From organizational crisis to multi-platform salvation? Creative destruction and the recomposition of news media

A networked business in the making

In line with this evident shift from print to digital, on 21 January 2013, The Guardian published an email memo from Lionel Barber (2013a), editor of the FT, to his staff. This set out how he proposed ‘to reshape the FT for the digital age’ (p. 1) and sought to explain why the paper was seeking voluntary redundancies. The context was the disruptive effect on ‘old titles’ by ‘new entrants such as Google, LinkedIn and Twitter. … Our competitors are harnessing technology to revolutionise the news business through aggregation, personalization and social media. Mobile alone, for example, accounts for 25 per cent of all the FT’s digital traffic’ (p. 2). And then, in a telling phrase, Barber observed, ‘We are moving from a news business to a networked business’ (p. 2).

Ever since late 2006, along with the FT’s CEO John Ridding, Barber had been determined to lead a push to digital as a way of saving the paper (Interview, FT executive 1, 2012, p. 11). After the bankruptcy of Lehman Brothers and the ensuing crash in 2008, the existing strategy was significantly enhanced because the advertising market diminished dramatically as a source of revenue. The FT’s leadership was extremely aware that technology giants such as Google, Apple and Amazon had reshaped the marketplace and fundamentally challenged print journalism’s future. The company’s digital wing, FT.com , looked to online retail businesses for its model recognizing that the subscription business is ‘a direct Internet retail business’, which very few publishers knew and understood. Within the media field, the satellite broadcaster BSkyB was admired at the FT for its ‘very, very smart use of technology and content packages to … constantly lever a bit more yield from their audience’ (Interview, FT executive 2, 2012, pp. 2–3).

Barber wrote that the FT’s decision to raise prices, charge for content and opt for subscription had been justified. He set out an eight-point plan that involved reducing ‘the resources devoted to print’ (p. 3). Summarizing the cultural change required, Barber stated, ‘On unified news desks, we need to become content editors rather than page editors’ resulting in ‘a more dynamic and interactive form of journalism beyond the printed word. This is vital to drive deeper engagement with readers and build our subscription business’ (p. 4). As one senior FT manager put it to us, ‘People are wanting a kind of interactive, dynamic experience on line that’s very different from the newspaper’ (Interview, FT executive 3, 2012, p. 2). For instance, the creation of reader communities – recognized at the FT to be a special strength of The Guardian newspaper in London – is one goal. The highly respected FT economics columnist Martin Wolf is seen as exemplifying this kind of contact. The FT blog Alphaville is also seen as a way of building online communities (Interview, FT executive 1, 2012, p. 4). The paper also holds monthly teas with readers who talk to staff and comment on particular articles and the effectiveness of the digital presentation. As a key figure at FT.com commented,

[It] helps so much to have that feedback loop and it’s absolutely essential to make a success of the digital age, really critical. And a lot of the editorial guys haven’t been engaged in that so it’s opening their eyes a little bit, making them feel the feedback and the interactions. (Interview, FT executive 1, 2012, p. 5)

The aim is to seek reader engagement and multiple visits from subscribers, to move the business model towards subscription and away from dependence on advertising, to turn the FT into a global newspaper and to exploit the trusted financial news brand that people are willing to pay for. It is still possible to read eight articles a month for free on the FT’s sites. Return readers are encouraged to take out a subscription.

In line with Barber’s summary account, therefore, our interviews reveal the detailed impact inside a newspaper of the process of transformation. Indeed, the senior staff see this as a transition from the newspaper to a combination of print with a website, mobile platform and apps – Barber’s networked business.

The FT’s new course has entailed a number of key changes. It has resulted in simplified editionizing, meaning a shift from separate UK, European, US and Asian editions to a common global edition. FT executives wondered whether UK subscribers – who still constitute about 50 per cent of the readership – would ‘buy’ this. The FT has also aimed largely to eliminate time-based editions by way of continuous website updating. The FT’s current iPad app has both ‘live’ and ‘morning paper’ options, reducing the choice.

The FT’s management has also sought to change the newspaper’s revenue base: currently some 50 per cent of the FT’s revenues come from advertising, a decline of around 20 per cent in the past decade. Advertising is seen as an uncertain source, being volatile because of the vagaries of the business cycle and also as increasingly subject to competition because of the increasing movement of advertising revenues from print to digital and the strong market position in the digital space of players such Google, Apple and Amazon. The ambition is drive up subscription or ‘content revenues’ so that in the next few years these become the main basis of the enterprise’s revenues (Interview, FT executive 4, 2012).

This has meant that there is a powerful incentive to move increasingly from print to digital distribution. The rationale is that to increase digital subscribers is cheap, with low marginal costs, and furthermore that digital distribution vastly increases the FT’s potential reach. In 2011, for instance, FT Chinese exceeded more than 1.7 million registered users.

Reshaping news production

These strategies clearly play into how news production is being reorganized – a question much discussed in the academic literature. At the FT, there has been a decisive shift from print to digital jobs, with the creation of a live news desk and the creation of new roles. A lucid and detailed description of this emergent ‘web first’ culture came from a senior figure in FT.com :

We have 100 more journalists than we did previously. If you break down what they are doing, the bulk of them are still involved in content origination/reporting or columnist activities but that is now being supplemented with creation of content in different styles. So we have video specialists. We have interactive graphics specialists. We have blog editors. All these are categories of expertise which we didn’t have ten years ago, and there is now a large cadre of people who focus on these things and that continues to extend. So we have a mobile editor. We have a social media editor. And we expect those functions will continue to develop over time. And then you have got the whole sub-editing or editorial production function, [which] I guess is probably a more generic way to put it. I mean, that is changing to the extent that there are now editorial production resources working across both print and online and mobile and their skill set is necessarily changing, the way they work is changing, the time of day they work is changing as well, because the newspaper is a very lumpy process where all the content gets spat out at, kind of, 4 or 5 o’clock in the afternoon from the journalists and then turned into a paper very rapidly for production and distribution during the evening. And online is a 24-hour process which is much, kind of, smoother in many ways from a publishing point of view. (Interview, FT executive 2, 2012, pp. 4–5)

In terms of the organization of work, this has meant moving away from a 1-day print cycle to having journalists write more frequently ‘to keep the site dynamic’ – thus, how stories are written changes (Interview, FT executive 3, 2012, pp. 12, 16). It is recognized that this is a fundamental shift in production culture. If news production can be seen as a time-machine of daily creation, traditionally bounded by a predictable 24-hour cycle (Schlesinger, 1977), then that model – in true Schumpeterian mode – has begun to undergo a fundamental process of destruction, neatly summed up as follows:

The lovely part about our daily newspaper is it’s a daily cycle. You get something done at the end of every day and you feel like, ‘Yes, tick the box’. Problem with the digital age is it’s never done. You get it out, you still have to change it, you know, and the story never stops – and that’s a struggle. (Interview, FT executive 1, 2012, p. 4)

This kind of change is very challenging to established conceptions of how a newspaper works. Our informants were clear that ‘the FT is not a breaking-news site. We are not the BBC’. However, at the same time, for certain stories that are seen as typifying the FT’s expertise – such as the appointment of the new Governor of the Bank of England, Mark Carney, on 26 November 2012 – being the first to break the news is especially important (Interview, FT executive 1, 2012, p. 5).

The changed cycle has meant moving away from long-established shift patterns based on a printing cycle, with some staff coming in earlier and fewer needed later. Currently, the news staff are divided broadly 50:50 between print and digital, but the shift (as Barber noted in his email) will increasingly be towards digital. Related to this are ‘more flexible’ work patterns. This has gone hand in hand with several rounds of redundancies which, we were told, was not about ‘reducing head count’ but rather about ‘losing staff who have skills we no longer require and bringing in staff that have got the skills that we will need in the future’ (Interview, FT executive 2, 2012, p. 6).

However, destruction of the old to make way for the new is not without its challenges. Previous newsroom studies have highlighted some of the frictions involved in embedding a fully converged approach to content production (Erdal, 2011; Van Weezel, 2009). One instance we have found in our research of how adherence to the traditional routines and practices of print production may frustrate change is the misalignment which, despite copious volumes of return path data, still occurs between spikes in usage of online versions of newspapers and the daily publication cycle. One senior manager conceded that whereas the number of stories published every hour at FT.com throughout a 24-hour period typically increases very markedly in the early evening when the print edition of the newspaper is approaching its production deadline, the known peak periods in usage of FT.com occur elsewhere in the day. This very concern was addressed in an open memo from the FT’s editor Lionel Barber to the newspaper’s staff in October 2013. This called for journalists to ‘publish stories to meet peak viewing times on the web rather than old print deadlines’ (Barber, 2013b).

Even for companies such as FTG, overcoming the conventional rhythms of news production so as to align the cycle of production with patterns of online usage can be a struggle. And the FT is by no means alone in this. Other leading UK press groups, all of whom lag far behind the FT in promoting a ‘digital first’ approach to production, acknowledge the difficulties that pertain in ensuring that online content is refreshed at such times and with a frequency that encourages high levels of engagement among digital users. Looking beyond the United Kingdom, an analysis carried out internally at the Wall Street Journal in spring 2013 showed that even though the peaks of online consumption occur elsewhere during the day, journalists at WSJ.com are still posting copy in accordance with traditional print deadlines (Romenesko, 2013).

Along with changes in the news cycle, not surprisingly the pattern of editorial conferences has also changed. There are two conferences per day, the first being the traditional agenda-setting one in the morning, whereas the second, in the afternoon, reviews Web analytics to see how stories have been doing. While currently, as one senior manager put it, ‘We are very resistant to editing by numbers’, the web analytics – it was conceded – might drive narrower story selection much more in future.

In fact, Web analytics have become central to developing the emergent business model. As one of the FT’s financial executives put it,

I can see through our analytics exactly what … people are doing on the site and am actually understanding their behaviour and their needs … and judge from their behaviour as to which parts we can improve, and that leads to product innovation. (Interview, FT executive 4, 2012, p. 6)

Knowledge about readers has become increasingly important and this has led the FT to try to control the relevant data as much as possible and has set off a process of dis-intermediation. For instance, the paper launched its own HTML5 app in preference to dealing with its customer base through iTunes. This required considerable long-term investment, building up a specialist team of software engineers within FT.com . The FT has also tried to recapture corporate users that seek its content through paid aggregator sites. Exceptionally, it accepted that in order to remain indexed by Google it needed to allow users free access to their service: ‘We negotiated that. Now it’s down to fifth click, pay now. … We monitor that very closely. If we see people abusing it, Google has given us the right to stop it, particularly at corporate level’ (Interview, FT executive 1, 2012, pp. 7–8).

Furthermore, the sophistication of Web analytics has offered much more precise feedback to advertisers about campaigns. It has also allowed the FT to tailor its content to users based on their browsing behaviour, allowing them to ‘frame and shape that product so it answers the need of the user at that time’ (Interview, FT executive 4, 2012, p. 9). The use of Web analytics has started to pose new problems for the exercise of journalistic judgement and conceptions of professionalism. It has broken down beliefs about the need to sequester news values, first, from audience feedback and, second, from technology and commercially driven concerns to enhance the attractiveness of the product. This is in line with what Deuze (2007) noted a several years ago:

As media companies are beginning to integrate the emerging creativity of producing consumers this in turn changes the ways of doing things for media professionals, who now have to find ways to incorporate their audiences as colleagues in the creative process. (p. 95)

Users are not quite ‘colleagues’, to be sure, but they are evidently increasingly impactful. Thus, in respect of making items more prominent because of feedback received, the FT editorial staff were careful to stress that

We are not going to edit by numbers. But we can know that first thing in the morning while you are commuting into work, you’re more interested in reading about your sector in particular, therefore that will be your first view. … You don’t want to go so far down the line of personalization that you don’t expose the serendipity. … We do recommended reads on the web app and that’s based on your browsing behaviour. (Interview, FT executive 1, 2012, p. 6)

Our informants were keen to stress that journalistic judgements still held prime position:

We are not anywhere near like [title x] where we have people coming down and saying ‘You have to change your headline to this or that’. We don’t do that. But we have one of our specialists sitting with the newsroom and just helping them, so they will come to my guys for advice on ‘I am going to do a special on Africa and this is the slant. … What’s the best way to discover that? What kinds of tags should we use?’ We get advice but we don’t determine. That’s very much editorial’s decision. (Interview, FT executive 4, 2012, p. 14)

In a droll play on words, this role was described as making headway with the ‘moreons’: ‘more on this story, more about that topic. … So it’s generally not about the core story. It’s about this stuff around it that makes it come to life’ – using interactivity, pictures, slide shows, and videos (Interview, FT executive 4, 2012, p. 15).

Significant tensions have begun to emerge between enhancing the discoverability of the FT’s content in order to build the relationship with the customer and subtly shifting editors’ news judgements about what matters – all in the cause of growing the revenue stream deriving from increased purchases of digital content.

Changing platforms

The newspaper has undertaken a far-reaching process of change that is still under way. The strategy has remained rooted in print – increasingly combined with digital services – while, at the same time, its management realizes that over time the output will move increasingly, if not exclusively, to digital platforms and that this will ultimately represent ‘the inherent value of a firm like The Telegraph’ (Interview, TMG executive 1, 2012, p. 2). Inside the group, therefore, the gradual development of a new business model has been likened to a journey.

Reflecting on the path taken over the past 20 years, a senior digital editor remarked,

In 1994 we were the first national newspaper to launch a website and it was … just about … playing around with the technology. And at that time, in 1994, very few people would have had the foresight to realize how transformative it would be to the news industry. Had they had that foresight, I don’t think that they would have given the content out for free. … They may have done so for a period of two or three years but I think they would more rapidly have introduced a payment system too. … The narrative that was prevalent, sort of four, five years ago, which was that people won’t pay for content, you have just got to put it all out there and it was about driving advertising and the larger numbers that you need to drive advertising, I think is outdated. (Interview, TMG executive 1, 2012, pp. 9–10)

In many respects, and this is hardly surprising, the diagnosis of the problem echoes that reached at the FT but has been arrived at more slowly. There was a need, we were told, in phrases that matched those of Murdoch MacLennan, to escape from the high cost, high revenue model of print to embrace digital production and distribution. The shift was presented as efficient because it gave access to ‘relatively large numbers of people at relatively low cost’ both for advertising and for editorial (Interview, TMG executive 1, 2012, p. 4). The New York Times is seen as a newspaper making a successful transition from an exclusive print base by charging for its digital content. Its 166,000 digital subscribers and claimed $US100 million revenues were noted approvingly in 2012 (Interview, TMG executive 1, 2012, p. 10). The sense of how this shift may challenge the very conception of the news business’s place in the world may be illustrated by this quote:

We have for 158 years been an organization that has only reached people in Britain. And now we have more than 50 million users, two-thirds of which are outside the UK and one-third of our audience is in the US … 70 or 80 million users. (Interview, TMG executive 1, 2012, p. 4)

Aside from the continuing decline in print circulation, The Telegraph management also noted the ‘very big challenge’ represented by ‘the compression in advertising yields’ (Interview, TMG executive 1, 2012, p. 11). So how has The Telegraph shifted its ground? It is important to note that while print editions remain very important in terms of revenue generation, now TMG’s leading figures no longer see it as just a newspaper but rather see the newspaper as an essential part of a multi-platform business. As a senior technology executive put it,

One of the key things that we set out to do from a business perspective but also from a technology perspective is to make sure that you don’t throw the baby out with the bathwater. So rather than just do big, full steam ahead at only digital, it’s making sure that there is a package of stuff that, in terms of experience, makes sense across platforms – and that includes print. (Interview, TMG executive 2, 2012, p. 1)

Consequently, TMG has sought to ‘add value’ to the print subscription by giving loyal subscribers access to the iPad edition and mobile apps, the idea being that this is experienced as a ‘premium subscription’. It makes good sense to nurture the subscriber base, which – at 300,000 – is higher than that for any other UK national generalist newspaper. Holding on to this base, in the short to medium term, is seen as key to managing ‘the business through the transition where you are obviously going to end up needing a lot more volume in digital’ (Interview, TMG executive 2, 2012, p. 2).

It is widely recognized at The Telegraph that mobile devices hold the key to future consumption of content; indeed these are seen as dominating the next 5–10 years. The launch of the iPhone in 2007 was seen as a turning point, a shift from ‘the web era to the mobile era’ (Interview, TMG executive 1, 2012, p. 3). The change in sensibility about how to connect with what is variously described as the audience and customer (and hardly ever at all as the reader) means that there is a continuous search for new ways of developing The Telegraph as a ‘brand’ and of finding ways of building loyalty on the part of the customer – a process labelled ‘engagement’.

One way of changing the offer has been to launch new sites in the fields of fashion and travel, where it is known that advertising will do well, and these have already proven to be profitable. In part, the shift of distribution to the iPad and other tablets has been seen as an advantage (Interview, TMG executive 1, 2012, p. 5). There is a well-tuned sensitivity to how making use of interactivity can ‘spur loyalty’ on the part of the reader:

Fast track to where we are in two or three years, what we need to be knowing is that a particular reader spends 70 percent of their time on the crossword. … When we have an innovation, we should go and touch that person right away. (Interview, TMG executive 1, 2012, p. 6)

Such intimate knowledge has become feasible through tagging page traffic and making use of increasingly sophisticated Web analytics. The crossword example is not fortuitous. The Telegraph has discovered the importance of time spent on games on mobile devices: 40 per cent of iPad app use is doing crosswords. There is also a double advantage in using metering to control access to the content. Presently, a registered user can access up to 20 free articles a month. According to one senior manager,

The metre is for two reasons. One is you want to maintain reach. And the second thing is that you want to have a prospect pool of people that are essentially sampling what you have to offer. So, if we went completely behind a wall, then new potential customers wouldn’t necessarily try us and therefore we are going to be limiting in the long run our total subscriber number. (Interview, TMG executive 2, 2013, pp. 3–4)

Changing news work

The way The Telegraph’s business model has changed has had major consequences for how the journalistic production process is organized and also for how journalistic practice is conceived. All journalists under contract to TMG work for The Telegraph’s multi-platform operation and produce copy for the Web and other forms of digital distribution as well as the papers. The news operation, we were told, is about 85 per cent ‘integrated’ as between print and digital production. As a precaution, the company has retained print specialist capacity in the evening team that produces the following morning’s newspaper, to avoid any distraction as to how the Web pages look (Interview, TMG executive 1, 2102, p. 12).

Nevertheless, during the 2012 Olympics, the newsroom was expected to think both about how the story was playing out on the Web and, at the same time, consider what would be done in the next day’s newspaper. This is just one instance of a new way of thinking about the multi-platform offer. Our informants told us that journalistic work was increasingly seen as ‘holistic in terms of the narrative, or to be taking care of everything from the headline, the words, the selection of pictures, the selection of the video’ (Interview 2, TMG executive 1, 2013, pp. 4–5). Increasingly – in a term now bandied around many media businesses – the editorial team has become much more ‘curatorial’ in function.

The interaction between digital and traditional forms of journalism also came into play during preparations of The Telegraph’s celebrated revelation of the Members of Parliament’s (MPs) expenses scandal (Winnett and Rayner, 2009). As we were told,

Where we have 1.5 million documents, having the skills to dig into that database and select this information is where you need old school journalism skills. You need to know what you’re looking for because it’s a vast array of information but then you need the new skills, which is how to pull out the information in a relatively short period of time. (Interview, TMG executive 1, 2012, p. 16)

The newspaper had played its digital first card in order ‘to capture the attention of the general public through the TV broadcasters’ (Interview 2, TMG executive 1, 2013, p. 8). The question of whether the story was print or digital was not the issue – rather it was a matter of achieving maximum impact.

However, this is evidently the last gasp of the old order. What we do not yet know is how long this transitional phase will last. There have been significant changes in staffing over time, with hires in new areas and fires in the old. While it has proven difficult to obtain precise figures due to commercial sensitivity, it is estimated in-house that some 25 per cent of the staff in a newsroom of some 500 are now exclusively focused on digital production, compared to some 10 per cent in 2007 (Interview, TMG executive 1, 2012, p. 18). A total of 14 staff are now assigned to video production; five work on interactive graphics – skills that, for instance, were simply unrecognized as needed in the very recent past. It is acknowledged by company strategists that as The Telegraph moves increasingly towards being a primarily digital operation, it will need fewer staff (Interview, TMG executive 1, 2012, p. 19).

Murdoch MacLennan’s observation that it is broadcasters and aggregators that are now the key competition for The Telegraph rather than other newspapers is highly pertinent to the current evolution of the business. Tremendous attention is paid in the newsroom to what is trending on sites such as Twitter and Facebook and also to the lifespan of stories and the page views they attract. The editor of the print edition and the editor of the website – Telegraph.co.uk – meet each day at a news conference to discuss their respective stories. The discussion begins with the online proposals and then it moves on to print.

The SEO [search engine optimisation] guys talk about what’s trending on Google. We then talk about what’s trending on Twitter. We then talk about what our readers are sharing of our stuff on Twitter and Facebook. So what among the top five they are sharing on each of these. And we talk about what are the most commented on – so, which articles are getting the most comments. (Interview, TMG executive 3, 2013, p. 1)

Apart from affecting how the website is adjusted to address this kind of feedback, the clustering of readers around particular stories is also affecting how The Telegraph’s management is increasingly thinking about the brand itself:

We have been putting more analytics in the hands of editors and journalists over the last few years and one of the tool sets they have got basically works in real time, so you can see how people are engaging with content, we can see what is popular right now, you can see all of that. And as they get more comfortable with driving decision-making on an hourly basis based on analytics, you can begin to add more to the mix. (Interview, TMG executive 2, 2013, p. 8)

On the one hand, the company claims to have extended the range of forms through which content is supplied by a daily posting of some 50 videos, 25 blogs and 10 picture galleries. However, enhancement through range is not seen as a complete solution to the problem of audience building. Company strategists think the key to future success is to ensure that a small cluster of daily stories – between three and five – will carry and define the brand. To the extent that this will be implemented in the near future, it will steadily take The Telegraph away from the comprehensive conception of broadsheet news prevalent only a few years ago to one of highlighting a few main stories in ways that are much more characteristic of broadcast news. This line of thinking was well expressed in the following comment:

I think there is merit, actually, for a lot of organizations, in just saying, ‘Well, how could we get a bigger impact with fewer stories?’ … I mean, maybe as few as 30 stories a day, and do them really, really well. And you may publish many more than 30 stories a day but you might be promoting and pushing aggressively a relatively small number of stories. (Interview, TMG executive 1, 2013, p. 7)

We have noted that at the FT there were unresolved tensions. These concerned, on the one hand, the trade-off between news judgement and journalistic autonomy being conceived as the professional bedrock and, on the other, decisions about content being driven by ‘the numbers’ embodied in Web analytics. Not surprisingly, similar contradictory strains were also evident at The Telegraph. Nonetheless, managers still maintained that the ‘editors are guardians of the brand … and good editors will always be rigorous about that’ (Interview, TMG executive 1, 2012, p. 9). It was also remarked that while ‘You can see where all your traffic is coming from … you can’t be led too much by it. You have still got to go with some of your instincts. You can’t completely edit to the analytics’ (Interview, TMG executive 3, 2013, p. 4).

The Telegraph is still addressing the matter of how best to achieve a balance between the drive to update stories and the need to offer added value to reinforce reader ‘engagement’, seen as essential to growing the subscriber base. An example given to illustrate how the problem was being managed concerned gross domestic product (GDP) figures issued by the UK government:

We will put out a holding story, a headline and [be] very brief. We will give our economics editor a couple of hours to really get the story right, as opposed to breathlessly updating the story. … At the end of the day, it’s about good news judgments and from that point of view, the dynamic hasn’t shifted.(Interview 2, TMG executive 1, 2013, p. 6)

The big shift in priorities, however, is reflected in the view that ‘digital first’ is largely meaningless because now online has general priority:

The only copy that doesn’t really go up online first are some of the sports columnists … anything under embargo, obviously. … We hold back some investigations for the paper. There is some stuff that we will put up at 7 o’clock the next morning on the basis that actually it will do better in search or with Google traffic. … On the whole, people are writing for online first.

The Telegraph is informed by its increasingly sophisticated knowledge of when stories are being read, and by whom. Consequently, it publishes stories that will hold up when they are likely to achieve the highest readerships; and when necessary, it also obeys the imperative of breaking news.