Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
-
Upload
journalismcouk -
Category
Documents
-
view
218 -
download
0
Transcript of Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
1/22
FINAL Hinton WAN Hyderabad
1 Dec. 2009
Thank you.
I was invited here to talk about the value of journalism. About how
we at News Corp and Dow Jones have worked to create a debate
about the future of journalism in the digital world.
We have deployed some lavish language to stir things up.
We have called Google a digital vampire, and a parasite.
We have pointed the finger at the content kleptomaniacs of the
internet whose business models depend on purloining the
expensive journalism of mainstream media.
But now a little context. I use Google just as most of do. What it
does to enhance and enrich our lives makes it a true wonder of
the age.
1
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
2/22
It is true that Google is at the heart of the crisis confronting
journalism today. That their almost incalculable and growing -
power warrants great vigilance.
But the main, and most uncomfortable, truth is that this industry is
the principal architect of its greatest difficulty today.
We are all allowing our journalism billions of dollars worth of it
every year to leak onto the internet. We are surrendering our
hard-earned rights to the search engines, and aggregators, and
the out-and-out thieves of the digital age.
It is time to pause and recognize this Free Costs Too Much.
News is a business, and we should not be ashamed to say so. Its
also a tougher business today than ever before. We have
survived other perceived threats - radio, television, cable TV.
But this time it is different.
2
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
3/22
How can it be that the Internet offered so much promise and so
little profit? I guess a lot of newspaper people were taken in by
the game-changing gospel of the internet age. It was a new
dawn, we were told. A new epoch, a new paradigm. And we just
didnt get it.
Like an over-eager middle-aged dad, desperate to look cool, we
ended up dancing obediently to other peoples tunes. For a while.
You can almost hear the music an algorithm and blues
soundtrack accompanying the harbingers of the new economy
with the new rules of the new age. Their rules.
These digital visionaries tell people like me that we just dont
understand them. They talk about the wonders of the
interconnected world, about the democratization of journalism.
The news, they say, is viral now that we should be grateful.
Well, I think all of us need to beware of geeks bearing gifts.
Here we are in 2009 more viral, less profitable.
3
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
4/22
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
5/22
The blogosphere has an explanation, if not a justification, for
whats transpired. The world has changed utterly, they type. The
mainstream media doesnt understand it. Its the inevitability of the
Internet.
Or as Jeff Jarvis, one of the leading proponents of the
information-must-be-free imperative puts it: The content economy
is over.
Is it really?
Its been barely a decade since the Internet bubble burst on the
information highway to the digital future. Ten years ago, it was
taken for granted that Web sites supported by advertising were
the future. Build it, and they will come. Eyeballs and advertisers.
Clicks and cash.
We have learned a lot since then. Today, there is one thing we
must agree about the content economy the content economy
that they tell us is over. That is, the one thing free news sites have
5
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
6/22
in common with online newspapers the one thing free news
sites have in common with online newspapers virtually none is
making any money.
They are in good company. Even Google is struggling make
money with free content on the Web its own content, that is.
YouTube probably defined viral on the Web more than any other
site. It lets anyone upload any video they like for free. Millions did
and do. It is a wonder of online traffic, which is why Google paid
$1.65 billion to acquire YouTube just three years ago.
Now Google needs to make a profit on this acquisition. How do
you make money on YouTube? It is supposed to come from
advertising. But as it turns out, not enough companies wanted to
put their advertising alongside home videos of pet dogs having
baths, or kids doing karaoke in their bedrooms. So YouTube
Google is resorting to paying millions for quality, professional
content in an effort to lure the advertisers they need.
6
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
7/22
That makes one wonder just how long it will be before YouTube
asks its viewers to start paying up.
Free costs too much.
Even advertisers, who once cared above all about clicks and
page impressions, are starting to become more discriminating.
More and more, they want to reach quality audiences to burnish
the image of their brands.
A few months ago a study called "The Silent Click" by Comscore
and the Online Publishers Association (OPA) reinforced the
reluctance of brand marketers to rely on click based metrics. It
found that eighty percent of display ad clicks came from only
sixteen percent of internet users.
Furthermore, these obsessive clickers are predominantly younger
and lower paid than most web users.
7
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
8/22
Two weeks ago the Internet Advertising Bureau and Bain &
Company released a study called "Building Brands Online."
This report highlights the disconnect between what brand
marketers are now asking for in terms of quality measurement on
the Web -- brand awareness, purchase intent, favorability --
versus what online publishers have traditionally been providing
them -- click-thrus, unique visitors, ad impressions.
So, ironically, what they now want is more of the 'old media'
metrics they are used to getting from print and television.
In other words, they are looking for intelligent, quality journalism.
Obviously this is all great for the Wall Street Journal Digital
Network. It supports what we have been saying all along; that
audiences exposed to display advertising on high-quality content
sites are more engaged, more favorable towards a brand, and are
more likely to spend.
8
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
9/22
We are seeing evidence of this every day. For instance, our
homepage buyouts on WSJ.com have sold out for the last two
months.
We can take heart that high-quality content can break out from
the pack and earn the highest online advertising rates.
This is encouraging, but we know that advertising will never be
enough. We need the primary customer to pay as well. Leaving
the fate of our business in large degree to the cyclical economics
of advertising is too dangerous.
In the digital world, constant innovation, product development and
investment is needed to keep pace with the competition and serve
our loyal customers.
Its not as if theres no precedent for charging for content online.
In the U.S., online content from Major League Baseball and
Consumer Reports have attracted large paying audiences.
Quality journalism is for sale too.
9
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
10/22
The Dow Joness flagship - The Wall Street Journal -- has up to
now - been the one major U.S. newspaper charging for content
online.
At the same time it has been the one major newspaper that has
been able to grow circulation and circulation revenue.
The Journal this year became the top-selling selling
newspaper in the United States. And it did it by selling more
subscriptions in print and online. It did it while garnering more
individual subscriptions. It did it while charging more for those
subscriptions.
If you are not finding new readers willing to pay, maybe it should
come as no surprise. Newspapers available for free on the Web
surely are making consumers an offer they cant refuse.
Now if you believe the bloggers, that is what newspapers should
do. They should price their content at zero because the content
10
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
11/22
isnt whats valued. The theory is its the links to the content that
give value, and the advertising they bring.
Convenient.
But who will buy all this advertising? Who is going to underwrite
the cost of this content?
Lets not forget the basic economics: The rates on our ad cards
increase when there is less competition, not more.
There is something else fundamental at work here.
Implicit in the false gospel of the Web is the faith that free is
superior. And those who dare think otherwise are heretics and
fools.
Charging for online news, they say, is unfair. By asking us to pay,
newspapers are depriving readers of something they need and
should have. Deserve, even.
But neither the newsstand nor the Web is a lending library. Even
Google has conceded it cant just reprint every book without due
11
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
12/22
consideration to publishers and copyright owners. Why should
journalism be different?
The book business hasnt surrendered its copyrights. The music
business may have struggled for a time with the issue, but it
hasnt surrendered either. Neither has television or movies. Why
should we?
Lets face facts. A business model that assumes we cant charge
for the content we produce assumes that our content has no
value in the online market. In pure economic terms, such a
business model has to mean one of two things: Either there is no
demand for the content or there are substitute supplies of that
content sufficient to drive the price almost to zero.
I dont believe it. And I doubt you do either.
It seems rather nave then stupid, even - that so many
newspapers would be so self-deprecating. That is the logical
12
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
13/22
conclusion, after all, if we place zero value on the content the
news which is our product.
Newspapers, particularly in the United States, have historically
undersold themselves to their readers. Much as the blogosphere
advocates today, newspapers in the 20th Century sacrificed
circulation revenue for circulation volume in a quest for higher-
margin advertising revenue.
Cant say it didnt work for a time. But look where its left us
At the Journal, we put elements of our publication outside the
paid wall as a way to attract traffic and potential subscribers. The
compelling proposition, however, is that the content that
differentiates the Journal isnt free. You want the Journals global
scope, you want news, you want analysis and commentary print
or online you pay.
13
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
14/22
The Journal has more than 2 million paying subscribers and
among them, more than a million who pay to take the newspaper
digitally.
Why is it that paying for content in 2009 strikes some as such an
outrageous proposition?
Many of us here today are old enough to remember when
television was free. Well, it isnt any more.
Just check your cable and satellite bills.
Even radio omnipresent and forever free, right? In the U.S.,
nearly 20 million subscribers pay for radio from Sirius, the satellite
radio operation. HBO built a name and a business entirely by
persuading people to pay extra for content on television. SKY,
Star millions of consumers are willing to pay for content they
want and value.
There are other examples from the Journal. The Journal now
charges for news via online devices like I-Phone and Blackberry
14
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
15/22
and the emerging e-readers like Amazons Kindle. Already we can
see that these new platforms will deliver millions in revenue.
For Dow Jones charging for content is a vertical proposition that
assimilates the disparate needs of disparate audiences.
Our news has several lives and several levels of value. A
companys earnings report is instantaneously rendered as news
by Dow Jones Newswires.
In a fraction of a blink of an eye, its first iteration is transmitted as
algorithmic code to be recognized by Wall Street computers
programmed to interpret and perhaps act.
That same headline goes at the same time to trading desks for
subtler analysis. For this content, the price is handsome.
Next, the news is on The Wall Street Journal Web site. A reader
pays up to $149 a year for that. Or maybe he will take it instead
via I-Phone or Blackberry; that costs $100 a year. A reader using
an e-reader pays $180 a year for the news. And in tomorrows
15
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
16/22
print edition, the price the value, if you will is $350 a year. In
archival form in Factiva, more value will be delivered for years to
come.
At the same time as we navigate our way into the digital future,
everyone here knows that the newspaper business must
rationalize the lingering inefficiencies which inhibit our industry.
Chief among those is the excess printing capacity which weighs
us down. Behind the journalism, newspapers are of course huge
manufacturing and distribution operations. So many of our plants
sit idle much of the day or worse, much of the night. The ROI on
idle, the return on our investment, costs too much.
The Journal is reducing its cost base significantly by tapping that
excess capacity. Contracting with printers in locations around the
U.S., we not only reduce the cost of production, we cut the cost of
transportation.
16
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
17/22
Our production team also is on the other side of the
rationalization equation. Our own excess capacity was put to work
to print another newspaper. In this case, someone elses
efficiency is our revenue.
Not so long ago in America at least this kind of co-
dependence was unheard of. Newspaper companies were self-
contained, relying entirely on their own staff and their own
facilities.
Today newspapers are sharing delivery trucks. Outsourcing
customer service operations. Consolidating regional news
functions. These trends will accelerate and they should.
Watch for the Internet to be yet another inflection point in this
regard. There is no reason why newspapers should build unique
content- and payment-management systems on the Web.
17
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
18/22
Might as well build more printing plants
The lesson we should take from the Internet revolution isnt that
free is final. Its not that trust and authority are unwelcome.
The lesson is that new efficiencies are possible. It is possible to
re-conceive our business in a less costly context. It is possible to
sell differentiated content to familiar audiences and extended
ones.
What makes sense for newspapers is to consolidate Web
commerce functions. As a pioneer in online news payments,
Dow Jones already has such a platform. When we rebuilt it
recently, we added the capability to allow other newspapers to
share our expertise.
Unique content wins unique users; unique facilities dont.
I dont know when newspapers will no longer be characterized by
the paper on which they are printed. I do know most of us in this
room charge for content on paper and still collect a tidy sum in the
18
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
19/22
process. Most of us still collect enough to continue to produce
quality news and still produce a profit.
Eric Schmidt, Google chief executive, said recently about the
debate on free versus paid:
As long as youre on the side of the consumer, youre pretty much
on the right side of all these debates.
No doubt he is right. The consumer will determine the business.
Consumers will seek the valuable over the vapid because they
always do.
They subscribe to HBO and SKY when broadcast television and,
indeed, YouTube, is free. They will continue subscribing to
newspapers if the newspapers provide the value they seek.
19
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
20/22
Barney Kilgore, the inestimable former editor of the Journal and
CEO of Dow Jones, said something we ought to remember in
this time of transition.
The man who would create the first national newspaper in the
U.S. and redefine journalism in the process said a long time
ago:
The fish market wraps fish in paper. We wrap news in paper. The
content is what counts, not the wrapper.
We can only wonder how things might have been different today
had other newspapers done as the Journal did in 1996 and set a
fair price for content online. We can only wonder what we would
be talking about here today had newspapers recognized the
import a decade ago of the bursting of the Internet bubble.
20
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
21/22
There isnt enough advertising to support every online aspiration.
Now we must regret the stories not covered because we didnt
demand what we truly were due.
And yet this remains an age of great promise for what we do.
Only a few hours ago in Washington DC, Rupert Murdoch, the
chief executive of News Corporation and my boss, told the U.S.
Federal Trade Commission:
We now have the means to reach billions of people who until
now have had no honest or independent sources of the
information they need to rise in society, hold their governments
accountable, and pursue their needs and dreams.
The future of journalism belongs to the bold, and the
companies that prosper will be those that find new and better
ways to meet the needs of their viewers, listeners, and readers.
And they should fail, just as a restaurant that offers meals no one
21
-
8/14/2019 Speech from Les Hinton, Dow Jones CEO, to World Association of Newspapers conference
22/22
wants to eat or a car-maker who makes cars no one wants to buy
should fail.
And he went on:
In the future good journalism will depend on the ability of a news
organization to attract customers by providing news and
information they are willing to pay for.
Free costs too much. Good content is valuable. That hasnt
changed. It never will. The question is who will provide the
content and who will be compensated fairly for the value
delivered.
Thank you.
22