'The challenges of the online world' Rupert Murdoch's speech to the American Society of Newspaper Editors in Washington DC on April 13, 2005
Rupert Murdoch http://www.thehoot.org/story.asp?storyid=Web202159222200Hoot110548%20AM1591&pn=1 When a newspaper proprietor faces this many editors in one room, usually it means only one thing: a demand for a pay increase. But as I stand before this esteemed group of editors today, I'm reminded of something Mark Twain once wrote to a friend: How often we recall, with regret, that Napoleon once shot at a magazine editor and missed him and killed a publisher... But we remember with charity that his intentions were good. Ladies and gentlemen, I come before you today with the best of intentions. My subject is one near and dear to all of us: the role of newspapers in this digital age. Scarcely a day goes by without some claim that new technologies are fast writing newsprint's obituary. Yet, as an industry, many of us have been remarkably, unaccountably complacent. Certainly, I didn't do as much as I should have after all the excitement of the late 1990's. I suspect many of you in this room did the same, quietly hoping that this thing called the digital revolution would just limp along. Well it hasn't … it won't …. and it's a fast developing reality we should grasp as a huge opportunity to improve our journalism and expand our reach. I come to this discussion not as an expert with all the answers, but as someone searching for answers to an emerging medium that is not my native language. Like many of you in this room, I'm a digital immigrant. I wasn't weaned on the web, nor coddled on a computer. Instead, I grew up in a highly centralized world where news and information were tightly controlled by a few editors, who deemed to tell us what we could and should know. My two young daughters, on the other hand, will be digital natives. They'll never know a world without ubiquitous broadband internet access. The peculiar challenge then, is for us digital immigrants - many of whom are in positions to determine how news is assembled and disseminated - to apply a digital mindset to a set of challenges that we unfortunately have limited to no first-hand experience dealing with. We need to realize that the next generation of people accessing news and information, whether from newspapers or any other source, have a different set of expectations about the kind of news they will get, including when and how they will get it, where they will get it from, and who they will get it from. Anyone who doubts this should read a recent report by the Carnegie Corporation about young people's changing habits of news consumption and what they mean for the future of the news industry. (Margo: The report, called Abandoning the news, is here.) According to this report, and I quote: There's a dramatic revolution taking place in the news business today, and it isn't about TV anchor changes, scandals at storied newspapers or embedded reporters. The future course of news, says the study's author, Merrill Brown, is being altered by technology-savvy young people no longer wedded to traditional news outlets or even accessing news in traditional ways. Instead, as the study illustrates, consumers between the ages of 18-34 are increasingly using the web as their medium of choice for news consumption. While local TV news remains the most accessed source of news, the Internet, and more specifically, Internet portals, are quickly becoming the favored destination for news among young consumers. 44 percent of the study's respondents said they use a portal at least once a day for news, as compared to just 19 percent who use a printed newspaper on a daily basis. More ominously, looking out three years, the study found that 44 percent expected to use the internet more to learn about the news, versus only 25 percent who expected to use traditional newspapers more. And their attitudes towards newspapers are especially alarming. Only 9 percent describe us as trustworthy, a scant 8 percent find us useful, and only 4 percent of respondents think we're entertaining. Among major news sources, our beloved newspaper is the least likely to be the preferred choice for local, national or international news going forward. What is happening is, in short, a revolution in the way young people are accessing news. They don't want to rely on the morning paper for their up-to-date information. They don't want to rely on a God-like figure from above to tell them what's important. And to carry the religion analogy a bit further, they certainly don't want news presented as gospel. Instead, they want their news on demand, when it works for them. They want control over their media, instead of being controlled by it. They want to question, to probe, to offer a different angle. Think about how blogs and message boards revealed that Kryptonite bicycle locks were vulnerable to a Bic pen. Or the Swiftboat incident. Or the swift departure of Dan Rather from CBS. One commentator, Jeff Jarvis, puts it this way: give the people control of media, they will use it. Don't give people control of media, and you will lose them. In the face of this revolution, however, we've been slow to react. We've sat by and watched while our newspapers have gradually lost circulation. We all know of great and expensive exceptions to this - but the technology is now moving much faster than in the past. Where four out of every five Americans in 1964 read a paper every day, today, only half do. Among just younger readers, the numbers are even worse, as I've just shown. One writer, Philip Meyer, has even suggested in his book The Vanishing Newspaper that looking at today's declining newspaper readership - and continuing that line - the last reader recycles the last printed paper in 2040. April, 2040, to be exact. There are a number of reasons for our inertia in the face of this advance. First, newspapers as a medium for centuries enjoyed a virtual information monopoly - roughly from the birth of the printing press to the rise of radio. We never had a reason to second-guess what we were doing. Second, even after the advent of television, a slow but steady decline in readership was masked by population growth that kept circulations reasonably intact. Third, even after absolute circulations started to decline in the 1990s, profitability did not. But those days are gone. The trends are against us. Fast search engines, and targeted advertising as well as editorial, all increase the electronic attractions by a factor of 3 or 4. And at least four billion dollars a year is going into R+D to accelerate the process. So unless we awaken to these changes, which are quite different to those of 5 or 6 years ago, we will, as an industry, be relegated to the status of also-rans. Properly done, they are an opportunity to actually improve our journalism and expand our reach. For those who are confronting this new reality, we tend to focus on the technological challenges, which is understandable, since those are the ones we believe - or hope - that we can do something about. Thinking back to the challenge that television posed to the newspaper business, we can see some similarities. A new technology comes along, and like many new things, it is somewhat exciting at first, simply by virtue of being new. Like the advent of radio before it, television was always going to be at best an alternative way to get the news, and at worst a direct competitor. There was no way to make it a part, or even a partner, of the paper. That is manifestly not true of the Internet. And all of our papers are living proof. I venture to say that not one newspaper represented in this room lacks a website. Yet how many of us can honestly say that we are taking maximum advantage of those websites to serve our readers, to strengthen our businesses, or to meet head-on what readers increasingly say is important to them in receiving their news? Despite this, I'm still confident of our future, both in print and via electronic delivery platforms. The data may show that young people aren't reading newspapers as much as their predecessors, but it doesn't show they don't want news. In fact, they want a lot of news, just faster news of a different kind and delivered in a different way. And we in this room - newspaper editors and journalists - are uniquely positioned to deliver that news. We have the experience, the brands, the resources, and the know-how to get it done. We have unique content to differentiate ourselves in a world where news is becoming increasingly commoditized. And most importantly, we have a great new partner to help us reach this new consumer - the Internet. The challenge, however, is to deliver that news in ways consumers want to receive it. Before we can apply our competitive advantages, we have to free our minds of our prejudices and predispositions, and start thinking like our newest consumers. In short, we have to answer this fundamental question: What do we - a bunch of digital immigrants - need to do to be relevant to the digital natives? Probably, just watch our teenage kids. What do they want to know, and where will they go to get it? They want news on demand, continuously updated. They want a point of view about not just what happened, but why it happened. They want news that speaks to them personally, that affects their lives. They don't just want to know how events in the Mideast will affect the presidential election; they want to know what it will mean at the gas-pump. They don't just want to know about terrorism, but what it means about the safety of their subway line, or whether they'll be sent to Iraq. And they want the option to go out and get more information, or to seek a contrary point of view. And finally, they want to be able to use the information in a larger community - to talk about, to debate, to question, and even to meet the people who think about the world in similar or different ways. Our print versions can obviously satisfy many of these needs, and we at News Corporation will continue to invest in our printed papers so they remain an important part of our reader's daily lives. But our internet versions can do even more, especially in providing virtual communities for our readers to be linked to other sources of information, other opinions, other like-minded people. And to do that, we must challenge - and reformulate - the conventions that so far have driven our online efforts. At News Corporation, we have a history of challenging media orthodoxies. Nearly twenty years ago, we created a fourth broadcast network. What was behind that creation was a fundamental questioning of the way people got their nightly entertainment to that point. We weren't constrained by the news at six, primetime at eight, news again at 11 paradigm. We weren't constrained by the belief that entertainment had to be geared to a particular audience, or reflect a certain mind-site. Instead, we shortened the primetime block to two hours, pushed up the news by an hour, and programmed the network to a younger-skewing audience. The result was the Fox Broadcast Network, today America's number one network among 18-49 year-olds. Similarly, we sensed ten years ago that people watching television news felt alienated by the monolithic presentation of the news they were getting from the nightly news broadcasts or cable networks. We sensed that there was another way we could deliver that news - objectively, fairly, and faster-paced. And the result was the Fox News Channel, today America's number one cable news network. And most recently, at the The Times of London, circulation decline was immediately reversed when we moved from a broadsheet to what we call our "compact" edition. For nearly a year, we offered readers both versions: same newspaper, same stories, just different sizes. And they overwhelmingly chose the compact version as more convenient. This is an example of us listening to what our readers want, and then upsetting a centuries old tradition to give them exactly what they were asking for. And we did it all without compromising the quality of our product. In this spirit, we're now turning to the Internet. Today, the newspaper is just a paper. Tomorrow, it can be a destination. Today, to the extent anyone is a destination, it's the internet portals: the Yahoos, Googles, and MSNs. I just saw a report that showed Google News's traffic increased 90 percent over the past year while the New York Times' excellent website traffic decreased 23 percent. The challenge for us - for each of us in this room - is to create an internet presence that is compelling enough for users to make us their home page. Just as people traditionally started their day with coffee and the newspaper, in the future, our hope should be that for those who start their day online, it will be with coffee and our website. To do this, though, we have to refashion what our web presence is. It can't just be what it too often is today: a bland repurposing of our print content. Instead, it will need to offer compelling and relevant content. Deep, deep local news. Relevant national and international news. Commentary and Debate. Gossip and humor. Some newspapers will invest sufficient resources to continuously update the news, because digital natives don't just check the news in the morning - they check it throughout the day. If my child played a little league baseball game in the morning, it would be great to be able to access the paper's website in the afternoon to get a summary of her game, maybe even accompanied by video highlights. But our internet site will have to do still more to be competitive. For some, it may have to become the place for conversation. The digital native doesn't send a letter to the editor anymore. She goes online, and starts a blog. We need to be the destination for those bloggers. We need to encourage readers to think of the web as the place to go to engage our reporters and editors in more extended discussions about the way a particular story was reported or researched or presented. At the same time, we may want to experiment with the concept of using bloggers to supplement our daily coverage of news on the net. There are of course inherent risks in this strategy - chief among them maintaining our standards for accuracy and reliability. Plainly, we can't vouch for the quality of people who aren't regularly employed by us - and bloggers could only add to the work done by our reporters, not replace them. But they may still serve a valuable purpose; broadening our coverage of the news; giving us new and fresh perspectives to issues; deepening our relationship to the communities we serve. So long as our readers understand the distinction between bloggers and our journalists. To carry this one step further, some digital natives do even more than blog with text - they are blogging with audio, specifically through the rise of podcasting - and to remain fully competitive, some may want to consider providing a place for that as well. And with the growing proliferation of broadband, the emphasis online is shifting from text only to text with video. The future is soon upon us in this regard. Google and Yahoo already are testing video search while other established cable brands, including Fox News, are accompanying their text news stories with video clips. What this means for us as newspapers is the opportunity to partner with credible video programmers to provide an infinitely better product. More access to news; more visually entertaining news and advertising product; deeper and more penetrating coverage. At News Corporation, where we're both a video programmer as well as a newspaper publisher, the rewards of getting this right are enormous. We've spent billions of dollars developing unique sports, news and general entertainment programming. We have a library as rich as anyone in this world. Our job now is to bring this content profitably into the broadband world - to marry our video to our publishing assets, and to garner our fair share - hopefully more than our fair share - of the advertising dollars that will come from successfully converging these media. Someone whom I respect a great deal, Bill Gates, said recently that the Internet would attract $30 billion in advertising revenue annually within the next five years. To give you some perspective, this would equal the entire advertising revenue currently generated each year by the newspaper industry as a whole. So of course, all of this could not be new money. Whether Bill's math is right is almost beside the point. What is indisputable is the fact that more and more advertising dollars are going on-line, and we must be in a position to capture our fair share. The threat of losing print advertising dollars to online media is very real. In fact, it's already happening, particularly in classifieds. No one in this room is oblivious to it. television and radio are in the same spot. In the same way we need to be relevant to our readers, the internet provides the opportunity for us to be more relevant to our advertisers. Plainly, the Internet allows us to be more granular in our advertising, targeting potential consumers based on where they've surfed and what products they've bought. The ability to more precisely target customers using technology-powered forms of advertising - contextual-based targeting and behavioral targeting - represent a great opportunity for us to maintain and even grow market share and are clearly the future of advertising. While the technology still develops in this area, we today face the more immediate challenge of transforming our offline classified businesses into online marketplaces. And not just for the traditional cars, jobs and real estate categories. What we're learning is digital natives increasingly are finding their dates, their plumbers and their restaurants online. The growth of these verticals is resulting in real growth for on-line advertising. But let's not kid ourselves: with so much choice on the web today, both for readers and for advertisers, we have to do a better job creating original and compelling content in these product areas - using the inherent advantages we have as the eyes and ears of our respective communities - if we're going to drive traffic to our sites …. and ultimately real dollars. And the history of our industry shows that we can do this. Technology has traditionally been an asset to the newspaper business. It has in the past allowed us to improve our printing, helped us collect and transmit the news faster and cheaper - as well as reach people we never could reach before. So of all the trials that face newspapers in the 21st century, I fear technology - and our response to it - is by no means our only challenge. What I worry about much more is our ability to make the necessary cultural changes to meet the new demands. I said earlier, what is required is a complete transformation of the way we think about our product. Unfortunately, however, I believe too many of us editors and reporters are out of touch with our readers. Too often, the question we ask is "Do we have the story?" rather than "Does anyone want the story?" And the data support this unpleasant truth. Studies show we're in an odd position: We're more trusted by the people who aren't reading us. And when you ask journalists what they think about their readers, the picture grows darker. According to one recent study, the percentage of national journalists who have a great deal of confidence in the ability of the American public to make good decisions has declined by more than 20 points since 1999. Perhaps this reflects their personal politics and personal prejudices more than anything else, but it is disturbing. This is a polite way of saying that reporters and editors think their readers are stupid. In any business, such an attitude toward one's customers would not be healthy. But in the newspaper business, where we rely on people to come back to us each day, it will be disastrous if not addressed. As one study said: "Even if the economics of journalism work themselves out, how can journalists work on behalf of a public they are coming to see as less wise and less able?" I'd put it more dramatically: Newspapers whose employees look down on their readers can have no hope of ever succeeding as a business. By meeting the challenges I've raised, I'm confident we will not only improve our chances for success in the online world but, as importantly, improve our actual printed newspapers. Success in the online world will, I think, beget greater success in the printed medium. By streamlining our operations and becoming more nimble. By changing the way we write and edit stories. By listening more intently to our readers. I do not underestimate the tests before us. We may never become true digital natives, but we can and must begin to assimilate to their culture and way of thinking. It is a monumental, once-in-a-generation opportunity, but it is also an exciting one, because if we're successful, our industry has the potential to reshape itself, and to be healthier than ever before. Thank you very much. Commentary on this speech can be accessed from: http://webdiary.smh.com.au/archives/margo_kingston/000899.html ------------------------ Yahoo! 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