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Nieman Journalism Lab

Nieman Journalism Lab

The newsonomics of momentum in the WSJ/NYT battle

Posted: 10 Jan 2014 08:44 AM PST

What a difference a year makes in America’s national newspaper war.

As we look back at 2013 — and forward to 2014 — we see that The Wall Street Journal, an innovative leader in the digital news business, seems to have lost momentum in its titanic battle with The New York Times. 

When Rupert Murdoch bought the Journal and its parent Dow Jones six years ago, he declared that war, aiming to blur the historic line between a business newspaper and a general interest one. The declaration was pure Rupert: part real animus, part envy, part bluff, and wholly aimed at winner-take-all. Even as the deep recession wounded all publishers, Murdoch invested in the conflict, establishing The Wall Street Journal as a pioneer in news video, tablet innovation, and global growth, while also investing in old-fashioned reporting resources, launching expansions both in general news and in coverage of New York City. His moves on offense contrasted with the strategic retreats of the Times. The proud company was forced to sell its new headquarters space, take on onerous loans, and live perilously on the edge.

For much of the past half decade of hand-to-hand combat, the Times appeared uneasy in its footing. Through tough times, it managed to hold together its core asset — the 1,100-or-so–strong newsroom. But for much of 2012, the eight-month search for a new CEO emphasized the Times’ double vacuum of leadership and strategy. The media’s whispering classes conjectured that the Times was taking so long to find a CEO because the choice could be the one that would make or break the Times’ ability to survive as a standalone, Sulzberger-family–directed institution. Then, enter new CEO Mark Thompson, immediately dogged by various BBC messes, as he worked to establish credibility for himself on this side of the Atlantic.

Today, the tables have turned a bit. At the Times, the reader revenue strategy — exemplified by its digital paywall — has offered a greater sense of stability, a modicum of hope, and a budding confidence. It has completed a multi-year strategy to place all its chips on the flagship New York Times brand, selling off The Boston Globe and rebranding the storied International Herald Tribune as the International New York Times. Thompson looks like he has survived the North Atlantic winds of controversy. Though execution remains a big question, its areas of focus are the clearest they’ve been in a long time — innovating the second phase of reader revenue (“The newsonomics of The New York Times’ Paywalls 2.0″), finding new growth in digital advertising, and redoubling efforts and staffing in video and mobile. The Times organization is moving in a more unified direction than it had in previous years. Further, it is basking, even if just for a digital moment, in the glow of being the global pioneer in paid digital reader revenue models.

The year’s final financial performance (to be reported Feb. 6) will show a year similar to 2013, with maybe a little growth in revenue. It’s not out of the woods yet, but a clearing is visible.

The Journal is another story. At best reading, it’s been a year of reorganization, shuffling just about everything that could be shuffled, above and within the Journal’s reach. Its parent company spun off all its newspapers (and a couple of other balance sheet-improving ventures) into the new News Corp, complete with lyrical Murdoch-written logo, as the now-separate 21st Century Fox moves forward into the more profitable world of TV, film, and digital video. Lex Fenwick, the CEO of immediate WSJ parent Dow Jones, has brought Bloombergian B2B zeal to the remaking of the company.

Fenwick’s moves to radically rationalize and reshape Dow Jones B2B products have gained most of the attention, but a careful view shows that the same one-product, one-price strategy has fundamentally altered the Journal’s direction. Further, we’ve seen a profound exodus of top Wall Street Journal execs and much change in management overall — and limited new product development. Though fewer financial performance numbers are released about the Journal than the Times, a set of them affirms that the Journal’s assumed ascendancy in its head-to-head war with The New York Times is no longer true.

In previous years, I’d written much about the Journal’s innovations in video, mobile advertising, and other areas, more than I’d noted the Times’ product innovations. What happened in 2013 to turn the innovation tables? Though Dow Jones declined to comment on the company’s overall performance and strategic focus, I talked to numerous people in and around the war to get a sense of the wider newsonomics of the competition. Here we focus on their businesses, not their journalism — which continues to be distinguished in both shops. The success of those businesses, inevitably, will shape available newsroom resources for both companies in the years ahead.

Unexpectedly, this battle has between much more of a newspaper-to-newspaper competition. Six years ago, the Times still owned a variety of businesses from which it has now exited. Now it’s the Times alone. The corporate change in and around the Journal is more profound: While the Journal is part of a larger company, it is now a part of a newspaper company. Until the mid-2013 News Corp split, its performance could be subsidized by an Avatar blockbuster or healthy Fox News profits. Now it’s looked to as a profit center.

With News Corp’s London-based Times papers and New York Post being money losers, the Journal stands after the U.K. tabloid Sun (the best-selling paper in Britain) and its Australian newspapers in financial performance. Though new News Corp CEO Robert Thomson inherited a comfortable $2 billion cash cushion and no debt (in contrast to the planned Tribune spinoff), the cratering of the print ad business means that News Corp shares the financial pressures of its peers. The Journal must begin to stand on its own.

With that landscape in mind, let’s look at where the Journal now stands, in its management, its business performance, and its product innovation.

Management

Fenwick took command of Dow Jones two years ago. Long-time Murdoch loyalist Les Hinton stepped aside, as the collateral damage of Murdoch’s U.K. Hackgate threatened to impact the Journal.

Fenwick seemed like an odd choice at the time. A veteran business-to-business executive, he brought the legacy of his long-time Bloomberg tenure to what had long been mainly a business-to-consumer company. Though Bloomberg’s B2B terminal-based model has been wildly successful, its multiple attempts to grow consumer businesses in TV, radio, and magazines have far less so.

Public attention on Fenwick has focused on two things. One is his management style. Fenwick is universally described as a man who likes to be the decider, a top-down exec in an age where at least the hint of collaboration is nearly universally espoused. Secondly, the information world has been astounded at his remaking of the B2B side of Dow Jones.

Launched after lots of internal integration at year’s end, DJX has become Dow Jones’ Bloomberg. It’s one product, largely at one price, bringing together its Factiva enterprise information services, the Dow Jones Newswires, and much more. The early reaction to the higher pricing (with some customers being asked to pay three times or more what they previously did) and to the lack of separate product choice has been noteworthy. Cancellations have been reported, but it’s too early to know the overall business impact of the major change.

What’s important for Journal watchers to know is that the same single-product, single-price strategy now being tested in the B2B marketplace has been applied to the Journal.

As the application became clear, the exodus began. The Journal has seen dozens of managers leave. Alumni talk about the exodus of summer 2012 and summer 2013. Within six months of Fenwick’s arrival in February 2012, the departures had begun, concentrated early on in and around the Factiva business. Some were forced; many were voluntary. The summer timing wasn’t coincidental: News Corp’s fiscal year ends June 30, and annual bonuses are paid in August. Consequently, it is the last 18 months of the Journal that have seen the greatest change.

Across the Journal, top management change has been sweeping. A very partial list of the departed:

  • Todd Larsen, president
  • Alisa Bowen, head of the digital business
  • Michael Rooney, chief revenue officer and ad head
  • Beth Buehler, head of business management and business development
  • Laura Evans, head of audience insights/analytics
  • Jennifer Jehn, head of consumer sales
  • Daniel Bernard, chief product officer
  • Dean Delvecchio, chief information officer
  • Bethany Sherman, circulation head
  • Christine Brendle, publisher at Wall Street Journal Asia

All but Bowen — who now heads the challenged-but-cash-flow-vital digital business for News Corp’s Australian papers — left News Corp.

Why did they go? While Fenwick’s management style is part of it, the reasons go directly to the nature of what they were able to do to move the Journal’s business forward. As Fenwick moved toward single-product, single-price, the execs found:

  • they had less latitude to experiment and innovate in their groups;
  • that if they could justify innovation, necessary resources — tech and otherwise — had been diverted to the massive DJX changeover; and
  • that the B2C business had switched places in Dow Jones thinking, becoming the less-favored child.

Some weighed a personal strategy of waiting out the new regime. Most decided that even if top management were to change again, the unwinding of this single-product, single-price change would take a couple of painful years to happen.

The shock of the change — close to a 180-degree reversal — permeated all parts of the Journal’s consumer operation. It’s meant that the Journal — which put its model-breaking WSJ Live on more than two dozen non-WSJ video platforms (“The newsonomics of WSJ Live”) and did an early test with Pulse to determine the pros and cons of third-party distribution — cut back on its partnership and third-party platform testing. While the Times and the Financial Times are testing subscriber-authenticated reading on Flipboard, the Journal is absent.

The 2011 “WSJ Everywhere” strategy seemed an artifact of the past. Many of the business partnership plans and tests — all designed to pour new would-be paying customers into the top end of the customer flow via sampling — ebbed away. The issue: If you don’t throw out more fishing lures, through introductory pricing and wider sampling across platforms, paid subscriptions inevitably will flatten — which they have.

Further, the strategic change meant that new segmented, separately priced digital news products, like CFO Journal and CIO Journal, would be folded into the single subscriber proposition. Ironically, that comes at a time when separate niche products like Politico Pro is the new industry model — at the arch-foe Times too, where executives plan to test three such products in the spring.

That’s not to say that the Fenwick pricing philosophy doesn’t get credit. Even his critics say he has rationalized pricing that was too loose. The problem, they say, is that in swinging the pendulum over to stronger pricing, he hasn’t allowed that cheaper, introductory-offer sampling that the business today requires.

Among many of the exec replacements is a common career stop: Bloomberg. For instance, Trevor Hopkins, who replaced ad leader Michael Rooney, is one of the many Bloomberg vets to have replaced the old guard. Beyond the question of clubbiness is that B2B background and how well it applies to the Journal’s consumer business.

To be clear, Fenwick had done with the B2B business what he was hired to do. Robert Thomson had longed talked about the B2P (professional) market, and how a company with Dow Jones’ vast resources should more smartly serve it. He’d been frustrated about the pace of that rethinking and reorganization. Thus he had a strong hand in selecting Fenwick. The goal: Make more out of the B2B businesses that may have contributed only about 30 percent of Dow Jones’ revenues — but a higher proportion of its profit.

The consumer impact of the Fenwick appointment may have been unanticipated.

When Robert Thomson leapt from his position as top editor of the Journal to CEO of the new split-off News Corp, the balance of power at the Journal shifted. Though Thomson had been the editor in title, he wielded much wider business influence. His successor, Gerry Baker, is much more a traditional newsroom leader. The business savvy that Thomson had brought to his job is no longer in place to balance Fenwick’s B2B proclivities, as the new CEO faces the big task of managing the new three-continent News Corp, the largest news company by revenues globally.

Financial performance

The Journal and Dow Jones financial performance is somewhere in the middle of the new News Corp pack. News Corp doesn’t break out the results of its individual companies. Overall, the company’s first quarterly report as a spin-off, issued in November, was subpar, down 5 percent in EBITDA and 4.3 percent in adjusted revenues.

Its majority News and Information segment was worse, off 6 percent in adjusted revenues year over over year. We do know that circulation revenues were down 6 percent overall at Dow Jones for the last quarter, or $11 million, though we attribute that decline to the company’s struggling B2B sales, not its Journal print and digital subscriptions.

Advertising still represents a majority of revenues for the Journal, sources say, in the mid-50s percentagewise, with circulation in the mid-40s. That’s the inverse of the Times, which recently reported that 56 percent of its revenues now come from readers. Given that reader revenue is now growing as paywalls have gone up, and that print ads remain in sharp decline, majority reader revenue seems to be the preferable market position.

Sources say that the Journal failed to make its advertising budget for 2013. Like all dailies, it is struggling with print, likely with a low-to-mid single-digit decline and a mild drop in digital advertising as well. That performance would be quite similar to the Times.

We can estimate the Journal’s current profit in the 5-8 percent range.

Readers

If we measure Lex Fenwick’s application of single-product, single-price to Journal subscription pricing, we can see where he’s had success. The Journal has long lagged the Times in pricing, and even his critics credit him with rationalizing print and digital pricing. While that has meant less sampling, it’s also meant more immediate revenue, with double-digit price increases in print and digital. How much more circulation revenue we don’t know, nor do we know how it compares to the Times’ year-over-year increase of 4.8 percent there.

The overall readership numbers for the Journal, though, appear flat. Total average circulation, as measured by the Alliance for Audited Media (the industry’s successor to the Audit Bureau of Circulation) is down 1 percent, 2013 compared to 2012, as we can see in the chart below. The Times is up 15 percent, as we see below.

wsj-nyt-circulation

Both papers have lost print readers, of course, but the Journal lost more last year: 9.5 percent of its daily (six days a week) print circulation, compared to a 5.7 percent comparable weekday loss for the Times. Over the last two years, the Journal has lost 13 percent of print circulation; the Times has lost 12 percent.

Over the last year, the Times posted a 31 percent gain in paid digital products; the Journal was up 15 percent. Over the last two, the Times posted a 265 percent gain in paid digital products; the Journal was up 55 percent.

Consequently, in all the available public reader data, the Times is faring better than the Journal of late.

To be fair, the Journal was a turn-of-the-century pioneer in paid digital strategy, and one might imagine a plateau would come given that 10-year lead. Acknowledging that, the questions become: What has the Journal recently done to build on that lead? And how come it let its foe catch up?

In digital traffic, October Nielsen data below shows the Times with far greater reach than the Journal in their home country. Its U.S.-based audience is more than double the Journal’s. The Times manages 36 percent more time per person than the Journal and a page more per month, a 9 percent advantage there. The Times’ new redesign, launched Wednesday, is intended to further that engagement lead, even as the Journal gets ready to launch its own digital redesigns later in the quarter.

wsj-nyt-circ-table

Looking forward both on reader revenue and engagement, a critical question facing the Journal is whether to stick with its freemium model. That model, more commonly used in Europe, puts up a hard wall in front of many articles, especially the Journal’s unique stories, while allowing others to be freely read. Developed before the meter — which allows readers a free sampling of from 5 to 25 stories a month — the freemium model may be less flexible and consequently less successful in converting occasional readers into paying subscribers.

Products

New product development is a reach for new subscribers and readers, for advertising — and for buzz. Both the Journal and the Times have learned from digital startups the value of launch announcements.

Both have emphasized video. Late last year, The New York Times Minute won lots of notice as an attempt to satisfy news customers with quick three-subject reports several times a day. Its year-earlier Snow Fall project had redefined integration of multimedia into traditional storytelling. The Journal’s WSJ WorldStream, a first-of-its-kind video blog, launched in mid 2012, but has received less attention. Alan Murray, the Journal’s then deputy managing editor and a key part of much of the pre-Fenwick consumer innovation, is another of the execs who’ve left, becoming head of the Pew Research Center in November 2012.

Video is a key battle area between the Journal, which once had a substantial lead, and the Times. Chris Cramer, named head of video last March, is one of those trying to restart the innovation engines at the Journal. A BBC/CNN veteran, he has been joined by Edward Roussel as head of product and Michael Rolnick as chief digital officer.

Cramer points to growth in the video business, citing:

  • expanded WSJ Live coverage in Asia and Europe;
  • a 200 percent growth in WSJ Live pageviews since the September 2011 launch; and
  • plans for a bigger focus on global technology coverage and U.S. political coverage in Washington.

Further, the December News Corp purchase of video aggregator Storyful should help video strategies — and indicates the potential of greater strategic alignment across News Corp news properties.

For all who’ve moved into new roles at the Journal, the tasks are straightforward and parallel the goals that Mark Thompson has set out at the Times. They are all around the familiar: more reader revenue, support of digital advertising, mobile expansion, video exploitation. That requires building on innovation, marketing it well, and being perceived as a leader. This is a game both about leading change — and grabbing attention for it. Here, too, the Times seems to have gained an edge on the Journal.

We’d have to believe that a comparison of the Journal’s and the Times’ recent trajectories would make Rupert cringe. He believed he had the Times on the ropes, and now he finds his prized Journal playing catch-up. at least in the game of media perception and in a number of key metrics. In trying to fix the B2B side of Dow Jones, the company looks like it took its eye off of the Times competition, allowing the Times to catch up after Murdoch and Robert Thomson had invested so much in the new Journal.

Thomson, himself, has got to be casting a more direct eye on the paper’s fortunes as Lex Fenwick enters his third year of reorganization with quite uncertain results in both B2B and B2C. We may see the News Corp culture — pick a top leader and give him room to make the changes he sees fit — tested strongly by the time 2015 comes around. Commanders have their place, but changing out the officer corps in mid-battle takes its toll.

In the Journal/Times faceoff, the competition is far from over — but the battle lines have changed.

Photo by Jonathan Seitz.

This Week in Review: The Times launches native ads, and Yahoo’s against-the-flow news app

Posted: 10 Jan 2014 07:00 AM PST

A new look and new form of ads: Most news site redesigns aren’t much of a story, but when the news organization is The New York Times and the redesign is the first one in eight years, it gets a bit more attention. There were several places to read about various aspects of what the Times implemented and why: Mashable noted that the site has become semi-responsive, with adjustable dimensions for desktops, laptops, and tablets, but still a separate mobile site for phones. Journalism.co.uk emphasized personalization and engagement, with customizable menus, personal on-site breaking news alerts, and easier commenting. Fast Company pointed out the less cluttered design, and CNN’s Brian Stelter (a former Times reporter) highlighted the new back-end publishing system. The Times’ Reed Emmons explained some of the tech changes undergirding the site.

Initial reviews for redesigns are typically notoriously bad, but early reactions to the Times’ changes were actually fairly positive. Times public editor Margaret Sullivan collected some readers’ complaints and noted that the Times is committed to continuously tweaking and improving the site. Slate’s Adrian Chen tried to explain the lack of outrage about the redesign, concluding that it doesn’t change users’ experience much. “It allows you to read the Times the way you have for years. It's just a little prettier,” he wrote. PandoDaily’s Adam Penenberg described it as a return to the simpler Times designs of the late ’90s and early 2000s, and Poynter’s Sam Kirkland said it still feels like a desktop-first design.

The most notable part of the redesign, though, is the Times’ introduction of native advertising — ads that mimic the paper’s editorial content. As the Financial Times noted (and as the Times’ leadership promised), the newsroom isn’t involved in creation of these ads; instead, they’re being produced by a new unit within the Times’ ad department. Digiday’s Brian Morrissey explained a bit more about how the ads will fit into the site, and Ad Age’s Michael Sebastian gave a few other notes, including that the ads will remain on the site indefinitely, and that they won’t be shared by the paper’s main Twitter or Facebook accounts.

The Times had previously promised that the ads would be clearly marked as paid-for content, and the first native ad, by Dell, certainly appeared to make good. Adweek’s Lucia Moses said the Times went further than most in identifying its content as an ad, noting that if the point of native advertising is to trick readers into thinking it’s editorial content, the Times labeling will defeat that purpose.

Still, blogger Andrew Sullivan was concerned that the news/advertising distinction isn’t strong enough, noting that it could get lost when the post is viewed outside the context of the rest of the site. And at The Guardian, Emily Bell said two questions need to be answered as native advertising becomes more widespread: How long will this trend last, and how transparent these ads will be.

yahoo-news-digestYahoo moves further into mobile news: Yahoo announced several new developments this week, including the launch of an app called the Yahoo News Digest that sends a twice-daily summary of stories to users. It’s the first new app based on Summly, the news-summarizing app Yahoo bought last year. The Verge’s Casey Newton has a very good summary of what makes this app distinct: It’s not personalized, but instead offers a single curated digest to everyone. It also has a definitive ending point, in contrast to the endless stream of news that’s in vogue elsewhere. Because of those distinctive choices, Newton called the News Digest “one of the best-looking, and most quietly provocative, newsreading apps we have seen in some time.”

On the other hand, BetaBeat’s Molly Mulshine understood Yahoo’s rationale behind the app, but saw it as superfluous. (The app got some glowing early reviews, though they appear to have come straight from Yahoo employees, as BuzzFeed observed.) Yahoo also launched new tech and food sites (called “digital magazines”), with the former being led by ex-New York Times tech columnist David Pogue. Pogue’s introductory post focused on tech coverage that’s more about elegance and efficiency than devotion to gadgetry or any particular tech religion, and he talked at Yahoo’s launch event about writing about tech for “normal” people.

Yahoo also launched a new unifying ad system that allows clients to buy ads across Yahoo’s platforms in a self-service format. (Adweek and TechCrunch have the details on those changes.) And it announced the purchase of a context-based mobile app, Aviate, that’s still in private beta. Yahoo CEO explained all the changes as part of a shift a mobile-centric media company that produces more of its own content and offers it in more mobile-friendly ways. Readwrite’s Owen Thomas said the changes helpfully narrow down Yahoo’s focus from its previous days of overreach, but its mission isn’t quite as cohesive and inspiring as its rival tech heavyweights.

Reading roundup: It’s only been a few days since the last This Week in Review post, but there are few ongoing stories that have continued to develop during that time. Here’s a quick rundown:

ezra-klein— We haven’t gotten official word that Ezra Klein is leaving The Washington Post after the paper reportedly rejected his proposal for a standalone explanatory journalism site, but The Huffington Post’s Michael Calderone reported that the Post has begun looking for Klein’s replacement. Gigaom’s Mathew Ingram urged the Post to cut a deal with Klein, and here at the Lab, journalism professor Dan Kennedy said the situation shows why news organizations should embrace a network model rather than one based on closely guarded control. Michael Wolff of The Guardian was skeptical, however, that such individually driven news sites represented a financially stable journalistic path.

— A few more pieces of the National Security Agency and Edward Snowden story: Wired’s Steven Levy wrote a long piece explaining what the NSA’s surveillance has meant for the tech industry. There was also some conversation among The New Yorker’s Amy Davidson, political blogger Marcy Wheeler, and Pentagon Papers leaker Daniel Ellsberg about whether Snowden broke the oath given to federal employees. And there were a couple of posts on the new Pierre Omidyar/Glenn Greenwald First Look Media initiative — one by Greenwald on his role in the project and another by NYU’s Jay Rosen with its new hire, Bill Gannon.

— We got a bizarre intersection between Twitter and advertising this week when the producers of the movie Inside Llewyn Davis bought a full-page ad in The New York Times that consisted solely of a tweet by Times movie critic A.O. Scott. Times public editor Margaret Sullivan checked out the story behind the ad, noting that the tweet was edited and that Scott had denied the producers permission to use his tweet in an ad. Gigaom’s Mathew Ingram and Reuters’ Felix Salmon both gave some thoughts on what the episode might mean.

— The Financial Times’ Jurek Martin and Danish professor Rasmus Kleis Nielsen offered smart, conflicting perspectives on whether the current state of American political journalism is something to be lamented (Martin’s view) or celebrated (Nielsen’s).

— Finally, The New York Times’ social media desk has loads of useful advice in this post at the Lab about what works for them and what doesn’t.

It’s an outbreak! The most shared Upworthy posts of 2013 shed some light on virality

Posted: 10 Jan 2014 06:00 AM PST

Upworthy doesn’t always get a lot of love in some of the more high-minded parts of the Internet, but there’s plenty to learn from their success building the fastest-growing news site on the web. In an end-of-year review, Upworthy has released some data on its most shared stories. The blog post that sums it up includes an engaging interactive that breaks down posts by popularity and categories like body image, income inequality, and gay marriage. Some of the big analyses:

— We saw that tens of millions of Internet citizens are deeply concerned about the way women are treated and the way they (and their bodies) are portrayed in the media. Posts about women's body image, about how the media distorts societal ideas about beauty, and about equalizing the opportunities available to girls and boys were all hugely popular. In all, viewers shared, tweeted, liked, commented on, or pinned the 22 posts on these topics more than 14.5 million times.

— We also saw that, contrary to popular wisdom about what goes viral, neither "difficult" subjects nor fact-filled presentations scare people off. Nearly 20% of the people who watched a deep dive into American health care policy thought it was worth passing along to their friends. A powerful historical video of a teacher giving her young students a firsthand lesson in bigotry was viewed more than 3 million times. And four of the posts in the top 100 were about the important (but thoroughly unsexy) topic of income inequality.
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