is now part of Dentsu. So they've all been absorbed because the people running the agencies are media people. If I look at our businesses over the last 10, 12 years in particular, media has been the engine. You have to remember people look at WPP and say $17 billion of revenue. It isn't. It's $70 billion of media that flows through our business that we, on behalf of our clients, manage. Randall: So wasn't it... Go even back into the prehistory, wasn't it always true that all the money came in through the media, but culturally the influence was... Martin: Oh yeah, it was. But, to this day, very interestingly, we are the only company... I think Aegis did it, as well — but we are the only company that shows its billings and its accounts. I think that's a fundamental mistake because the power of our business, to some extent, rests on our ability to make... Irwin Gotlieb coined the phrase, "media investment management." We've now bastardized that into our consumer insight division, called it data investment management because these two areas... We manage an investment portfolio, effectively, for our clients of $70 billion. We run a $70 billion fund where we decide whether that's the right number. Should it be more? Should it be less? And which, in an increasingly fragmented world both geographically and functionally, where's the best place to invest that? Randall: So, if we're thinking about this chronologically, we go back into the prehistory, the money flowed in through the media function, but the culture and power was creative and relationships. Then a set of independent companies, media, independent media agencies come into existence. Martin: And the creative companies started to lose media. I looked at Ogilvy and Thompson, I think it was in the early '90s, I remember we looked at it in London and we'd lost so much media revenue because these media independents were popping up all over the place. We said to the people, at that stage I think it was Chris Jones running JWT and Shelly Lazarus at Ogilvy, so it would have been the early to mid-'90s, "You're losing your media. You're losing out on your media business. We've got to do something about that. We should set up Mindshare." We didn't call it Mindshare at that time. Randall: Clients started unbundling their options. Martin: Absolutely. And it's the benefit of functional specialization. The irony of all of this is that WPP, Omnicom, Publicis, IPG are all really full-service agencies that existed in the '50s. It's not different to the JWT of Berkeley Square. You walked in there in the '50s, number 50 Berkeley Square, whatever it was, and you found Lexington PR, which is now Hill & Knowlton. You found BMRB which is now Cantor and Research. You found an operations research company because, when they came up with the idea for Mr. Kiplings Cakes, which was residual dough from bread making, I think it was, and Mr. Kiplings Cakes, they, JWT research department, the precursors of the Mad Men, laid out the factory. Actually drew a plan of the factory and how the factory would function to make the Mr. Kiplings Cakes, which became a famous brand. What we've done is created more vertical specialization. We're now busily building horizontal integration to get everybody to work together. But the analogy is sort of to a house where you have strong columns and a roof that you support rather than having a very strong roof with weak columns. So strong functional specialization. Randall: This recognition and this re-organization of the agencies is really happening at roughly the same time as the Internet. Martin: Yes, the digital thing accelerated it because it put more emphasis, it was a secondary I think. But what it did was it said, "Not only is the medium equal to the message, but the medium is going to become faster, equal, or even more important, because the medium is fragmenting." You don't have to just worry about offline. You have to worry about online, too. And online, by it's nature, is much more fragmented because it's much more tailored. Randall: So Google, when does Google really enter into your consciousness? Martin: Middle to late '90s. I think I'm quoted in the Harvard Business Review in 1995, I think it was, as saying the Internet was going to... I don't think it was exactly the most prophetic statement, but, "The Internet was going to make a substantial difference to our business and our lives." Randall: But Google started later. Martin: Yes, but people started to look really at the Internet pre-Google. We started to look at the implications of it. Google really accelerated it. The ramp-up on Google was so strong and so quick, and the story was such a romantic one and they were very broadly spread in terms of what they set out to do that I think it started to have an effect quickly. I would say pre-Google, middle of the '90s, late '90s. Randall: At what point did the notion of, personally, of Google as foe or frenemy really occur to you? Martin: We were always terrified. Not terrified. We were always worried. Analysts would say to us, "Are you going to be put out of business?" Clients would be looking at their developments and saying, "What are you going to do about it?" Our people...Just like the people in our business who had the power in our business, which were the suits and the creative, let's put it like that, just like their attitude to media were not right. The funny thing was, they only changed their attitude to media when they were in trouble. You asked could we have done anything, could news organizations have done anything about the digital revolution. The fact is can you ride the waves. You think you can roll back the sea, and you can't. If you said to me, "What do you regret about WPP over the last, say, 13 years is that we haven't done more faster growth markets and we haven't done more digital. Because the benefit of 20-20 hindsight, if you had done those deals that you had thought were marginal, if you had taken on those people that you thought were not fundamental and not core, and were marginal, you would have invested in more human capital in the digital era and you would have invested in more companies. Randall: There is a little bit of unfairness in that, anyway. Because, the responsibilities as a publicly traded company, differ from the responsibilities of a venture company... Martin: Yes. They look for different things. The simple fact is it's more, if you run a legacy business... We have to change the engines on the airplane while we're flying, just like newspaper companies had to or TV companies will increasingly have to. That makes it much more difficult. A venture capital company also funds a company which has no legacy. So it doesn't fell trees and distribute newsprint. It makes a digital magazine or newspaper. So it's much easier. It has none of the attitudinal, the soft or the hard, the infrastructure problems. It has no infrastructure to service with a cash-flow profitable operation. And the VCs look at internal a different way. They look at top line and top line growth. They don't worry about margins. They worry about hits, circulation, views. They don't really worry about the traditional. They don't worry about return on capital. They worry about ramping up on the top line as rapidly as possible. And often, if the thing makes money, it's a problem. You remember Internet 1.0, the cash burns, all those companies that went out of business because they were burning cash too fast. Randall: I want to ask you one more question about the media agencies and the intersection of the unbundling phenomenon and the Internet. If we go back through the history of advertising, I think you can argue that agencies and the publishers, the media, were kind of in a healthy collaboration with each other. Rising media prices were good for the media and were good for the agencies. Martin: A bit like real estate agents who are pricing houses. You've got remunerated on a percentage of the value on which the deal got done which, from a client point of view, was the wrong thing. Randall: Right. At some point, there are a couple of points where things change. One was arguably, media as a commodity, became less valuable because, in a digital world, supply would always outrun demand. Martin: I'm not so sure that it was that. I think that people began to wake up to the fact that it was made in an inflation environment, and you've got to remember inflation really peaked in the late '80s when a Kraft cheese single I remember, in Chicago, was twice as expensive as a private label. I remember thinking to myself, I wrote it in the annual report in 1989, "This can't last. It's crazy." But inflation, and since 1990, we haven't had much inflation. Having gone through that, clients realize that it didn't make sense to incentivize us, either from a creative point of view... If you were working for Proctor like we did at Saatchi on Charles St. pre-1985, on Pampers Diapers, we worked on it for free because there were no billings, therefore we didn't get 15 percent or 17.65 percent on cost for production, etc. What we had to do was wait until they launched, which would take four or five years. But when they launch, my God, they launch. Proctor would launch and say they have a share objective of 10 percent and they spent money on TV until they got to that share. They didn't stop. We were rolling the 15 percent on the 30-second ads or the 60-second ads or even longer, 90 or two minutes. We were rolling in. So it was a very different...but I think clients...and then with the rise of finance and procurement in '90s, people started to say, "Are there alternative models that make sense?" And what we do is invest time. The pity about our industry is the brilliance of the idea doesn't often result in us being brilliantly paid, but you could argue that the old system did that better because if it was a brilliant idea they'd run it more and you could get more commission. But, essentially, I'm not sure that it was to do with the digital revolution. That might have accelerated it, but I think fundamentally clients realized - quite rightly - that paying people just on the price - that the bigger the price, the more we made - was not the right economic model and that we should have skin in the game. We should have fees to cover our overheads and a normal level of profitability and our direct costs, but then we should some incentives, keyed to market share, or sales success, or whatever, and often we don't have control of them. Randall: There were a number of factors. So inflation went down. Media inflation went down. Clients became more procurement oriented, so really inspecting things more. I think the Saatchi bank acquisition probably had a role in that at least in making people respect their fees. Martin: Yes, I think that's with all due respect probably a more looking at from this side of the water. I mean there were some extraordinary characters involved in that. I mean there were...in a way you were right, because it did...it had smacked a little of the "Barbarians at the Gate" and over-ambition, and people packing guns, and all that sort of stuff. I mean it was pretty hairy stuff. It would have made a great Mad Men sequel. But there was a bit "Bonfire of the Vanities," that stuff. Randall: But the net result was that the fee structure changed the conversation structure... Martin: Yes, the domestic servants were getting out of line. That was why probably clients felt that basically the agencies...now what's interesting to your point is that subsequent to that as a result of the pressure in the system, whether it be the rise of finance and procurement now particularly post Lehman, but I would argue since the early '90s, since the end of inflation, major inflation at the end of the '80s, and the evils of inflation. And I would argue you could argue because of the Internet revolution. You could argue because of this pressure on costs that clients in a slow growth world have. As a result of that agencies consolidated even further, and the range of choices to clients has diminished, actually. I mean if you think about if you're going to do a worldwide campaign, if you accept that a small agency in New York, or London, or Paris, or whatever, can't handle it, and that you have to have a network, your range of options, if you think about it from a holding company point of view, is probably down to about four or five. Randall: Right. So is it fair to say, is it fair to conclude that from all of this that in the balance of power between media and agencies, agencies began to become more powerful...? Martin: Well, agencies became more powerful because they took the media function. So the media function it was split asunder from the creative. It's not been sort of realigned, but in a holding company structure, the new 21st century full service agencies as opposed to JWT of Berkeley Square. And as a result what we've done with media is instead of having Mindshare, MEC, MediaCom and Maxus, we have GroupM, which goes to the market as one. Not in all markets. It doesn't go in Brazil, but it goes to the markets as one, basically. And we have, if you look at our media shares, market shares, it's anywhere between, let's say, 25 percent or, let's say, 20 percent up to 50. Some markets were 50 percent of the market. So we can go and actually exert significant leverage in a constructive way, not in a destructive way, not in a sort of totally price driven way, but in a constructive way in terms of developing content, ideas, sponsorship as one. And if we represent 25 percent of the market or a third of the market then that's a very strong negotiating position on behalf of our clients. Randall: And you have more choices. Martin: Yes. Well, we have more choices because of the digital revolution. Randall: Right. More choices of media, right. Martin: Absolutely. Well, we were getting more choices offline as well, but along comes Larry and Sergey and others, and Mark (Zuckerberg) and everybody else, and we now have more options. So we get interesting opportunities if we're creative about it, if we're not just creative about it, scientific about it as well. Randall: For most of the first decade of the Internet revolution, though, the advertising and marketing communication support that was going to these Internet companies was below the line. In fact, the Internet was kind of a giant below the line medium. Brand advertising largely stayed away. Why do you think that was? Martin: Well, I think it takes a long time for older people like me - not you - but like me to adjust. So I think...well, first of all there's that. Secondly, the people who run companies tend to be those people so they tend to be conservative. Thirdly, the people who run companies demand strong performance, and you're experimenting. You don't know what these things...even today if you're, let's say, on calendar year, and you get to November, and you're short on sales, and you have some resources, you're probably liable to put some into the Christmas period on TV even now, right? Online is probably a slower burner with the exception of search. Google's power is its search and mobile search, and the power of the algorithm. And with that one exception you're probably...you know, it's sexy to invest in new media. You're not going to get fired for doing it. You'll get your headline in Ad Age or Campaign, or whatever, saying what a clever boy or girl you are. But it takes time to adjust. I mean the simple thing it's the old data that we use that Mary Meeker has developed. We know that newspapers and magazines absorb about 20 percent of our media investments as an industry, and we know consumers spend only about 10 percent of their time on offline on media of that type. On mobile and Internet we know they spend about a third of their time and yet we're only spending 20 percent. So those things have to adjust and they take time. So similar question - why is it with the change in demographics in America that people underweight Hispanic advertising, that they underweight Afro-American, that they underweight gay and lesbian advertising, that they underweight Asian-American advertising even though those people are the new mainstream? Randall: Right. Martin: And by the way you've only got to go look at why did Obama win twice? He won because he understood those demographic changes. Randall: Right. Right. And they not only had the courage, but they had the necessity of putting those plans together to go for the those audiences. Martin: Yes, so we consistently underweight...and there are companies now in America that say all their growth - all their growth - will come from that new mainstream, all of it. Randall: So what I was getting at was a question of whether major news organizations, who are early many of them jumping into digital media, jumping into online, made a mistake in not trying to play to their historic strength, which is brand advertising, but going kind of willy-nilly down that path of below the line. Martin: Well, they made a big mistake on the content issue. I mean a big mistake. Rupert was the first person I think to wake up seriously to the importance of pay walls. But, you know, I think it's a tremendous difficulty, because it's very easy to figure out Myanmar, or Vietnam, or the geographical changes. It's much more difficult to figure out the technological changes. I mean you asked about whether these organizations could have done something 10, 15, 20 years ago. I mean it's easy to look back and say, "Well, why didn't we do that?" But it's very difficult at the time. Randall: OK, talk about the pay wall... Martin: Because the valuations...you remember the valuations that Internet 1.0, and you take one of our competitors, Omnicom, which had the lead with Agency.com, and the other agencies just in the late '90s. And then we had the Internet bust in 2001, '02, and they got rid of all these assets off their balance sheets into that ill-fated thing called Seneca... Randall: All right. Martin: ...which had to put it back once it got it sorted out, and I would argue that subsequent to that they decided that they weren't going to take the risk. In other words, getting burnt made them shy, and today they're not...I mean obviously I'm making a competitive comment, but they're not as advanced as ourselves or others in terms of digital penetration. I think the reason is that they started off brilliantly. They were way ahead of the pack on it, but then they got burnt, and they decided to pull back. So it's very easy to sort of criticize from the boundary, as we would say in cricket, but if you're at the wicket or try to hit the ball out of the park, it's much more difficult. Randall: Even on the paid content front? I mean if you look at it is that something that could have been known at the time? Martin: Yes, but I think even so...you know, strong news organizations, you see it with newspapers now. You know, if you said to me, "Why is it that newspapers..." I shouldn't name names, but there are some really strong branded newspapers. Why is it that we don't advertise even in the classical way - forget about digital - in a classical way more aggressively? Because they're inflexible. Successful organizations tend to be arrogant. They tend to be overconfident, and that's why they fail. Randall: Well, I've told newspaper audiences when I speak to them that I first learned the term, "order taker" as a term of a program in the newspaper business when they were criticizing themselves as being just order takers and not developing the services or the products. Martin: Yes, they think they have a sort of semi-monopoly, or whatever, and their brand is so strong that, "they will come," and what people are looking for...interestingly, talking to newspaper owners currently, if they say to you, "What can we do that would help WPP, or GroupM, or Mindshare?" or whatever it turns out to be. It's always that we say, "Greater flexibility." And by the way, this boundary between advertising and content, advertorial, right, is going to get increasingly blurred. I mean I don't think consumers should be misled. If it's an advertorial it should clearly say at the top of the page, "This is advertorial." But content, there's going to be increasingly amounts of sponsored content, of content that's developed for specific commercial purposes just as much as for editorial purposes, and the two things are going to mix. Randall: This is called...this is now going...the faddish term for now is, "native advertising." Martin: Yes. Randall: But you don't think it's a fad. You think this is... Martin: No, I think it's a way...you said what can people have done 10, 15, 20 years ago? They could have been much more flexible, actually. They could have gone...if it's called native advertising, gone into that area or developed that approach, that flexibility, far earlier. Again, without naming titles I can think of two or three titles who the editorial people would say the business people they're just not flexible enough. Randall: When I took a brief stint away from the IAB, working with one of the major publishing companies, I remember talking to several CMOs at the time, because I was trying to get my bearing, and they all made that comment, and they also made the comment, "We're not looking to fool anybody. We're not looking to... Martin: To mislead. Randall: "...break the wall between the two. We just want to be part of the conversation." Martin: Absolutely. Randall: And I remember hearing them say — there were three who all talked about the Huffington Post and said, "One of the reasons we like the Huffington Post is... Martin: Because they're willing to... Randall: "...at least we can get in a conversation with them." Martin: Yes, in different ways. Randall: Yes. Martin: You know, people wouldn't like wraparounds, right, on newspapers and things like that. They would say there's no way that we're going to allow some sponsor or advertiser a wraparound, and that started to change. And I don't...again, I'm delighted. I'm not suggesting we mislead consumers, and we should be clear about that. You see that now with online. I mean in an opt-in, opt-out, when we're asked to opt-in to something, and we have to go through these 25 pages of...well, actually I counted one site where it was a 60-page document that you had go through. It'd take you about three months and get a lawyer to go through it so it's hopeless. So it's incumbent on us to come up with cheap and accurate ways of getting consumers to understand what they're letting themselves in for, particularly when the privacy debate has reached the degree that it has. Randall: I wanted to follow up on that with you, but I wanted to ask one more question about native advertising, because you also mentioned earlier or referred to the importance of quality in the media, and you I think said, not just implied, that quality... Martin: And it's become much more superficial. I mean Twitter is superficial, right? The thought that you can reduce it to 142 characters, or whatever it is, is bizarre. Randall: So is it your...? Martin: Well, I remember, I was watching Charlie Rose one evening when I couldn't sleep. I think it was in Shanghai or something, and he was interviewing the lead media guy on The New York Times. And Charlie said, "Where do you get your information from?" So I expect him to say, "Well, of course I get it from The New York Times." No, no, no. He gets up in the morning and he goes to Twitter. That's where he gets his information. Randall: Well it's a news feed. People set it up to be a personal newsfeed. Martin: It's a PR device. Randall: Yes. Is your professional opinion now as the head of the largest advertising company in the world that quality in media matters to advertisers and their agencies, or is that too simplistic a...? Martin: No, I think it does. I mean it shows what an old fart I am. I bemoan the rise of superficiality. I bemoan the fact... Randall: You can bemoan it, but professionally... Martin: Well, the downside, it's the downside of Google, isn't it? It's not just Google. It's the downside that we...it's sound bites. It's lack of depth. It's, "Done this, move on to the next." In a funny way when you're successful you get no time to enjoy it. I mean at least when we used...when I was at Saatchi's or the beginning of WPP, you'd announced your annual results, and we'd all go out and have a good lunch for about two or three hours at the end of the year to celebrate. You don't do that anymore. You immediately move on to the next. So there is no pause. There's no relief, no chance, really, in that case, to celebrate success. On the other hand what you're seeing is the lack of depth, and I think this is the real problem, a real problem. I mean when was the last time that anybody really did a deep piece on WPP? I mean a really deep piece. And the answer is I'd have to go back to...there was an article done, I think, in Forbes about 18 months, 2 years ago where the guy took a month. Randall: I thought you were going to say the late 1980s in The New York Times. Martin: That's true, but he took a month, and he wrote a long piece, but that's the last time so now it's bash and crash. And people look - and I accept this as a rule of the game - they look for the headline. They look for the...we were talking last night about some PR that had been done or articles written by some London newspapers on a certain situation and it was always...and people say always looking for the sensational. And you did when you were a journalist. You would look for the sensation. You would want...but it was...and it's also about beating people. If Bloomberg gets a story, and Squawk Box doesn't, I mean now you have the situation where Squawk Box says, "I'm not going to let...if you do Bloomberg you're not going to come on Squawk Box." Randall: But what I'm asking is so that's your moral, philosophical... Martin: It's not a moral...it's a philosophical, more philosophical... Randall: As a media investment advisor, which is what you are... Martin: I think quality is really important, really important. Randall: OK. So when you think about... Martin: Although the cult of celebrity [laughs] probably negates that. Randall: Well, in the native advertising debate it's an interesting one. Here's a question: Can native advertising be reconciled with quality in media? Martin: Well, I think it can be if you're explicit. If you're not, if you're opaque about it, no. Now in this world you can't be opaque about much I think. You have to be transparent. We see that every day. We've seen an example here in New York in the last 24 hours in the mayoral race. So it's very difficult to be opaque about these things, and that's that good side of it that you can't hide things anymore, and if something's naughty it gets exposed. The downside is it gets exposed quickly, and you move on to the next. I mean we see that...you know, see kids interviewed in school, "What you do want to be when you grow up?" They say, "I want to be famous." What does famous mean? Well, then we go into, "Hello," magazine, and, "OK," and everything else. Randall: For all the challenges that media companies have you made some investments in media. Martin: Yes, a lot. Randall: You invested in Vice media, among other things. Martin: Yes. Randall: It looks like it's doing... Martin: It's doing extremely well. Randall: So why is that? Talk a bit about your investment in Vice and what that implies about the evolution of the advertising agency. Martin: Well, if I look at WPP, we've experimented. We've said if content is king - either traditional long form content or short form, or digital, or whatever it happens to be - if content is king we should be in those conversations. So we started out with Harvey Weinstein's fund. Actually, I think even before that Media Rights Capital, which now have done, "House of Cards," distributed with Kevin Spacey through Netflix, but we did, "Bruno," and, "Borat," before. So we're experimenting with content. Imagina --- we had 20 percent of a company in Spain called Imagina, which owns the rights to La Liga, the football league there, and also is one of the biggest, if not the biggest, producer of Hispanic content in the world. We've invested in Vice, as you say, in Peter Chernin's Fullscreen, which manages 100 YouTube channels. I mean we're trying...I mean do we know? It comes back to what I said before. Geography I can follow. I'm intelligent enough to understand 60 million consumers in Myanmar or 85 million in Vietnam, and that's got to mean something. It might be bumpy but it's going to mean something. I find it much more difficult to plot what's going to happen technologically. So we are a strategic...going back to your point about venture capital investors - we are a strategic venture capital investor, right? We take a strategic view, which means we're not as nasty on the financial front. We don't have such high sort of internal rates of return as private equity companies, which Steve Swanson always tells me, "You never come and take money from us because we're the world's most expensive source of capital." Private equity funds because of their rates of return. We've got a slightly more relaxed long-term view. And I think the analogy to the family wealth, private equity funds, the Banksias, the Santo Domingos, the 3G people, who take a longer term view. They're not like Carlyle or Blackstone, the sort of as short-term private equity orientation such as TPG. We'll take a 10-, 15-year view like a Warren Buffett long-term view. That's sort of like...We're even less financially savvy or as focused as they are. We take a much more strategic view. But we wanted to be part of that content revolution. Not just traditional, but more importantly the digital piece. A thing like "Vice," which is very exciting, it's great fun too, and breaks the rules. You go to Brooklyn and you see their edit suites...you see their editors. I think Shane is on the west coast this summer building edit suites or a facility in Venice Beach in LA. It's very exciting, because it doesn't obey the rules. You've got 18-year-olds at 12:00 on a Saturday night manufacturing content. Randall: And it could mean something big. Martin: Absolutely. Very big, very big. Randall: Right. So part of the responsibility, and also the joy, I guess, of the... Martin: Well, it's another arrow in our quiver. I want to be able to say to clients that we have insight and sometimes we haven't got it. But that would mean that we go to the outside to get it. We don't have to own 100 percent of it. We don't have to own even 51 percent of it. It can be a minimum...It can be Omniture, Buddy Media. Buddy Media was a platform. It's now part of Salesforce.com. Omniture went to Adobe, but was web analytics. Buddy Media was a platform to use Facebook, which our clients were confused by, our people were confused by. But in both cases, of web analytics and the Facebook platform, we had 500 people being trained so they understood more, clients included. They understood more about the potential of Facebook or the potential of having a web analytics dashboard that... Randall: Right, so the strategic investment was also a method to do training for a large chunk of the organization. Martin: Absolutely, and that was very important too. But it really was to get a better understanding, because a lot of this stuff is confusing. If I say I'm confused by technology, I think most clients...I mean, it is true that our client is changing. It's no longer just the CMO or the CEO. It is more the CFO, the chief information officer, the chief procurement officer, and most importantly, the chief technology officer or chief information officer. And then there's the big debate. Whoever was going to do the oral history of advertising in 10 years' time, it would be very interesting to speculate as if you were talking to whoever is the largest advertising and marketing services group in the world, what they would say in 10 years' time about who their client is, because we are starting to see...and then there's this debate in the trade journals as to who's going to control that. I think that's less of a thing. What you have to do is think about the fact that we are no longer just an art. The difference is, 20 years ago, we would be having a purely artistic conversation. There would be doubts about the media being that important. David Ogilvy had written 50, 60 years ago the importance of one-to-one communications, direct and direct mail. Randall: Well, he came straight out of the tradition. Martin: And research as well, Gallup, etc. So in a way, as with many things if not all things, David was very much ahead of his time. He didn't think about it in terms of a computer or in terms of algorithms or Facebook or whatever, but he did understand that tailoring, having a message on a one-to-one basis, in his case by mail...you know, it was called Ogilvy Direct. It wasn't called Ogilvy One. Ogilvy Direct was a direct marketing, direct mail...envelope-stuffing company. Randall: Yeah. But also importantly, and I'm not telling you anything you don't know, is that he saw no distinction between that form of marketing and the creativity or the aesthetic appeal of the content of that. Martin: Yeah. Randall: He saw the two could be absolutely aligned. Martin: Yes, I think that has changed. I do think the medium is...it's certainly equal to the message. It may even be more important, which doesn't endear me to certain people inside our organization, but I'm willing to discuss why that's wrong. I don't think it is wrong. I think the media part of the business...so if I look at the growth parts of our business for the last 5 to 10 years, it's certainly the fast growth market that brings them to the next level, but functionally it's certainly media planning and buying, what we call media investment management, and digital. Those are the big businesses that are growing very rapidly on a consistent basis. Randall: Last topic, you mentioned privacy before. You've mentioned quite a lot in public that...I don't know word for word, but you are a data company. You are in the business... Martin: I would prefer to be an even bigger data company. Randall: As you look at the... Martin: The reason for that, just so we're clear, is we want to differentiate ourselves by our ideas, or big ideas. If Dove wins at Cannes or an IBM ad wins at Cannes or a Grey's Direct TV ads win at Cannes or whatever, that's great. But equally, and, again, this is like the media and the creator, equally the role of data given the development of the new media is becoming more and more important. You can know far more about your clients without invading their privacy, without knowing who their names are or whatever, but understanding more and more about what their physical and emotional needs are. Randall: Is this an area, the access to data, analyzing data in particular, collecting useful protected data, a way for media companies that might be challenged now including audience data.... Martin: Absolutely. We have our Twitter data alliance. We've already got some data which shows when people watch live television, which those Nielsen ratings are showing that fewer younger people are, but those people who are watching them, even younger people, have their other devices. They have their other media like Twitter and Facebook which they are using at the same time. They might be using their mobile phone and their Blackberry or their iPad or their iPhone at exactly the same time as they're watching something on live TV. Understanding through data how consumer patterns of media consumption have changed is absolutely critically important. We don't tend to think that way. What's going to drive us that way is our competitive set. We always thought, "research, it's going to be a dull lunch." We're Hollywood agents and you've just seen Harry do his deal with David Droker. Nothing is new in our business in a sense. But the competitive set is not just Omnicom and Publicis and IPG and Dentus. The competitive is Google and Facebook and maybe others. These are not technology companies. These are media owners. The competitive set is some of the consulting companies like Deloitte and IBM and Accenture. These are all companies which are looking at the marketing space, and they come at it from the technological end whereas we come at it from the creative end. My view is we have to be a creative business, and that's paramount. I would even argue that maybe even equal to that, not subservient to it, is the scientific bit. This is no longer a craft business. This is no longer those private partnerships of when I was at Saatchi. I used to go and...Dancer Fitzgerald. You mentioned Bates, all those companies that were swallowed up. They were private partnerships. They were sub S companies or partnerships where the accounts were distributed to the employees. I remember somebody at Dancer telling me, "Those brown backs that Arthur Anderson showed the net asset value. You were a share owner. You were interested in..." They were taken back from you at the end of the meeting. You never got to see them. Total secrecy. Proctor was your client at 15 percent and 17.65 on production, and that was it. It was a license to print money. [laughs] It's changed. Randall: Using this argument and the way you kind of sketch out the competitive set, I can imagine...the question is, can you imagine. I can imagine that major news and entertainment organizations can also be part of that, but it requires them to reconfigure and grow new capabilities. Martin: Absolutely. You're seeing that, but I don't think many, if any...I'm a great admirer of NewsCorp and I think Rupert understands that, and James, Lachlan, Elizabeth, and members at the time. He'd acquired power from...The professional, the non-family members, they understand that. They really get it. They are a true media...I don't like the word "conglomerate," but a diversified media company, both geographically, in Turkey, in Germany, in Italy, in the UK, or whatever it is, as well as the US and then Australia, and functionally. Whether it was the right thing to invest in MySpace or not, Rupert did it, because he turned round and did his deal with Google, and people cried out, "Genius!" They looked at MySpace at the beginning, and said, "Whoops," and then, "Ah." Now we understand. By the way, it's very interesting. Companies that are owner-controlled are better dealing with this sort of things than bureaucracies. I don't mean bureaucracies in a bad sense. I mean it as in managerial-led bureaucracies. People who have a lot at stake, either reputationally or financially, are more likely to pound the street and pound the activity than people who are...There's a separation between ownership and control. Randall: How threatening do you think the current environment around privacy, regulatory environment, public sentiment... Martin: I think it's serious. I pride myself on being somebody who obviously knows about these things, or has an understanding. I presume I was surprised by it when they say I'm speaking to somebody from one Western government, I won't say which, who said even the prime minister of that country was surprised, because security services, technically, particularly in this country, don't report into the political structure. When the intelligence services swap information, or do whatever it is they do, they often do it without the knowledge [laughs] of the political bosses. Of course, then it puts people in a very difficult position. I think it is very important. I think even the younger people, who technically...Everybody says, "Well, they're free," but they release some information and they exchange some information, I'm not sure I agree with that. We had the owner of Assembly come to the Cannes Stream conference, and we asked...even he was interesting. He said, "I don't worry about putting stuff on the Web, but I worry somebody else putting a picture of me. That it doesn't go through my filter before he or she puts the stuff." There's even a nervousness. I think it is a difficult area. With Xaxis, which is our online media buying platform, we chose not to opt out, which would be the easy way out. With clients, you're saying, "his is what we're going to do." We began buying this inventory. It would be opaque. Do accept it. We could write into your existing contract, which is not. What we did was, we said, "We're ripping up our existing contract. We'll give you a new contract which embodies an opt-in procedure, because we thought that that was a more transparent way of dealing with it. It's exactly the same." I did go to the advertising bureau, to Brussels, to argue and make the case that we should have "opt-out," which is what we use and the industry really wanted. That's gone by. That's finished. We're not be going to be able to get away with that. What we have to do is to have a simple opt-in process, so that consumers, and this will become even more important after present, they understand exactly what they're letting themselves in for. ...
VIDEO: YES

Alan Spoon
BIO: YES: Alan Spoon has, since 2000, been a general partner...
TRANSCRIPT: Paul: It's March 26th, and we're in Cambridge. It's Paul Sagan, John Huey, and Martin Nisenholtz. Paul: We're doing the oral history of when news ran into digital technology, and going back 40 years and going forward. Maybe we could start with, not the end, but the beginning and your first time, and when you either first saw digital technology colliding with or sneaking in on the media business, or where you said, "Wait a minute, this is not like yesterday." Alan: It goes way back. I was online in '71 and '72, as a student at MIT. Actually, together with some professors, sold a software set of programs to help manage Standard & Poor's "Outlook" magazine, subscription management and their financial statements. I used to carry a big Samsonite suitcase with a very slow acoustic coupler terminal. We ran it out of a time sharing computer in Central Square. I was online a long time ago, and had always thought about the implications of that. I didn't use it a lot in my consulting days at BCG, except for computation, but when it came to affect content, one of the...I'll come back to Viewtron, but when it came to the first investment commitment on the part of the Post Company, I was the Vice President in charge of strategy, investments, and so forth. We bought a company that turned out not to be a success after 15 years, called Legislate, which took the Federal Register and all the Bills moving through Congress in all their versions, and made them available online for folks who wanted to monitor what was happening as far as introductions, amendments, and progress. That was content being affected by... Paul: That would have been...? Alan: '83. Paul: Pre web, pre dial up, pre consumer? [indecipherable 04:05] So early, but not consumer yet. Alan: Not consumer yet, although I did look at Viewtron when I first came to the Post Company, and said, "Hey, have a look at this. [indecipherable 04:20] Ritter was doing it." I embrace technology. I was given training in what have you. That was, I believed, before it was called Alpha Mosaic. It was really clunky, and it was like $30 a month. George Lucas was in the movie theaters I was thinking if people go on Saturday night and they see these great constructions, computer graphics, et cetera, whatever else it was doing, costuming, and they're going to come and look at these mosaic pieces. I didn't think they were ready. So we declined, I guess, on the strength of my recommendation to get involved with that. But it wasn't that we weren't going to continue to monitor it. I should have scrapped my background through those years to see when I first got exposed. Bob Kaiser and I, Ralph Terkowitz, all began thinking about the implications for digital media for the consumers starting in the early '90s, I think '91, '92, when we started Digital Inc. We thought it was a clever name, before the Web. That was proprietary on AT&T interchange, which had its own issues. But good partners not such robust technology. We began to build a team there and sold it on a subscription basis. I think we had, before we made the decision to go to the Web, 30,000 paying subscribers at $30 a month. Martin: Competing then was CompuServe, Prodigy in the proprietary space. This was your way in into a walled garden. Alan: Yeah. That's right. Don Graham and I were making a sales call in Chicago to a major client. We were going to the airport in Chicago. I was talking about the Web and how it was coming on. Don and I always put our heads together on these things. We decided, "You know what, we've got to get to the Web." So, forced march, cell phone call from the back of a cab, "Changing strategy. We need to move off of the proprietary system." Because as I always put it, "We are winning the county track meet but the Olympics lay ahead. We need to have a heck of a lot more subscriptions than that." We shifted the model from pay to advertising-supported. Martin: Before we get there I don't want to lose the legislate track because a lot of newspaper companies in the early '80s invested in and had fairly interesting B2B products. Dow Jones obviously had the biggest investment with Telerate but we (The New York Times) had the (Times) Information Bank which we then sold to Mead. John: Dow Jones also had a News Retrieval. Martin: Dow Jones had News Retrieval. Right. Martin: Legislate seems like a perfect fit for the "Washington Post." Alan: It was. Martin: Why didn't it succeed? Alan: Because that content became more freely available and the subscription model didn't work. There wasn't a competitive wall around it. I think we had by far the best technology available but "good enough" won. Paul: That hasn't happened in financial news but it happened in political news. Alan: It wasn't news. This is what Bloomberg is doing now. It wasn't news. We were taking content that the government printing office was putting out and making it instantly available. We didn't have a newsroom. Martin: It wasn't proprietary. Alan: We had a few editors and verticals trying to organize materials or add stuff to it. But it wasn't like they were out on beats. John: You had a technology background and you've been online... Alan: More of a user technology background. Yes, I used to program computers and build compilers but I wanted to get to the applications. John: You went to MIT. You weren't an English major, I'm guessing. Alan: I did go to law school too. So I can write. John: That's debatable why you were still writing. I'm sure you can write. By this time you've been looking at this for a while and you're in a very high position in a newspaper company, publishing company. Are you more excited about the possibilities of this technological coming or are you more fearful of its threat to the business model? Alan: Let's just call it a pounding headache where I was determined to make sure we were ready for that future. The entire decade of the '90s. I could see it coming our way. I wanted to get ready. The Post company got in very early and lost a lot of money, but laid the foundation for what could well be the future. The future of that operation being digital. We did it at Newsweek. We did it, to a lesser extent, with commitment to TV stations. We were embracing early broadband for cable. As AOL was coming on, I'd go to the movies, there was Sleepless in Seattle. There was the email going back and forth. Everybody's laughing and I'm suffering. I'm thinking, "The behavior, people in restaurants are talking about ICQ." I'm listening to those things. People are eating their salad. I'm thinking, "People's behavior is changing." That was all throughout the nineties. Paul: What happened? Because it didn't end well for the whole industry. Alan: What happened? Without getting into the details... Paul: We'll take some detail. Alan: No, I am going to be careful here. We too bid for the Boston Globe. He knows this story better than you will. But we didn't bid as much as they did. Incidentally, the Boston Globe was very innovative, with the likes of Lincoln Millstein and others creating Boston.com. The point of the story is, we didn't see a perpetual, bright, growing future for that print property. You can read it more broadly. We set our price accordingly, so we didn't win the auction. The reason why I tell you that story is, I'd forecasted, with the kind of judgment that a generalist brings to it, that there was going to be shrinkage of print revenue. It hit harder and faster in the mid 2000s than I forecasted. Even at our price, we'd have overpaid. Once things got going in the ad supported world, they began to follow each other, with momentum, the herd, enlightened or otherwise. So what happened was it didn't migrate entirely, but it's migrated harshly and significantly. I don't think it's going back. I long bought the thesis that, if you could target audiences and measure, an accountability cycle, as to what I got from what I paid, you got past the classic... The classic department store magnate in Philadelphia who said, "Half of it works. I'm just not sure which half of my advertising is..." Paul: But isn't it true, what happened was actually, the math was 10 percent worked? Alan: I used to call it, in my talks, dollars to dimes. Paul: That's about right. You've got a dime showing up in digital, for a dollar in print. Then Google took half of it. Alan: Yeah. But you've got to step way back. We're wandering a little. You've got to ask yourself, what is the new equilibrium on marketer's spend. It's a mixed change. But they're not going to put in their pocket the savings of the 90 cents. They're going to redeploy it in ways that they can sell more goods. It just got deployed away from traditional media. Paul: And news. Alan: That's another matter altogether. If you look at the investing I've done since, Polaris has done since, it's been much more vertical ized. You and I have, over the years, talked about the value of health audiences. They're trading in $20 and $25 costs per thousand (CPM). Remnant general news is 25 cents. Financial, I've got an investment in a financial vertical leader. CPM's at $100 per thousand. Smaller audiences, but exactly the right audiences. I've got another investment, talking to patients. Those are measured in thousands of dollars, CPM's. Because you're talking to the patient. John: The other thing that happened to the mix, at that same time, simultaneously, is the cable television industry grew up from not particularly much of a factor in national advertising to being a huge factor. Alan: More targeting. John: Yeah, that's targeted. It's vertical. They take their audience. So it wasn't just digital. Then cable television started adding digital components. Martin: Let's go back to the point at which the industry tried to come together. One of the themes that we've chatted about is that the industry missed who it was competing with. There was an attempt, early on, to create something called Career Path, which would have created a large... John: Classified Ventures. New Century Network. Martin: All of those things failed. Is that because joint ventures, in consortia just simply can't work, or is there something about the journalism or newspaper industry that is particular about that failure? Alan: I don't think it's particular to the industry, as much as it is the inherent difficulties of pulling a joint venture off. I could go on at length about that. Occasionally they work, but most often they don't. Because people's agendas are not aligned. The rewards of success are confusing. Execution by various partners is a function of their conviction and their defense of incumbency, as opposed to their aggressive embrace of change. We were always forward leaning in that regard and some of our fine partners weren't. You couldn't establish the uniform national footprint. What was the motivation for...Like I said, I could go on at length about cannibalization. My mantra, around The Washington Post company, was, "I want to anticipate rather than react. I want to experiment in the market, rather than study. I want to cannibalize, rather than defend." People got sick of me saying that. But I went around for nine years saying that, when I was president. So that was our bias. We didn't have that necessary alignment. I recall how reluctant, at times, The New York Times Company, was to come into. It ultimately became a good partner, but other times...Their quarterly sales budgets. "What do you mean? Let's have these four legged sales calls. That's my client. Not your client." John: Was ownership ever an issue. Because in the newspaper business, you have these wealthy oligarchs who were used to having rule over their domain? I'm not talking about one in particular. Alan: I think they had a bunch of Martins and Alan's around, saying. "Wake up. The world's changing." John: Were they listening? Alan: In varying degrees, yes. But listening and conviction and action are different matters. John: When was the first time you saw the threat of a free classified and what it could mean to the newspaper industry? Alan: I've been thinking about it. I don't know the exact date. But it came to a head with a company called Junglee that was scraping our classifieds and then selling a frame of revenue around it. Martin: Didn't you then acquire that company? Alan: Yes. I went out to see the venture capitalist, which I am now, and I said, "There's problem here. We created that content and you're not going to take it from us. If you try, it's going to be you and your children and your grandchildren who are going to be doing battle with us. So we need to figure out another plan here." In fairly short order, we bought it. Then we went around, trying to Junglee in a way that other media organizations were trying, fair and constructive. As opposed to exploitative. So we bought Junglee, turned out to be a very good investment. John: And then? The evolution of the classified in the industry? Alan: Classified Ventures, Career Path, but there was also... Martin: Brass Ring. Alan: Brass Ring got into it very early. John: Why did Craig end up with the position of share that he ended up with? What explains that phenomenon, other than free? Alan: Give me more context. John: Well, Craigslist comes along... Alan: Oh, I was thinking about Craig (indecipherable). [laughter] John: No. Craig Newmark, who we had in here, recently. Alan: Because in the world of classifieds...You didn't spend as much [indecipherable 18:27] I did. When you have the market under one tent, the bazaar is concentrated in one place, even if its clunky, not elegant, maybe even dirty, if its all there, you are going to go. He had aggregated, early and comprehensively a whole bunch of supply and content. Others came along too late. Martin: Another theme that keeps coming up is the cultural one. You've touched on it, already, a couple of times. But Digital Inc., separate organization? Alan: Yeah. Martin: So from the outset you're creating a separate organization? Alan: We started out inside The Post building. There were all kinds of tension and well meaning, principled contention. Don and I concluded, we needed to give these guys a chance to blossom. We moved Digital Inc. to Virginia, out of reach of The Post. It didn't meant the phones didn't ring and it didn't mean that those guys didn't get summoned, regularly, back to the newsroom or the newspaper business side. Which, of course, was a drag on their time and their efforts. Probably, to a degree, it's still going on. There was a proprietary client ownership. "You can't go there first with your 10 cent offer when I'm selling a dollar's worth here." All of which slowed down the blossoming of those things. We should probably make a footnote. I'm not sure we'll get there. Which is pay versus advertising supported. That was a big decision. I remember making the decision on the couch in my office with Don. Then the other debate, where the winning argument isn't clear. Was it going to be nationally oriented or national and local. Because The Post was so strong in local, as well as a good national brand in certain areas. So we should come back to that at a point. John: We had a long talk with Gordon Crovitz, who made the argument that it was an easier decision for DOW Jones to stick with pay, because they had long been selling their news service on a 24/7 basis. It wasn't such a cultural shift. Alan: Not at all. Actually, I'm surprised he derived the justification from the news service. As an individual businessperson, I have to read The Wall Street Journal. John: As a former Wall Street Journal reporter, I can tell you, the DNA there was if you found news you didn't wait for the paper. You broke it. Alan: Culturally, very important difference. There was a debate that Len Downie and I had, when the Microsoft trial was going on and Rajeev [indecipherable 21:35] was coming out with reports at 11:30 in the morning, following the morning court sessions. They were great and we wanted to put them up in WashingtonPost.com. Len said, "The story's not fully reported yet. We've got to wait until later in the day." He was right. It wasn't fully reported. The question was, do you go out with a half baked egg or not? John: Which DOW Jones had been doing for 100 years. Because you sit in the room next to the Reuters guy. As soon as you hear news, you jump up, you run out of the room, you get on the phone, you break the news. Alan: But that wasn't in our culture on general news. John: Or any other newspaper. Alan: Len obviously had his head and heart in the right place. He was focused on getting a daily paper out which was the best possible. John: Your point, that you were getting ready to make, was that The Journal was less of a commodity, because they had... Alan: I don't think there's a comparison. I would have done the same thing at the journal. The trouble with general news, as opposed to financial news, it's available in lots of places. The market of advertisers doesn't value it as highly, because of the general readership and the first paragraph that's available everywhere. John: We've got to go back and cover a lot of ground, but since you're rolling on this and you've clearly thought about it, I have to ask you a question. What's the future of the general news business? Alan: It's tough. I don't have the obvious answer. I'm not suggesting there isn't an answer. John: Some people argue that there never was a general news business. That it was always bundled with other things. It's just a rebundling. Alan: Think about the bundling of advertising. You knew where to find the tires in the newspaper. Maybe not in The Times. But in any local paper you knew they were going to be in the sports section. You knew where to find the white sales in January. They were in the A section, even if you didn't know where Sudan was. Now, if you're shopping for white sale items at a good price you're thinking about Amazon. You're probably going to some auto website to think about tires, with price discovery there. I'm talking largely newspapers, but it affects other media too. Part of the information that people valued was the messaging from the advertisers. That became unbundled, together with ESPN doing what it's doing in sports. I'm not sure who's covering city hall anymore, except for the local news and TV stations. But the TV stations have, because of cable, been forced into ambulance chasing and stories that aren't as policy oriented. Paul: So if you want to be a corrupt politician, go local? Alan: Yeah. Paul: No one's watching, in a lot of places. John: Run for the school board. Nobody knows who you are and that's where all the money is. Alan: Yeah. I'm not suggesting that people are scheming to do that. John: They've always been scheming to do that. The school board has always been where they go. That's where the money is. It's where you can get your uncle the janitorial contract. We had one example that grew right up out of The Washington Post. I don't know if it makes money or anything. I know you're long gone from The Washington Post. But this whole... Alan: I'm still close in spirit and conversation. John: The homicidewatch.com. The woman, she's a Neiman Fellow up here. She started this thing because she realized that everyone who's touched by murder is interested in it and that local newspapers had really de emphasized their coverage of this thing. That's an example of a vertical that used to be part of general news. Alan: There's local newspapers where I live and always were. People do keep an eye, were there break ins in your neighborhood. Our metro editor, Larry Kramer, who you ought to be talking to, used to run restaurant closings and why. People wanted to pay attention to who had rats and who didn't. It's not highbrow, but it's relevant and interesting. The trouble with that, it's very valuable, but valuable to 30,000 people maybe, in an area that could actually be affected by it. It flips back the other way. The economics are probably there for a decent CPM, but the cost of selling that ad, local here or CitySearch, which I was involved with too, is high, relative to the revenue that you can pull together on it. Martin: Let's go back. You said it was a hard decision, this free versus paid decision. Alan: It wasn't that hard. We wanted maximum exposure. Martin: It was coming off of Interchange, which you had charged for. That was natural. Now you've got this decision to make on the web. In retrospect, good decision? Bad decision? Alan: It's the topic of the day, pay walls. I don't think there's an obvious answer. When you erect a pay wall the viewership drops off so dramatically that the advertising total dollars, even at higher CPMs, really diminishes. So you have to get enough on the pay side to make up for the loss of the ad dollars. You're seeing papers move toward pay wall, including The Washington Post. But I don't think you're going to see a million people buying New York Times pay subscriptions. Martin: The Post's methodology is even more porous than ours. Given that it's 20 free a month, I don't think you're going to see any dramatic drop off. Very few people, in the scheme of things...That's part of the problem. Alan: Drop off in free use, you mean? Martin: Drop off in total audience. Alan: Yeah, I agree. Because it's so porous, therefore the pay business isn't going to be that big. Martin: Right. They're going to have to either tighten the wall, to get more, or they're going to have to live with, essentially a free website. Alan: If you're going back in history and you think about what was happening mid nineties, '95, '96... Martin: I have absolutely no question... Alan: For us, it was appropriate. Because we together with The Times Company, owned The Herald Tribune. Functionally, Russ Lewis and I traded off gaveling the board meetings and understood the economics. At its peak, what? A couple hundred thousand circ. Half on time, half a day late. You put The Washington Post out there and The New York Times out there. The big stage, the big proscenium across the world, for access to our news. Our reporters began to figure that out, as time rolled on. High ministers in various countries were aware of what that reporter was writing, timely, as opposed to waiting maybe to turn to IHT or the clipping service to come out the next day. That was great for newsroom extension. We had a dramatically bigger audience, which for certain advertisers, created a heck of a lot of revenue. Martin: Another strategic decision that The Times made and The Post made, I'd say roughly at the same time, was that The Times made the decision to go national in print. Alan: Brilliant decision. Before my time. Simply brilliant decision. Kudos to the family. Martin: The Post could have, I think, done that. Alan: They could have. Martin: Decided not to. Alan: I wasn't there. I read the books, but I'm young enough to say that I wasn't there. Could have. That was a very important decision, on the part of The Times. It's the future. The brand is known because it's widely distributed. Print becomes less of an issue over time. Martin: Over time, yes. That's right. Paul: Do you see a print less state for the news business? For these companies, at least? Or a news business that's wholly different? Alan: I don't know. The metaphor that I use is the industry is tumbling down a staircase, back and forth. You've got to look down the shaft and say, "OK, there's a landing down there and I'm going to stop at that landing. When I do I'm going to be healthy. I'll beat it." An equilibrium that makes sense economically. You've got to figure out what you're going to look like at that point, which goes to the product and the costs and the rational revenue judgments. Right now, still tumbling down the staircase. I think there's going to be an equilibrium. Somebody's going to figure out the right mix. I think the issue is aggressively trying to get there as opposed to waiting for the model that comes out of one of the top 50 markets who's luckily happened into it. But I'm more forward leaning in my style in that regard. And the Post company was, too. Martin: Speaking of which, some have argued...We spoke to Tim Landon... Paul: One second. Let me do the stop and restart. [beeps] Paul: We're back. Martin: We spoke to Tim Landon at the Tribune Company. Alan: I remember Tim. Martin: He was quite clear on this verticality notion and that actually once they got the formula right with Career Builder, the jobs vertical, it rolled on. That Cars.com was a big success. Alan: It's been a big success, Cars.com. That's right. Martin: His view is that for reasons that have to do with the fact that they bought Times Mirror and others, they just didn't continue to, as he said...I think he said, "Rinse and repeat." They just didn't continue that vertical strategy in the way...Had they done that, it would've been a completely different world today. Part of that probably would've involved some M&A, which obviously was part of your portfolio. Did you think at all about...When did you leave The Post, by the way? Alan: I left in May of 2000. Paul: OK, so you left very early. There was a point in 2001 and 2002 when Internet businesses became very, very cheap. Alan: Yep, and newspaper companies were rolling along with nice profits. Martin: That's right. Unfortunately, not a single person... Alan: It still goes on. Martin: ...outside of Barry Diller recognized the value that was being created at that point. But I was wondering whether, in retrospect, you felt that that was a huge missed opportunity. Alan: I think there'd been a number of missed opportunities all throughout the decade of the 2000s. Paul: Can you elaborate on that? Alan: I think there'd been some great companies that incumbent large media organizations should've considered buying for talent and know how, feistiness, high energy that could've represented the team to take those firms forward. John: Can you give us dream scenarios? Alan: I have to be careful on this because I'm kind of a player in investments, various things, but for example... John: This is for history. Alan: Yeah, right. Somebody should've bought Internet brands. Martin: Well, a Times Mirror guy ran it, which is interesting. Alan: Polaris, I as a significant investor in Internet Brands. Extraordinary adeptness. Great margins in 100 verticals, which wasn't just reporting in newsroom, it was conversation, it was software. A lot of people talked to each other, user generated news. Very high margins and defensible margins. A private equity process began and this is the team and the profits to buy at a time when actually, we were heading through the period of the Great Recession. It was the example of something that one should've bought. There were others. We missed them at the Post company, too. We had some conversations with some notables, but maybe I was a little too cheap with what I was offered. John: What are, "couple or more?" Who did you talk to or who did you think about? Alan: We thought about a lot. Had an early conversation with eBay. That wasn't really content per se but saw its power. John: You guys had bought Kaplan and that wasn't really content. Alan: That's mid 80s. John: That worked for a long time. Alan: It worked fabulously. Along the way when I became president of the Post Company some institutional investors would call and say, "You don't really want to own this business." Not our investors but others who worried, private equity guys or maybe an analyst. It wasn't that big, $50, $70 million of revenue. But it wasn't a blind call, just to stay in it and to go bigger at it. It was a demographic trend, the possibilities of extension, both, online and other areas. John: International. Alan: It's become the biggest piece of The Washington Post Company. It was two steps forward one step back, three steps forward one step back, et cetera. It was hard but ultimately it built an enormously valuable franchise. But that didn't come out of the attention or love given to The Post, Newsweek, et cetera. That was because the company was substantial cash flowing we could do those things. Had a board, very importantly, had a board and an ownership that thought way beyond the next quarter, way beyond. John: Had Buffet. Alan: Yeah. Bill Rowane, Grahams, Jim Burke, Dan Burke. Martin: That should have served you well through this period as well. Alan: Served me well? Martin: No, no. Served the Post Company well, sorry. Through every period not just in the period of the '80s with Kaplan and the '90s. A particular strength that a lot of newspaper companies have is exactly what you've just suggested. Yet it didn't seem to...Maybe it did in some cases. Alan: Substantial capital was spent in Kaplan by the board and Don after I left, really substantial. All part of the same thesis. We showed up in the '90s and they stopped doing it in the 2000s, at lot of newspaper actions. We just didn't win because we had a different view of the future. I've said this many times, we already had The Washington Post. We didn't need another jewel slapped on the side of our crown at the expense of mis allocating our resources. John: Whereas The Tribune Company was showing up and winning, quote, winning. Alan: There's always the buyer's remorse, "Gee, I won the auction. What was somebody else thinking?" They were spending on more TV, which still continues to be a good margin, although slower growth, on more cable, more Kaplan, but away from, you might say, the threatened, general news vehicles, metro dailies. We did buy and grow more of the local tabs, because you need to know what's happening with the local school, open it twice a week and you turn the tab. John: What would you say when you look back on your whole career in the publishing business or even in the post publishing venture capital business, what would you say were two or three of your best decisions, biggest hits, things you feel the best about? What are two or three that got away, that you could have replayed them? Would any of it have made that much difference to The Washington Post Company ultimately or the industry? Alan: This is a first impression question. A great decision was the company's commitment to invest in Kaplan and I had to revisit to stay in it and drive it hard. The board supported us. Significant decision. I think significant decision to go early on Digital Inc. and then washingtonpost.com because the digital future is secure because that's where it's headed. We lost a lot of money on the way toward it but we were willing to do it. A big miss during the Washington Post Company period for me was we had a chance to buy a lot more cable and a lot more TV. Conservative analysis and a good discussion the board had, "Let's not do that." We should have done more of it. That's during that era. In the current VC era, I've seen a whole bunch of great ones. I tried to invest in Facebook at the beginning, but that was 3,000 miles away and who knows. There was Accel two blocks away. That was obviously a wonderful opportunity early on. There are those that have shot the moon. At the time, we had some regrets but the business models have been held up. I don't want to name them. We had short term regrets and then satisfaction that we didn't do it later. I had a close look at Pandora. A very close look at Pandora. Didn't fully appreciate just how dramatically broadly distributed it would be in mobile, although it's starting to happen. But always had a headache about the cost of the music. We'll see whether I was right or wrong. There's a list of things I didn't do which is very long. John: One of the things about history that we're learning in this process is how different sometimes things look when you look back on them. You know what was going on and what were the... Where are we now and where are we headed? How would you describe this current period and the near term future. What's...? Alan: I think it's going to be challenging for broad-based, general interest news to bring together in one place, electronic or print, what used to be the bundle that was offered because of fragmentation. Starting with cable and now the web, infinitely fragmented. Personalization, user generated content, professional and user sourced curation. When the tiles come back together, it's not going to look like the painting with just three colors inside a given frame. It's going to be different for every person. What's the implication of that? We're getting to a new place. There are a lot of vertical solutions in there, but mass aggregation, mass media is going to be challenged. It's going to be challenged in TV networks... John: Most of the opportunity going forward, as far as you can see now is going to be vertical. Alan: The opportunity for people to re aggregate conveniently. A lot of people don't necessarily want to become editors. There's a price we're all paying, it's not my phrase, but the echo chamber. We're watching what we're comfortable with. We're not being surprised with, to use an overused term, the serendipity of, "Oh I didn't know that!" John: Some people have suggested that the next step, everything they say is in line with what you just said. But then, the next step might be either some consolidation of the previous big shouldered mass media giants by either the so called super stacks. The Apples, Amazons, or via Twitter or Facebook or some of the social, that they may be owning some of these... Alan: It's a lot more fun to buy growth than it is to solve shrinkage. John: You don't see that. Alan: I just, I can see a leadership in a board discussion. Do you want to take on a problem and rationalize it for a big breakout or do you want to continue to feed the fuel of your growth? It's human nature to say, let's go with the growth. Martin: Alan, the one area that your venture experience really directly touches this field right now is in the young companies that are being built. There are two types of young companies that are being built. There are aggregators like Flipboard. I'm talking about companies that are directly in journalism, not something like WordPress, which both the Times and Polaris are in. It's an enabler, I think it's a very successful company. I'm talking now about news companies. On the one hand, the aggregators like Prismatic, Pulse, which obviously, just got sold, or I think it's close to being sold, and Flipboard, or so called new and native journalism entities like Business Insider, BuzzFeed that have a different character than the deep health vertical of financial vertical that you alluded before. These are more traditional news companies, not traditional in the sense that they do anything particularly traditional, but traditional in the sense that they are more general. What do you think of those models? Either the aggregation model or the more innovative new companies like BuzzFeed, Business Insider. Alan: The last five to seven years, I spent less time on them than you have because you had a professional responsibility to be an expert, and you were and had to be in the center of all those conversations. My reactions are at a higher level. Those business models given how people writing checks to them, namely advertisers, are not as enticing to me for the general news offering as other things that I and we invest in. They get to be medium sized businesses, but I don't think they get to be giant. Now, there might be valuations that are giant because of hopes and dreams, but in the end, I'm thinking about sow what kind of profitability can they generate against how big an audience and what kind of revenue? I'm not running them down. John: You just don't want to own them. Alan: I have a mandate now to take care of endowments and pension funds, compounding in meaningful capital. The exits associated with those, Huffington Post aside, I didn't forecast Huffington Post would sell for the price that it did. I had a chance to invest, and I chose not to. Shame on me. That's one that I didn't do, but I don't have great regret. A good price to pay for a business that in a rational, sober market would not have been paid. It was strategically important to AOL maybe, we'll see what happens. I have not been paying as much attention to those kinds of businesses, as I know you've had to. I'm making a comment, I guess, as a result. ...
VIDEO: YES

Andrew Sullivan
BIO: YES: Andrew Michael Sullivan (born 10 August 1963) is a...
TRANSCRIPT: John Huey: It is March 14th, 2013. We are in the world headquarters of "The Dish," which is to say Andrew Sullivan's smallish apartment in Greenwich Village of New York. We're talking to one of the true journalism surfers of the Internet. He has blogged for mainstream media companies, he has blogged for disrupters, and now he's blogging for himself and for you, the reader. Andrew, I'm going to ask you the "first time" question. When was the first time that you realized that this thing called the Internet was going to transform either journalism or transform your life as a journalist? Andrew: I knew it in an intellectual sense by the end of the '90s. You just saw. At the same time, the '90s was a time when there was this huge crash. I wanted, as a writer with a bunch of materials, to have a website. I thought I should have a website. Everybody else has a website. I had a good buddy. I didn't know anything about it, so I said, "Would you please put my pieces up on the website so that there's a resource I can build up?" An AndrewSullivan.com resource, we did that. Every time I called him up to say, "Could you post a new piece of mine?" He would be, "Fine," but it wasn't his day job. Eventually, he said, "Here's this new platform called Blogger.com. Why don't you put up your own pieces?" [laughs] Politely. I was like, "Cool, sure!" John: Was anyone blogging at the time? By the way, we've interviewed Dave Winer, who is one of the people who developed a blog. He's talked about his... Andrew: At the time, I don't think there was...Maybe Mickey Kaus was, maybe? Blogger to me was a total revelation. John: You weren't copying anyone, you were just... Andrew: No. John: ...finding a way to... Andrew: I suddenly realized, when I put the first post up, I could put stuff up here that I hadn't published elsewhere. This was the light bulb moment. There was another light bulb moment in June of 2000 when I was in England. I remember it. I was travelling from London to Oxford to see some friends. Actually, Niall Ferguson. I noticed the Evening Standard had its news...The Evening Standard used to be an afternoon paper. They always had those great billboards with some outrageous headline to make you buy it. Get on the train, everybody would...It was 4:00 in the afternoon. I'm like, "Journalism has done this! It has actually produced material around the clock. Why don't I just start writing at different times and provide the readers with the kind of journalistic service that the London papers are doing?" Seriously, it took just doing it to suddenly realize, "Why can't I do this and do that and do the other?" Then I said, "What do I write here? What is a post? What happens?" Essentially, I would read the New York Times when it came online at midnight. It used to all come on at once. I'd make fun of Maureen Dowd's column before anybody had read it. This was, I felt, super fun. [laughs] As long as you don't mind losing every friend you had in Washington, which I didn't at that point, it was absolutely... I borrowed freely from my work at The New Republic. Like, the "Notebook" of The New Republic, which is a bunch of little items of opinion that pointed out stuff. Then there was the "Diarist" at The New Republic, which I used to write much more personal, first person voice stuff, like your life. Then Private Eye in London and The Spectator of London were also inspirations for me. Private Eye had Pseuds Corner. Readers sent in material for poseurs. Hence, our Poseur Alert. I slowly developed these little features that seemed like fun at the time. Even the View from Your Window. One day I was like, "I'd like the readers to see what I see every day, which is the in tray," which is a simply amazing litany and variety of people from every place on earth telling me stuff, communicating instantly. Not only instantly, but incredibly erudite, interesting people who were experts in their fields, obviously, and had things to tell me. How do I get them to see each other? All they're seeing is me. As an experiment, I said, "Why don't you take a picture on your digital camera of what you see when you look out your window every day. We'll do it for a week." John: You're still [d]oing it. Andrew: I can point to the post where I'm like, "Please stop." [laughs] I was deluged with hundreds and hundreds. It's just me, sitting in my room. First of all, I have to format these bloody things. What am I going to say? Now, it's a feature that has become a book and also has a weekly contest that Chris Bodenner runs now as an art form on Tuesday. There are geography classes now that do the View from Your Window as part of their class. What's fantastic about it was that one simply constantly improvised. It was so much fun. I didn't have to ask. [crosstalk] John: [You were excited because it] talked back? Andrew: Yeah, exactly! Now, some journalists aren't likely to take to that very well. We won't mention any names, but you can imagine. You're thrown into this melee of conversation. Increasingly, I wanted their voices to be part of it, so they also became part of it. I did that for six years by myself. John: That was from about 19... Andrew: It was 2000 to 2006. John: That's you, yourself, AndrewSullivan.com. Andrew: Around 2006, people in the media stopped asking me what a blog was. It took six years for [inaudible 11:33] . John: That was kind of a dirty word at first, except for you and a few other people. Bloggers were characterized always as people sitting in their basement in their pajamas as opposed being in a... Andrew: In a suit in an executive suite with a bunch of journalists. John: Or in the Iraq bureau or whatever the... Andrew: They weren't wrong. [laughs] I was sitting...I do, do most of my blogging in boxer shorts. It's true. I get out of bed. I get the coffee. I have these people basically drumming their fingers on a desk waiting for me to cough up some loogie of insight. John: But it depends on who's sitting in their underwear. Andrew: Obviously, the underwear is not the salient characteristic of the blogger. It's an accoutrement, but it's not an essential character... John: It's the uniform, but not necessarily the... Andrew: Of course, the point was... Paul: It's just a piece. Andrew: What? Paul: A consistent piece of the process. Andrew: It is the one...I would have always my nightshirt, which had a bunch of ginger snap cookie remains that had melted in with the coffee. The beard was full of whatever it was at that point. John: So, 2006, you... Andrew: Then suddenly these people, Jake Weisberg at Slate, various other people say, "We'd like to include your blog." Suddenly. It happened almost overnight. Since I wasn't earning any money except for a couple of pledge drives, I thought, "That's interesting. That might be worth doing." I talked to Time and various others. There was a slight bidding war about it, which itself was interesting. They were understanding that there was a readership out there they weren't reaching. John: There was a reason that they came after you. You had something they wanted an audience, a buzz factor and they were willing to pay for it. Andrew: Yeah, but not what I wanted. That was what's interesting about the economics of this. I said to them, "Look, you are not hiring a writer. I am not going to be on a fixed salary like a staff member because I bring you..." Currently, I brought to The Daily Beast 1.2 million unique visitors a month. "That's worth more than me just being a writer. I'm bringing all these people to your site. I want to be rewarded for that. If that grows in size, I want my salary to grow with it. You're putting ads on these pages. I give you the page views, you get the money. I want a cut." John: No one did that deal? Andrew: No, [laughs] not to start with. Time said, "That's interesting. Yeah, I can see the argument in that. Let's try this out for a while. Then we'll go for year two, and we'll figure that out." I was like, "I just want to say this as a principle that I want my salary to go up next year in line with some kind of traffic incentive." The other thing that people don't understand is that blogging is incredibly hard work. To produce 50 posts a day which we do...then, by myself, many fewer posts. But still, every day you have to have an opinion in on basically anything. You have to produce in a way that other journalists didn't. It is a much more punishing regimen than regular journalists were used to. I also wanted a premium for that. At the end of the year, they were not budging. They were like, "How can we agree to this? Who knows where this could go? You could end up earning a fortune if it suddenly took off." I was like, "Yeah, and you know what? If you have a decent ad department, you can sell. It's a win win, right? It's a total win win." But they weren't used to relationships with writers as partners. They were used to writers as employees. Then David Bradley comes...I said, "No, I'm gone." I was ready to give it up. The Atlantic comes along and gives me my dream deal. Their website is basically nowhere. "Would I come and kickstart it?" I said, "Yes, I will, on the basis that we do a three year contract and my salary is pegged to my page views." What Time feared is what happened at The Atlantic. The Obama year...I was among the first people to pick...That "Why Obama Matters" cover on The Atlantic suddenly made me the journalist that was the Obama guy. I already in the spring on the blog said he's going to be the next president. When he won Iowa, you could look at our traffic. It was from universe into another universe. I could tell you this. It starts here. It does that at 9/11, it does that at the Iraq war, and it does that with Obama. Since Obama it has grown pretty steadily, although we don't know where we are now. Because we're in this transition, we don't know what the traffic will happen. I got too expensive at The Atlantic for their comfort. Without going into any detail, we agreed eventually. Also, there was a slight conflict of philosophy in terms of what online journalism should be doing and how you want it to behave. I just had different vision. John: Can you elaborate on that at all? Andrew: I'll try. They made me sign a legal agreement that I wasn't allowed to talk about anything that happened at The Atlantic. I'm legally... Paul: If we ask the question in a different way...Not to be cute, but just what should online journalism be? Andrew: "Journalism" itself is a word that in some ways doesn't work online, because it's based on daily. This is not a daily. It's not even a publication. It's more of a broadcast. You're a 24 hour broadcast channel, but of writing, at least at that point. At that point, there were no videos, really. It was just beginning. YouTube was beginning to move. We were beginning to embed videos and so on and so forth. I thought there's no way you can re create a magazine online, because you don't have any staples or any paper. Every page is like any other page on the Internet. It all has the same status, appears on the same screen. This was Matt Drudge's great insight. In 2000, I went down to Florida to pay my respects to the great Drudge. Again, I didn't have any friends in Washington. I wrote a TRB why Matt Drudge is the best thing to happen to journalism in a long time, which was like talking about the turd in the punchbowl. That's exactly what I was at the time. He said, "It's a broadcast, not a publication. You've got to remember that." I thought you can't package all these people in one bundle. People go to the writers they like. The way people encountered the Internet to begin with was porn and money, tech stocks, or plain email, and also "sex with [inaudible]" sites. These were the big... [laughs] Basically, what I'm saying is that it was all person to person relationships. It wasn't person to institution relationships. You couldn't suddenly say all these people are one institution and you want to go there. I just didn't believe that model could work. No one gets up in the morning, goes online, and wants to go to Time, but they will go see Arianna Huffington or Matt Drudge or Andrew Sullivan or Glenn Greenwald or Josh Marshall. They know these people. The medium itself had emerged as that peer to peer thing. My concept was, find a circle of great writers and bloggers. They were all different. You can't really combine them. But let them be there. Have a diversity group, the only criterion being intellectual honesty. It didn't matter right, left, middle, or just indefinable. Let's start a conversation. It will be at the level of The Atlantic. You create a discourse, an environment for bloggy chatting, and then you put out this really classy monthly magazine. In other words, I saw the model as being, get a bunch a bloggers out here who are your writers and helping your brand get its identity, and then put out this fantastic monthly print product. I think monthly print products have a future because they're deep dives. There are pond skaters and then there are plumb lines. The great thing about the blogosphere is that with a hypertext link, you could both do the pond skating but with a link, link to something that's really quite deep and long and interesting. That put writers at the center of journalism online. Now, if you're running a company, that's not what you're particularly interested in. What you want is advertising. You want lack of controversy. You certainly don't want stars. They're dangerous. You don't want to turn into a TV channel where you start having to negotiate Barbara Walters' salary. The idea is that you chop up a magazine into lots of different sections that are essentially created for advertisers, what they call verticals. You basically create the Internet journalism for advertising, not for writers. Whereas my view was, this great thing means I can write anything. No one can stop me anymore. This is a writer's dream for a writer to reach his or her readership directly without any publisher, editor, colleague, advertiser, having to pass those hurdles, let alone the fact checker and the copy editor and getting it to Si. Liberation. John: At this point, you're one of the most successful, well known, most imitated of the blogosphere. You have helped lend credibility to commercial websites one mass, the other elite. You're being imitated at all kinds of online publications. You have this philosophical... Andrew: Difference. John: ...difference, and maybe economic. And then what? Andrew: As long as I had in my contract total freedom of editorial content, they couldn't touch me, which meant, of course, I could criticize what they were doing, which they didn't like very much. Then The Daily Beast comes up and says, "We're going to give you a real cut of the advertising revenue." I'm not going to go into absolute details, but I would actually start getting ad revenue. By that time, I'd also found interns at The Atlantic who'd been able to...As the Web expanded....The Web, in 2000, when one man is blogging it, is manageable. There's no way in 2013 one person can read the Internet or even grapple with it. I developed this team of interns who would help me. They wrote memos. They would go into the Internet. I always called them leafcutter ants. They'd go out, find a nugget of interesting material, trundle it back, give me a memo. I would then write up...On top of my own stuff, I'd then look at theirs. It developed that way until it became a collaborative, organic process. All the major people who are still at The Dish are former interns. That was also interesting. I realized that was beginning to create a magazine from scratch, like at The New Republic. John: And a culture. Andrew: And a culture, a sensibility, a high/low sensibility, a place where you can go and anything can be said, a mixture of quite high level stuff. You read philosophy and talk about god and theocracy, but then there's also the penguins falling over "Mental Health Break" every day. It's a mix, a very cultural, political mix. Then, of course, advertising starts to collapse online. Who wants to click on those banner ads? I can see the logic. John: Now the bloggers are in the same place that the company is in. Andrew: Exactly. Then you realize that yeah, great, half the advertising revenue after costs. Well, half of zero is still zero. John: You finally got your piece of advertising right at the moment... Andrew: It disappeared. John: ...when the advertising went away. Andrew: Exactly. Paul: The moment they said yes, you should've been suspicious. [laughter] Andrew: I know. I should've been suspicious. I kind of was, but the concept...Remember, this was a while back. At that point The Dish had brought in at the last year at The Atlantic...Around 2009, it was looking good. They brought in $1.7 million in advertising money from my page alone. Part of me thinks half of that or at least some part of that would be amazing for a journalist but, of course, it didn't work out that way. Then we had to hit the issue of "what now?" They were prepared...I could get a salary to do this blog, just about. It would be a good salary. I'd done very well as a blogger because I'd leveraged from site to site. One of the smart things I did was insist in every contract that at the end of any time at one of these magazines, they are required to redirect that URL to whatever URL I want to point it to, so the readers move automatically to a new place. You can literally watch The Atlantic's traffic quintuple in a matter of a couple hours. David Bradley gets very excited. John: I'm familiar with that. Andrew: [laughs] Yes, because that's what happened when I went to Time. It kept getting bigger. That's the thing. It kept getting bigger as we grew. Then we sat down over the last few months. At that time, Chris, Patrick and I had been working on this for several years. We were like, "Either we give it up..." A large part of me was willing to do so. I was exhausted. There were health problems. The sheer toll of this on the human body is intense. I had a bad period of pneumonia. My doctors were telling me, "You either stop this crazy pace or you're going to..." They basically picked me up and said, "No. We have created something. We're not letting this go." When I bumped into Dish readers on the street or wherever and I said, "I think I'm giving it up," they would respond with two words, "You can't." I realized this no longer was mine. This was a community, a passion, a community. We sat down and said, "How do we monetize this? How do we make this work?" We really went blue sky. I'm not making this prettier than it was. We really did. We sat down and said, "Everything is on the table. What do we do? How do we do this? What do we want to do?" ... We asked ourselves...We want to write and we want to write freely. We want to explore the world. There's more to explore now. I think, for us, the great bonding moment was the Iranian revolution where went...We called it going cable, which meant that...In the old days of going cable, when you would just treat a news story and do nothing but this story. Chris Patrick and I took shifts and basically covered the Iranian revolution morning, noon, and night for about a month and got amazing traffic. I think we innovated a new form of live blogging journalism, of raw material. The videos, the tweets that were coming directly. We were filtering them and editing them but we were really a channel for the opposition. Then we found out that the opposition itself was loving our site. It was an amazing moment of catalysts, that we had something going. But we realized that our core strength was the fact that these readers came back every day. That 73 percent of them had bookmarked us. That they spend an average of 17 minutes a day on the site, that they were passionate about this project and that they were increasingly giving us the content. They were having discussions about topics that we were turning into what we call reader threads. They were creating the content. We thought, "Before we go to any billionaire or any advertising network," although we explored and thought about all those things, why not ask our readers to just pay us to do this, and make it as simple as possible. We decided to go to a pay model. When we thought that, we thought the cleanest, clearest model is just to really go cold turkey. Take all the ads off, like the get advertising. I was talking to another editor friend of mine in New York, because I asked advice from people about this. It had to be discrete at the time, but he's like, "If you can get out of the advertising business right now, and survive, [laughs] do it. All of us want to do this. We're all completely exhausted with this process, and it's more and more work for less and less return." We thought we'd do it. We thought we'd just say, "It's over to you." I told Barry [Diller] and Tina [Brown] we wanted to go independent. Our contract was up anyway, so it would have to be renegotiated. We've managed to find this company, "Tinypass," which we'd just come from a two hour meeting with, that would have the technology to set up the "pay me," the freemium model, the New York Times model. It would only take a pretty small cut of the revenues. That media had only been four months out of beta. This was very new. I guess at my point in life, 20 years of HIV, I'm like, "Why not." The worst that can happen is I can be humiliated and we'll fail. But I also increasingly felt that unless journalists actually honestly went to their consumers and asked to be paid for what they do, in this medium, because this medium is taking over every other medium and will be all media at one point, then there's no future for journalism at all. Very few people actually want to read journalism, like news and analysis. The newspapers were able to sell them, the classifieds, the cartoons, the crosswords, the sports section, a whole bunch of stuff bundled together, but if you tried to sell them the op ed page, no one would buy it. If you tried to sell them the editorial page, I mean, people would ask you, "What's that?" That's what we knew as journalists. John: How's it going? Andrew: That is a great question, and we are still trying to figure out the answer. John: How far are we into this experiment now? Andrew: We are six weeks into the beginning of the meter. [laughs] Yes. And only two and a half months since the establishment of "Dish Publishing LLC" as a company. John: Well, the lights are on. Andrew: The lights are on, yes. That's my savings. I currently have no salary, [laughs] and we have no ads. Paul: The whole audience come at first? Andrew: It was a weird thing, because we knew we couldn't keep this under wraps, so we knew we couldn't do what we needed to do and then announce and then have the site ready. So we had to announce a month before. We had a month to get all this stuff done, which was crazy, to actually create a whole site, redesign it, set up the business, do things like payroll, taxes, lawyer, on top of doing the blog every day. We're currently basically ready to drop dead, but we did it. The response immediately, because we were able to put up, not a meter, but we were able to put up a link, to tell people if they want to pre subscribe to go here. We raised half a million dollars in basically three days from our readers. We are now at $640,000. We made about 110 grand in February. Our fixed costs are, excluding the three of us who own the company, is around $400,000 a year, currently, just to do what we do. We're already profitable, if Chris, Patrick, and I want to be poor right now. [laughs] That's basically it. But we have no debt. We didn't want investors, even though we could have gotten plenty, I think, because the whole point of doing this is to be free of those pressures. John: So you cut out all the middle men? Andrew: We cut out every middle man available. John: There are no agents, it's just you and... Andrew: There are no agents, yes, and them. They pay me and I write for them. They pay us and we assemble and we edit the Internet for them. John: I've been trying to think of a historic precedent for this in terms of business transactions, and I haven't come up with one yet. [pause] Andrew: You don't have to have a million readers, you could have a thousand. It doesn't have to be your only source of income, it can be a supplemental source of income. The whole point of this is beginning to understand how we can gain revenue and money without advertising. Let's be realistic about this. The numbers online, as you know, are...Take them with a pinch of salt. You have two different versions. They seem to show completely different universes. We have about a million plus unique visitors a month. We have currently 25,000 or so subscribers. But every day, we notice...You can have a unique visitor measure every day, as well. We find basically that every day about 80,000 people are showing up regularly. We have a very solid...It just doesn't really go below that. That's the beauty of The Dish. We're stable. We developed this audience that's stable. 25,000 out of 80,000 is pretty good. John: You don't want middle men. Would you rule out associates or other bloggers that you have respect for that could become part of the... Andrew: The network? John: Yeah. Andrew: Not unless it makes sense to do so. John: But if it enables you to leverage more reader revenue and some of your costs across a broader base and maybe someday pay yourself a salary? Andrew: This is all to come, John. John: But you're not opposed to this. Andrew: No! John: This isn't Thoreau. You're ready to go... [pause] Andrew: I'm not Thoreau, but, yeah, there are plenty of opportunities to use this. The truth is that I do want to make a success. One reason is because it would be nice to be able to write for my own magazine, basically. The most rewarding experience in journalism has been working with my former interns and now colleagues at this enterprise. It's a great group of people. That's a wonderful thing to have. I don't have to be that wealthy. This doesn't have to dominate the media. It can just be what it is. That's why I didn't want investors pressing me to grow. John: The technology that you work with is perfectly suitable now for what you do. There are all kinds of new disruptive technologies always coming. Andrew: Always coming. You have to always be alert to them and try and shift to them. We have an RSS feed. We don't have an app, actually. The blog is so "appy" anyway. It's now what they call "responsive," which means that it will fit the size of whatever tablet it's on. John: Your social profile? Do you spend a lot of time worrying about any of this? Andrew: No. John: You're still a blogger, basically. Andrew: Fuck yeah! [laughs] Yes! That spirit, the original spirit of, "I'm a blogger and I'm doing it because of freedom," is still, I would say, my primary objective. I don't want to become a Huffington Post. I don't want to become anything but what we are. But I'll tell you this. What we do want to do is to use this platform to start commissioning long form journalism, to take the blog form and get this readership and say to them, "We want to publish..." We can start on a monthly basis. "...a really good piece like the Steve Brill healthcare piece." The kind of pieces that don't get written anymore because these magazines don't really exist or they've been hoard out. Just say, "We're going to pay the writer real money from your money. It will cost you $1.99. We'll give a buck to the writer and 99 cents to us." We'll do it through our own...They've already got a payment system. It's a one click. They're already in our system. They've already got it. It's easy. Then you start resurrecting old form journalism that will be downloadable onto tablets from a blog community. In other words, from the blog, you re invent the magazine. Eventually, you could do a monthly... My stage two model we call "Deep Dish," which is an attempt to harness this energy, this visceral pond skating energy, for deep dives. Just mentioning that fact a number of people submitting stuff to us is way more than I can handle. I can barely get through the day right now doing The Dish. We'd need money to hire an editor and so on and so forth. But that's in the future. What we're trying to do right now in the first 12 months is to establish that we have a model that can pay for us just to do what we do, which is modest. Chris used to have on his cubicle at The Atlantic, a Shepard Fairey poster, but of Charles Darwin. It just says, "Very gradual change we can believe in." From the very beginning, my whole view of the Internet has been, "Listen to it." Don't come at it as a journalist with your previous models of what journalism is and try and shove it on that screen. You've just got to live in it. I'm a bit of a feral creature on the Internet. I was roaming the wilds of sex chat rooms and fast trading stocks at late night. I lived there and loved it. Loved the anonymity of it, loved the weirdness of it, the email. I love the fact that I don't have to talk to people on the phone anymore. That's something I don't ever want to lose. I think also that's what the Internet's about. That's why it's different than old, mainstream journalism. I can use expletives. I can put photos of corpses. I can raise issues like, "What on earth is Sarah Palin talking about with that weird pregnancy and labor? Can someone explain to me how this makes any sense?" I can say I was wrong about Iraq. I can now, actually this month, 10 years later, re post stuff I wrote 10 years ago to show where I've come and grapple with it. There are so many ways in which this medium can be played with, have fun with. I think the idea is freedom and fun. If we've made money...Potentially, I think, we could make a lot of money if we wanted to, but in the short term, it is to reinvest in good journalism and good writing. I'm afraid that there's going to be a lost generation. There are people who were never taught how to write an essay, never taught how to write a book. The old media institutions, for whom I felt a certain amount of pity as I saw them grappling with this, I now have lost the pity. A lot of them deserve to die. They are lazy. They haven't really had a connection with their readers for a very long time. They're learning, but most of them deserve to die, I think, at this point. Certainly, the entire book publishing industry should be pulped tomorrow. It's a huge scam. The idea is also to eventually publish my own books this way. Once you create a magazine really, it's a different form of magazine, but a community basically online, a conversation online, it can then produce products and different projects, essays one offs, books, merchandise, but basically focusing on the writing. I think we can get revenue that way. If we have to go to the advertising route, we will do it. If we have to. I have no philosophical objections to advertising, but I just feel that in fact we're reaching a point, and this is my gut feeling, I don't know market research on this, in which people would actually like to go to a page which has a lot of white space. It's calm, it's quiet. They don't have to tell which piece was written by some CEO from Chevron who has a slightly different hue of beige on it or something. They know they're not having to click five times to read a whole article, because they're trying to get page views out of you for ads. They just come to the thing. It's an infinite scroll. They never have to go anywhere else. If you want to unpack pieces, it will be happy enough to go to a separate page and click back. In other words, creating the simplest, purest, calmest, quietest. We want the highest signal to noise ratio on the Web. That's what I'm trying to do. ...
VIDEO: YES

Arthur Sulzberger, Jr.
BIO: YES: Arthur Ochs Sulzberger, Jr. (born September 22, 19...
TRANSCRIPT: Martin Nisenholtz: This is an oral history so that's the best place to start. I'll cast you back to my job interview. Arthur Sulzberger: I remember your job interview so well. Martin: You said two things at that interview that have always stuck with me. The first is that the Times isn't in the newspaper business and that you had an agnostic view of delivery. It didn't matter whether it was electronic or...I think you used the word "mind melding" at the time. Arthur: Indeed. This is, being a Star Trek fan, I use that as my kicker. Martin: This was obviously early 1995 so nobody could imagine what was going to happen or few people could imagine what was going to happen with the web at that point. The other thing you said was that we had just built College Point. You'd just...Actually, no. Arthur: Edison. Martin: We'd just built Edison. We had just either bought the land or put the planning in place for College Point. And you said, "This is most certainly the last printing plant I'll ever build." I just thought that was an interesting place to start, because clearly, we're now in early '95, you're talking...You must have had some inkling that digital journalism was going to be a very meaningful thing prior to that. Can you remember the first point at which you said, "Hey, there's something to this electronic delivery, and it's going to really impact me, the Times, et cetera." Do you have any recollection of that? Arthur: I don't remember what happened that caused me to say there's going to be a shift coming. I don't remember that singular moment. I do remember that interview that we had with you, where you turned to me, and to Joe Lelyveld, and to Russ Lewis. Was it Russ Lewis? Martin: Yes, Russ Lewis. Arthur: And said, "Why? Why do you people want to go digital at all? Why do you care"? Martin: I was testing at that point. Arthur: Yes, I know you were. [laughter] Arthur: I know you were. Maybe, in part, it's due to my two years as a wire service reporter for the Associated Press. Where we would transmit our information from London, where I was working, and it would go around the world, and it would appear in countries everywhere. I never felt tied to a particular piece of paper. Perhaps that was the beginning of thinking about it more broadly. It was clear that this was going to be the next telegraph, and it was going to change the way people consumed news information. Received and consumed news information. Martin: I guess I always took this notion of the word agnostic as being mostly a point about delivery. You've also often talked about the way it changes journalism, as well. Arthur: I wasn't aware of how it was going to change journalism. At that point, it was not on my radar screen at all. The fact of the immediacy of it, I get that part, but not to the degree we have to do it today. I certainly did not get how it would change the competitive framework. Landscape, better word. The fact that the competitors of those times for The New York Times. The LA Times, the Washington Post, the Chicago Tribune, would not be the competitors, in a fundamental sense, that we face today. Martin: I guess the only one that still is, is The Wall Street Journal. Arthur: The Wall Street Journal is certainly, that's right, again because it's a national and international play. BBC, the FT. I think of print, the FT and The Wall Street Journal would be the two major ones I would put out there. But that it would lead to the full throated blogosphere that we are working in today, the individual. I don't think I saw that at all. Martin: I understand that. If we fast forward just a little bit, it's going to relate to this early history, but throughout the years, you've also talked a lot about the nature of authority. I think this is a key thing, because there was... When I joined the company, it's not that there weren't other authorities, but they were all very centralized and top down. How do you think this notion of authority has changed in the last 20 years, and do you think it's a good thing, a bad thing? What's your view of that? Arthur: Let's start by saying, it's not useful to say, is it a good thing or it's a bad thing. It exists, and you have to make the best of this changing nature of authority. Do more people have a greater voice in reaching their friends, their colleagues and total strangers? Absolutely. There's no question about that. But do people still value information that they trust and can trust? Clearly, and I think we're seeing that. There's going to continue to be room for authority in this sort of traditional sense of that word. Authority because people check their facts, because they correct their mistakes, they own their errors, and because they can be trusted to bring a thoughtful conversation into place. We are working to do that more and more. Better integrating with our own audience. Think of the audience The New York Times content, and how we can better use that audience to build a really robust discussion. I think both sides of that are true. We (know that fact and rumor) circle the world in a second. Therefore, it's more critical than it ever has been, to have trusted, verified information out there. Martin: Back to the mid '90s just briefly. I joined the company, and... Arthur: We're all grateful. Martin: Thank you. We made a recommendation that was somewhat controversial at the time, although we made it in the context of other folks having made the same decision, to offer the website for free. Many people have said that this was a good decision. Many people have said this was a terrible decision. There are people, in fact people who we've interviewed, that are on both sides of that. I just wanted to get your thoughts in retrospect. Do you think it was the right decision, honestly, to offer the Times on the Web for free? At that time? Arthur: The answer is, absolutely I do. I do for a couple of different reasons. The first is, we didn't know what the business model was going to be. It was so early in that system. To see what kind of audience we could build, what kind of tools we needed. At a time when this was a highly profitable newspaper and company, because of its print heritage was, I think, correct. Two, I think by offering it free, we found it easier to engage our journalists in building the digital muscles that we needed to really make this work. Because, as you recall, the newsroom embraced it in theory but not really in their heart, because it got... Newsrooms, as you know, are mission driven organizations. They saw this in the early stages as getting in the way of the mission. The mission was getting the best quality information into the hands, literally, of people who were holding paper. But once they started to see what kind of reach they could get, once they started to get feedback from people living outside of the United States who had read their stories on this thing called the web, they started to say, "Wait this is core to the mission." I think it would have been a harder sale, had there been an element of charging for it, in making that transition. What do you think? Martin: I don't want to editorialize too much here, but I absolutely think it was the right decision. But [what] I would say is this, Arthur. We entered into this with the view of experimentation. You often used that word. We charged internationally, to begin with. We didn't like the results of that, so we pulled it back. Arthur: We charged for opinion and the columnists. We pulled it back. Martin: There were ongoing experiments, all along, in terms of charging. My view had always been that, if we built really big, loyal audience, we would be able to convert them when the product was at the point where they were ready to pay. That turned out to be true. It's funny, because the Journal took a different course and we've ended up... Some of their content is now free. Some of our content is now free. A lot of it is paid. We've ended up in much the same place, from a business model perspective, almost 20 years later. That's an interesting footnote. Paul Sagan: Can I interject? Martin: Of course. Paul: We played with these metaphors of swimmers and tide. The swimmers were everybody in the business. The Times was in the business. The Journal was in the business. The tide were some of these other events that were going on. Some were completely [inaudible 11:38 orthogonal] . Craigslist didn't wake up trying to be...Even an advertising business had a huge impact on some aspect. Then there were other things, like Reuters. For the first time, basically releasing their wires into the wild, if you will, through Yahoo right around the same time. Giving the audience access not just to free content, free news, but in a different way which was more than they ever had before and sorted. I'm wondering how much you thought about that, and those other things that were going on at the same time? Either informed the decision or you thought were unimportant, or thought, "This is going into some big stew and we don't really know what it's going to taste like when it's over." Arthur: There was so much happening out there, as I recall. We were working, first, in the earliest stages, with AOL. We were finding ways to do partnerships. There was so much going on that nobody really knew what was around that next corner. I don't think anyone really understood what Craigslist was going to do to the newspaper industry. Less effect on The New York Times, because that's not been a dominant advertising area for us. But classifieds, for most newspapers, were 60 percent. This is one of those situations where you just couldn't see clearly around corners. That meant, to change the metaphor from the swimmer and the tide that we had to find a way to stay balanced in a canoe going down a very fast, tough river. Being able to test and learn, to Martin's good point, meant being willing to try to all paddle in one direction. And then all paddle back in another direction. That was a hard part. It meant having a more unified approach than most news organizations were comfortable doing. Martin: I want to probe the next step which was that there was an acceleration, once Netscape went public and the dot com boom went underway, there was a clear recognition that something very big was happening. We didn't quite know what it was. At that time, we took a very controversial decision. It was a wrenching decision, in some ways, to create NYTD. And break out the organization which had been reporting to the New York Times and the Boston Globe, respectively, into this new unit. Can you talk about your thinking about that, at all? Arthur: The thinking behind breaking our digital arm out, from the rest of the organization, was tied to the thought that we were not quick enough at innovation and that we needed to separate these organizations, to give the digital arm the ability to make faster decisions, to test and learn, in a way that was outside of the Times brand, to a certain degree. It wouldn't have quite the same impact. I'm not sure that we got to that spot that we were going for. But it did allow for us more speedy maneuvering, in creating our digital operation. What do you think? Martin: By getting to that spot, if you mean we didn't actually take the company public, which is what we had intended to do, that's true. Arthur: When we created NYTD, it was not about taking the company public. That came later. That evolved later. The initial decision was, faster decision making, more autonomy, less command and control. Does that sound right to you? Martin: That sounds exactly right. Arthur: That was the thought and it's not a bad thought. Martin: No. I think it was exactly the right thing to do at that time. Arthur: We experimented more. We learned more. Then we came very close to selling, to going public rather. I will say, thank God, we saved ourselves from that. It would have been a very tough place to be. Just as we were on the verge of doing that, the market fell, the bubble burst and we were saved from our own vision. Martin: But we kept NYTD alive. Arthur: We kept NYTD alive. Martin: For another five years. Arthur: Absolutely. Then integrated it back into the organization. By the time we did that, it was so critical to the state of The New York Times, that the integration was pretty easy to embrace. Do you agree with that? Martin: I don't want to skip over a couple of things. In the late '90s, we did a couple of things that were quite interesting. I just wanted to get your perspective on them and subsequently, what happened with them. The first was the creation of this website called New York Today. Arthur: Local. Martin: Yeah. Meant to dominate the largest market in the country. It very quickly grew to do that. It was the largest New York website. Arthur: We were partnered with who there? Martin: Elon Musk, the guy that now founded Tesla. He created a business called Zip2. We were partnered with him. He supplied a lot of the underlying database technology that allowed us to offer all sorts of restaurant guides and things like that. That was very helpful. The other thing we did was we bought Abuzz, which was the knowledge management system. Kind of a precursor to companies like Quora, and to some extent, Yahoo Answers. These were two very early moves. I just wanted to get your perspective on them if you have one. Arthur: Both Abuzz and New York Today, very different. I was more familiar with New York Today, to be honest, than I was with Abuzz. But in retrospect, we will probably agree that we could have done more with Abuzz. That was a missed opportunity on our part. We weren't as focused on it as we should have been. Martin: This has got to be kind of a conversation, because we went through this together. I would say it was the single largest mistake that we made, shutting down Abuzz. Arthur: It may well be. That was at the time the bubble burst. Martin: That's what caused it. Arthur: That's what caused it. I understand. In retrospect, we should have found a way to put resources. We just didn't see this core. That was the error. New York Today was a great experiment. We've seen many others try to follow in those footsteps, becoming even more and more hyper local. Patch, obviously, being a great example. Some of the work we did with NYU and other journalism schools, to try to create more hyper local parts of NYTimes.com. Paul: What happened to that site in the end? Arthur: New York Today just couldn't sustain itself. Martin: No, what happened is, the dot com bust happened. We were told we had to get profitable. We had two approaches. We could have gone in...To get profitable, we had to cut 40 percent of our expenses, some way or another. It was all people. Either we could have gone across the board or and just cut... My recommendation and the decision we made, ultimately, was we were going to put all the wood behind NYTimes.com, which, at the end of the day, given the mandate, was the right decision. But you're talking about, literally, a couple of million dollars a year, Paul, in a company that, at the time, was making $800 million in cash flow. To Arthur's earlier point, it was just short sighted. But hindsight is always 20/20. Arthur: In truth, what we've learned about our sites, and what we've learned about our reach is just it's not about hyper local for The New York Times. Hyper local is...Others can play that game and should. We can do more than we're doing in that. Let me not back away from things like Scoop and perhaps investing in other verticals that will meet some of those needs. But our future is international and growing the brand of The New York Times internationally in languages and reach. Martin: I want to go back, just for another second. Paul mentioned Craigslist. There were a lot of efforts, at that point in time, in the classified business, as well. We were principles in a business called Career Path. I don't know whether you remember that, but it quickly collapsed under its own weight. Arthur: As I recall, Career Path was a number of different newspaper companies all banded together. I remember one meeting we had, early on, where our then CFO snidely said something to the entire...About having met with the group, "How can you be wasting your money this way? Am I at the right place? Martin: Yes, it was the same CFO who... Arthur: We're not going to mention her name. Martin: We won't mention her name. But when I joined the organization, I wanted to have a three person R&D team attached to the small, 15 or 20 person team that we ultimately built, in order to do stuff that wasn't just repurposing the paper. She wouldn't fund that either. There were a variety of things that... Arthur: Martin, the point about those early years, and even later years, is how challenging it is for a traditional company to find, within itself, the ability to fund long term projects that it doesn't see a return on in some three to five year window. There's no question that that has been one of the challenges that we, and so many of our other companies in the journalism world and outside, have faced. You've made the point many times that, why did Barnes and Noble not become Amazon? And so many other things. That's always been the challenge for us. We got better at it. You tried to set up an R&D team very early on and that failed. We did not see the way to fund that in the way we should have. But was it seven years ago, eight years ago that we created the R&D team. We were late, but at the time, we were still the only newspaper media company that had one, if I'm not mistaken. Martin: One of the very core, early issues, as I recall, and you were intimately involved with this because it came to a head, was the use of our archive. In fact, the use of our content. We were, at the time, licensing our content to Dow Jones, LexisNexis and others, in a unit that was outside of The New York Times. That unit, when I arrived, basically said, "No, you can't have access to the content." Do you remember that? Arthur: No, I don't. But I find it amusing and I'm hoping that this story ends with me saying, "Wait, the entire purpose of this is to get our content to people who want to get access to the news, information and opinion of The New York Times." Martin: But you had to go to your father to do that? [laughs] Arthur: That doesn't surprise me. The challenge has been, for very long, and to a very limited degree still remains, finding that balance between being cannibalized and cannibalizing yourself. We're now at a point where we recognize that this is the future. Print remains a critical part of what we are. I think print's going to be around for a lot longer than people, including myself, would have said, five, seven years ago. But it's not the future. You have to invest in the future. But that wasn't always the way it was seen back in 1995. Martin: Paul mentioned the Reuters deal. You have a history with the AP. Eventually, the AP licensed its entire wire to Yahoo and they subsequently developed the largest news website in the world. Still is, in terms of reach. What do you think of that? Do you have any... Arthur: I must say, I really don't have an opinion on that. I was a reporter at The Associated Press. I was never on the AP board, though my father was, the way Michael Golden is. I understand they're under tremendous pressures to adapt and change. They've got to do that. But let's agree that the competitive field has shifted in dramatic ways. Reuters would never have been seen, by a previous generation of leaders here, as a competitor. Now it very much is, Thomson Reuters. Bloomberg, major competitor now. It's a different world. Martin: You mentioned Bloomberg. What do you think about that model? Arthur: What do you mean about that model? Martin: The idea that you're subsidizing a news operation off of a very rich other business. It's a little bit similar to The Washington Post, in Kaplan. Not the same, obviously. Because the information business is very common to Bloomberg, whereas education and The Post are very different. Arthur: There are going to be a whole variety of different models. Some of them are going to have longer glide paths than others. Bloomberg has one model. ProPublica has another model. Thomson Reuters has a third. We have ours. You're just going to have to keep on testing and learning. When I came here, roughly 80 percent of our revenue was advertising. 20 percent was circulation. Roughly. It's now 50/50. Circulation revenue, print and digital is clearly the growth area, as we adapt to the new digital advertising environment order. [edited] Martin: Let's fast forward now to, we've integrated the businesses. What we're beginning to see, in the mid 2000s, is the growth of the aggregation space, particularly, with The Huffington Post starting. Google News. We had this very, to your earlier point, open, free view of the Web. We wanted as many people to be looking at our stuff as possible. We wanted it to travel around the Internet as much as possible. We embraced RSS. We're the first news organization to do so. The links could go all over the place. In some ways, as a result of that, these aggregation businesses began to flourish. There are at least two different views of this. Rupert took the view, fairly early on that Google News, and other aggregators were stealing his content. We did not. In retrospect, looking back eight years, do you think we should have been much more aggressive on the copyright side, and locked it down more, or not? Arthur: No. I do not think that we should have been more aggressive on the copyright side. I think that we were building a new audience, building a new way of getting our news and information out. Even when we finally moved to a pay model, we moved to it in a way that allowed people to share. We integrated social into the way we were creating the metered model. I think that was important. That was critical. Now, can we, The New York Times, do more in the world of aggregating? Because people trust us, I think, the answer is, absolutely, "Yes." We're now in a place that's always been a little bit of an issue with our newsroom colleagues, and some in the business, but, mostly, the newsroom. We're now moving past that. An hour from now, at the time this interview is happening, we're going to be announcing some significant changes in the structure of The New York Times company, that are going to feed greater alignment, faster decision making, in conjunction with the business and news operations. I think you're going to start to see us begin to do things a little more daring, let's say that, a little more willingness to try and grow, and learn. Aggregation, we have, perhaps, some thoughts about how we could be better at that. But, if every morning, and I'm making this up, you knew that Tom Friedman was going to collect the top 10 things that he felt were important for you that day, that would be a pretty interesting list. Or, Andrew Ross Sorkin. Or, so many others. Martin: That was part of Andrew's concept in developing DealBook. Arthur: Exactly. With DealBook. Martin: It started as an email, in fact. Arthur: Exactly right. Martin: There's this notion of openness. I'll just ask it in a very direct way. You mentioned a lot of different companies as new competitors, including Bloomberg, and Reuters. We've been cooperating, however you want to characterize it, with companies like Twitter, for years. Arthur: Facebook, and others. Google. Martin: Mark Zuckerberg referred to the new newsfeed as a newspaper. Dick Costolo, obviously, has a great stake in news in terms of Twitter. How do you view those businesses? Arthur: Martin Sorrell was exactly right when he coined the phrase, "frenemy". How long ago was that? Easily, a decade ago. Martin: No, it was at one of the Zeitgeists, I think. Paul: A long time ago. Arthur: A long time ago. In digital terms, Martin, it was a lifetime ago. But, there's truth there. These are both tools for disseminating our information to an audience that wants and values New York Times journalism, and they're also a challenge because they have their vision of how to connect people. But we can learn from them. We have built a powerful base, a powerful audience. We've got to become better at finding ways of using that audience, connecting that audience to each other. I'm not suggesting we're going to become Facebook, or Twitter. But, rather, what are the things that we ought to be thinking about doing to make use of the insight, the knowledge that The New York Times audience has, when an event occurs? I think that's a fascinating next step for us. Martin: You just talked about the reorg. What do you think will happen as a result of this? In other words, what's your hope going forward? Is it that we become more international? Arthur: The growth of, The New York Times, is going to be, certainly, in the international sphere, there's no question about that. As you know, we started our first foreign language, non English language website in China. At the moment, it's blocked, because of our journalism, but, that's happened in the past. You remember, we were blocked in 2001, and I had to fly to China to get them to open it again. But, there's a real future for us there. We're rebranding, The International Herald Tribune. In a few months, we'll rebrand it, The International New York Times. We'll be growing, internationally, under one brand. Video is a critical part of our future, I think. We've just hired a woman to become our new video head. She came from AOL, from, The Huffington Post, if I'm not mistaken. Martin: AOL. The Huffington Post part of AOL. Arthur: That's what I mean. We've got some real opportunities there. [edited] Arthur: Let's go back a little bit. As you think about where The New York Times is going to grow in the future, you're thinking about international, you're thinking about video, you're thinking about social, and you're thinking about mobile. Those are the four areas that we have isolated. Because the mobile reading experience is dramatically different from the traditional screen experience, and, we have to think about what new products we can create that are more easy for a handheld device like the iPhone, not the iPad. Martin: I know that you've announced that The Globe, is up for sale. I don't expect you to comment on that, at all. Arthur: In The Globe, we're happy to... Paul: We can cut a deal, today. Broadcast. [laughter] Martin: I would love for you to comment on the state of more localized journalism, and the fact that A, Warren Buffett has been very bullish, and was very bullish in his last letter to shareholders, on the small newspapers. I'm talking about the community space. Arthur: I totally get it. People have been putting the newspaper industry into one bucket, and, I think that's unfair. The challenges and the opportunities that a national/international brand, like The New York Times faces, are very different than the challenges and opportunities that a metro daily, like, The Washington Post, The Boston Globe, The LA Times, has. Very different, yet, again, are the truly small, local, local papers, The Topeka Capital Journal. Each one of those categories is going to have to find the answers. But, they're not going to be the same answers. There will be similarities. There will be significant differences. Martin: Do you think that these companies, including The Times, can sustain the level of newsroom heft that they have in the past? Arthur: I can't speak for those others, because I'm not close enough to them. But for The Times, absolutely. It's core to who we are. It's core to our future. We've been through many challenges, and many changes, and there are more ahead. But at The New York Times, right now, we have more national bureaus than ever in our history, and more international bureaus than ever in our history, at a time when a wonderful, powerful paper like The Washington Post has no national bureaus. It's a very tough, and different place. Our brand promise is based on quality journalism with a broad reach, international, but more than that, science, culture, food, and dining. We have to find ways to support that brand promise, and move it, more and more, into the digital future. I'm very bullish on this, because I think that you're seeing us do that. Martin: Paul, do you have any questions? Paul: One or two. Crystal ball gazing is always tough. Arthur: Yes, I've learned not to do that, in painful ways. Paul: It's painful. There's clearly a future that's going to get determined by some of these big, call them Internet players. We're talking about Google, Facebook. The big news organizations you mentioned, News Corp., Bloomberg. Reuters tops it. Arthur: When you say, News Corp., do you mean News Corp. one, or News Corp. two? Paul: I'm not sure if one is newspapers or two is newspapers. But that would help. That would change their competitive dynamic for sure, not being one company with the resources that come from that. But, there are also a number of emerging smaller players who have a different view of scale, and how big they have to be to be significant. Huff Po is, certainly one. We were at, Business Insider, yesterday, which has got a different view. They don't think that they need to be as big as any of those others to be relevant, in terms of audience, or, to have an effective business model. They have a different view of return, scale, overhead. I'm just wondering, how you think those other players will affect the audience's view of news, and how you, and others, will have to react? Arthur: I've learned that the greatest challenge that a company, like ours, faces is not locking in on an answer too soon, and staying flexible. We've seen some competitors that have succeeded very well. We've seen many competitors that have tried in the digital space, and are now more or less gone. I recognize that there are digital competitors that see their mission in a certain way that doesn't match the way that we see our mission. They're more local. Or, they're more vertical. We have to do some of that. There's no question that we need to do some of that. But, our mission is different in a fundamental way. The breadth of our coverage has to be broad. It just has to be broad. We have to recognize that we're going to be covering stories that people aren't going to be coming to in droves, because that's our mission. We are going to have people on the ground in Iraq and Afghanistan. If people don't come to that in droves, that's not why we're there. But, we also need to have the columnists, and the stories that have much, broader, broader impact and reach. Martin: Paul brought up, Business Insider. One of the things that Henry Blodget said about Iraq, and, I just love your view of this, is that there are bloggers, tweeters, all sorts of people, on the ground in Iraq, who are, in a sense, reporting from there. Arthur: Who are commenting from there. That's the challenge. How many of those bloggers and tweeters on the ground, in Iraq, are truly independent, truly bring the kind of judgment and fact checking to what they send out? I'm not casting aspersions on any single one of them. But, you and I, both know, how fast false information travels, and how hard it is, sometimes, to find out how false it is. At The Times, that's our professional duty and responsibility. We make mistakes, Lord knows. Dick Cheney has got an interview that's coming out on Showtime. Martin: It's a film, actually. Arthur: It's a film. In the interview, he still says that there were weapons of mass destruction in Iraq. He's still convinced that they were there. We, of course, made some errors in our journalism. But, we owned them, and we corrected them. I think that builds trust. We are a human institution, therefore, we are fallible. But, the trust comes from the fact that when we realize we've made a mistake, we go out of our way to say so, and to correct it. That's not true with so many people on the ground, who are not tied to the same journalistic standards, and have, sometimes, their own issue. Paul: I have a question about audience. My last question, I think. Martin: Can I follow up on this one? Paul: Go ahead. Martin: By the way, Henry's, clearly, not the only one. There are many, many people who believe that so called, citizen journalism is... Arthur: Absolutely. There's a great role for that. I'm not trying to denigrate that across a spectrum. I'm just trying to say that, sometimes, it's a big challenge to find out who are those people whom you can, actually, trust. Martin: There's also an analytical point, as well. There's a news analysis issue that, sometimes, can't be served, or, isn't often served. Anyway, what was your point? Paul: It's just a thought about, since, we're really all here to serve audiences. We're not doing it for its own sake. We're trying to reach people with information that's relevant. Arthur: Trying to serve democracy. Paul: Absolutely. This community has come together, at least, vertically, in North America, as a democracy, in the United States. For a long time, this notion of gatekeeper was central, because the means of distribution were so challenging, whether it was newspaper, plant, or, TV and license. People came together in this aggregate. Read the paper in the morning, watch Walter Cronkite at night. The Internet blew that part up, into this mass fragmentation that you still see, as a rule, on television. There might be 500 channels, but, each person picks 8 or 10. Arthur: Yes, that's right. Paul: You see the same thing happening on the Web, in some sense. People have 10 or 15 [sites] that they go to, and the rest are random, that they hit on searches. If you buy into it, that will probably continue. Because the one thing people don't have, is infinite time. They need the world well organized. How do you think that affects the evolution, both for The Times, and others, thinking about doing journalism online and reaching people who, even if we multi task, we still only have 24 hours in a day? Arthur: I'd like to speak for The Times because I feel that what I know, is what I understand. It comes down to maintaining the brand promise, for us. Maintaining it, as the world is speeding up. But the brand promise is quality journalism. Quality. An opinion that is thoughtful. Not always that you agree with, but, that it's thoughtful, opens your eyes to a different points of view. The joy of this time we're in. The joy of this time is that instead of at seven o'clock turning on a TV show to see what's happening in the world, you just go to your iPad, go to NYTimes.com, and you'll have a totally, different experience, than you had at five o'clock, six o'clock, seven o'clock in the morning. Totally different. That 24 hour news cycle continues. But, we are moving along with it now. We've got to get better at that. We've got to integrate video into that. We need to integrate our audience, in different ways, into that. But, you're right. People are going to continue to go to sources. There may be 10,000 different sites you could get some degree of news and information from. But, that's not the competition. Martin: I just want to follow up on that for just a moment. You've painted a very, very easy to understand vision here, which is that quality journalism, because it's rare, will lead to more subscribers who will pay. Arthur: If we give them a quality experience. Martin: I've got it. The advertising business is not a great business anymore, online, certainly. That could change. It's been up and down for years. We don't want to say it's never going to. But, let's just assume that more and more people are going to be paying, and, so far, the metered model is something that people seem to be paying for. This is a longer term question, Arthur. It seems to me that some of this is generational. The question is, how do you get younger people, to appreciate what you've just outlined? Clearly, Baby Boomers, and, maybe even, the next generation behind them, grew up reading printed products. Arthur: The Millenials. Martin: The Millenials. Arthur: Growing the future audience of The New York Times, is a critical issue for us. We have a number of ideas. But, let's start with the truth. The New York Times has never been a paper that 20 year olds go to, naturally. Are we the most read paper on college campuses? Yes, we are, in the United States. But, in truth, people come to The Times, generally speaking, when their life moves to a different phase. When they get married, and they have a job, and they have a kid going to school, and all of a sudden they're integrating into the world in a much more full way. Then the need for the kind of quality information we have becomes, I think, a little more highlighted. That said, are there products that we could be creating for our Web audience that might be more attractive to a younger audience then our current products are? I think that's worth testing. I think there are things we could be doing in that arena to learn from. Because, absolutely right, we need to continue to evolve, and continue to give the kind of robust experience to people who want the kind of quality news information we provide. We've never been the biggest newspaper. We were never the biggest newspaper in New York, in terms of circulation, ever. Martin: We were the biggest newspaper on the Web for a very long time. Arthur: We were on the Web, that's right. Because our reach, and that's clearly more and more of what our future is going to be. But it's the quality of the audience that is really the important thing, not just the size of the audience. That said, absolutely on our radar screen is, can we be creating products that might be more attractive to a younger audience? That might be getting their information on their iPhones and other handheld devices, mobile devices. Not the iPad, but the real smaller ones. That's front and center on our... Martin: But the assumption over time is that people are going to continue to appreciate quality journalism. Without that, there's really no... Arthur: If that goes away, then you're right. Our mission is gone, because that is our mission. ...
VIDEO: YES

Kara Swisher
BIO: YES: Kara Swisher is the co-CEO of Revere Digital, the ...
TRANSCRIPT: Kara: How I got here to this room? Kara: Very happily, finally. I started off in a traditional career. I was the yearbook editor in high school. I did work for the school newspaper in high school and I worked for the college newspaper at Georgetown, called the Hoya. I did really well there. I won some awards early on. When I was at Georgetown in the Foreign Service school, I read The Washington Post, which I loved. I was a great fan of the Post. It was sort of its golden era at that time. They had cut one of the reporters who covered something I had covered and done a bad job. I was angry, because it made me suspect everything else in the paper. I called the Metro editor at the time and started yelling at him. It was Larry Kramer. Now he's publisher of "USA Today." I said, "How dare you print this in the 'Washington Post'?" Of course, I didn't realize they sent the idiot to Georgetown, like "That's not the best reporter to not go and cover a speech at Georgetown University.” I thought they should do everything with excellence. He said, "Oh, you mouthy, come down and tell me this to my face." I did. I took the bus. I think it was the M15 bus, down to 15th and L with the M-something bus. Anyway, I took it down there, we had an argument and he hired me to be a stringer for Georgetown. I started writing for the Post for these different sections that they have. They have District Weekly, which was the news that wasn't news area. I wrote about the university, about students, student life, and things like that. I used those clips to get into Columbia Journalism School. I'm very traditional. When I was graduating Columbia...It was only a year program...I got a lot of offers from newspapers in small places, Arkansas. I just didn't want to move there. I was gay. It was not conducive to my life. Kara: I decided to start at the bottom of the top, so I did a stint at the city paper. I worked at "The McLaughlin Group," the TV show, even though I'm very liberal. That was a terrible experience. I just wanted to learn about television. Then I went back to the Post. I was a news aide which was higher than a copy aide. John: Which was sort of a news assistant. Right. Kara: Yeah. It was a pretty good job. They have them at the Times and lots of people start there. I was in the Style section. I had a lot of responsibility which was surprising, but once you get in there, you realize the assistants run everything. A lot of assigning, a lot of...It was really good. The Style section was at its peak. It had the great writers, Henry Mitchell, Stephanie Mansfield, Henry Allen, and people like that. They really care a lot about just the way, the writing and everything. It was a great place to learn. I got to write a lot. I took any assignment I could. Then, in order to get hired there you had to be an intern. That was the way you went in at my age, at that time. I had been a copy, a night news aide, where I delivered mail. I delivered mail there in the mail room. I had run copy up and down when they used to actually do that. I realized I just had to be an intern because that's where they hired from. I finally got into the intern program begrudgingly because I was a lower level, a yahoo. You know what I mean I was the underground people. And I did the best job of all the interns that summer. I did every kind of work for every section. I knew my way around that place. I really did a good job and they had to hire me on some level. They usually hired a Harvard person. I was just more aggressive and I did more stuff. The only job available...You had to really go sell yourself in the newsroom...was the Business section, which was a backwater. It really was a backwater. I had been really inspired by "Barbarians at the Gate," the book, and thought it was a wonderful book. John: Bryan Burrough, yep. Kara: Yeah, and I was like, "Wow, you can make business interesting." Of course you can. It's money, people, sex, great greed. He did such a great job, I thought, "That's how I want to cover business." Business is an area I was super interested in. I almost went to business school. I took a lot of courses, a course at Wharton in accounting. I was very interested in the subject. I covered everything. I covered retail, ultimately. That was a great beat because all the companies were declining especially in Washington. They were losing Garfinkel's, Woody's, Woodward & Lothrop, and Hechinger. Giant Food was doing OK, but still it was a really tough time for retailing. I was seeing up close the decimation of newspapers. I was writing about it because they were all their principal advertisers. One of the great things about Don Graham was I never heard a peep out him. I was very tough on them because they were really driving these companies into the ground. I was very young at the time. It was really instructive. I started to see what was happening, like, "Oh, this is not good for the economics of newspapers. What's going to replace it?" At the very same time when I was doing this, I was dating someone who was living in Russia. We started to do very crude version email at the time. I was instantly fascinated by these things. I started using it a lot. I wanted to get off the retail beat because I was writing about a very wealthy family called the Haft family. They owned Crown Books and Trak Auto. I wrote about their fighting amongst each other. It became a huge, fantastic story in Washington. I got very well known for it but I couldn't stand this family. I am trying to sell a book on it. They never wanted it because it was all villains. Everybody was a villain. They're just awful, rich people. Nobody was good. John: Great story. Kara: It wasn't even an anti-hero. Everyone was vile. I started covering AOL. I moved to the beat. Nobody wanted this beat. I did. I thought it was really interesting. I immediately understood the implications of what this was. I think I did way before everybody else. I was very interested in email. I got interested in all kinds of aspects of it. When the World Wide Web came and it was commercialized with legislation, which Gore was involved with, I was immediately like, "This is something big." At the time, the Post had an opportunity to invest in AOL. They went on AT&T Interchange. I was like, "No, no, no. AOL, AOL." That was interesting. You could see they couldn't see what was coming. I felt like I was like, "Oh. Oh dear. This is bad," because the retailers that were coming into town, like Walmart, do not advertise in the newspaper. I was obsessed with classifieds, like, "What this could do to..." This was such a great medium for classifieds. Even before Craigslist, I'm like, "Classifieds are expensive, static, don't work, the people are rude, and they're expensive." I was like, "The whole thing is bad. Like this is a bad product that newspapers are relying on to keep their stuff going." John: They did. Kara: They did. They rode it to the bitter end. They deserved to die. I was really fascinated. At one point, I was at a fellowship at Duke for a couple of months. I downloaded all of Calvin and Hobbes books using their servers onto...I stopped up some of their servers. They got mad at me. I was like, "But can't you see? You can download a book." I was very obsessed with the idea of "You can download anything." Everything, it was sort of Mike Teavee in Willy Wonka. You could move a chocolate bar. I kept saying, "Nobody..." Everyone was like, "Well, so what?" I'm like, "So what? If you don't need paper, you can download. There will be devices when you read on them and it won't be the computer." They had a cell phone at the Post. It was a single cell phone, I think. I used it all the time. I carried it around. I'm like, "It's gonna be small, and you're gonna have it in your hand, and it's gonna have information on it." Nobody agreed with me. They were like, "Oh, Kara, that's...Why would you put your email at the bottom of your stories?" I'm like, "Because readers write you and you have this...You know, no one is writing letters anymore." They won't write letters. I think I felt like a little bit like Jeremiah or like Saint John the Baptist. I was like, "Well..." John: You were crying in the wilderness. Kara: Yeah. I became really obsessed with AOL, what it was doing. To me, the reason they were successful at the time more so than Prodigy or the others was because they had a product that was consumer friendly. Most of technology was not consumer friendly. It was very hard to use. I had a hard time configuring it. It wasn't fun. Apple had a service, that little town thing. There was a lot of stuff that was trying at the edges of where it was going. But AOL was the first one that really... John: Tried for this. Kara: They were... John: Public. Kara: The public. Their thing was so easy to use. No wonder it's number one. I thought that was genius, so easy to use, no wonder. That's where I met Walt. He was the only person who wrote about that AOL was the better one. I used all the services. He was right. He was very enamored of the Internet too of where it as going. He convinced me to...I was writing about AOL...I got a book contract to write about them because the editor, John Karp, who is now the head of Simon and Schuster also shared my interest in this. They were called online services at the time, not the Web. John: That's right. Kara: Everyone was ignoring it. Bob Kaiser was dismissive. They were all dismissive of it. I was like, "No, no. This is a scary tsunami headed your way," like you were saying, a meteor. It was so visible and so obvious as you carried it out, like, "If this phone got small, what does that mean for telecommunications if you could take this newspaper and beam it to someone onto those phones?" If you just took a minute and understood what it did to businesses, especially the news business, you'd be very scared. I was scared. I was like, "Oh, this is bad." As great as Don Graham is, I remember when I was leaving he said, "Why are you leaving?" when I was going to The Wall Street Journal because they wanted me to cover this so I moved to San Francisco to do it. I said, "The water is rising and you are on a lower floodplain than The Wall Street Journal. That's not to say the Journal isn't going to get decimated, The New York Times, but they're higher. Eventually, the water will reach them, but you're first." It was only a cycle of negative, cutting people. John: Right. It spiraled. Kara: You could see it. You could just watch it. I had covered business, so I was like, "This is like the horse and buggy, like when the car came. Like, don't you see what's going to happen?" John: It was particularly that revenue aspect that the retailers had taught you that you focused on. Kara: Absolutely. Yes. Revenue and classifieds. I was like, "These are the twin things, and these will not exist." What do they do then? Because the Grahams feel generous? No. Nobody feels generous. Maybe just a rich billionaire who feels like owning someone, which they have now. John: Yes. Exactly. Kara: You'll see. You'll see what happens when he gets bored with his toy. John: The Journal was what year did you...? Kara: 1995, '6. I was writing a book in '95. I think I arrived in the Journal in '96, '97, somewhere in there. John: In San Fran? Kara: I moved here immediately because I think they knew. They didn't know as much either. I felt like this was where everything was happening. I had done research for my book, so I had been here. I had seen early Yahoo when they had just a few people. I met Jeff Bezos when it was tiny, tiny, tiny, tiny. They were at a really crappy headquarters in Seattle in a bad section of Seattle. I had met all of them during the process. AOL, at the time, was the biggest, the fastest growing one. I had access to all the founders, even ones that are gone now. I met Pierre Omidyar when he was leaving General Magic. John: Stepping back now, if you saw it coming, why couldn't you convince them? Kara: They just didn't believe it. They were on highs. It was really irritating. Even at the Journal, I think I've said this many times in interviews, they called it a fad. They called it CB radio. One of the reporters, who is now working for an online...I wrote him, I didn't find the email he had sent me about it...but he called it CB...Now he's working for a very online publication, like, "Ha, look what happened." They were very convinced that people wanted to read newspaper. I was like, "I don't...You know, I, I don't know why." They just couldn't get out of the medium. I was a student of history, I was like, "You watch these things happen, and they don't happen slowly. They happen quickly." This was not a drip, drip, drip thing. Literally, it was probably like people using horses and then cars. People using movies, talkies. It was better. One of the things is these people didn't use these things. I used every one of them. I could see where they... If you could envision, like right now with a lot of these watches and stuff like that, Google Glass is not what it's going to be. But it's going that...If you conceptually think about wearable everything or sensors on your body. John: Ubiquity. Kara: It's not going to be glasses on your face. You're never going to have sex again if you do that. You know what I mean? John: Right. Kara: They're wrong. They're not responding to you. You're responding to them. There's all kinds of issues. What the press does is focus on, "Oh, they're not comfortable. They're not..." I'm like, "So what?" Focus on what they mean, what they...It's sort of like obsessing on the clock when you should be able to tell what time it is. It's kind of a different thing. I don't know. There was so much resistance everywhere. Everyone hated what I was writing about. John: Do you think that Chinese wall prevented you from being heard? Do you think the Chinese wall did that? Kara: Chinese wall? It wasn't...It was like what consumers wanted to read. They had no sense of their readers. That's not a business thing. That is like, "You should know who is reading you." They didn't care to know who was reading them. They didn't care to talk to readers. They didn't care to look how they consume things themselves. They liked their little worlds they had built where they talked down to people where there was no back and forth. Where there was no talking back. Where there was this disgruntled readership that didn't get they wanted. The minute these people got they wanted, they jumped for it. John: They jumped. I can remember it. Wall Street Journal in 1989 doing focus groups across the country as we went from two to three. To come back, bang my head on the desk because 90 percent of the readers didn't read anything but the front page. Kara: Right. John: Because the "What's News: World-Wide" gave them enough. Kara: I think about that in the digital sense. That's the way it is. A lot of things...these longer stories that were...not that they're not laudable...reporters just go on and admire each other. Some of the stories are laudable and should be released, these great New York Times' pieces on Ebola. No one's doing a better job. There are several places doing a great job. You don't get that level of quality but there can't be...that just can't replicate itself over and over and over again, when you can get it. When you can get a lot of news...Their first instinct was to call it trashy or crappy. That was true at the beginning but my argument was people get better and you will get worse. It will improve. Look at BuzzFeed. They're now hiring people covering. You know what I mean? They want to move upstream because of advertisers and things like that. You can move quickly from downstream to upstream rather than the other way around. John: You're saying the speed of the transition didn't surprise you. Kara: No. It was clear because of these devices. Once the iPhone came out, I was like, "Oh. Game over." That's a computer in your hand. Just because they got it right. There were versions of it, it wasn't right. You know the Blackberry didn't look quite right. You couldn't read a browser on it. Once the iPhone came, I was like, "Oh dear. That's the end of that." John: What were the other inflection points? The iPhone, what else? Kara: The Web itself. The World Wide Web and the links, the hyperlinks. The Mozilla browser, again, when I saw that thing, "Oh. A reader for this." It was so easy to use. It was understandable. It's still crude if you really think about it. It's not...It should be touch-screen and very intuitive and very...it's headed that way. It's slowly getting to where it needs to be. Once you started to see these laptops, it's people moving around. I think the phone to me was the greatest moment. John: The phone to you... Kara: When Andrew Sullivan had a blog. I kept bugging the journal about it. I'm like, "Hey. This is interesting." When we saw a bunch of these tech blogs, most of which were shoddy. I'm like, "Why can't we do this?" Let's take our quality stuff and go in here and steal it. Let's steal the land. This is a land grab. Let's steal the land. We have the quality. Why don't we combine the quickness, the sense of humor, and personality with the quality of reporting and the ethical standards and then create. That's wow. Create a better product for them and just kick them out. They've already plowed the field. People are getting used to reading. To me, my grandfather always said to me, "If people are hungry, they will eat dog food." They were eating dog food, but let's give them a nutritious meal, if they're interested in it. You could see, not just young people, it was myself. I hadn't picked up a newspaper. I read everything online. I just watched my own habits. Just right now, I haven't been to a movie in a year. It's not because I have kids. It's because I just don't. I watched them online. I watched them on demand. My television habits changed really quickly once it became available to me the kind of choices that I wanted it. John: One could have argued that among the newspapers of that era, the Journal was better, should have been able to make the leap because all of the reporters of the Journal were filing for Dow Jones newswires, anyways. Kara: They tried a number of things under Rich Jaroslovsky. They tried a bunch of stuff. I think they were trying to create a consumer product too early. People were not ready. The consumers weren't quite there. It was a little heavy. It was a little graphics heavy. It was very much...Essentially, it was porting the newspaper onto the Web, which wasn't quite right. They didn't quite understand how the people wanted to consume this stuff. They didn't consult the readers, like, "What would you like...?" The readers, to be fair, didn't know what they wanted either. One thing they did want is great content. That never has changed. John: It hasn’t but it can be nebulous. Define… Kara: They still read longer stuff. That's not true. They do read...Look at the stuff with California Sunday going on that I think is interesting. Some of the Times' stuff is...People do consume it. It's just...They like...Maybe, half of the stuff should have been shorter. One of the things that Gordon Crovitz from the Journal, and I agree with this, used to do, he would circle everything that he didn't know from the day before in the paper. That was in the morning paper. He would circle everything that was new and the circles got fewer and fewer and fewer because he knew. Why print this earnings People were already getting on the Web. They were like, "Oh, because we do it that way." I'm like, "OK. I'm sure we could churn butter, too. Guess what? There's a store just around the corner that has butter. Why am I churning it?" That iterated itself constantly. They weren't trying to create a product that was new and fresh based on what people already knew. It's the way they did it, the deadline system. "It's six o'clock! Because it's six o'clock! Why is it six o'clock? Because it's six o'clock." No! That's not an excuse. Guess what? It's 24- hour news cycle now. I like that. Who cares about the deadline but a reporter? There's no such thing. They'll get it done. They didn't want to stop. I think it's a function of age. It's a function of "I don't use this stuff. This is for the kids." John: There's always a bias of the status quo. Kara: Why not? It's comfortable. John: Tell me about this. When you moved out to San Francisco, what was the ecology among the journalists? At the beginning, there were very few people. Kara: Very few. It was me and Markoff. Markoff was writing more about chips and security at that time. He had moved really...He's more science focused and more real technology. I was more literally like, "What time is it?" rather than "What's inside the clock?" A lot of tech reporters wrote about what's inside. "Here's how the machine works." It's like, "Who the hell cares how that fucking Internet works?" I was not interested. I was interested in the silent impact, the business impact, what it did, the products they would make versus how it worked. Do you know how a television works? No. Would you need to know? No. You need to know the different shows that are on. You need to know the business behind it and stuff like that. A lot of the reporters were very techy, very geeky. John: Many of the reporters began as they would start to program. Kara: Technical. Which was great, but it doesn't really get you far. It wasn't narratively based. I was very interested in the narrative. I was always interested in narratives and that's why I wrote books. It was like, "Here's the story. The narrative of any of our great inventors, Einstein, Benjamin Franklin, that's more interesting than how the lightning actually works. That's interesting to some people, but the narrative is life. It's more interesting. John: Was there camaraderie or was there competition? What was that..? Kara: Nobody was doing it. John: Nobody was doing it? Kara: No! I wrote a lot of unusual stories. I remember the time. They got a lot of attention, because I would write about, "These geeks don't wear nice clothes," or "Hey, they think the great restaurant is a taco stand at the corner of Mission and Fourth. "Hey, this guy who has a hundred million dollars lives in a one- room walk up." This is the unusual culture here. Here are their headquarters. Their nursery schools. You know what I mean? They have lollipops and slides for their workers. I wanted to write a lot about the culture and the crazy business. Here's a million dollars, you have no revenue. I thought that was interesting. John: What changed in the culture out here? Kara: It hasn't really. I mean, changed how? Meaning? John: I mean money. Kara: Money. John: Money makes a difference. Money has influence. Kara: It does and success. Some of them succeed, some of them failed wildly, incredibly, fantastically. A lot them did succeeded. First, there was the bubble stuff. That just got out of hand. That's normal in every single economic boom of a new medium. There were 9,000 training companies. There were 9,000 car companies. Then, there weren't. Then there were three. That's what happens. This is what happened here. There were lots of them and then there's Google, Yahoo, and blank. John: There is a drive to monopolization. Kara: There is almost. John: Almost. Kara: In this case though, there was more proclivity to be lots of...you didn't know where the next challenge was going to come. I don't think Google foresaw Facebook at all. I don't think Facebook foresees whatever is going to take over Facebook. John: That's bad. Kara: That's the thing. That's the scary part. The young eats its old here. John: You are absolutely comfortable if you talk with that transition in the audience between snail mail and not, speaking with authority and no one talks back, to everyone talks back. Kara: I like that. I always like readers. I always thought readers were smarter. I got a lot of my tips from readers. Reporters hate talking to readers. They hate readers. John: Why is that? Kara: I don't know. Paul Fahri and I at the Washington Post used to have a thing. We had stories that were very popular. They weren't light. They were just fun to read. They were interesting. We used to call up the NBR society, Nothing But Readers. Reporters were often writing for each other. We were like, "We're the NBR...We're Nothing But Readers." That's who likes us and that's all we care about. We always focused on that. What would a reader be interested in…? What would delight them? What would inform them? What would make them go, "What?!" John: Surprise, right? Kara: That's a fact. That's where you have to be, I think. Still today, you want to do that on the Web and you can succeed if you keep doing that, in terms of...There's different levels of success but you generally succeed if you... It's the same formula. I think a lot of these newspapers got willfully boring or lazy so you had really poor and shoddy press release stuff or you had stuff that was too...long is not right. It was just too insider stuff. John: Too insider. Yet, what you saw during your time out here, is a tremendous sort of flooding the zone. All the media, the number of assets, the amount of manpower, the amount of time spent devoted to tech whether it's the Journal or the Times, whether it's World Outside. It's huge. Kara: It is huge. They did it in this way, this panicked way rather than a...It's hard. My feeling is if someone's going to eat your lunch, it might as well be you. You know what I mean? You're getting lunch eaten no matter what. Someone's going to replace you. Maybe these companies were not capable of doing it. Just should have been like, "You know what? We're going to make our product until time runs out and then we're going to move on." They put people in charge who were actively hostile to it. They didn't like it. "When will this Internet thing go away?" Instead of it being a permanent state of our living. That's one of the things I think that was hard. The people in charge. Look at Bob Kaiser's book. I was like, "What? He doesn't like change." Then he embraced it, of course. A lot of the people who were very hostile are now very embracing of it. John: Better late than never. Kara: I guess, whatever. It was sort of a lack of understanding of the reader. To me, it goes back to lack of understanding of the consumer. You could, not just your kids, you can watch yourself, what you're doing, what kind of things you're doing. Just like with this car stuff. You're using Uber a lot more. Do you need a car? I keep saying you're not going to... I give this speech and everyone's like, "Oh no, Kara." I'm like, "In 15 years a car will be like owning a horse. You're not going to own a car if you live in the city. Why? It's expensive. You take that money and do something else." There's no need. John: By the same token, the level of transparency and how the readers react now is multitudes greater than it ever was. Kara: Yes. John: In the old days, you never knew if a reader read the to the bottom of a story. Now you can find out. Kara: At some level, you have to ignore little bit of it. It's like being a chef. If you cook for whatever you want it ends up a slop. There is some level of taste. If we did that we'd write Apple stories all day long. We would have a huge traffic not Apple now, but different… Snapchat. Whatever. There is a level of choice and taste. Like "OK you want to read about this but we're going to let you read about women in tech. We're going to write about Gamergate the way people are talking about women. You may not be interested, but we are." There is some level of guiding... John: Taste and discrimination. Kara: Yes, 100 percent. That's why The New York Times is still great. You don't agree with them that's one thing. But they certainly have a point of view. John: There's always the thing you're doing with reporters is what was always done classically is triage. This is worth X, this is worth Y, this is worth 3X. Kara: They're doing more stories of meaning and what it means. I think people are so confused by all the rush of news. There's a real space for people to explain it like, "OK, don't worry about this. Worry about this. Yes, you should not do this." That's truthful voices. I think what's interesting lately everyone's like, "Kara, she tells it like it is." I've always told it like it is but now people like it. It's a voice that says, "You know this thing at Microsoft? That was a stupid thing and he was stupid to say it. Guess what? It's all over Silicon Valley. Guess what? They pretend it's a meritocracy, it's not. 72 percent of them are men." I just say that and it's like, "Oh, the truth." I'm like, "The truth? The truth is out there." Like this kind of stuff and that has power. In a way you can amplify that on the Web in a great way. John: Is reader growth, reader skill discriminating what to read and what not to read? Is that growing? Kara: I think it is. I've always thought it was. I think there's a disdain for readers. I just think there's a bigger disdain for readers among the media that they don't...I trust my readers much more than I trust other reporters. John: Do you think the readers in a world full of, what somebody said, "Infobesity," too much information? Kara: That's funny. John: Are readers going to get to the point where they can discriminate themselves? Kara: Yes. You're thinking of them as children. They're not. It's like when they go to the supermarket, they know that when they're buying the Pop Tarts, they know what they're doing. Don't assume everybody is stupid. They're buying the Pop Tarts because they want to eat the frigging Pop Tarts. I don't think people want shoddy things. You don't go to the store and say, "Hey, I'd like the tainted meat. Please give me the tainted meat." They don't. They really do have a sense of what they want. It's just you don't like what they want. It's like my kids like, Vines. Guess what? They're not watching, Gilligan's Island or whatever the heck stupid thing I ever watched. They watch Vines. That's what they like. My kids know what they like. The things they like are not all stupid. Some of them seem stupid to me, but they're not. I can see the appeal of it. It's just a different thing. They're very clear on the things that they want to choose. I think that's lost on a lot of media people. John: It's funny to be talking the day after the, "Bay Guardian," closes. Kara: That was sad. John: What does that say to you? Kara: It says, "The Bay Guardian is closing. Nobody gets to read that." I don't know. I think we agonize over those things. The financial situation for them was bad. Again, listings. I work for the City Paper. I know that business, that's bad. Listings are so digital. That's done, then. The small businesses to be able to reach people, now they do it on Groupon or whatever the heck they use. Every bit of the…that was a financial situation. Some of their content had been not responsive to what people wanted. That to me was... John: Financial. Kara: I think they held on a lot longer than I thought because literally there were two tenants in their business. Small businesses and listings have long gone away. It seemed like that. Right? It was small businesses? I mean, I remember the City Paper, it was like the pizza place, the... John: You had to sell in a lower CPM than The Washington Post . Kara: Yeah, the vintage store, the local restaurants, the couponing. You know what? People don't read that way. People don't read the hand-out newspapers, they just don't. John: Those papers like the Bay Guardian, they were counting on people, ithanging around for seven days. Kara: To me it was such an obvious economic problem. People don't read newspapers. They don't read newspapers. They read it on their thing. I don't know. Could they have made a product that...? It's probably hard. I don't know what I would have done with that stuff. John: Talk about the transition that you've lived through between sublimating ourselves to an institution or sublimating our brand to an institution versus becoming a brand yourself. Kara: I know, this, "Brand of Me." I hated working for a big institution. I'm a difficult person. I just realized that the hierarchical structure of a newspaper exhausted me. All the politics exhausted me, all of the politics of paying reporters. The competition among reporters was ridiculous. It was such a waste of my time. The idea like, "Why aren't you in the office?" I remember that. I was like, "I'm the most productive member of your group." I used to say, "I'm at the movies." You know what I mean? Am I 12 and you have to tell me? I don't even treat my 12-year-old like that. It was just that sort of Daddy-culture. The editors. It was editor-driven and I never liked that because I thought they sat in their seats and didn't know what they were talking about. In our place, our reporters tell me what's important. I have opinions but if they don't know better than me, I have a problem. John: Are you comfortable with them building their brand rather than re/Code’s brand? Kara: Yes. I want them to lead. Yes. They can do both because it shows an excellence. If The New York Times keeps trying to poach us, what does that say? We're doing something great here. I'm good. That's right. You can't train them up at The New York Times. You can't, obviously. You have no ability to take young people and bring them up. They have none. All they can do is steal. That's interesting. John: All right. Here's one coming back at you. Here's an anecdote about, "Justice League of America." Kara: Oh yeah, that. John: Tell me about that. Kara: That was the idea. That was with Markoff, I think he was involved, and Mossberg, Who else was involved in that? There was a bunch of people. It was the same idea. We thought we were the bomb. We really did. People were listening to us. It started to get very clear that it wasn't because...Mossberg was not bigger than The Journal, but he wasn't smaller. It went well together. Markoff, wasn't bigger than The Times, but he was. He had followers who liked Markoff. John: Was Steven there? Kara: I think Steven might have been. John: He was at Gillmor? Kara: Gillmor. These were people who had voices and interesting voices. Walt, if you think about it was the blogger before there were bloggers. You trusted Walt. That's kind of an old-timey thing too in lots of ways. You trusted certain people. I think that the idea was to get us together...It was almost like United Artists. Remember when that happened? John: Yes. Kara: What could we do? People liked us. They didn't need the brands? It became very clear to us. We do not need The Wall Street Journal to make me interesting or Walt interesting. I did not need to have The Washington Post behind me for sure. You could see it when all these other bloggers popped up like Andrew or whatever you think of Michael Arrington at TechCrunch. He was the show. He built a brand out of nothing. It iterated everywhere. It was in sports. It was in politics. When "Politico" first came around I was like, "You guys should invest in this" to Don. Why? If it's good people, will go to it. This audience moves to things they like. When Arianna started at Huffington Post and she got attacked a lot...I think there was a particularly nasty piece of work about Arianna...I wrote her a note and said, "Keep doing..." That was my idea for the Journal, "Let's create a tech protocol, a blog thing where we invite people in and stuff like that." When she did it, I was like, "Damn, she did it." It wasn't a fresh idea, lots of people were thinking like this but she pulled it off flawlessly. I wrote her a note saying, "Ignore all your critics, keep doing what you're doing. It's perfect. I love it." Like you admire it and you're like, "That's exactly what I'm going to do all the time." When she did that that was really important. She's been much more important than people really...People like to mock her, but I don't. I never do. They love to. John: Why didn't The Justice League of America take off? Kara: Because the timing was wrong. I have a napkin where I was promised $10 million for it. I don't know why. It just wasn't the time. I was ready to go, but they weren't a little bit. Again, I was a difficult employee. I didn't like listening to editors. They would cut things...I didn't think the editing was so bad. It's just that I really didn't like to be told by a New York editor what was happening in Silicon Valley, "Here's what the real story is." I was like, "No, no, no. I was just with these people. This is the real story." "No, but really what we want to say is." I'm like, "No, that's not what we want to say." The other part I didn't like and some people were more comfortable with was, they used to call it the to-be-sure statement. That's a Journal special, right? We were writing about Webvan or one of them and I was like, "This is a frigging disaster." I'd done the reporting so it wasn't like it was based in my punditry, like I just decided to declare. This was reported and I just wanted to say it, "This is a full-class cluster-fuck going on here. The money's going to get lost and it's going to be a disaster." The Journal was like, "Let's get an analyst to say that." I was like, "Why? I can tell you. I know business. I'm looking at the numbers. I've done the reporting. This is a disaster." "Let's get an analyst." Then you had the, "To be sure, some people feel that duh, duh, duh." I didn't think the idea wasn't going to happen, this delivery service. I think now it's really finally coming...It's working. It has the right elements. Some ideas just take time, even if they fail the first time. That's very common in Silicon Valley. I just hated the "To be sure. To be sure some people say that Webvan could be a success." John: In a certain period we said, "At some point, tech will change the world. To be sure many people have thought duh, duh, duh, duh." Kara: To be sure, perhaps the meteor headed directly for us will hit somewhere else. Like, "To be sure, it's going to hit us." I hated that. Why not just say so? A good example is Yahoo. Two years ago I was like, "All right, she looks good but I've got to tell you. First of all, she's never run anything, never had a P&L in her life, she was sort of trouble at Google to say the least, they didn't like her. She's not the star that you think she is. I know it looks like that. "Guess what? They have this Chinese asset that's going to get the stock up. Their core business is declining. Here's the statistics, blank, blank, blank, blank, blank." Everyone was like, "Oh, you're attacking her." I was like, "No, no, no. Look at the core business what it's doing. Every quarter it's declining. Look at Facebook's business, it's going up. Google's going up. "It's hard to do badly in this fast-growing industry. But they're doing it. Something's wrong with their technology or their staff or their salespeople." I said, "Because, to be a failure in online advertising during this period takes an effort. To be this bad you have to really try to be bad." I kept saying it. I was like, "I don't care. Once this Chinese thing is gone they're screwed." Now, all of a sudden, The New York Times writes a piece, "Oh, she's facing some headwinds." I'm like, "Yeah, to say the frigging least." I was saying, "Look, you can say all you want, 'She looks good and free iPhones. Yeah for everybody,' but guess what? This business is severely challenged." Instead of not saying it, I said it. That was more powerful. Now that it's happened that way, I look like a genius but it wasn't a genius thing to say. If you did your homework, it was obvious what was going to happen in that regard. Now, I don't get it right on all of them. I was completely wrong about Facebook. I thought it was a little bit of a flash in the pan and I was wrong. I didn't love eBay at the time it started. In certain cases if you do your homework, you should be declarative. That's why I want to create stars. I want Peter Kafka when Comcast or someone does some deal thing, "Look this is bullshit." I want him to say, "Look, this is bullshit. Here's their reporting but do you know why they're doing this? Because of streaming, they have to do streaming, because downloading is dying. Because nobody's buying downloads anymore and that's why they're pretending to be like this." In the case of HP, the split. They're touting it as a this. I just wrote, "This is a well-orchestrated disaster. Well done, but it's not from a position of strength you split up your company." We just say it. I think readers like that. We're saying it from reporting. We do not say it from loudmouth. I want my reporters to be like that. In the extras, people are confused. If we did the reporting, we could come back and pretty safely say, "Here's what's really going on." That's so invaluable to people. The great reporters of The Times and The Journal do that. John: Yeah, do that. Here's a question. In a journalistic environment what has been the influence of covering an industry where the wealth and influence has only grown? Is it corruptive on journalism? Kara: A lot of people have left journalism. I've had offers out the yin-yang. I haven't taken any. Money unfortunately doesn't motivate me. I wish it did. I never thought about it. When I think about it I could be extraordinarily wealthy at this point. I think the people that leave, leave. I don't know what the effect is, what's the corrosive effect. We didn't take money from any... Kara: Do I need a new party that has nicer shrimp? John: Somebody said to me that the problem is that you're confronted with that wealth all the time. Kara: If you care about money, yes, that's corrosive. You should get out. There's a lot of anger towards them. But then, just do it, it's not that hard. They're not that smart. Many of them are smart, most of them aren't. I think a lot of people have gotten out and worked for companies. Some people have moved to like a Google. A bunch of reporters went to venture capital firms. It was interesting. I'm not sure why that was, to be their storytellers. I think that's just soulless. I would want to kill myself. By the way, I make a ton of money doing this, being an entrepreneur so I don't know what corrosive is. I don't think you can get bought by a nice shrimp. Actually they don't throw that good a party. DC has better parties. John: It's twofold. Number one, covering politics as someone said to me the other day... Kara: You're a media insider. John: ...you're playing access. You want to get access. Once you get that access... Kara: You want to keep it. John: ...you know you're sacrificing the distance that maybe you need. Kara: That's always an issue. We try to bite them on a regular basis to let them understand what we're doing. I suppose we could bite harder. We could probably bite harder. I like Valleywag and stuff like that, but sometimes every story's the same. It's like, "They're all assholes." They're all stupid? That's not true. But that's their shtick. I agree. I like those fresh voices saying, "This is bullshit." Not every entrepreneur is a douche. Many of them are. I don't think we get things for access. I think if something goes bad we're pretty much on it. We are. Not everybody is, but that's their choice. John: How do you think our craft, our profession did covering this transition over the last 20 years? Kara: I thought it was negative, scary. Fearful of it. Aside from some various series, like The Journal's privacy series, I thought was great. I don't think people care. That's another issue. I don't think people care that they're giving away their privacy. Some of the deceptive practices, it certainly was nice to see the light shone on those. I think that a lot of it is fear-based, a lot of the coverage, or else it's cheerleader. John: It seems to be bipolar in that way? Kara: Like, "This can only go up and to the right." Maybe not. I've seen a couple of things really crash. There's not a lot of real deep scrutiny. At the same time, there's a lot of...I'm like, "Every year The Journal writes the excessive party stories. Like, "Oh, gosh, that again?" That kind of thing. It's like, "Now it's at its peak." I'm like, "No, no. Actually '97 was at its peak. Trust me. I was at those parties." The Times does these Facebook stories the same every year. I think one of the editors discovers, like, "Hey, did you know on this Snapchat people sext? We need to get on that." It's like, "Guess what? People have sexted in some form since the beginning of time. Go look at the ruins in France. They're writing dirty cartoons on the walls." That makes me laugh. John: If you're optimistic about the future, how do we drive that deeper scrutiny that we're not getting right now? Kara: There are certain great topics right now like diversity and gender issues in tech. That's a great story. This is our greatest industry. It is our greatest industry. It's the leading industry in the world and we still have this nagging problem with sexism. The new thing is "unconscious bias," which I think is actually true, but it's essentially, "I have an excuse for being an idiot, I wasn't paying attention," instead of the obvious sexism. I think that's an interesting issue. I think the stupidity of some of these...The expression I use is, "There's a lot of great minds chasing small ideas." When are they going to get involved in the big ideas and come out of their stupid bubble? Like around poverty, around healthcare, around all kinds of things. These minds could be better served focusing a little bit more on important issues. They want to separate themselves from government. They don't want to fix government. They just want to ignore it. I'm like, "You know what, guess what? World War II went pretty well for all of us." Do you know what I mean? John: I know. The problem is... Kara: They have a Tea Party mentality in a weird way. John: The problem is that Silicon Valley has become a model for the world. Kara: Yes, but it isn't. We're doing a City series about how innovation is created. We just did this Vegas thing. There's a lot of problems about trying to create happiness and innovation. We had suicides, there were layoffs, it doesn't work, people don't want the things. It's very soulless. Humanity is always looking for answers and there really isn't. I think we shouldn't use these people as icons. It's another thing. But they are. They're the celebrities of this age. John: To a degree we cover them as celebrities. Kara: We do. We definitely cover them as celebrities. On our interviews, we're pretty tough on them in those interviews. They like to come back for more. I'll tell you that. That's fascinating to me. The smart people...You know Jobs came back year-after-year and some of those interviews got rather testy but he liked the challenge. He liked to try his tricky reality... John: It's a throw down. Kara: Yeah, and Mark has been really good. Unfortunately he didn't do very well at one of our things. One good thing about these people, what I always think about is that these are the founders. That's unusual. People who run Hollywood and Detroit are not the founders. Those founders died a long time ago. These are the founders. It's like, "How would you cover Thomas Edison?" He's a flawed figure. How would you cover him today? How would you cover Einstein? How would you cover any of the great industrialists, Henry Ford and stuff like that? You're going to get a certain element of religiosity, like "Jihadism" even. I don't know if Jihad is the right word because it's a terrible word to use. But it's religious. There are zealots. John: Zealotry. Kara: They're the founders. They're going to be gone at some point and they founded something really profound here, something major, big, and important. That's why it's a more difficult thing to cover because they really have accomplished something. It's like the people who made the cars. Whoever made cars, boy was that an accomplishment. Whoever made rockets, that was an accomplishment. That moved humanity forward, maybe not forever. Certainly the Internet, the people who have done stuff. You meet Marc Andreessen, he created the frigging browser. Guess what? Everyone uses it. It changed everything. That's kind of an exciting part of it. You do have to have a little bit of awe about it, but not like a, "Gee whiz," or anything like that. Now you hold them to account for today but there is something fascinating about being around founders versus..These were the first. John: Fair enough. Kara: Like meeting Columbus. Guess what? You get to interview Columbus every day. It's like, "Wow." It didn't turn out well for him. John: Fair enough. Two last questions. Number one, are journalists getting side stepped now by these companies? They come back more to talk with you. But, a company is using other... Kara: So far, not us. They try, but I am tricky. I was just at Twitter, and we had got the memo about Vivian within seconds of them putting it out, it's not a big deal to get someone's memo, but they were like, "We didn't want to put it out that way." I am like, "Oh, too bad for you, I am just putting out a memo." They were like, "How did you get that?" I am like, "I am not telling you how I got it." We're always poking at them. They still get so much over on me, that it drives me crazy, but, if I really wanted to focus on them, a tricky crafty reporter can always fuck with them, every time. If you are a really good reporter, you make the calls, you call, you call, you call. You develop relationships, you ask questions, you can screw with just about anybody. I don't mean screw with them. They can't put one over on you, if you really apply yourself. The issue is, in the fast moving pace of it, we are being sloppy. I think about that a lot. We don't spend a lot of time. We need to spend more time but it's moving so fast, we just touch it and so we miss that scrutiny that requires thought. I don't think a lot, and I wish I had time to think. John: That's the flip side of the deadline. In the deadline, we have 24 hours to think. Kara: Right, but now I don't think enough. Even then, you couldn't quite put together the real thing. I would like more time, but, that's gone in this era. Unfortunately, we fill it in with our phones and our...My sons, when they are on their phones, I would say, "Come on, It's dinner time. Put that down. Let the music...in different ways, and not all the time." They look in, just a second, just to say, "Could you just, one more thing?" There's always one more thing on that fucking thing. There is always, it never ends, that is an endless library, an endless entertainment device, there's always something interesting, there's someone talking to you, it's so immersive. It's not just entertainment. It's entertainment, it's knowledge, it's social, it's feedback, it's being loved. You could be with that your whole life, and you would be perfectly happy or something. John: It is Encyclopedia Britannica and the television... Kara: The television, and the telephone, and letters. It's always on, and that's the problem with it. That everything is always on, so, you can't...Even when we are doing this business, I am like, "I have to sit and think about what we want to be because I think I am making decisions..." I was talking to someone, I got all sucked up into an SEO decision, I thought, "Did you really want to go for the traffic because, guess what? I can't get to the level I need to, to make enough money. Why don't I go another...?" Just the ability to think, "Perhaps the direction I'm going in...Is it a different direction I should be going in? Maybe I shouldn't chase that one." That's the kind of thing that you have to think about. Are you being true to what you should be? It's really hard when there's such a fast pace. John: When the momentum is pushing against that. Kara: Yeah, it's like, "Oh, you should do that. You should do Pinterest." I'm like, "Yeah, yeah, eh, eh." It doesn't give you time to think, so that's the only thing. I don't want to do the Arianna slow-it-down thing, because it's like saying, "This is the pace." John: No, you're fighting against the... Kara: How do you make decisions? I think a lot of bad decisions...I can imagine the panic at the New York Times right now. I wish they didn't have to be under that financial pressure, but they are. I wish a billionaire would just buy them, and then could just do what they do beautifully. That's probably what's going to happen, would be my guess. We need a good billionaire. John: Are you optimistic or pessimistic about the future of journalism, about the craft? Kara: I'm optimistic about journalism. I'm not optimistic about newspapers. I think it's over. John: About journalism, you're optimistic. Kara: Yes, I think content...people get creative. People are super creative. We may not work out. Someone's going to get it right, and then they won't. What I don't have is a romantic attachment to a way of life, because I never thought that...People have this romantic attachment, "Ooh, it was like..." I'm like, "You know what? It wasn't so good for women. It wasn't so good for blacks. It wasn't so good for customers." It was good for a group of people, but...and it wasn't such good journalism, by the way. Some of it was, but boy, is more good information out there for users than ever before. I think people love great content, and smart people will find a way to do it. It may be under economic things. I may not be. I'm utterly not optimistic for things like The Times. I'm worried for that. Again, I hope someone buys it and they figure out some things that are economically more amenable, and still keep up the excellence. It may be smaller. It will be smaller. But we prove...We have a very small team here we kick some ass, some significant ass. Do you need that many people? They never think that way, like, "Are you actually being..." I think about it all the time, "Do I need this? What can I do differently?" I'm doing that all the time. I don't think people at newspapers are, because they've been enwrapped in cotton batting their whole time. John: It's hard for someone who's used to being general interest to decide what not to cover. Kara: Right, except they've been moving towards that forever, through the sections and stuff. John: There's always a rhythm... Kara: How do you keep that incredible quality and incredible institution? I think about The New York Times all the time. I could care less for the Wall Street Journal. I don't think it's as excellent as it was. The New York Times, to me, it is an iconic...maybe it's because I'm a certain era. But I think for a lot of people, it's really...I read it some days, I'm like, "That is fucking good. Like good." How can we do a business, where this can stay this good? A lot of it isn't good. I think, unfortunately, it has to do with a lot of cutting. That's going to be hard, because they don't think they can do that kind of cutting. But, sometimes in scarcity there's greatness. John: Sometimes there is, but it's a tough epiphany to get to. Kara: But look at Time Magazine. They have those dinners and those whiskeys. Do we need that? No, they enjoyed it, right? By the way, the stuff wasn't so good. Some of it was, some of it wasn't, but that just doesn't fly anymore and it shouldn't fly. Nobody wants that, and nobody wants a week-old thing. They got like, "Oh, I can't believe it." I'm like, "Can't believe it? Why would you want a week-old thing?" People just don't want it. People don't want to wear scabbards anymore. We're not fighting that way anymore. That's how journalists get. They get all up in their grill, you know what I mean? Like, "Oh, I can't believe it!" I'm like, "When's the last time you read a book?" John: It's funny for a profession, where there is always attention deficit disorder. They get so attached. Kara: Oh, sure, they do. They're the most risk-adverse people on earth. Their first instinct is, "How does this suck?" Maybe that's a good thing, but, honestly, some days I'm like, "Maybe it doesn't. Maybe you need to change." I think that's the last...self- criticizing. They can go on and on about someone's business and then they can't do it to themselves. At The Journal, when I was there, I wanted to do a piece on the troubles that The Journal's financials were going to go into in this new digital age and take it apart. They wouldn't do it. I'm like "Let's examine ourselves. Let's actually hold a flame right up to us." "No, why would we do that?" I'm like, "Are you kidding? If we did it to ourselves, what a sensation!" The end of the story, we go, 'Oh, no. We're screwed.' Wouldn't that be something?" Nah, they wouldn't...I thought that would be fun. John: For the next chapter. Kara: I don't know, we'll see. Rupert will keep it alive. He wants to live, a lot of parties, and whatever. He'll keep alive until he keels, and then the family's like, "Enough of this." John: Let them decide, yeah. Kara: Unless they like. John: They can afford it. Kara: For now, they can. John: For now, they can. Kara: As long as there's "Planet of the Apes VI," I guess they can. That's what keeps them going, right? John: That's the, "Where there's life, there's hope," mentality. Kara: Yeah, they'll be fine until then. I don't know if I'd buy a newspaper if I was that rich. Maybe I would. Why not? It'd be interesting. John: Thank you. Kara: Thank you so much. This is a great project. ...
VIDEO: YES

Jim VandeHei
BIO: YES: Jim VandeHei is executive editor and co-founder of...
TRANSCRIPT: Peter Hamby: Go back to The Post days. Was there a crystallizing moment for you guys when you realized that the digital space had a real future for both your careers and news in general? Was there some founding moment? Jim VandeHei: Harris? John Harris: No, there wasn't a light switch that went off. Anytime, starting from the late '90s onward, people became more and more aware of how the web was going to influence the future of all journalists. I became increasingly struck, over in The Post, that how much of impact that our stories had been moved into a digital space, but how much of our professional work lives, our daily routines, our mental habits, were still grounded on the once every day the paper comes out rhythm. I grew, over time, increasingly distressed by that, because it seemed to me a real disconnect between where our audience was and where our effort was. But that wasn't a light switch moment, that was something that happened over time. Jim: Yeah, I remember back then The Post was actually two physically different companies. One was a digital company on this side of the river, the other was the newspaper company in DC. Nobody was going from the newspaper over to digital. This is mid 2006, when almost nobody's going online, and for us it was never like, "Oh my god, The Post is sinking, we've got to get out of here. We've got some brilliant prophecy, that we know what the future is," it was more a conversation about, "We've got this really cool idea, we're looking at what's happening on cable, what's happening on the Internet, and the opportunity where journalists who have their own brand can really make a mark." That was really the evolution of Politico, was saying, "What if we just got six or eight of us together, started a company, we know we're going to break news, we know we'll get on TV, we know we can get people to pay attention. Let's see if that could actually be the germ of a company." Peter: But did you have an idea that you took to your superiors at The Post? Jim: It evolved from that. Peter: So what was that idea? Jim: It was essentially an evolution of what we've just described. It was that we had an idea that, once we went and talked to people who were much smarter than we were, and had money that we certainly didn't have any access to, about the economics of this. Could you create a website that was built around just being really interesting, breaking news, driving a conversation, day to day? Could you build a business model around that? I think with each conversation we had, many of them with friends of John's from over the years, everyone was like, "Yes, yes, yes, yes." John: What we believed then, and still believe, is that the digital space rewards niche publications that can really organize themselves editorially, organize themselves in terms of a business model around a single subject, or at least a single set of closely related subjects. That's really hard for the general interest news organization. We wanted to be a specialized site, with reports reflecting that specialization. In other words not generals, but people who really knew politics, and knew government well. We talked about building that kind of space within The Post as kind of a site within a site, as one idea. Simultaneously with that, we had an offer to try to build that site from scratch. Peter: From outside? John: From outside. Peter: What happened when you talked to the folks at The Post, when you took this argument to them, or the idea? What was their reaction? What were the conversations like? John: There were a lot of people at The Post at that time, and I think that's still true of the people over at The Post, who are thinking very hard and very seriously, conscientiously, about these questions. They were intrigued and enthusiastic to try different ideas. There was certainly a possibility that we would have stayed at The Post and tried to go with this site within a site strategy. In the end, it ended up being more attractive, and I think more successful than it could have been by starting from scratch rather than trying to build within an existing brand and an existing institution. Jim: An existing institution would have strangled the idea. The reason I think it worked is we were able to move so quickly and not have any of the baggage of being a legacy institution. Nothing against The Post. It was just a big newspaper that was getting the bulk of its money from the newspaper. The idea that suddenly they were going to give us the freedom to really build something in isolation, I think they wanted to do that, and I think in retrospect it would have been really hard for them to do that. Peter: You used the word baggage. What else do you see as baggage from a legacy? Jim: It's what's killing newspapers. The baggage that I described is just the fact that they went through years and years and years, a generation of profitability, and they were newspapers. They were used to putting on a physical newspaper, and that creates rhythms, that creates demands, that creates a certain type of reporter. Obviously when you say, "You've got to change that." You've got to move quicker, you've got to be on digital, you've got to have people who maybe are mediocre reporters or they're solid reporters, but they're not household names, and you suddenly look at a media culture that's certainly rewarding people that were doing distinctive work or were household names. People that can get on TV, people that can break news, people that can write stories that are going to get clicked around. That's a tough transition to make. It's tough to do from scratch. Just really tough. It's tough for any big institution to change quickly. It's the reason reinventing government is hard, it's the reason that restructuring a corporation is difficult. You get habits ingrained into a company that are very difficult to undo. Peter: How confident were you that this digital venture would work? Did you have metrics and numbers to back this up or were you just flying blind? [laughs] John: [laughs] No, we had an intuition and a hunch. It wasn't just blind hunches. It was hunches based on what we were seeing all around us. It's not like 2006, early 2007 was so long ago. By that time, there were already plenty of examples that we were seeing of reporters and sites that were outside the traditional establishment of journalism having lots of success, lots of impact, doing lots of creative work. We could see that. The relative position of places like The New York Times, the Wall Street Journal, or the Washington Post, which used to be unchallenged, unchallenged superiority, unchallenged ability to set the agenda, that relative position was rapidly diminishing. Lots of places were competing for attention, for impact, for being the most important story of the day. Abundant evidence. We took that evidence, and it made us believe that, if we got the right roster of people with the right focus, that they could have impact. That was the intuition or the hunch. But at the time we started, the time Robert Albritton gave us the green light and a budget to go out and try this, it wasn't in our mind or in his so sharp that we knew exactly how we were going to measure success, exactly what success would looks like in our traffic, or revenue, or anything else. We had a high degree of confidence that we had a good idea, and we had a fairly high degree of confidence that, if that idea was good, that we were the right people to make it work. But beyond that, we were operating on a hunch. Peter: Moneywise, how long did it take you to find your sea legs? Were you making money quickly? John: It's been a while ago now, but these were long early months, when we were a new brand in Washington and digital revenue market was still pretty young. Those early months were very slow. The ad market is really pretty made up, at least then, I think maybe it's changed, it was made up of very conservative people, who themselves were products of institutions and products of old habits and old ways of thinking. That first year, 2007, we felt like we were having immediate impact. Almost from day one we were breaking news. We were getting quoted. We were seeing the news product be successful. I think there was a lag time of maybe six months or so before we started to see the revenue come in. A lot of that early revenue did come in our paper. It was only about a year after that, that we really saw the digital revenue start to come to us in a big way. It seems to me now that the ad market has caught up. They're no longer so stained. In fact, people are always looking for the new thing, puts a burden on us to keep innovating. Peter: How much of your revenue is from the subscription product versus the newspaper, versus digital ad revenue? Jim: If you go back to even three or four years ago, almost all of our money, 80 percent, was coming from the newspaper. Now it's a much more diversified company. We get more from digital than we get from the newspaper on the advertising side. We've added subscriptions, high end subscriptions, not like The New York Times, doing a broad based subscription at this point. We're just doing high end subscriptions for political insiders and that's been very successful. If you look at, almost everybody is doing the same thing now. They're just doing different variants of it. To be a successful media company you have to have, essentially, four or five different revenue streams. You have to have subscriptions. You have to have print ads. You have to have digital ads. You have to have mobile ads. Almost everyone has events now. You've got to hope that the totality of those revenue streams is big enough to fund a profitable company. I think that's the big test for everyone. As John was saying earlier, the idea of niche publications, if I were an investor and I was going to place my bet on companies, I'd be placing it on companies that have real focus and real expertise, and therefore command the attention of an important audience every day of the year. Folks like us, or the Financial Times, or the Wall Street Journal, or AllThingsD, I just think it's a lot easier to build a business model around that than it is around a traditional newspaper, either a small newspaper or a national newspaper, that is of general interest. Those are the ones that are going to have a tough time. Peter: Do you think of yourselves as a national brand or distinctly Washington brand? Jim: We care most about being a Washington brand but undoubtedly we're a national brand. Our traffic is what, 88 percent now outside of Washington, DC. John: Some months between 5 and 10 percent coming from abroad. Peter: How big is the newsroom now compared to when you started? John: It's a lot bigger. We started as an organization as a whole with about 60 people, of which probably 40 people were in some capacity or other in the newsroom reporters, web producers, editors. Now we're a company of 250 plus of which probably about 180 or so are newsroom based. Peter: During the last presidential race, how many reporters did you have? You were paying to send reporters out on the road and travel the country. A lot of news organizations weren't. Do you have any idea of how many reporters you sent out or how much money you spent on the election last year? John: I know how much money we spent. That's a knowable fact. We had a core group of probably 8 to 10 people owning our coverage and then we had people making different cameo appearances, probably 20 or 30. Peter: Can you talk about the norms and values of this newsroom compared to The Post? That seems to be your main point of reference. When you're hiring here, what do you want from a reporter that's different from what The Post might want, and how does the newsroom operate? There are all sorts of legendary stories about you guys really pushing your reporters very hard and... Jim: That's Harris. Peter: ...like to break news. John: I don't really consider The Post our main point of reference. It's one point of reference but it's not... Peter: It's not your competition. John: ...obviously it's where our experience is. We're a niche publication that will thrive on its ability to attract people who are singly obsessive about that subject matter, who know it better, who care more about it, who are more energetic in pursuit of the big stories. That's the definition of a niche publication, is to have people who are singularly focused rather than general interest folks. Our best people have that. Our most ambitious people come in wanting to be that for themselves. Actually we don't really push people that hard because the reality is that our most successful people here are self motivated. Jim: I don't think that they do. I mean most newsrooms probably want. I think we've figured out, it took us a long time to figure out what type of personality works here. Like finding people who want to own their beat, who have a unique ability to break news or to write better than other people. That stuff matters and we tend to try to pay a premium if that's what it takes to have those people working for us. There's just no market for mediocrity so the pressure is on us to produce really good journalism. Not everybody can produce really good journalism. I think if you had to list the top 20 reporters in town, I'd say we have more than half of them. I think that's a pretty good achievement if you think about Congress, politics, and the White House. Those people are that's gold. We're trying to tell people stuff they don't know. We're trying to inform people and make them smarter. Peter: Can you talk about the advantages of being a start up, editorially or more financially, does it make you more nimble? Jim: It does if you don't screw it up. In the beginning it certainly makes you more nimble because you have no legacy, which could either be you make good decisions and build a culture that works, or you can make a bunch of bad decisions and build it as just a dysfunctional start up as you would have a dysfunctional older institution. I think one of the smartest things that we did is early on, we're not CEOs, we're not businessmen, we're journalists by training, but we went out and we found people in business, ether CEOs or media executives and asked them, "How do you set up a good company? What works? What doesn't work? What are the things we should be doing?" By no means I think we had good instincts in retrospect but there's a lot of stuff that it took us a long time to figure out. How to be good managers. How to be good leaders. What is the appropriate balance of trying to demand the best out of people but not wearing them into the ground? That process to us has probably been one of the most exciting parts of this job, is just learning, building new muscles that we didn't have. That's all we did. We were journalists and then we had to become leaders. That's just a different world. Peter: What do you think your most disruptive impacts have been in the media landscape in our current media ecosystem? What's been your big picture impact do you think? Have you changed the kind of content that people want that other news organizations are not delivering? John: Yes. I do think that the people who care most about a subject have a demand for immediacy. They have a demand for sophistication. They have a demand for volume. They want to know what's going on. They don't have a casual interest in stuff, they have intense interest in this stuff. I think that was the opening that we had, that was a lot of political coverage and a lot of government coverage. There wasn't a lot of coverage that was giving the kind of intensive focus that we were both in the moment and with a high degree of knowledge and context and sophistication behind that coverage. I think that's changed the audience's expectations. Jim: One of John's obsessions early on was this idea of getting rid of a lot of the journalistic conventions, the "voice of God." The truth is we still say it to this day why in the hell is it that there's such a huge gap between how interesting reporters are, either in email or at a bar, than what they are when you actually read them? I think we have successfully narrowed that. We've taken these people who are fascinating minds. We have some of the most curious, intellectual minds around, and I think we get more of it. We force more of that in front of our readers, because readers, they don't need the "voice of God." They don't always need the background. They like to have fun with journalism. They like to be informed. They like to be entertained. They like to be challenged. I think we've been very successful at that. I don't know that that's necessarily a disruption, because I don't know that others are doing that much of it. The disruption John described...if speed was not in this market, we brought speed to it. But now everybody does speed, so that's not sufficient. John: It's not like we were disruptive, but there are people who are disrupting us. Twitter is a great example. They've taken some of the role that used to be occupied by blogs and made them less relevant. Peter: Also, I feel like in the last...like in 2008, you guys broke a ton of news and then you were sort of a go to news breaking site. Then Twitter kind of happened in between and took some of that space, right? [crosstalk 18:48] Peter: You guys still broke the news... John: The routine news that you get just by virtue of being there and posting first, basically there is no way to win that competition. Twitter will always be there first. It's not always the competition that most interests me, I think, is really the one that we focus on, is the publication. There's no way that Twitter's going to break the Herman Cain story. Twitter can be fast, but it has a hard time being really smart and I think we can do that. Peter: Do you view yourselves as competitors with The New York Times and the Washington Post and the Wall Street Journal? Are you waking up every morning trying to beat them on stories? John: Sure. Them and lots of other people, too. The way the media universe has changed, everybody's a potential competitor. It might be CNN one moment. It might be Huffington Post one moment. It might be the Washington Post one moment. Yeah, I feel like that. Every day the game is to have the most interesting story on politics or on Washington anywhere. Some days you win that competition, some days you won't, but we'll judge ourselves by we win it more often than others. I feel sure that they, in their political coverage, will view us as competitors. We're going to certainly view them as serious competitors whom we respect. Peter: That gets to my earlier question about disruption. I talked to Stuart Stevens yesterday for a separate project I'm doing and he was complaining about The New York Times coverage, the cycle. He was saying this in a sort of derisive way, but he was like, they only cover a process and personalities, and they were trying to keep up with Politico, and they were trying to be Politico when they should have been New York Times. I have a hypothesis that a lot of news organizations are now trying to do the peel back the curtain thing and they didn't used to do that. I think that's partially due to what you guys have been doing. Do you disagree? John: Might be. It might be. I think everybody's trying to...if you were The New York Times 10 years ago, what you wrote, just because you were The New York Times mattered. You set the agenda. That's not true anymore. If they write a boring story, it's a boring story that nobody's going to read or pay attention to. It does up the ante for quality journalism. What breaks through? That's it. If you can break news, it breaks through. If you can offer a sharp analysis, that breaks through. If you can do an investigative piece that other people don't have, that breaks through. It's the companies that produced a lot of news that has now commoditized that have the hardest time adapting. I think a lot of the big institutions essentially did produce a lot of commoditized journalism that now is irrelevant because everybody has it, and if you're interested in it, you're getting it on Twitter or Facebook in tiny little bites and you're looking for something else. When you talk about disruption, you have to remember that. Disruption's a baby. We're only in the beginning of it. If you think about new media, the thing exploded in late 2006, early 2007, we're just in the early stages of that. Nobody knows how this plays out. You went through the web disruption, which we just went through. Now you're going to go through the pay model disruption of who will pay for what, which we don't know. Times is having some success. Others not so much success in that area. Then by the time people figure both those out, 50 percent of all consumption of media is going to be done on something this size, which has massive ramifications for how long a story can be. How you present your journalism. That's going to be a hell of a disruption. Disruptions...it's not like they're over. We're just sifting through to figure out what worked and what didn't work. It's constant. Peter: What are you finding that people are paying for in the politics space? Jim: Remember, ours is unique in that we're not The New York Times doing a metered system at this point. What we're doing is we have set up a series of verticals that are essentially Politicos little mini POLITICOs for different sectors of the economy health care, energy. People in this town will pay for information that's essential to them doing their job. There's no doubt. We've proven that with our POLITICO Pro and we're going to continue to expand that because I think we're very good at producing the type of journalism that this city needs to function. Now that's much different than the broader based journalism that we're doing that's for the country, for the world. That's different than that. At some point, we're going to test, I'm sure, a pay model for all of our content, like everyone else, but we don't know how that plays out. Just beginning that experiment. Peter: Have you guys seen any other organizations apply your model in an interesting way or successful way to completely different sectors. Verticals like sports, business, Silicon Valley or whatever. John: Sure. [crosstalk 23:37] Peter: ...they look to you and they're like, Oh, those guys are doing something pretty cool. John: AllThingsD, Business Insider, Foreign Policy. Jim: ESPN is one of the world's biggest brands. John: But we copied them, right? [crosstalk] Jim: ...a bit longer than we did. Peter: The last thing I want to ask you is video. Last year, you guys implemented a web show during the campaign, which got a lot of insider attention. It got a lot of buzz. I emailed in a couple times. Jim: I remember that. I might have mentioned you once or twice. Peter: Yeah, thanks. You're shooting all kinds of video content here. Jim: Correct. Peter: You've got a full time professional video staff. Why? Why video online? John: One, because I think it's one of the buckets of experimentation and I would say that video, for all of us by the way, is total experimentation right now. Nobody, the best that I can tell, has cracked the code on how you do video outside of being a cable network online where you make money. We all think there's the potential, because there's this massive audience for it, if you can do it right. For us, it's all about experiment, experiment. If it works, it works. If it doesn't, move on. What works? Those shows work because there is a huge audience online in moments, in big days, a primary, an election, State of the Union. What we have found, it's really hard to get a live audience — probably impossible to get a live audience — outside of a big day, so you try to move away on the days where you don't have a big event to something that is on demand, where you can slice it and dice it. Make sure you're putting video matching up with stories that are similar to it, because most people are reading something, might be interested in also watching something about it. I think that's a place where we put a lot of emphasis on. Or we've also started to experiment a lot with just shorter shows. The attention span online, you're not getting people to sit down for 30 minutes. Period. Five, yeah. Peter: Are you seeing a lot of engagement with your video content online? John: We do, but again, it depends. Certainly the shows that we're doing, we're seeing that we can start to build an audience for, and certainly video that is topical to the story, you can get a good audience for. The stuff that we've certainly struggled with I think everyone's struggling with is just trying to do a show every day that's longer than five minutes and think that you're going to get a loyal audience. That's a challenge and a lot of people are experimenting with it. ...
VIDEO: YES

Dave Winer
BIO: YES: Dave Winer (born May 2, 1955 in Brooklyn, New York...
TRANSCRIPT: Martin Nisenholtz: We're here with Dave Winer on the...what's today's date? Paul Sagan: February 20th, 2013. Martin: ...with Paul Sagan, John Huey, Martin Nisenholtz. Why don't I kick it off? Let's go way back. Before Scripting News, what got you interested in web publishing? What was the catalyst there? You're a computer scientist, right? Dave Winer: If you go way back, yes, I am. I have a master's degree in computer science. I'm a programmer. When I wake up in the morning, that's what I do. When I was in high school, I started an underground newspaper. That was my impulse, was publishing. I didn't discover computers until senior year in college. It wasn't at all a passion for me. In fact, it was the opposite. I detested computers and engineering culture, and all kind of stuff. Martin: What year would that have been? Winer: Which year is that? When I was in high school? Martin: Senior year in college when you discovered computers. Winer: '75. 1975. It's still pretty early for computers, but they were there. I was at Tulane University in New Orleans. They had IBM mainframes and really old stuff. Paul Sagan: Punch cards and FORTRAN. Winer: Yep, FORTRAN and punch cards. I can't say I loved it, but I had an affinity for it and I was good at it. I was looking for something that I could earn a living doing. I was going to be a poli sci major. I took a lot of English classes. I'm more of a writer than I am, by inclination, that I'm a programmer. I wanted to pursue it. I got a job in New York working in the computer time sharing business, worked in the Empire State Building on the thirty ninth floor. I learned there, that I could really do it. I wanted to go back to school. I had applied to grad schools in computer science and got accepted, more or less everywhere. I went to the University of Wisconsin. There, they had modern computer equipment, Unix. This was still very early in Unix. This was 1977. That's when I really got...This is what I was meant to do. This is really what I do. This really clicked. I'll try to keep it really brief. I started a company in 1983, I guess it was. I had moved to Silicon Valley. I'd become an author for the leading software company in the valley at the time, Personal Software. They did VisiCalc. Our product didn't ever ship. I started a company to ship it. It was called ThinkTank. It was an outliner, the first one. Martin: Was it written for the IBM PC? Winer: First written for the Apple II. Then the IBM PC. We really hit it on the Mac. When the Mac came out, we were seeded with the Mac early. We got it half a year before it was announced and we shipped it. We were second or third product out, on the Mac. We loved the Mac and the Mac was a perfect fit for what we were doing. So when did I get interested in publishing? The continuum really is, the Mac evolved into publishing. Martin: But now Outliner is a business creation tool, in a way. Or isn't it? How did you think of it? Let me ask you the question instead of answering it. Winer: That's a long story. Because I use outliners today, as writing tools. That's how I write. That's how I compose. That's how I design systems. That's how I write software. I write software in an outliner. I think outliners are going to be the way we all work with computers. I think it's been delayed. We had a tremendous of software in the eighties. But the technology industry destroys itself every 10 years or so. A lot of the art is lost. So we lost graphic user interfaces when we switched to the web. We lost outliners. It all comes back eventually. It's a cyclic process. Who used outliners were... lawyers loved them. Academics. Accountants, teachers. It was an education tool. Anybody who was aware of their intellectual process. Martin: The nugget I'm trying to get to, Winer, is that the user is now creating, for the first time, on a digital device. Winer: That was always the premise of the personal computer industry. We never saw the user as anything other than the originator of... We never created content. That wasn't what we were doing. We created tools for... Fundamental difference. It's where the clash of the technology industry and the publishing industry comes in. To this day I hear on NPR that we are the listeners. I go, "Well, you don't get the point. You want our money. You want us to participate." When they ask for the money we're participants. But all other times we're listeners. It's a disconnect. Why should we not be participants all the time? That's the fundamental premise of the personal computer, the technology industry, the whole thing is directed at the user as the creative force. The technology industry is evolving more towards the publishing industry now. If you look at Twitter and Facebook, they really don't see the user as a creator. They see the user as a consumer. Martin: We'll get there. Let's continue with the history, because I think it's important. So we get to the outliner. And then from there... Paul: Which is the eighties. Martin: Which is the eighties. Winer: The big thing that happened in the eighties was desktop publishing. Desktop publishing dropped the cost of publishing. When I started personal software in 1980, they got venture capital money and they bought this enormous laser printer. It was very impressive capital investment. It was like half a million dollars. "We're going to do our own type setting and layout. We're going to save a lot of money with this." It was a bargain. But by the time the eighties were over, that same laser printer now cost $1500. That was the process. The process of driving the cost of publishing down. Until the point where the web comes along in 92, 93, 94, somewhere in that time frame. The cost of publishing goes almost to zero. When did I figure that out? I figured it out when Page Maker came out and I saw what people were doing with it. From then, it's a very... Martin: What's interesting is we just had Jerry Levin in here. He talked about the network, in his case meaning the cable network mostly, being the fundamental driver for him. The PC industry was really a standalone industry for a long time. You could connect modems up and all that. But they were very slow and clunky. Microsoft I don't think ever really even at Apple cared that much about networks. Winer: I did. I called my company Living Video Text, for that reason. That's what I thought we were doing. Martin: Isn't it interesting that you called it that? Winer: Yeah. I said we were in the communications business and that we were producing both publishing and reading tools. That's the way I always thought about what we were doing. John Huey: We had Levin in here primarily to talk about videotext. Martin: So why didn't you invent AOL? I'm just curious. Winer: I think in my own way, I did. I had a product called Living Bulletin Board System, LBBS, which was...I don't think in centralizing terms. It isn't my first impulse. My first impulse is to give the tools to the people to do it. So my thought was we're going to put one of these servers inside of every work group, is going to have a server, and have the ability to publish. Eventually our product became we never marketed it. The thing is that Apple did and didn't believe in it. They were having a fight about this at Apple. You're right about Microsoft not getting it. They didn't. Or they didn't want it. They didn't think in those terms. But Apple came this close to being the Internet, when they included Apple Talk networking with every machine in 1986. It wasn't just to connect laser printers. There was all this kind of stuff you could do. There was email. The problem was the APIs were just horrendous. Because there was a guy in there named (Richard) Gershon who was in charge of the networking software. He did not believe in developers. I don't know what his thought was. But the APIs were completely impenetrable. Believe me, I hacked those over and over again. I hired all kinds of people who said they could get through them. Nobody actually a couple of people did. I merged with Symantec in 88 and we bought a company, Think Technologies, who had gotten through it. There were like three of four companies who had figured out how to get through that stuff. Then Apple killed them all. [laughs] Apple would do that. Paul: Talk a little bit more about... Winer: Wait. Just let me close the point. Had they instead decided to let a thousand flowers bloom and make this a priority that developers would create applications that run on Macintoshes as nodes on a network, it would have been trivial in fact, it was done to bridge those networks across the public network. There would have been no need for the web. Absolutely none whatsoever. And we wouldn't have taken the big step backwards that we did take. Because the web is not a graphic user interface. It's only now beginning to have some of those trappings to. Paul: Talk a little more about the view text influence in the eighties. And is there any linkage to the seventies in the original Teletext that the publishing industry did. Winer: The only reason I got interested in it was because I was reading about it, videotext, in all the business publications and how it was the next thing, and it matched up with what my view of what the future was. I don't know why videotext didn't work, because I never actually joined the videotext industry. My thought was this would be a part of the personal computer industry. Martin: Yeah, see, I joined the videotex industry. Winer: Oh, you did? Martin: Yeah, I did. I worked...I believed passionately. The reason I thought it might work was because the infrastructure was there. It was a kind of tortoise and hare thing, Winer. I mean you were the tortoise in the sense that the PC gradually took over the earth, but in the early '80s there weren't a lot of PCs. Winer: No. Martin: And I was kind of the hare thinking, well, everybody had a TV. Everybody had a phone line. Winer: Right. Martin: If we could just get a low cost coder into the home somehow, whether it was done by cable companies or newspaper, everybody would be able to enjoy this kind of distributed world. And I was wrong, and you were right [laughs] . Winer: Well you weren't wrong. No, you weren't wrong. The thing was that what was missing was the bridge between the two worlds. That's what we needed to have. That should be the lesson that comes out of these things is that...I mean I don't know why the bridge was...I mean I went down and met with...I came to New York all the time. I was meeting with people at CBS. There was a guy at Dow Jones. I think his name was Steve Burgess. I don't know if you know him. And I used to...you know, I'd come to New York all the time and meet with the...and they were fascinated by the personal computer industry. And I had the credentials. They would talk to me. And I kept saying, "Well, when is there going to be something we can do together?" Somehow that never happened. Had that happened I don't know what it would have taken to get some installed base of hardware that people could use the stuff at home, but there would have been a drive. There would have been demand created for it. That's the thing. I mean you have to make people want it. They have to feel some pull to get it, at least in the United States they do. In France I think they just finally shut it down, right? Martin: Well, they did, finally, but they just took away all the yellow pages directories and created an instant application. Winer: Right. Martin: I mean you couldn't search for anything [laughs] . Winer: But that's a good way, not a bad way to do it [laughs] . Martin: Well, no, no, no. It worked. Winer: I'm not going to say it's a good way, but it's not a bad way. Martin: Yeah, that was called Mintel, and it worked. Paul: Yeah. John: So to back up just a second, you're saying if AppleTalk had been developed to where it was a connectivity device then... Winer: It was a connect point. John: But if it had been more user friendly to developers. Winer: Developer friendly. John: Developer friendly. In a way that what they've done with mobile and apps has finally...no. Winer: No, in a way that Internet...what the Web was. I mean my career was completely kaput when the Web came along, and when I saw what they did I mean that was the thickness of the docs for the...you know, if you want to understand HTTP that much and HTML, add that much. It was really simple and incredibly easy to understand. And Apple's was impenetrable. It wasn't that I could even give you a depth of their docs, because all the docs in the world you probably couldn't figure out. You probably had to be friends with Sidhu, and he probably had to take you out to lunch and tell you. I mean that's what all these guys had in common was that they were all kind of buddies with Sidhu. So, no, what they had to do was trust the developers. It's the same thing I was saying with videotext in the United States. If big company guys...and that's what Martin did, and I don't want to embarrass you or anything, but that's what Martin did that was unique. When, me, sort of the lowlife from whatever, comes to Martin and says, "How about letting us have your XML?" I don't know how you decided to do it, but he said, "Why not?" and they signed an agreement and they gave us the XML. And they let us run with it. And as soon as that happens, what he... John: And then what happened? Tell us that story, then, because Martin knows it so well. Winer: It's a great story. John: Well, tell us that story. Winer: I'd love to tell you that story, and I'm not sure you know the whole story. Maybe...probably you do, OK, so... Paul: I don't know. Go ahead. Winer: So some guy sends me a link to a server on the New York Times website so it's obviously deeply buried, no password or anything, but not the kind of thing you would trip over normally. And inside there there's a folder for Associated Press for...I mean all of the different publications, a lot of different famous publications, OK? And you dive into them and you see, International, New York, Sports, Business, .XML, each of them. You click on the link and you see, oh my god. It's not full text to the stories, but it's got all the information. It's got the headline, a synopsis, a link to the story on the website. They do an incredible job of categorization at the Times. I mean this is...I'm looking at the goldmine. Not a goldmine, this is it. This is the Holy Grail. So what would I do [laughs] ? Well, I can't not take this and re purpose this. I didn't ask for permission. I just went ahead and wrote a script that pulled one of these folders every 15 minutes, sucked it out, converted it, moved the content over to my servers, and then I told everybody where my URLs were. And then I get a very nice call from [laughs] a licensing person at the New York Times who's sweet, really nice person. I felt like I was, you know, called down to the dean's office in high school, because that happened to me a lot. John: Now where are you and what are you doing? Winer: California. I had a company called UserLine Software, and we were doing...well we were doing blogging. We were starting, basically, building blogging tools when there was never...there was no blogging. We were sort of developing the idea of blogging. John: And this is... Winer: What year? Is that what you're asking? John: Mm hmm. Winer: I'll have to figure that out. It's probably '99. John: OK, so in '99... Winer: 2000. No, no, no, it's not '99. It's 2000. John: OK, so it's 2000. You're in California building these blogging tools. You get this link. Winer: Oh, we're also building aggregation tools for news. RSS didn't really exist yet. I mean it was sort of nascent, but it wasn't really popular at all. John: And what were you planning to do with it? Winer: Oh, what I did with it was we had an aggregator that we just plugged in, and we had several news sources Wired, Red Herring, Motley Fool, lot of blogging tools. We had a lot of stuff coming through our system. What we didn't have were the major news organizations. John: So you get this call from the licensing department at the New York Times... Winer: And she says, "You're a very sweet boy, but you can't do this." And I go, "Oh, please." You know, I felt like...I felt loved and admired but absolutely prohibited to do this [laughs] . John: But caught. Winer: Caught. And I said, "I understand. I won't do it anymore." And I didn't. Once you tell me I can't do it, you know...I can't do it. What can I do? And then I get a call from Martin's office, and, "Martin would like to meet you." [laughs] "Fine. I'll meet you." So I went out to dinner with him and John Lodell, and John Markoff, and I think it was Matt Richtel? Was that possible? Yeah, Matt Ricktall. We went out and had a wonderful dinner in San Francisco, and I pitched Martin on two ideas. One was, "Let me have the XML," and the second was, two things, really. Let's give every New York Times reporter a blog. Paul: That was a bridge too far. Winer: I know. And the next... Martin: I would have loved to have gotten that done, but it was a bridge too far. Winer: And then I pushed it even further, and I said... [laughter] Winer: ...and I said, "Let's give..." Well, I think it's important to play Monday morning quarterback on these things, OK? Paul: Yeah, I do, too. That's why we're doing this project. Winer: I said, "Let's also give blogs to every person who's quoted in a New York Times story. Let's have that be the algorithm. The theory on that was let's let the reporters be the gatekeepers, because that's what they want to be, right? They want to be the judges of who's authoritative and who's interesting. Had the Times done this in we needed it because we needed infrastructure. We were really...the venture capitalist did not believe in what we were doing. That would come much later, right? John: What restaurant are we in? This sounds like a historic event. Winer: I felt like it was. I knew that he couldn't do it. Martin: Not Greek. It was a high end, maybe a Turkish, or...I can't remember. Markoff might remember. Huey: OK, but we're in this...we're having this historic dinner. Winer: [laughs] But the important thing...I mean what came out of it did matter a lot, that we got the permission then. It took us a few months to work out the agreement and we got a license to use the content. And then what I did with it was I did not immediately publish it as RSS because I didn't want them to get embroiled in all of the flame wars that go on in the tech industry. In other words...because there were sort of like...there's this group of people, and have you been hearing about Aaron Schwartz? Yeah. I mean, OK so there's this group of people that want RSS 1.0, the RDF based format, and they're trying to stop us from moving forward with the non RDF version, which is the one that has the installed base. I mean it's a question of where...the momentum's going in this direction, and there's this group that comes along and says we need to pull it over here. What I didn't want to do was throw the New York Times into the middle of it. I was sure you guys weren't even aware of it, right? I mean why would you be, you know? Martin: Right. Winer: And so we published it in their format, actually, at first, and it was open. Anybody could use the New York Times format. I think it was actually called New York Times format. And then quietly six months later we switched it over to RSS 2.0, and we placed the emphasis on being really quiet about the actual format that was being used, because we didn't want to emphasize that. That wasn't the important thing. The important thing was we now have the ability to drive...well, we have the New York Times news flowing through the network. And I was happy. New York Times is a...let's say it's a nine, and everything else to me, at least, is at most a five, you know? Martin: In terms of comprehensiveness, authority, depth, everything. Winer: And personal allegiance. I grew up with the New York Times. Martin: OK, so it was... Winer: I grew up in New York. The New York Times was what we read every morning at the kitchen table. It's what... Paul: So it's the Holy Grail and you had it. Winer: And I had it. And that was it. And the industry felt that way, too. Not the tech industry. The publishing industry felt that way. The tech industry could give a shit. They don't care about... Paul: Content? Winer: Yeah, they don't care about what you read. They don't care about the users. They don't care about any of that shit. They care...I don't know what they care about, but they don't care about that. I really cared about it, OK? And so did the publishing industry, because what happened was is then all of the other publications followed suit. It happened in the space of...it got to the point of where it was like, "Oh, yeah? Oh, Reuters now has feeds? Oh, OK. That's great. Oh, USA Today has the..." Martin: Now, so... Winer: You know? Wait, wait, there's a key point here. There was no compatibility issue here. All they did was copy the New York Times, and that's an important...that's a dimension of leadership that the publishing industry doesn't understand that it has, doesn't get that when you move...when you get a leader to move...I mean you have to tell me if that is something you guys are even aware of. Martin: Yeah, we were aware of it at the time, and I think... Winer: That you would a leader in this... Martin: And I think we were aware of it when we implemented the metered model that other publishing companies would follow if we succeeded at this. It's a different kind of thing. Winer: I thought you were...what's the metered model? Martin: It's the idea that you have access to a certain amount of content on the Times website for free. Winer: It's what we have today, then. Martin: It's what we have today, yeah. Winer: And I thought...I didn't think you were a proponent of that. Martin: I was not a proponent of a gate, but I was a proponent of some form of payment in the end, because I recognized that at the end of the day advertising was just not going to be able to cover the costs. Winer: See, I've spent a lot of time thinking about this. I don't think it ever will, that your metered approach will ever support what you want to do. Martin: Well, we can get into that later. Winer: Yeah, OK. Martin: You know, let's get into that later. It's very, very important. Winer: All right. John: And it's a big question. Winer: Yeah, of course [laughs] . It is a... Huey: It might be the biggest question. Winer: It's the most interesting one, too. Once you have the answer to that question, you have an idea what the shape of our world is like in the future. Paul: You know, I...my... Winer: Because, wait...because the way news works is direct determinant of how politics works. You can't separate the two. If we want to have reform in our political system, we have to rationalize our news system. It has to work. It has to have a future. It's very important, hugely important. Not just because I care. I don't care about whether they make money doing it. It's not...it's all the same to me. Martin: So, but, Winer, let's...we went through a lot of history here. Let's go back for a moment, because there's this paradox here, which is that you have this great allegiance to, fondness for the New York Times, which is in a way the ultimate top down journalistic organization. {abbreviated} Martin: I was saying that you view the Times as this...you have this great allegiance to it, have...but at the same time you're inventing this form. You've said all along that the purpose of technology, or at least its driving force, is to decentralize everything. Winer: Yeah. Martin: So you got two things going at the same time. Winer: Yeah, I know. It's dysfunctional. It's very dysfunctional, because at the same time I don't believe that the Times does a very good job. I honestly don't. I get to see them cover things that I care about, and I know they don't do a good job. Martin: And so you think a better job can get done by this highly decentralized blogosphere. Winer: Yeah. I can give you lots of examples of it. I think the... John: Give us one. Winer: Well, just give you...I will. I'm going to give you the theme is access journalism. That's the problem. The problem is that in order to do the job as you've defined it these guys have to see the world through the eyes of the people that they cover. The bloggers don't. The bloggers are people. They're users. They're... John: But wouldn't you argue that you need both, that they balance one another out? Winer: I do, but the roles will be different. I absolutely do agree. I mean I don't know, OK. I don't know. I'm a scientist and I have to say we haven't reached a stable equilibrium at this point so I don't know the answer to that question. John: Well, I don't want to become a participant here, because this is too good, but let me just throw a model out for you that...think of the news business as sort of like functioning democracy or a republic, say, in the United States, and think of the New York Times as the Senate... Winer: No. John: ...or the Supreme Court, or... Winer: No. John: ...and the bloggers as the House of Representatives, and... Winer: No. John: No? Winer: No. No, I think that in the end... John: Where I was leading with it, I was going to say if you're right that the New York Times does not do a very good job, I would submit that...and I'm much more skeptical about the New York Times than Martin, then I would submit that it's a lot like democracy. It's not perfect, but it's better than anything else that's out there. Winer: Yeah, that's nice, but I'll tell you we're in the midst of a change that where what we are living with in the future probably will not resemble very much like what we have been living with in the past so to say that we've reached a point where we've got the thing that's better than everything else is not likely. It's just not. How could it be? Because the whole system... John: For now, I'm just saying. Winer: Well, no. John: But go ahead. OK, go ahead. Winer: No, I think there are way too many limits. Well, for the...yeah, I mean if you look at...pick one area. If I want to find out if a piece of computer hardware, whether a phone is any good, I do not read Walt Mossberg. I do not read David Pogue. I do not even read the leading bloggers, because they're all in the access game. They all have to say... John: They get it first. They get early. Winer: And I resent that. I really don't like the fact that they get it first, but I don't... John: So where do you go? Winer: What do you mean? Where do I go? John: To find out? Winer: First of all I go to the store, and I buy one, and I use it myself, and I write about it, because I want to be one of the people that influences them. That's one of the ways I see my role. There are lots of places. I mean one place...have you...I go to Amazon product reviews, for example. I mean I went to go buy some stereo equipment, and I went to a store, and I felt crippled because I couldn't read the reviews, you know? John: OK, so your point of view...now I get it, and this fits in with where we're going. Winer: Well I barely stated my point of view, so... [laughter] John: No, but it begins with access is an original corrupting sin, and users are purer, and... Winer: Not purer, they just don't have that problem. John: It's cleaner, or... Winer: Yeah, users are no panacea. Users are people. They have the foils...they have all the problems that people have, you know? But you... Huey: But there are a lot of them. Winer: Yeah, that's right. And you can learn whether you trust them or not, and you have to get to know them, and then you figure out who... Martin: But, Winer, going back to the start of blogging, you play a huge role in the invention of this thing. Had you envisioned that bloggers could be significant information...? Winer: Sure. Absolutely. Martin: OK, so you didn't do it for the money. You did it...no. So you did it because you thought this was a... Winer: First of all, by the time I started blogging I already had plenty of money so money was not my motivator. I'm not one of these people who believes that money is sort of the way you keep score. I'm not interested. It's not the way I I'm not built that way. I love playing with technology and making big things happen. That's just what I love to do. And I stumbled across blogging. It's like everything. I was thinking about it before coming in here, is like, well what is the theme? First of all, one of the things is I always do it with people. It's never the lone individual. Everything I've ever done has been in collaboration with other people where their ideas and their point of view makes me see it from a different place, and then I can see something that I can do, and blogging was just like that. What happened was, I started writing, sending emails to friends of mine with other people's ideas, and then I started reacting to other people's ideas, and then I realized I could put my own ideas out there. When I did that, it was explosive. It was just wonderful to see what kind of response came back. That was what was unique about it. I don't think that ever happens. [laughs] Martin: Let's talk about blogging as a publishing, as a CMS, as a publishing platform. Because it just didn't appear out of thin air. It was designed. John: And give us a year again. Let's always know when we are. Martin: We're 2000, right? Winer: No. Oh no. Way before that. The seminal experience for me with blogging, the one where I had the moment of sort of, "This is incredible," I remember where I was. It was late '94, 1994. My archive still has all this stuff in it. If you want the pointers to the stories I can get them for you. What was the question? John: It was 1994 and you remembered where you were and you were blogging. Winer: Right. I started sending these ideas out there. One of them was that IBM and Apple should get together. They were technology industry driven. That's what I was thinking and that's who I was writing to. John: Where were you? Winer: {abbreviated} I was living in Woodside, California. I was pretty much retired. I had basically shut down my company because we ended up in competition with Apple, and Apple had killed us, really, basically. We didn't have a way forward with the company. I had lots of free time. I was out investigating new stuff to play with because I had access. There's that thing again, right? I could talk to anybody I wanted to, and they would more or less tell me what they were doing. I wasn't writing publicly about it because it never occurred to me to do that. This was all emails. I sent emails to people. They would respond. I wrote one about where the PDA industry should go. Then the guy who was in charge of Motorola at the time, who's a friend of mine, Randy Battat, sent me back a thing saying, "No. You're wrong." I ran his thing. That sort of showed, OK...I didn't edit his writing. He had a few spelling errors, and a few run on sentences, whatever. I cleaned it up and made it more presentable, but I didn't change his words. I didn't edit anything out. He got to talk to all of my readers exactly the way he wanted. That was a major epiphany for me, that wow, you can have this kind of back and forth. Then I realized that everything that the tech industry had been doing about the Internet to try to...because by this time, they understood that it was there. They needed to do something about it. Everything that they had been doing up to that point was going to change because this Internet thing was happening. They didn't want it. They really didn't want it. I wrote a thing called "Bill Gates vs. The Internet." I compared what the tech industry was creating versus what the Internet was. I get a response from Bill Gates, and I run that. And that was it. That was the moment where basically...Bill Gates is a very unique character. His character completely came through. It's in a way the character was the character that you don't get when he gets up and gives a big speech. It's the character you get when he rants at you in an email, which is the real Bill Gates. I've had a number of meetings with Bill Gates over the years. He even tried to buy one of my companies at one point. I had a lot of dealings with him about that. This is the guy. [laughs] I had him sitting right there and sent it out. It just made waves in the tech industry. It was like all of a sudden they were cursing me. Michael Spindler, this was another moment. Michael Spindler, who was the CEO of Apple Computer, said to a reporter at the San Jose Mercury, "Oh, you've been listening to Winer. Don't listen to him." They quoted him in the paper. [laughs] I said, "Oh, OK. It's all working. This is wonderful." It's a great feeling when something like this clicks. It probably only happens once in a life, if it happens at that, where what you've been dreaming about...this is the kind dream I had as a kid. I would have put it different terms when I was a kid. For me it was like maybe sports metaphors might have been more like it. Just to hit the home run so out of the park that basically it changes the way people look at things. This was that. John: When you watched that moment, you had created that phenomenon, and it was this eureka moment, tell us about how it spreads out beyond the tech industry into journalism? Winer: Well that took a lot longer. The tech industry was the core of blogging for many years. I don't know how it spread out to other industries. John: Well in your memory, when you became aware of it. Winer: When I became aware? Huey: When you realized it was going to become something really ubiquitous and transformative to other industries like journalism. What was the first journalism blog you became aware of? Winer: Wow, that's a good question. Much later. [crosstalk 37:50] Winer: That would be '99. It would be Dan Gilmore. Dan was using my software. Step back. I'm writing all this stuff, but I'm a software developer first and foremost. What am I thinking while I'm doing this? I'm thinking, "Well what's the software?" And I'm writing software all the time. I'm writing software that manages my own flow with the idea that this will turn into software that other people will use as well. {abbreviated} ...In '97 I had a thing called the, I think it was called the News Page. I think it was called News Page. It had a series of tools, something called Auto Web, then Clay Basket, News Page, and then Manila, and then Radio. That's the sequence of my blogging tools. Meanwhile, somewhere in there, you've got a bunch of other people who are doing blogging tools. But from '97 to '99 pretty much everybody was using my tools. In '99 we get competition. Blogger comes along. They ship before we ship Manila. They shipped in the summer of '99, and we shipped in December '99. Dan Gilmore and my uncle were my two test cases for Manila. I went down and did a demo for Dan. You have to ask him. I think he liked it right off the bat. He had been following my career up to that point as a software developer on the Mac and everything, so we knew each other. He used it. Then he had a class he was teaching in Hong Kong, so he gave blogs to all of his students, at the same time frame for testing purposes to find out what they would do with it. Then we shipped it. The thing about it is that it had impact in journalism before I was really aware of it. I hear from people now, like Om Malik for example, says his first blog was one of ours. I didn't know him back then. We did a conference here at Harvard when I was a fellow here called BloggerCon in 2003, you wouldn't believe all of the people that were there that I didn't know that ended up becoming...the leading political bloggers were all there. I don't know them before they become famous so I'd have a hard time telling you when I... Martin: Can I ask you a quick question? Winer: Yeah. Martin: I want to go back to this question about blogging as a CMS. Because people could write in other CMSs. There's something about blogging and the formal elements of it... Winer: No. It's ease of use. It's because we hacked at lowering the barrier to entry. We really hacked at it. Before we did Manila, I made a list of all the steps I had to go through to update a piece of writing on my website, and it was like 20 some odd steps. They were all really frightfully complicated. I said, "We just need to get that list shorter," so we hacked at it. It's like playing a game, it's like playing Scrabble or whatever. It's like, How can I get these three steps down to one?" Finally we were at the point where we got it down to three steps. Basically, you have to put a button on every page that says, "Edit this page." You click the button. A dialogue comes up. You make the change. You hit submit, and that's it. It's done. Until we got to that point, it wasn't easy enough for most people to use. That was the key point. Martin: The key point was ease of use. Winer: Absolutely. Martin: What about interactivity, the fact that people could comment on a post? Winer: I never felt that was an essential element of blogging. There are always ways for people. I had the first discussion forum in the blogosphere, discuss@userland.com, was attached to Scripting News. Scripting News was pretty much the only blog at that time. If you go back and look at the archives at discuss@userland.com, all the initial people were in there. I kept saying to them, "Come on guys, start your own. Don't just be hanging out in mine." Because that I felt was the commit step. Later I learned that not everybody is a blogger by any stretch of the imagination. Most people are not bloggers. Most people will not blog. John: Why do you think that is? Is it personality? Winer: DNA. Yeah. Martin: But is Twitter a blog? Winer: Less and less. Yeah, it was initially, yeah, very, sort of, low commitment blog. [laughs] There's not a whole lot of commitment going on there. Martin: Right. I'm must saying...yeah. Winer: Sure. I'm also very liberal about what I think is a blog. When I started here at Berkman (Center, Harvard), the first project was, "What's a blog?" We came up with an unedited voice of a person. I don't even care if it's on a computer as long as it's a person that's writing as an individual, not as part of an organization. That's why a lot of things the Times calls blogs I don't think as blogs. John: So just free association. Martin: That's a CMS issue. It's a CMS but not a lot. Winer: They're using the blogging CMS. Martin: That's what I'm trying to get at Winer, in part. Winer: Oh, I didn't realize. No. The tool doesn't define the activity. The activity is itself. John: Your definition of a blog is that it's non institutional and it's the unedited voice of an individual. Winer: No. The first part I wouldn't include. Because it can be institutional. I was blogging as CEO of Userland software for many, many years. That was very much a blog. There's a buck stops here thing going on. There's nobody else that's responsible for this. It's just me. John: You're unedited and you're unaccountable. Winer: Yeah, I'm totally accountable. John: To the? Winer: To the readers. I'm more accountable than any of the writers at the Times are. John: Unaccountable to an editor. Winer: I see. That's what you mean. Yeah. But I'm so accountable because I can't spread it out. I wrote the whole thing, every word in here is my word. John: Just free association, leaping way forward, we've done a lot of the history. Leaping the way forward, name some blogs that you think now in the current firmament are highly influential. Not tech blogs. Just throw some blogs out there that you consider state of the art. Winer: I don't like questions like that. Huey: I'm going to rephrase it. In a day, how many blogs do you check in on, and what are some of them? Winer: I'm systematic about that. You can go to tabs.mediahackers.org and you can see what blogs I read. Because I have a river of news. This is a whole other topic we can talk about. But I have a river of news. I don't check them. I have software that checks them. I only see the new items on all the blogs and I see them in reverse chronological order. I don't just check blogs. I check all news sources, complete level playing fields. A lot of the links in there are from the New York Times, a lot of them are from Hacker News. Hacker News is a great source. It's a group site that's run by Y Combinator that people just submit links to. For some reason, they don't get spammed. The quality is very high and a lot the great stuff I read comes from there. I read a story about the origins of Pulp Fiction in Vanity Fair, and that led me to watch Pulp Fiction again. It's only the second time I ever watched it. I saw an actress in there who I thought was fascinating, she just had three lines in the movie. I looked her up. Found she had blog, spot blog, and I spent an hour in the middle of the night last night reading her blog. I thought it was so remarkable that I sent the pointer to it to a lot of my friends because I felt they should all read this. I don't even remember the URL. I don't even remember her name. But that's the nature of it. I read articles in the New York Times all the time. Some of them are very remarkable. Paul: It seems to be sort of about the river. The question about the river is... Winer: This is what I think the news industry misses, is to get systematic about having more news flow across your attention and to share that flow with your readers. Stop thinking about being the source of all the information, rather be a source of judgment would be a really good place to start changing things. John: I was going to saying listening to you, you sound like personal prototype of the news consumer of the future but the process has to get more retail, more user friendly, slightly less sophisticated. Somebody has to set up that system. Winer: Yeah. Let's work on that. Absolutely. John: Somebody has to build that river of news. Winer: Well yeah. That's my process. That's exactly my process. I like to discover new activities that are new. That means there's no established process for doing it. Develop the process and do a lot of it manually, and do it receptively until a pattern emerges, at which point, I can see, "All right, this is what I need to optimize and simplify." You got it. That's exactly it. Optimize it and simplify it. Then productize it. Then announce it and hype the hell out of it, and hope the people use it. John: That seems way different to me from Twitter. Winer: Actually they and I are pretty much in the same school. Yeah. I really respect their process. I mean the inventors. Paul: River of content that users create. Winer: Oh no, it's a river of news for sure. [laughs] Mine came first. But that doesn't matter. I don't care. Paul: ...to filter it and create your custom look. Winer: But we can do a lot better than Twitter does. Paul: No question. Winer: Here's another thing, another message for the news industry. They don't love you. They're not going to be nice to you in the future. Twitter does not love the news industry. The day Twitter buys one of your companies, the light is going to go off. I don't know if it's on or off. The light bulb is going to go on, and you're going to go, "Oh fuck! Look what happened. Now one of our competitors owns our access to the readers." It's going to be the nightmare moment. It's inevitably going to happen. It's probably going to happen in the next two years. Huey: Google or Twitter? Winer: Twitter more likely than any of them. Paul: Google doesn't care. Winer: I don't know about Google caring our not. But Google isn't in a position to do it, Twitter is. The news industry and the entertainment industry maybe beginning to get a little bit smart about this because they're starting to promote hash tags instead of their Twitter names, which is much better. Because that's portable. Wolf Blitzer gets on CNN and tells everybody, "Go to my Twitter account and see what I have to say." I think that's suicidal. Martin: Great for Twitter. Winer: Fuck yes. They merged with Time Warner. Martin: They do it for page views I guess. Winer: Why CNN does it? Martin: Yeah. There's got to be some reason they do it. I guess they do it for page views. Winer: I don't think they're that smart. John: I don't think they know why they do it. Winer: That's right. That's my guess. Paul: If you can go all the way back, people promoted their AOL keywords, then they did their URLs. Martin: Yes, but URLS were open. That's the difference. [crosstalk] Winer: They controlled the URLs. Martin: Yeah, URLs are good. AOL keywords like Twitter. Paul: But the stream of that was, "This is cool. This is how I appear cool." John: It's the cool factor. That's exactly what it is. Winer: It's probably more fear of being called not cool. Because by the time they're doing it, it's not cool anymore. John: It's fake cool. Winer: It keeps people from criticizing us. Paul: But it builds someone else's brand. Winer: I don't think AOL was real serious. Yeah, they were wrong to promote their own AOL keywords, but AOL wasn't the kind of threat Twitter is. We're on the cusp of, we're really there now, of reinventing the way television works. Twitter is much closer to the way television is going to work in the future than television is. Paul: Say more. Winer: Well let's say you put video on Twitter. Then tell me, what's the difference? Martin: Vimeo. Winer: What do you mean? Why does that have to be a limit? Martin: No. Vimeo. Winer: Oh, Vimeo. Vimeo is video. But that's not the video that you're getting on the TV set. Martin: Right. Right. Winer: I thought you said volume. Martin: No no, Vineo. I just think that's the first step. Winer: Right. Absolutely. Well, they buy CNN. It's the acquisition moment where they don't have to develop it themselves. They just have to merge with one of these guys and then they can create something that's superior to anything the other guys can create. This is the way the technology industry works. It's the lockout. It's, "I've got the thing that you need to be on." It's like Microsoft. You go back to Microsoft and Lotus. Lotus had to be on Windows, but Lotus knew that if they went to Windows they were allowing Microsoft to strangle them. But it was impossible, they couldn't avoid being there. John: You guys missed this but this is exactly what Jerry Levin said to me in the Happy Cow Cafe when we were talking about mergers and acquisitions, I said, "Who buys Time Warner?" And he said... Winer: Twitter? John: Twitter, Google, Facebook. He said... Winer: Twitter. It's really Twitter. John: According to him, he doesn't even read the news anymore. He's figured out that it's one of these...or it could be one of the super stacks, he said, like Amazon, Apple. But a competition ensues among all of them and then they all bow on it or more. And Twitter shows the way, and then they all do it. Winer: It's not a very bright future for news if that happens because they're not friendly, warm people. They don't believe in the open all the ideals of journalism, they're very cynical about them. They don't believe in them. John: It could be said these...Twitter hates...They don't like you. You were saying they don't like you, you being the news industry. Winer: I don't think I said that. I think they don't love you is what I said. Huey: They don't love you. What does that mean? Winer: I was about to say what I mean by that, which is that the New York Times wrings its hands over journalistic independence and all the rules of journalism, which are mostly pretty good. What's her name, the new public editor? {abbreviated} Paul: Margaret Sullivan. Winer: I really like Margaret Sullivan. She's the embodiment of what I'm talking about. She's still a balance. She's still going to weigh a little bit more heavily on the politically correct thing for the internal New York Times point of view. She's not going to make incredibly terrible waves, but she's willing to represent the public a lot more than the other public editors were. But when she says, "You can't do this, this, this, and this and work at the New York Times," that's what I'm talking about. That's what they don't love. It's all the rules that you guys have established, which have value. Those rules have to change. They do. I know that's a hard thing to contemplate, but it's true. They do have to change because you have to let people in who have really strong interests. They have to have direct access to the readers without going through the reporters. That has to happen. That has to be facilitated by the news industry. That's kind of the thing the news industry is resisting. That's what will be completely lost when it's acquired by the tech industry. The tech industry thinks that's fine. The tech industry also doesn't mind doing all kinds of things to promote Lady Gaga over whatever else. They want to make money and they'll do whatever it takes to make money. That will very often subordinate the interests of democracy, of the government, of making the right decisions as a society. All of the vital functions that we look to news for, that will all be subordinated to their business models which will involve finding out what Lady Gaga thinks about this stuff. John: Then the only thing left standing between that and the truth will be bloggers. Winer: But here's the sad news. Bloggers are getting hurt by Twitter, too. Seriously getting hurt by Twitter. I used to have no, we are. Paul: Say why? Winer: I don't really fully understand it. I don't understand it, because I'm dealing with incomplete information. There are a lot of theories about why. Paul: Readership is down? Winer: I'll give you an example. I publish something on my blog that's controversial. I have a comments section. I'm publishing it because I want to find out what other people know and what they think. I'm trying to pull that in. I have the ability for people to comment on my blog and they don't do it there. They respond to me on Twitter. There they're limited by the 140 characters and nobody else sees it but me. That wasn't my idea. My idea was to get them all to read each other and to have more than 140 characters to respond. And that I would have more than 140 characters to respond to them if I had a response or a follow up question. Paul: Is that a solvable problem? Winer: I don't think so. I don't see how. It's not a problem I can solve. But there is a paranoid thought here, too. Which is that, I noticed that the read counts on my links are going down over time, precipitously. As I get more followers, the number of clickthroughs is going down. A lot. To the point where now it's about 10% of what it was a year ago. Not down by 10%. But 10% of what I had. I don't know the reason. My worst fear is that they're not passing along the links. That all the people that follow me aren't seeing everything that I post. Martin: There's also a dynamic inside of Twitter where you just get more and more irrelevant followers, who want you to follow them. It's a kind of spam, in a way. Winer: There's that. I've heard that. I think that's at work there and also, more competition for people pushing more links. Therefore I'm only one of many people that people follow. People follow more people now. Paul: I'm curious, Winer. A lot of folks, not the Times, but the Journal, the Washington Post, The Guardian, a few others, built social readers on top of Facebook and they seem to have all failed. Maybe the Post is the last man standing there. I'm not even sure whether The Post's social reader is it just that Facebook is a good environment for games, but a bad environment for news? Winer: I don't know. I resigned from Facebook a year ago. I just didn't want to be on it. I didn't like all the things that they were doing regarding privacy. I don't know what's going on there and I don't want to know. Your guess is much better than mine. But I never believed they should have done that. It's consistent with promoting your Twitter handle. Trusting Facebook is ridiculous. Facebook is run by a guy who's 26 years old, didn't get his degree from Harvard. I just don't want that guy being the arbiter of what everybody reads. I don't disrespect him, but I also don't think he should be responsible for what a billion people read. And he is. He controls it. They don't make any pretense that everybody sees everything that you post. That was what Mark Cuban got so upset about, about a month ago, when he discovered that was true. He goes to all this trouble to build up this following on Facebook. And they do not forward everything that they post to everybody who's liked him, who's decided to subscribe to him. He was appalled. He was outraged. He was right to be outraged. But it was not hidden. They don't tell you about it, but it's not hidden that they do that. They do. John: How is that decision made? Winer: That's a very good question. This is the really scary part about it. They decide what's relevant to you. They have algorithms that figure out what you need to see. [laughs] Do you think that has anything to do with their business model? Martin: It's kind of a hall of mirrors, in a way. Winer: I don't know what that means. John: It's the Google mentality. Winer: It's as if Google decided, in their search engine, that the results you needed to see were the ones that make them the most money. We trust that Google isn't doing that, right? That's implicit. It's an integrity issue. It shows that... John: I trust that they've got it under control enough to where, to what degree they're doing it... Winer: Doesn't hurt you that much. John: It's not apparent and maybe doesn't hurt me that much. Winer: I'm there too. I know that they have their meetings and somebody says, "We've got to get our revenue up for this quarter. Why don't we tweak this number a little bit so that we're putting a little bit more pollution into that." They're trying to keep a balance, to the point where people don't leave them. But I would much rather have the decision be made the way... This is where my affection for The New York Times comes in. As much as I don't like a lot of their attitudes, the superior attitude they have about everything. I really don't like that. I would rather have the decision made the way they make the deacons then the way Facebook makes it. John: But you don't see that as the future? You're not confident that... Winer: I would like to work together to try to make it more of the future. Not less. I would rather see that then I would like to see what we have right now. And yet the news industry, when I've said that there are really very few of them that are willing to listen to that idea. That I could personally, in any way, help them. But yet I can point to times when... We could have had Twitter. I had the river of news on the BlackBerry and we talked about this. I wanted to come present this to you. I had The New York Times on my BlackBerry in 2005. This is a year before Twitter launched. It was wonderful. It was incredible. I don't know why The Times wasn't interested. But The Times was clearly not interested in this. When the door gets knocked on we need to have a response. John: Do you know why? Winer: I'm sorry. I don't remember why. Martin: I don't want to put you on the spot. Winer: I'm trying to think back. You know what my theory was? In the same sense that you asked about theories about Facebook and everything. I think they had spent a bunch of money on developing their own mobile client and they didn't want to hear about one guy, working in his spare time, making something that was better than what they produced. Yet that was true. That's how corporations work. I've been inside big companies. That's how it works. You'd be forgiven for that, but let's learn from that. This is another one. The Times is bringing in tech startups to share space with it. I would much rather see them bring in bloggers to share space with them. I think they have to have their buttons pressed. They need to feel a lot less personally secure in their positions. Because that's the reality. The reality is they're a lot less secure. But it has to be not just in terms of their retirement programs and their salaries and whatnot. It has to be that culturally, they see the tension in their office, every day, and the people who rise to the challenge have a chance to do that, so that you get some cross pollination between the two. So that they maybe learn that bloggers are not the worst people in the world. That we take baths and have college educations. We want a lot of the same things that they do. In fact, I think bloggers, in many ways, have a more pure... Martin: My own view of the river 2005 was a particularly difficult year. Because we blew up NYTD. When NYTD existed, there was a small, more entrepreneurial group of people driving good and bad. There were positives and negatives to that. When it was integrated back into the mothership, the decision rights became quite fuzzy. So my ability to make a decision or not make a decision... Winer: I believe that. Totally. Martin: ...became quite fuzzy. So things like accommodating people promising things from the outside, at that point, really became much more difficult. Winer: But play Monday morning quarterback on this one. What would have been the right thing to do? You want to know my opinion? The right thing? Absent the circumstances. This is not politics. I knew that that had happened. I knew that you weren't in a position to make a clear decision on this stuff. Martin: I was one voice among many. Winer: I liked it better when you were the guy that made the decision. But what would have been the ideal thing to do here would have been to try to strike a deal. And believe me, I didn't want any money. Or I didn't want very maybe just a little bit, because my time's... Martin: That never even occurred to me. Winer: Right. What I wanted was to really do a launch on this thing. Here you've got a newspaper. You've still got people reading the newspaper. You've got all this visual stuff going. Let's put ads out that tell people, "Read the New York Times on your Blackberry." Let's drive readership to this thing. Because it's good for news. That should be the only thing that determines whether or not the news... Martin: Let's get into the metered model for just a minute. Because I know you have to go very soon. Winer: What time is it now? Martin: It's two minutes to 12. Winer: All right. I'll be a little late, OK. Martin: The tension here is that some of the decisions I made, including working with you on the XML piece, are viewed by a lot of people as giving away the store. The reader model was actually a huge compromise. There were a lot of folks in the company who wanted a hard pay wall. Then there were people like me, at the outset, who were totally for the open side of it. We came together at the end around metered model, which also allowed you to come in through the side doors. It's a fairly open model. If you look at the numbers since we implemented the metered model, it's pretty hard to argue that it hasn't been a net benefit for the company. at least in the short term. Certainly it's tens of millions of dollars of new money into the company. At a time when print advertising has been declining, but Internet advertising, for all the reasons that we both know, is suffering. So tell me why you think it's good for news to do what you just said? Winer: I actually want to ask you a question. Why is it giving away the store to publish I don't think you believe this. But what's the argument? Martin: The argument is that... Winer: It says that it's giving away the store to do the XML. Martin: The argument is that by allowing the content to be aggregated in an RSS reader, as an example, it commoditizes it. In other words, you no longer become a destination. You no longer become an authority. The authority now rests with the aggregation point. That is, ultimately, the individual, which to me is an inexorable march of technology. You're fighting against history. Winer: I think there's something to be said for that. I also agree that it's the march of history. Then why not become the aggregation point? If you see it that way. I'm not asking you, I'm asking the world. In other words, why isn't the news industry as cutthroat as the tech industry? That's how the tech industry, that's how Bill Gates... Martin: It doesn't have the DNA to do that. Winer: That's what we need to change. That would be the argument to have a rule that you at least have to sit down and listen to these ideas when they come along. Because it's still the opportunity, Martin. It's still the opportunity for any one of these guys. This is what Yahoo discovered in...what year was it? When we first came out with RSS... When RSS was catching on and they did My Yahoo. Probably it was 2003, 2004 time frame. Somewhere in there. They did My Yahoo and CNN wouldn't do it. Martin: No. My Yahoo was done in the nineties with Biz Dev deals. What you're talking about is Yahoo Reader. Winer: Yeah. But that was also called My Yahoo. Martin: Oh? Was it? Winer: Yeah. That's when I... Paul: It was added to My Yahoo. Winer: OK. To me, that's when My Yahoo started. From my own very parochial point of view. I went around. At that time as I understood it were MSNBC, CNN and Yahoo. Martin: I think that's still true. Winer: So I went to all of them and primarily wanted to talk to CNN because I wanted Yahoo to have some competition. So we can start developing. Yahoo, I liked the guys tremendously. I thought they were very easy to work with. But they were going to be a lot more fun to work with if they had to worry about what CNN was doing. CNN would never do it. Their attitude was, "Why should we point to our competitors? Why should we give flow to our competitors?" Which didn't turn out to be the right strategy. Because if people want to find out what's new on CNN and they go to Yahoo to find out what's new on CNN. Then Yahoo has an unfair advantage and Yahoo can always find a way to make that work to your advantage. Maybe they have to send one person to CNN for every 10 people that come to them. But they're also going to keep a lot more people reading, whatever. You want people to come to you. I would still argue that The Times...you know in the right column where they put the, "What we're reading" thing? The links in the side? That should be a river, and that should be on the home page. Ultimately that's what we're going to be going to for news. We're all going to be going to mixed sources because that's the message of Twitter. That's really what Twitter's saying to the news organizations. This is what people want. People don't want to go to the New York Times as a destination. They want to go to a place where...in a way, that's like asking for the past back. There was a time when we all went to the New York Times for our news and NBC Nightly News in my family. At 7:00, we'd all watch NBC Nightly News. Some families were ABC, whatever. We're not going back there. John: Part of the explanation of the 2005 that is outside of the intellectual argument you make, I think, is right, but what you can't underestimate is how much the precipitous decline in, first, print advertising, then digital advertising, and then an even steeper decline in print advertising than anybody had ever imagined. How much that animated all the decision making. It put a blinding fear in all these companies. That's around the period where Carlos Slim, they had to get him to invest in the Times. There were serious financial... Martin: That was the view. There was a financial crisis in 2009 that transcended technology. John: You had the advertising collapse. Then you had the financial crisis. And then all that was followed by what? Everyone thought that was the bottom, and then it turned out that print advertising actually was going to go even lower than anybody had imagined. Coupled with, you're looking at your display digital advertising, and that started to go down. Now people are starting to think about the kinds of arguments that you're making, but your point that it ends up with Twitter buying somebody and all that, is probably right. Martin: I actually disagree. I think it's going in the opposite direction. I think that this fear is causing more people to hunker down, to kind of retreat... Winer: Which people? Martin: More news organizations to hunker down and retreat back into an older model where people either want what they have and they're willing to pay for it, and see it as a destination or not. Huey: Well they're trying that, but they don't have the ability to do it in the way that the Times did. Maybe this is a parochial point of view, but I think it's a pretty big deal when Time Warner just decided to say, "We're getting out of this end of the business. We're just not going to do this anymore, because we've got to make these kinds of decisions, and we're just not going to do that." They want a simpler business model. Not that over a long term, cable television... Winer: I think Time Warner actually has a good business model. I think the New York Times did benefit from having a business model like that too. I don't know why the Times isn't fighting for better Internet access in Manhattan. This goes back to what we were talking about at the beginning. Why isn't this something that the Times is vitally interested in? It's the New York Times after all. Why can't the New York Times take on problems like that and solve them? Why can't the New York Times, if it spots an opportunity like that, make a business investment and own it? The aggressiveness of the tech industry is what we need in the news industry. We need to have some balls out thinking here, and some real risk taking, and some ideas, and some passion for the future, not just love of the past. It's always this fight with, "How do we get back to what we were before?" which is only going to be going on for another 10 or 15 years, until everybody retires that remembers the way it was before, at which point maybe we can start getting...I'm not optimistic about that either, though. I'm just afraid we're going to be left without any kind of...we're kind of there anyway. In terms of a news industry we can depend on, I don't know. ...
VIDEO: YES

Scott Woelfel
BIO: YES: Scott Woelfel has spent three decades building and...
TRANSCRIPT: Paul Sagan: Good afternoon. It is March 27, 2013. It's Paul Sagan and Martin Nisenholtz, and we are on the line today with Scott Woelfel from Atlanta. Scott was head of CNN Interactive and really created cnn.com with an early band many years ago. We're here to get his thoughts and impressions on that, and other things related to when digital technology ran into the news business. Scott, maybe we go way back in the memory banks and start with your earliest memory of when you saw either the beginning of disruption, or capability of digital technology in news, or even earlier, if that was your first online experience and relevant to the narrative. Scott Woelfel: That sounds good. Thank you for including me in this. I need some digital implants in my head, I think, to remember back that far, but actually it doesn't seem that long ago, when you consider it's more than 20 years, in some cases. I had worked at CNN for a good 10 years before we started at cnn.com, but even before that, my first with digital technology was when someone fresh came to visit CNN from Apple, and this was in 1991, end of 1990, beginning of 1991. QuickTime had just come out, and they were looking to do a news magazine on [inaudible 01:33] to challenge "Time" and "Newsweek" and approached [inaudible 0:37] about it. I got by total chance, literally walking down the hall, when [inaudible 01:45] , "What do you do for this guy?" [inaudible 01:47] this was my and really CNN's first exposure to digital technology when it comes to interpreting news in some way. We put together a prototype of a disk, which is very hard to wide shot, because it's on Director, which is very hard to figure out how to play on a modern machine. It turned out great. It took maybe about two months to do it with some resources that Apple gave us. Internally... Martin Nisenholtz: Scott, can I break in for a second? You're breaking up on my machine. Paul, is he breaking up on yours? Paul: There's a little pixelation, but it's pretty OK. Martin: The audio is fine? Paul: I can hear Scott. I lost a couple of words, when he was just getting started. Martin: Then it's just me, thanks, I'm sorry to interrupt. Paul: Martin, you might want to...mute our mics, in case that interrupts, not on your laptop but on the Google interface, and we'll just unmute when we need to speak. That might help not interrupt Scott. Scott, sorry, you should pick up. Scott: Sure, eventually prototype for the CD ROM, I went to management at CNN, and they looked at it, and said, "This is interesting, but it's really not our business. Thanks for the disk, go back to your day job." My day job in that case, I was the Executive Producer for the prime time newscast. Again, this is Spring of 1991, at this point, it really got me interested in what the digital technology could do to expand the audience at CNN. I worked with a couple other people internally. To look at [inaudible 03:24] the online services, CompuServe being the primary online service, at that time. We struck out at the forums there, where we would have people talk about the news, typically, and also bring in some guests from time to time. CompuServe, they would have these forums where you would come in and there would be a guest and a relatively small number of questions to the guest that the whole room would see. We ran one of those. General comments on the news, and the side, we did actually [inaudible 03:58] Steve Brahms as a business. We did three disks, a year review in '93, actually, we did both years '93 and '94. We did something called [inaudible 04:10] a book, Britannica approach to some long standing conflicts around the world, all the encyclopedic information video heavy. We did one that I'm embarrassed to admit, which was the trial of OJ Simpson. Everything you needed to know primer before the trial started. Through the course of all this, of course, the Web started to emerge. I remember looking at and downloading my first Mosaic Web browser, in late '93. Yes, that's about right. Playing around with it thinking, "There's got to be some implications for this." But it really wasn't until a year later, because we were all doing our regular TV jobs. At the same time, this small group of people that I had assembled, that were really starting to get serious thinking about it. That was when I started to talk with Harry Motro and Mark Bernstein, both of whom had business experience. I did not have any business experience, just journalism. The three of us put together the business plan for what would become CNN Interactive and got that [inaudible 05:11] under the sports division of CNN in January of '95. Martin: Talk again about that process of getting it started as a, what we all called a new media or new media division, in what implied was these were old media companies. This was a cable television network company taking a step into a new space. Can you would talk about easy or hard to get funded, in your heart, or did the structure happen in the newsroom of CNN or did you set it up separately, and was that important or unimportant or seemingly important or unimportant at the time? Scott: I'll start with the convention which was surprisingly easy, I think, because what we were doing was so unknown to the television [inaudible 06:01] . It wasn't seen as a threat to anything else. We put together the plan, went to, Harry Motro was actually the one who did it, but went to Ted Turner and did eventually get referred to Ted who is still not that digital today, understood there was some potential here, referred him to Jon Petrovich who was running "Headline News" at the time, and we basically were funded out and we actually operated under him at the beginning of CNN Interactive. Harry really handled a lot of the funding part. My job was obviously just to put together the team and make a product out of it. CNN at that time was completely a broadcast television and radio network, had a hub and spoke system where there was a central news gathering hub that would bring in all the material, and then each network, whether it was CNN Domestic, CNN International, CNN Spanish, CNN Radio, whatever it happened to be, would take the material and use it from that news gathering hub and customize it for its audience and it's platform. I said the easiest way to bolt on this interactive thing in this would be just another spoke on that wheel. I created the system to tap into that news gathering hub and get our material that way just like everyone else was. What we did a little differently was, because we were filling a digital print medium, we needed a lot more material than what we were getting out of something that was created for television primarily. We did deals with the wire services to get the ability to use their, copy some of it, 100 percent under the copyright, with no rewriting, and then of course having the ability to rewrite it, and couple that to bring in a lot of the early staff of writers and editors had a wire service background because, again it was a very different animal than what we had done with television. We needed them to be able to process all this material into something quickly. They were used to a quick deadline a wire service has as opposed to newspaper reporters who are used to a much longer deadline. We did hire a few newspaper people, editors and reporters as well. The wire service really drove that idea of constant updates, which, of course, is what [inaudible 08:19] CNN television had worked up to that. Martin: I just want to break in here, because this is a crucial point you've just made about the journalistic side of this. You're a television network. This is a narrow band environment. You recognize that video is not workable, you have to create something entirely new, and it seems to me you guys got to pretty much write from the beginning, in terms of people wanting the most current news. It seems to me also, that the wires facilitated that at some level. Was it all of the wires, was it "Reuters," "AP," "Agence France Presse," was it all of them or just Reuters at that point? Scott: All. CNN had arrangements with all of the big four, so Reuters, AP, Agence France Presse, and, the German one whose name is escaping me at the moment. Those are the four big ones that we use, and so we have access to that, but it was a little bit of a gray area where we'd really take and republish some of what they were doing, whereas CNN obviously was using it as source material. We went out and created separate deals with AP and Reuters specifically to be able to use a greater extent of their content all the way up to using it 100 percent verbatim under their copyright. Paul: That was a pretty controversial time, because the newspapers were trying to keep AP from doing it, but Reuters did it with Yahoo and kind of set wire stories free into the great free Internet at the same time. Do you remember that and how that related to what you were doing and what you thought the competition was doing? Scott: Very much. It was an ongoing frenemy struggle with both Reuters and AP, but more with AP, over my entire tenure at cnn.com. They clearly wanted to be the fuel that powered this revolution in news [inaudible 10:26] , but as you say, they were beholden to their members, and were never really comfortable with the degree of how much was being used, and so [inaudible 10:34] conversation, the pricing was something that was brought up again and again, especially as we grew so quickly and generated revenue so quickly. That was something that was revisited many times. I left in January 2001. At that point, things were really starting to decline. We had cut back on wire material that we could use from AP/Reuters was still a pretty level relationship from where we started, but we cut back considerably, and after I left it was cut out completely a few years later. Paul: That was really an economic battle at that point, the question of whether it could be licensed was over, and that was a price question, right? Scott: It was, from my understanding, from where CNN was [inaudible 11:17]. CNN's developed the Wire CNN system which powers much of what they do now. Of course, they've taken that syndicated as well. It was, ironically, a good percentage, I can't say how much now, but a good percentage of that original Wire CNN team were those original wires people that I hired at CNN Interactive back in 1995 to push that forward, because they needed them for the exact same reason that I needed them back when we started cnn.com. Martin: In 1995, did you think about potentially charging for the service? There was really no advertising business to speak of back then. The newspaper industry, obviously, had a robust debate about that, but it seems to me you guys had a different heritage, a heritage of consumer free. They paid for cable, obviously, and you were subsidized through that process, but the consumer didn't pay directly for CNN on cable. You weren't being subsidized by the Internet folks, by the ISPs. You were in an ad only world on the Internet. Did you think about how that might play out in the business model, or should we just talk to Harry about that, that wasn't really something you got into? Scott: Harry was definitely more in the forefront, but my recollection is that we discussed it but not to a great extent, because the feeling was, CNN is advertiser supported and subscriber supported, and we knew that piece wasn't going to get [inaudible 12:50] or at least we felt that there was an advertising model that could work for us in a relatively short time, and that CNN, the company as a whole, was willing to bear the startup expense until we could get to that spot. We were lucky throughout my whole tenure there to have a very aggressive and innovative ad sales team that was dedicated to the interactive side. Fairly early in the process, we received a dedicated [inaudible 13:15] . That later split domestically and internationally. Our revenues, while they didn't cover our costs at the beginning, we saw some fairly significant revenues early on and they grew very quickly. Paul: Talk, if you will, about how the audience developed and your relationship with them developed, and what you learned and what worked, because I don't think it was foretold, just because CNN really dominated the cable news business at that point [inaudible 13:45] didn't have "Fox News," didn't have "MSNBC" competition. But there were lots of people who putting their URLs on television or in print or were new media type organizations or were the established dial up services making the transition, but something you guys did right made CNN the leader online as a news site for a very long time. Scott: Early on, at the very beginning, before we started, we said we wanted to take that essence of what we think CNN is to the web, and that is breaking news and coverage of live events and things like that. As Martin had said, we couldn't do video. We certainly couldn't do live video. We didn't do video at all in the first year, roughly a year, and then it was downloadable pieces, and it was a while until we got to streaming, about two years until we got to decent enough streaming that anybody could do it. Obviously, it was also keeping up with the growth of broadband at the time. We thought breaking news would be our bread and butter. We found almost immediately that was the case. If you looked at our traffic, even starting the first week, I remember being asked by an "Atlanta Journal Constitution" reporter to predict some of our traffic patterns in the early time. I was reluctant, and he was a good reporter, so he finally got something out of me, and I made a prediction of a certain number, and I don't remember what the number was, but I do know that I predicted that by the end of 1995 we would hit this number, I forget, I think it was the first week. We had a very sharp uptake, and if you looked at our traffic patterns, what you would see is a stair type pattern where we would gain audience around a news event, and we would lose very little of it. Then the next news event, we would gain more audience, and we'd lose very little. That stair step continued for I would say at least the first two years to be very significant, without a lot of drop off, which was in great contrast to what you would see on CNN television, which would get those huge spikes of ratings, but then it would drop back down to a baseline that grew very little. Instead, we would retain that spike and grow from there. We recognized this very quickly, obviously, and worked to make sure that the breaking news coverage was put up front, but then we'd expose the audience to other stories that often went outside the purview of what was thought of as CNN, and aggregate more page views and more viewership there. That was sections like Books and Legal, and other things like that developed over time, just a way to catch this audience and to keep them around a little bit longer. Paul: Two things. John Huey has shown up in the background, so that's who the new face... John Huey: Hi, Scott. Sorry, I'm late. Scott: Hi, John. Good to see you again. Paul: One thing that's emerged a lot, and you can think of it as the Clayton Christensen like innovator's dilemma problem for media companies moving into this space, do you think it's fair to say that you didn't have it initially, because what you could be perceived as competing with is your TV business, but you couldn't do video, and therefore you really were creating something new, unlike others who might feel they were always competing with themselves as much as the outside world, and many of the media companies really stumbled in that dilemma? Scott: We were very [inaudible 17:03] format. When I think back to 1995, and the introduction of television in the workplace was negligent. Even if someone had a television in the office, the chances it had cable, and it was on CNN was fairly low. Our hugest day part was clearly the works hours, because that's when people often had access to broadband they didn't have at home, too, when you think back to 1995. We would see most of our traffic come during the daytime hours. We weren't competing with CNN really at all, and in fact we were promoting night time usage [inaudible 17:38] people want to go home, and get the television experience of what they seen on their computers at work. [inaudible 17:45] continued for some time, even after we started to stream video there was still a sense of, "I'm going to go see what Larry King's guest has to say about this tonight, because I saw a short clip online." I did not see it as competition, but certainly some of the television executives thought it to be that, at the time, I don't think it ever really was. Martin: Who do you think the competition was every morning? What was the comparative? Was it Yahoo News, or other sites? Was it simply, this was early in Greenfield, and therefore just keep building a audience, and don't look backwards? Scott: More of the later. There was competition that arose every time, like the Portal [inaudible 18:28] , and obviously the news organizations that were, very few [inaudible 18:36] certainly not that round the clock breaking news presence that we had 24 hours a day, that we had from the time we launched, and over time. We really did give that sense of being there. We were able to grow on that, and establish that reputation early. Clearly, then we did get a lot of competitors over time, but I think we were able to stake out a pretty interesting space early on. Martin: You didn't think at the time, that the kind of software driven stuff that Yahoo was doing, particularly in Yahoo Finance, was competitive with you? They were also licensing the wires, as Paul said, and developed a big audience pretty quickly. Scott: I'm saying we didn't see them as competition, especially when you mention Yahoo Finance. To clarify, when we started CNNF.com, the financial news site, which later merged with money, was separate from CNN.com, so I did not have authority over that. I did later structural changes. I've obviously conferred with them, and I know there was a lot of concern about that, and then went to Yahoo Finance, and said, "There's some very good things they're doing, that we ought to do as well." [inaudible 19:58] in the direction that CNNF went in, and CNN.com ultimately. As far as the automated sites, there's that certain level of [inaudible 20:08] risk, that those of us that come from large news organizations had at that time, which is of course is, "Why do people go there, and not come to us?" Which is a little short sighted, and as I said, a little prideful. There was always that sense, in those early days, that, "We're going to do it first." "What they get is going to be something we've already done." "Let's make sure we're out there in front, and doing what people expect from CNN, and people will find us." Once MSN then we really saw the impact, because here again [inaudible 20:46] did not have the level of content we had. The volume of content that we had. Their content was certainly good, but it wasn't at the volume CNN was covering. Yet, they were getting massive influx of traffic from MSN, that we had nothing to compete with until the AOL deal much later, but it was almost a lost cause at that point. Beginning of '96, or early 1997, beyond, to start to lose this user race to them. We always beat them in page views, but the user race, where we were on top by a [inaudible 21:20] , was chipped away at until they surpassed us in, I want to say early '98. I don't remember. We never came back on top. John: Scott. Do I remember this correctly? Wasn't there a period in there where Microsoft tried to do a deal with CNN.com, instead of NBC? Scott: Yeah. Before we started CNN.com, CNN interact, so it was in 1994, and Harry Motro, and myself, and Jon Petrovich, might have been just us three. There might have been one more there, I don't remember. We went to Redmond, and met with the people there. Peter Newberg who was a [inaudible 22:05] , and had a long discussion. That was something that we brought back. Basically, I was there on the [inaudible 22:14]. Harry took the deal back, and Ted looked at it, and turned it down. For a good reason, I'm sure. Harry can share. I wasn't privy to that meeting. That was their first choice before they went to [inaudible 22:27]. John: Could you talk a little bit about what you just referred to. When AOL came into the picture, what happened to the traffic there? Without getting into all the pain and all. We all have stories like that. Scott: I have a lost year of my life in there, which I choose not to remember. John: Same here. Scott: There was a thought that there would be this synergy, not just between AOL, and CNN, but among all, Time inc, and Time Warner, and AOL, and other [inaudible 23:15] . Netscape, and some other things like that. CompuServe, which they had a piece of at that point as well. It got bogged down at such a high level [inaudible 23:26], I don't think those synergies ever came to light, at least not while I was still there. Basically, throughout calendar 2000, which was the year after, January 2000, the merger was announced, and then of course it didn't close until 2001. That whole year of 2000, there was all these attempts, "Let's have about 100 meetings a month to try to figure out what these synergies are." It was never anything concrete. We would place some links into some AOL property, but we didn't have that really direct pipeline that MSNBC had from MSN. We never really got that benefit the way I think we could have. AOL was a little bit on the decline user wise at that point, too, because of the rise of broadband, so you could argue quality of the traffic they were driving, probably wasn't as good as what MSN was driving as well. We didn't get as much benefit as I would have liked. As far as I can remember, we never over took MSNBC, and Unit Users while I was there after [inaudible 24:37] . Maybe on a one event spike, but not on a consistent basis. I think that CNN had to have surpassed MSNBC since then, but not while I was there. John: My memory of it is, that Turner broadcasting was the one division in Time Inc that lost all of its senior management, in that AOL merger, but that CNN.com seemed to somehow keep plowing through, in a way that nothing else did there. Maybe it hurt you in terms of development, and where you would've gone, I don't know, but it always seemed to be the steady thing that kept going through it all. Is that...? Scott: In the middle of it, my recollection's not as good. As much as anything, that lead to my departure. I think the rank, and file, and the day to day management at CNN.com, we insulated them pretty well from it, so I think in the same mission, and continued forward, and try to use whatever came from the merger as new tools that they could use, but upper management went through a lot. My boss changed about five times in five weeks, and there was the whole Time Warner corporate level drama, which gave yet another layer of management, so it was difficult. Martin: As the co founder of this thing. Looking back now, in 2013, are you happy with where CNN.com is today? Is there some untapped potential? What do you feel about the service now? Scott: I think it is one of the best out there, if not the best, certainly in the top two, or three. They've innovated in some really interesting ways with iReport, and some things like that. When you look at CNN.com, or a lot of the other news, you still feel that there is a newspaper page format to it that maybe isn't necessary in this day, and age. If I were to go back, and try, and do this all over again in this day, and age, I would probably do something that's much more video centric, and uses the text material as supporting material, which I still feel it is in a lot of cases. That's not to say there's not good video. There's great video at New York Times, and a lot of other sites, but not the experience I get, even from YouTube, and some other places where you feel like, "I'm here to watch this, and then I have other things at my disposal once I watch it." I think that's what I would do, if I were to try, and do it again. Martin: CNN.com started as something that was inherently a Internet based business, and business model that you had a separate sales team, and in many ways a separate editorial team, and yet you can't go to CNN.com today, and get the news from CNN video even though we are living in a video world. This seems to me to be a political/business model issue with the cable industry, and it's relationships with MSO's. Do you see a time when that changes? Scott: Good question. I'm glad you brought that up because that's something I wanted to mention. When we talk about video emerging at CNN, it was always short clips, because of the cable operators that didn't, in the simplest terms, most cable operators had a clause with the Turner networks, and they're going to get their material for the same price, I should say, the lowest price that anybody else is getting it for. If you're giving it away for free, or for advertising under advertising model online, and they could make a pretty strong argument that they should get it in the same way. This goes back to the whole time I was there, we could not stream any live programming at all, and it would have to be the raw cameras, or something like that. Not the on air feed with all the fonts, and everything else. You're right. That still exists today to a large extent. Yes, I think that model is definitely holding back some of the broadcast networks, and cable networks. Martin: It seems to me, to Paul's earlier point, that's where the Innovator's Dilemma is. In other words, the CNN's of the world are unable to, it's not quite the innovator's dilemma in the classical sense, but putting that aside, it's the fact that the cable industry, perhaps for contractual reasons, perhaps for business model reasons, just simply can't do, what the new players will be able to do. Including the new Eason Jordan, "Now this News," or whatever it's called which is setting out to do the CNN of the new over the top era. Scott: I think it's the same as someone who wants to present an a la carte offering, whether that's Apple or all these others that have been argue that are doing it. How do you take something that consumers seem to clearly want, which is to be able to pick and choose what content they get and what platform they get it on and deliver it in a way that totally breaks this old model, which obviously, generates billions of dollars of revenue for all these companies. I don't [inaudible 30:33] first. Paul: Scott, let me ask you at the end, you now sit in a very different place, running a different kind of firm, but still connected to media, so obviously, trying to figure out the audience and creative in messaging questions. What else do you think is out there working in news, particular, that's emerging or undiscovered or simply you think is going to be the model going forward, both as compelling to the audience, and as a business? Scott: The biggest trend, obviously, is the proliferation of cameras on phones and basically out in the hands of the public. Not so much in the citizen journal [inaudible 31:13] or what happens. But if you combine that with social media and you'd say, clearly, we're getting primary source material from really interesting places that we weren't getting it from before. But there's so much of it that how do you know what's good and what's bad? There can be a filter where the stars, for lack of a better term, that are out there electing primaries be elevated and featured that people know that we're getting quality because this person has our [inaudible 31:43] proven and finding a method to push that forward. I think that becomes really compelling in a very different offering than from what we see traditional authoritative news organization. You can look at something like iReports on CNN and say well that pushes in that direction, but it really doesn't, because, it tends to frankly, I think the material tends to be a little trivial, and there's not a great system there to say these are the people that are reporting the best content. If anything, that's still coming from the news organizations, as opposed to maybe the users, where it should. I think that's the nut to crack. If somebody can really crack that, then, I think you come off with something totally different, and that's very appealing to audiences out there. John: It seems to me that Twitter is basically doing that. The user is determining quote, "Who the stars are." They may have some big stars in there and they may have some friends in there, but they got a feed of content. Much of it now is pointing to video, and that will increase over time. It seems to be that that has happened. Scott: There is a lot of chaff in there as well. There's no end result, there's no consistency in results. Like you said, someone can bring you a video or to a website, or whatever, based on something they Tweet. Where's the entity that can collect a lot of that and give the critical mass around that around a story, around an event, or around a person, or whatever it happens to be, that to me seems to be the missing piece that would be fascinating part. ...
VIDEO: YES

Kathy Yates
BIO: YES: Kathy Yates is passionate about working with enter...
TRANSCRIPT: Martin: Paul Sagan and Martin Nisenholtz, Cathy Yates, San Jose, April 8th, 2013. Let's just go back a ways. Tell us when you first got into and met the Internet. How did that happen, what were you doing? I think you were at the newspaper when that happened? Cathy: I was at the "Mercury News." Martin: How did you get to the "Mercury News," what were you doing there, and then what happened to land you on the Internet side? Cathy: OK. I actually joined the "Mercury News" right out of business school. My early career had been as an economist in D.C. Then I went to Stanford for business school, expecting to go back to Washington and return to policy analysis. Business school was my first exposure to the private sector, and I became really enamored with the idea of trying to find a niche where I could combine what I like to talk of as private sector discipline and public sector impact. That's what got me looking at the newspaper industry. I interviewed at the New York Times, actually, but also met Tony, who was recruiting for someone to come in as his assistant. I decided to stay here in California and join him in that effort. Martin: What year was that? Cathy: That was in 1981. Martin: '81? Cathy: 1981. There were two big bets going on in the newspaper industry at the time. One was the launch of "USA Today." Do you remember that? Martin: Mm hmm. Cathy: And the other was Knight Ridder's experiment with "Viewtron" in Coral Gables. Tony was showing me the ropes of the newspaper industry. We were talking about those two initiatives, and my response was that I thought that "USA Today" was a really smart idea and that "Viewtron" was not going to make it. He winked and nodded and said, "You're new to the industry. We'll see what happens." We made a bet, and unfortunately, I've got to say, I think I won that bet, in terms of which endeavor persevered. Anyway, fast forward. I rose to the position of General Manager at the "Mercury News." After "Viewtron" had shut down, I became General Manager at the "Mercury News." My colleague Bob Ingle, who was the Executive Editor at the "Mercury News," began talking about how we should try to revisit the experiences that "Viewtron" offered up, learn the lessons, and come at it with a second generation attempt at electronic publishing. Martin: Were you supportive of that initially or was that something that you were skeptical of? Cathy: I was supportive certainly of the exercise of trying to understand the lessons, but it quickly escalated beyond an analytical project to a, "Well, let's launch Mercury Center." First on AOL, and it happened to coincide with the time when we were under tight operating budgets, anyway. Honestly, I just didn't see that there was much of a future in a limited, walled garden online approach. It was just too difficult, the penetration was too thin, there was nothing about it that said to me that would ever be a successful business enterprise. Martin: What year was this, Cathy? Cathy: This would have been, I want to say, '93, maybe. Martin: OK. It was just at the time that the web protocol Tim Berners Lee was developing. He actually developed it in 1990, but it's just beginning to get known now that the web is out there. Cathy: Yeah. I've never considered myself someone that sees trends early. I'll be a fast follower, but not necessarily the person with the vision. I've got to credit Bob Ingle for really understanding where it could lead. On the other hand Bob's not the best business person. He and I made kind of a good combination in this regard, because I was the skeptic and he was the visionary. Anyway, so Merc Center was born and we tried a number of different things. It was very innovative in a number of ways. But the staff knew that I was fairly skeptical about whether or not it would ever become a viable business enterprise. One day the chief marketing officer for Mercury Center called me into the boardroom and set me down. He said, "I've got to show you something." What he showed me was, it was a beta version of Mosaic. I just, I said game over. That, I believe in. I think what really was so striking to me about the Internet was the removal of boundaries. The newspaper business, as I experienced it, was always full of boundaries. It was very limited in so many ways. The manufacturing process, the distribution process, the limitations on how you package the news and the advertising always seemed to be putting up constraints that we were bumping into, even though we were an extremely profitable business. I think at the time the "Mercury News" was number one in terms of classified lineage in the country. We were always vying back and forth with "Dallas Morning News", but I think at that point we were on top. The Internet was just so apparently, so, just, gloriously, really, free of those constraints. That's what convinced me, "OK, this is a game changer." From that point on I really dedicated everything to it. I signed on to become one of the founders of Knight Ridder digital, so of course Mercury Center was part of the "Mercury News" initiative. Then Tony was looking to see if the experiment could be extended throughout Knight Ridder as an entire company. I joined Bob to put together the business plan that was the foundation for Knight Ridder Digital. That's really how I spent the remainder of my career with Knight Ridder. Martin: There's another thing going on during this period, which is this little lab in Boulder, Roger Fidler's, and we talked to Roger and we've just talked to Tony. What were your impressions of that at the time? Cathy: I thought Roger was very articulate at explaining what actually the current version of an online newspaper looks like, and this is back in the early to mid '90s. I mean it was revolutionary, it really was. He was a forward thinker and he was able to paint a vision that many people, including myself, bought into wholeheartedly. That this is the way the industry should go, could go, would go. But Roger was not able, ever really, to get any traction. He was running a think tank in a company that was all about operations and putting numbers on the board. Paul: Arguably, and he said his biggest budget was a million dollars a year, but if you'd thrown him an infinite amount of money you couldn't have built it then. The technology didn't actually exist to build an iPad, which is effectively what he showed as a wooden block 25 years ago. Cathy: Yeah, he was way ahead of the market. But he pointed the way in a very important way. He was trying to attract external money. One of the assignments I had was to go talk to some of the potential investors and get a read as to how serious they really were and advise Tony as to what could or should become of Boulder. The recommendation is that we pull it into Knight Ridder digital and use the expertise there to inform the product development that was ongoing at Knight Ridder digital. Martin: Now we'll get to MarketWatch and the later part of your career in a few minutes, but one of the things that's been a persistent theme throughout this series of discussions is this tension between media or, in this case, journalism cultures and technology cultures. In technology cultures, the engineering folks are, essentially, running the agenda and the businesses. For that reason, at least in an online context, there's a lot more innovation. In a media context or a journalism context, it's the journalists who run the cultures. It sounds to me like, in the case of Knight Ridder, Bob Ingle crossed those two. Although I guess, at heart, he was still a journalist. There were not real engineers in the company, right? It was still a journalism culture? Cathy: We brought in engineers at Knight Ridder Digital. We actually did implement an engineering oriented culture. I should say, more than engineering, a software oriented culture. We built out a platform and we had a major development effort that included both the platform in its entirety, but then a set of products. So the early products like Newshound, which was an early alerts service. What did we call it, Night Owl or something? It was an electronic library service. Then we had what we called Talent Agent, which was the beginning of the employment vertical that ultimately gave way to our efforts with CareerBuilder. We had this major product management function that we developed and software development operation. Bob did cross the two sides though. He was a very geeky journalist and was always interested in the technology. Of course, being here in Silicon Valley, he was an early adopter of everything, in wanting to try the latest thing on the block. That infused our culture to some extent. But that was only with regard to Knight Ridder Digital. Ultimately, the role of Knight Ridder Digital was to try to be an instigator of change at the newspaper level. It was hard to cross that bridge from where we were. Both a separate office staff, in what had now become Knight Ridder's corporate headquarters in San Jose, but fairly removed from all the day to day newspaper operations. It was not until near the very end of Knight Ridder's existence that the Internet activities were deeply integrated with the print. It was never truly embraced by the publishers. Certainly not when I was there. Paul: I'm just going to follow up on that inside outside question. A lot of companies dealt with that. Should it be separate? The conventional wisdom was, if you didn't put it outside, it would just get killed immediately. So almost everybody started outside. But then had the experience you described, which was it was outside and it couldn't move the mothership enough. Do you think you'd do it differently, meaning do it inside? Or would it have just died immediately? Was there another option? Cathy: It was probably the right call to get it started, initially, as a separate entity. What ultimately created a better alignment, not a perfect alignment, but a better alignment of interests, was all around the incentives, the goals and the objectives. We went too far with our goals being independent of the print goals. It was really Hilary Schneider, when she came on board and asked Tony, "Can we give the publishers double credit for all this stuff? Because without that, they will forever see it not in their best interest to support the online." It seemed as if any win that could be credited to the online activities was a loss for the print. It was very much of a win lose situation, instead of a win win situation. Honestly, though, that's just part of the dilemma in the business model. The business model was broken by the Internet. It's very difficult to be really successful at that and not do damage. Martin: That was my point about the engineering side, Cathy. There was a theory, to follow up on Paul's question, that by separating the unit out it could be a truly independent, large business. Essentially borrowing the brands, but not necessarily doing the same things, certainly not within the same business models. One of the questions that is continuously asked is, were these separate operations given the freedom to do what they needed to do? Or were they imaginative enough to do what they needed to do? In part, some of the folks are saying, the reason that they may not have succeeded is because they just didn't have the engineering talent to succeed. That wraps the two points together. I would just like your opinion about that. Cathy: I don't think that's the biggest problem, honestly. We could have gotten the engineering talent. We had some very good engineers. We had some very innovative thinkers. We defined ourselves as newspaper companies. Our whole mission in life was to fulfill the mission that a newspaper fulfills, which is to say bring accurate and comprehensive information to citizens of a democracy. Martin: That is kind of fundamental? Cathy: It is fundamental. But that's not where you make money on the Internet. [laughs] Martin: But the fact is, that's not where you made money in print. In print, you made money from classified advertising. Not from serving some social mission. The question I keep asking is, lots of people figured out how to make money on the Internet. Newspaper companies, despite all of this activity, innovation and investment simply didn't do it. I'm just wondering why. You were there. You must have thought about this. Why, from your perspective, couldn't they do it and still fulfill their mission? Was it because Craig came along and took the oxygen out? Cathy: Yes. That's what was broken about the business model. Classified, which had sustained everything, went away and there was no good substitute for that. I think the dilemma was that there was not a lot of passion on anybody's part to define ourselves as world's best classifieds section. It wasn't. It was limited thinking that I think I suffered from as much as anybody else. It was a struggle, and of course, you go down the slope gradually. You begin to fall a little bit and then gain speed and then gain speed and gain speed and you're in the middle of it and it's overtaking you before you even realize what's happening. I think that's what happened to the industry. While the most creative minds within the industry were struggling with the question of how do we get readers really engaged in online news, what was happening was that the classified business was going out the door. Martin: We talked to Tim Landen and clearly the industry learned a lot from CareerPath and that failure, built CareerBuilder and then Classified Ventures, which were real successes in their day. Now, obviously today, they're more complex, but for a period of time, the industry did manage to have some true successes and yet it still didn't matter. Paul: It turned dollars into nickels. Cathy: I don't know if there is any fixing the model. Martin: That's the other theme that continuously comes along, which is we've been working with this metaphor called "the tide and swimmers." The tide is technology and its inexorable march. The swimmers are the people like you and others who made decisions in the midst of all that. The question becomes could you, even if you were Olympic swimmers, have made any difference in a tide that was so difficult, so harsh. Or were the decisions made, the movements made during this period simply the wrong ones? If you had swum in a different direction or taken a different course, might've gotten to calmer seas, just as a horrible extension of that metaphor. Cathy: In retrospect, I guess I feel as if had it been possible for this transformation to have occurred, it would've happened. With all of the money, the dedication, the bright minds that the talent that existed in the newspaper industry, and I'm not just talking about Knight Ridder, I'm talking about across the entire industry, there hasn't been a huge success. Everybody's troubled. There have been obviously, in the New York Times, the Wall Street Journal, two enterprises that today are stronger than most of the players in the field. But it's still not a thriving business in the way that you see companies like Google and the Internet giants that have emerged. I think it was structural to the industry. Martin: Let's talk about MarketWatch for a couple of minutes because you leave Knight Ridder in what year? Cathy: '99. Martin: Larry Kramer, whom we talked to at some length, recruited you to be the chief operating officer, I think it was, in MarketWatch. Cathy: Yes. Martin: What made you jump to that company? Cathy: Before I went to MarketWatch, I went to Women.com. Martin: Oh, that's right, yeah. Cathy: Women.com was then acquired by iVillage. I went to Women.com and here was my thesis. I wanted to go to a pure Internet company that wasn't hampered by the requirement of protecting the mother ship. At the same time, I really believed in the value of brand. Women.com was sitting there with the partnership with Hearst magazines. They were the online face of all the Hearst titles. Yet, it was a standalone Internet company. I thought that it had the right ingredients for a very rich exploration of what that combination could look like, the real brand loyalty that comes with the content up from a print publication, but the freedom to operate like an Internet company. What I found was that some of that was possible to explore at Women.com. Really what the business was primarily about was pop culture and eyeballs. It was not really mission driven and I missed that. That's why I joined the newspaper business. I was interested in returning to a culture that had mission at its core. When the acquisition of Women.com by iVillage became, it wasn't announced yet, but it was apparent, that's when I started looking around. Larry and MarketWatch really appealed to me because, for one thing, we spoke the same language. Larry had come out of the newspaper business and as you know, grew up on the editorial side. I always had found the ability to form really strong partnerships with people on the editorial side when I brought to the table my operating experience. He's a captivating person anyway with a big vision of how this site could really change the game for individual investors in way that print never could. It was capitalizing on all of the advantages, the technological advantages, that came from the Internet to do something new in terms of information distribution that really served a social purpose. That was why I joined MarketWatch. Paul: Did you uproot from the west coast and moved to New York or did you stay here? Cathy: No, they were headquartered in San Francisco. Paul: Was Women.com as well? Cathy: Women.com was headquartered in San Mateo. Paul: Because iVillage was... Cathy: IVillage was in New York and they acquired Women.com but no, Women.com was in San Mateo. I've been in the Bay Area, with the exception of one stint in Miami, ever since I graduated from business school. I didn't know this when I came into MarketWatch, but the founder of BigCharts, Jamie Thingelstad, who had been acquired by MarketWatch and the BigCharts technology became the backbone of the MarketWatch website. Then Jamie had left and was not with MarketWatch when I joined them. We needed a CTO and I, at Larry's suggestion, opened up a conversation with Jamie and was able to entice him to come back to MarketWatch. This is where the combination of both editorial vision and passion and really vassel technology expertise came to fruition, at least for me. It was really a very, very dynamic combination. Jamie was a young whiz kid and he was very innovative and very cutting edge in terms of his thinking about technology and how it could be deployed all the time. Of course, Larry had a very big editorial vision. Those two ingredients were a powerhouse for MarketWatch. They really were. Martin: Do you think it requires an entrepreneurial environment for that to happen? Cathy: Oh yeah, absolutely, but there's always a tension. You need an entrepreneurial culture to allow the ideas to take root, but then you need some discipline and some structure to allow them to survive unless you happen to step into something that's really just very organic and spins off cash unbelievably, and we all know companies that have done that. The normal experience in building a company. Martin: I guess the question is, at least so far, we haven't yet run across anyone on the entrepreneurial side who has created the possibility for this mission driven notion in local regional journalism. We're seeing it in business journalism and MarketWatch in places perhaps like Business Insider or others. The places that doggedly cover the City Hall and the local businesses and those sorts of things, the kind of thing that happened at the Boston Globe, for example, with the Catholic church, those things we're struggling still to find. Why do you think that is? Try and put the Knight Ridder experience together with the MarketWatch experience and tell us why. Is it the structural point that you made before? Cathy: Well, let me make sure I understand your question. You're asking why is it that entrepreneurs don't go after the local space? Martin: They have. I'm asking why no one has yet... Cathy: Succeeded. Martin: ...through all this time, succeeded in a big way. Right, or in any way that I can see. Maybe you think Patch is doing it. I'm sure not sure it is. If there's an example that you think fulfills that mission that you described before, tell me what it is and we'll go talk to them. Cathy: No, I'm not aware of any. That's why I said if it were possible to break the model, If you define newspapers as being fundamentally local media, and if it were possible to find a way to support that endeavor in an Internet business structure, I think you would've seen it emerge, but I haven't seen it emerge. I think part of it is the nature of the audience. What we were trying to do at Knight Ridder was to create the possibility and we knew we could never do it entirely on our own, but to create the possibility of a national network of local sites. That's what Real Cities was all about, with the idea that in order to play in the Internet advertising game, you really had to have scale. Yet for a variety of reasons, structural reasons, political reasons, it just never worked. It didn't work with AOL, it didn't work with Knight Ridder, it hasn't worked with any other string or network of local sites that I'm aware of. I guess it comes down to the nature of the audience and how difficult it is to be able to aggregate an audience around a local theme. Fundamentally, what the newspapers industry was most advantaged by was the cost of setting up printing presses and a distribution network of trucks. We should all be honest about that. That's what allowed the economics of the industry to be so plentiful for so long. It was because there were huge barriers to entry, but they're just not there on the Internet. The audiences that do exist, the passionate audiences that exist on a local scale, are all just very, very small and they're all about very, very local voices. Martin: Anything that you have, Paul? Paul: No. It's a great summary of the dilemma. Martin: Yeah. Anything else, Cath, that you want to... Cathy: Well, let me ask you, guys, turn the tables. Where do you think it goes? You're trying to synthesize a perspective of history. If you were to turn it around and say, "Where does the future road take us?", what are your thought about that? Paul: I think it's still a scary road, because I think so much of the economic underpinnings was just yanked out of, certainly, the big city dailies and in the middle, that's the biggest prob. You mentioned the two biggest, do they have a national footprint and there's still some belief in hyper or small markets. Obviously Warren Buffet is making those bets. I'm not convinced those sustain themselves, either. The middle has gotten hollowed out, whether it's Chicago, LA, Philadelphia, New Orleans, now, and I don't see what replaces that. I'm not worried about the advertising audience, I'm not worried about the entertainment audience, but I'm worried about the news part of it. How do we keep watch on city hall? I don't think corruption went down because the Internet grew. I just think it's harder not if someone's not following you around looking it's a lot more bad things happen. That was simply for a long time a subsidized job, and that subsidy went away, and it doesn't easily come back. Cathy: How do you put a value on, do you think? Paul: Onto democracy, potentially? Cathy: No, on the job that a good investigative reporter does. Martin: Well that's a good question. I think that's the question. I see your point about the citizens. I think that there is a model, if people are willing to step up and pay for the content that matters to them in communities. I don't think, and I could be wrong about this, but at this point I don't think, I don't see the kind of robust advertising model that existed in a lot of media being replicated in digital, at least not for content in local markets. That could happen, but so far it's not. Then the question becomes how do you size a business to some series of revenue streams, whether it's some light advertising plus some willingness to pay? I think when you do that math you get to a very small staff, let's just put it that way. This is where the road forks. Some people believe that given the blogosphere and Twitter and other citizen journalism mechanisms, coupled with a small staff, you can fulfill fundamentally the mission that is necessary. Other people think that's ludicrous. We won't know, I don't think, until some set of people begin to try. One of the folks that we interviewed, Tim Landen, who was at the Tribune for many years, is trying. We'll see what he comes up with. As I said Patch, an AOL venture which is much more top down, much more, obviously, sponsored by Tim Armstrong who we intend to talk to during this process has a different model. But to your point, certainly nothing has emerged yet that we could point to that fulfills that particular mission? Paul: I think consumers have a very different view of value when they're eating à la carte than when they're at the buffet, and that newspaper was a bundle. I don't think you could say, "You paid us this amount, now tell me what each component was worth," because they valued not all of the bundle but some number of things that came in the paper or, frankly, the weekly magazine. It's not just newspapers, but newspapers are easy to focus on that bundle. To say to them, "Now, if you could only have that component, what would you pay for it?" I don't think people have any way to frame it. Investigative journalism is the hardest part, because it's not even predictable. You can't guarantee that you'll deliver every day. Cathy: The role of the publisher, let's face it, is to aggregate packages of content around their target audience's interests. I've wondered whether there could at some point be in the future certainly the technology exists to do it today but a real time content exchange, where publishers are able to acquire content that they would then distribute to their audience by purchasing, basically, publishing rights off of the content exchange. Martin: NewsCred is that exchange. It just doesn't have much local information [laughs] on it, as I understand it. I could be wrong about that, but... Cathy: I would say that there just isn't enough demand at a local level to sustain much of a price [laughs] for locally specific information. But in the world in which you have a real time content exchange, of course, the type of redistribution rights or publishing right, as well as the expertise of the writer, could be factored into whatever price has been paid. Martin: The other point that Tony made, which I think is worth reiterating here, is that Warren Buffet has invested in certain community newspapers, and those communities seem to have the coherency, the stability, and the support for the print product as well as the online version of that print product. They seem to have a loyalty that you don't find in a larger, more spread out, let's just say, metropolitan community. It's possible that all local communities aren't created equal. I don't know enough about how well Buffet's newspapers are doing to know whether... Paul Sagan: It's a niche or segment. Martin: ...niche, or whether he's even buying them for the real estate. Who knows why? [laughs] He's an investor. I don't know. But whatever... Paul: It will play itself out. Martin: Yeah, that will play itself out. Paul: It is a financial place, not a new model. Martin: No, it's not a new model. No. Cathy: No, I think it's remnants of an old model that can continue to persist in some pockets. I grew up in a Navy family, and the shorthand for where I grew up is New London, Connecticut, because my father was there in the submarine base. New London "The Day" has got fierce loyalty among its readership. Of course, it is a family foundation, so they don't have as much pressure as many of the other newspaper companies. They seem to be about the same size as when I was growing up, so they didn't expand hugely and then contract. They're probably able to pay the bills, but not a huge operating margin. I think one of the things that was a detriment to the industry was that everybody got used to such high operating margins, and that became the standard around which everyone's thinking aligned with regard to what needed to be produced. I think that might have also put some blinders on people in terms of the long term viability of the industry. We waited too long to try and defend those kinds of margins. Martin: Let me just ask one last question and then we'll be out of your hair. How difficult were the cultural issues at Knight Ridder? The company no longer exist, so there's not a lot of...Tony talked a lot about the inability for the print side of the business to fully embrace this. Paul: Church and state. Martin: Yeah. Was the innovator's dilemma really the key or core issue in some ways, do you think, or was that not, from your perspective, that important? Cathy: I think the innovator's dilemma was very real, but I think it went beyond the innovator's dilemma. You mentioned church and state. It wasn't just a radical transformation. The base is competition and what customers were after, which of course is what the innovator's dilemma speaks to. It was also the idea that there was something that was unworthy about the commercial side of the business, whereas the point of view that was all about "news for the sake of news." Truly, there was an element of that culture at Knight Ridder as well. That was a cultural war that went beyond the innovator's dilemma and compounded the issue. I think that, more than anything, is why there was a lack of passion in myself among others to become the world's best classified advertising vehicle. It just didn't speak to the higher purpose that so many people were in the industry to try and nurture. That created a disincentive for us to really be doing the kinds of things that we would need to do to, say, invest all of our energy in fixing the classified problem. Had we done that, would we have been able to do it? I don't know. It's pretty hard to compete against free, but you can certainly build off of the traffic that comes from having a free classified product, and we should have known that. We knew that the little liner ads in there attracted a lot of readership, attracted a lot of loyalty, and brought people to the newspaper. There were a lot of people that had subscribed to the paper just for that. But we didn't embrace that, and I think that was a cultural problem that existed in the industry. For all of us. ...
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