John Paton on paywalls, strategy, Patch, outsourcing and keeping local journalism vibrant

Mr. Singleton’s remarks (excerpted): 

“In order to get the person we wanted and in order to create a new way of doing business in our business we kind of took it to a new level.”  Singleton says the non-merger, naming Paton CEO of MediaNews Group Inc. at the same time he is also CEO of Journal Register: “It’s a little creative, it’s not been done before.”  He said he’s know Paton for 23 years and “he is a kindred spirit in a lot of ways . . .  he understands and respects what we do for a living.”

“The business model needs a lot of work, the newspaper model is changing and in order for us to even have a future, we have to dramatically change that model and yet we cannot forget why we do what we do . . . .[but]  even though the platforms are changing, the mission hasn’t changed.”

“John Paton understands it because he is a newspaper man first, he was a reporter, and editor,  a publisher, a corporate executive and has a very enviable record that is innovative in this industry . . . I am very  happy to turn over the CEO job to John because he is a newsman, he is a friend and I respect him a whole lot.”

(extended applause)

Mr. Paton’s remarks (excerpted): 

“The business models are going to constantly change, the mission is never going to change. Never gonna change. If you believe in democracy, than you need a strong news media. If believe in the First Amendment, then you need the Fourth Estate. And what we’re gonna’ be doing here and what we’ve been doing at JRC, is make that stronger. Becuase at the end of the day having poor products in your markets, no matter how good your business model is, is just a recipee for disaster.”

Responding to naysayers about his efforts at JRC:

“Newspapes aren’t supposed to be able to change — heard that one? Print dollars are bcoming digital dimes and digital dimes cannot replace print dollars. Heard that line? Digital dimes can never pay for the newsrooms to produce the high quality content that we want to produce so that we can have a strong news media in this country. That’s another one. Well, the digital first strategy we’re starting to show that people do want what we have. there are some lessons we’ve learned at JRC.”

At JRC, have grown audience by 100% year to year and that shows, says Paton: “People do want what we have.”  He says if they stay on track, 18 dailies will have more digital revenues and the expenses of their newsrooms.  He says he’s excited about coming together with the MediaNews team.  The TapIn app [developed for MNG’s Bay Area News Group]  that you have is outrageously good. The Denver Post site is outrageously good. There is so much we can learn from you.”

JRC-MNG under common management is 11,000 people with common cause and goal “to produce high quality news for the benefit of the communities we serve, and to bring the crowd in.”

A role bringing communities together

“A lot of communities across America are hurting today and you know that. We play an important role in how those communities come together to discuss what they need to discuss in those communities to figure out what their future is going to be and I want to make sure that if collectively we have any legacy at all it’s that that we made sure that debate, those concerns continued to be debated through the products that we produced for those communities.”

‘Patch ain’t going to work’;
a company for good, change

In days, weeks months ahead I look forward to getting to know all of you. The Digital First umbrella serves 57 million Americans served, 41 million of them online. “If you don’t mind me bragging a little bit — AOL here we come. Because Patch ain’t going to work.”  The JRC-MNG umbrella management group makes it one of the two two or three news companies.

“And that will be a formidable company for change, a formidable company for good, as we produce for those communities the information they need.”

NOW PATON TAKES QUESTIONS FROM THE AUDIENCE. THE QUESTIONS ARE PARAPHRASED AND PATON’S ANSWERS ARE DIRECT QUOTED WHEN IN QUOTATION MARKS:

Q: What would be Digital First impact be on Denver Post?

Paton: Too early to tell effect on one paper.

In discussing their Michigan papers, he quips: “Michigan is a game preserve for corruption.”

Q: More like Reddit or Gator?

Paton:  His technical vision — in 18 dailies they have community media labs particularly for bloggers. They pre-select people through a process. Important to understand what you want — “Collectively the people in Denver know more about what is going on in Denver than the folks at the Post every would.”   But folks at the Post have context.  He says their community media labs, as in Torrington, Conn., are “an important first step to connecting with the community.”

Be the water cooler again

Paton want’s papers to “become again what we have stopped being, in many cases, the place that the water cooler plays where people talk about what’s happening in a community. I want to make a virtual version of that.”

He says he isn’t focused on particular business models or technology. He just wants to focus on “how do we get better products, how do we become better newspapers, and people can then go out and sell that.”

On the question of what stays local and what should be consolidated: “I think strategy should be corporate.”  He says the two companies have perhaps 900 different products in the digital environment at various locations. “I can’t imagine 900 digital strategies that are going to work.”

About charging for content (‘paywalls’)

Q: What do you think about paywalls?

Paton: “OK, here we go. I have not been their biggest fan. I think certain content should be paid for. I think there is going to a bigger upside in looking at content, paying for content that is content you have to create for that such as a tabloid app or an iphone app etc.,  a Droid app. I do think it is worth experimenting with  to see where we go with it because we are looking at revenue streams.”

“But I do think you have to very, very, in a greatly disciplined way you have to understand what it is you are trying to prove. So what is your reason for putting in a paywall at any one of your sites?  What is it you want to find out? I would know that before doing that,  I assume that you do. This is my first morning here at MediaNews. And then you are going to benchmark that against the input that you get.”

“And you’re going to have to decide how many get to slide under the  wall there for free before they have to pay. It’s 20 visits right for the New York Times but if you have three devices like I do that is 60 visits and that just about takes care of it. Or do you set the bar so low that you do hurt on traffic? And there are new things to count in our business now that really mean money, — traffic being one of them, you need visitors . Engagement by those visitors is another.”

Focused first on big bucket – advertising

“I’ve called the anti-paywall guy because really I’m the prioritization guy. There’s this big bucket called advertising and there’s this smaller bucket, but significant, called subscription. I wanted to focus on the big bucket. We were running out of time, on the big bucket, with a company that became bankrupt and we had to move fast. Now I think we need to now experiment with other revenue streams and that is going to include paywalls, clearly started here. But I think I would be a hard person to, I will be a hard taskmaster on trying to figure out what is it we are trying to prove here. And is it of value to us? Because I do believe that going forward, information is going to travel to people rather than the other way around. As it does now. You go and get that paper.”

“Now information comes to you from links and all other sorts of places. How you sort of bag and tag that information with advertising and the way you try to make money with the information you put with it are going to be much more important than an end location.”

Q: I’m encouraged digital revenues are rising, but what has happened to costs?

Paton: “Well, two thirds of all newspaer companies generally have infrastructure costs that are not either editorial, marketing, sales, research and a bit of admin. They are in all those things that are expensive to do. Producing them. From producing ads all the way to putting papers on a press and then delivering them. We have made an internal goal at JRC, which we’ve announced, its on the blog, we’re trying and get about half of those two-thirds infrastructure costs down while putting more resources into the field both for editorial and sales. And its, you know, it’s not easy doing this.”

Changes don’t run like Swiss watch

“Sometimes when you talk about Digital First or you read the blog it sounds like a Swiss watch, right? Everything’s working and we’re all going to be singing kumbaya by the end of the month. Well it doesn’t work like that. It is bloody getting this done, but it is completely necessary. I have run online-only companies, they are nimble, they are fast, they put products into the field fast, they fail fast. And they have a cost structure that is much more nimble than a current newspaper structure. So part of Digital Fist is figuring out those costs.”

“So we have gone down dramatically in cost but very little in the editorial costs and in some areas we’ve actually cut back a little bit on editorial and in others we are invested and we are net ahead and same in sales.”

Q: Do you have a corporate technology and development team?

Paton says over  the next 30 days is bringing leaders in both companies and functional areas together to  exchange good ideas, figure out what would be best to pursue; create a strategic plan for Dean and the board’s approval.

Q: What about national/international news?

 Paton:  “If anything’s been commoditized its national, international news. Local news hasn’t been commoditized at all. Right now the world is going mobile and social and all of that is going toward that Holy Grail of local news. Ask the guys at AOL, who just dropped $160 million or $40 million a quarter, trying to chase local news.” 

Consolidate national/international

“National news and international news I think can be consolidated if you’re running large companies like this where you can put the very best people in place to chase stories of national and international importance or originate, curate or aggregate so that you can do that over multiple properties where you can’t do that locally.”

“So part of the, I have no idea by the way who names these things at our place, but Project ThunderDome . . . that we’re working on right now at JRC, and hope to get the benefit of your knowledge and some of the things that you have done in some of your clusters, which is very similar, is to figure out how to increase the quality of national/international news across all of our properties on all platforms by making the very best deals in that marketplace — I don’t know if it is Politico or The Washington Post Co., etc., and then in many ways centralizing the heavy production part of editorial, which is very, very expensive, and then taking the people who create news locally, and add to that so there’s more feet on the street. That is what Project ThunderDome is trying to do. And you’re trying to do that in some of your own clusters as well. Is there a way for us to come together to get that done faster and better? That would be a big win for the companies.”

Q: What about outsourcing?

Paton: “We’ll, we’ve been outsourcing a number of jobs, in production mainly, at JRC. We have done to outsourcing both to companies in the United States and companies overseas and they tend to be in labor-intensive work such as ad-building etc. that sort of thing. We have been very open about this, it is part of that two-thirds cost structure that make it very difficult for newspaper companies to change. The other thing about stacking digital dimes which we’ve begun to prove you can do, it does mean a lot more ads, the volume of ads goes through the roof because a thousand dollar does become a two-hundred dollar ad or hundred-dollar ad and you’re selling 10 of them to make up what you lost when you lost the print ad and you’ve got to make those ads.”

Eighty-three percent of ads are made up

“I was saying this morning at JRC we have in any given 30-day period we have about 56,000 active local advertisers — mean they are buying something month — and 83 percent of them demand that we make their ad. That number is just going to get higher and higher and higher. The percent may stay the same but the number of ads is gonna’ to go through the roof, it already is. And so we have to find a cost-effective way to do or the bottlenecks will become huge.”

Q: What about his quoted statement of putting digital experts in charge?

Paton: “It’s about putting digital knowledge in charge. But the digital knowledge is a bit like the technology issue that Dean was referencing. It has to go with the knowledge of what you’re putting the person in charge of. So for example, the editor-in-chief at Journal Register Co. is Jim Brady, who we announced last month. Jim started at the Washington Post in the newsroom, he worked is way up through that newsroom, he was a VP of content at AOL for awhile, he was then executive editor of WashingtonPost online. He understands about news, but most particularly he has a high digital skill set. So that’s what I mean about putting the digital people in charge. Having a high, high knowledge of digital skill sets. But you have to have a big base knowledge of the area you are in charge of. The person who runs our VP of local sales, Adam Burnham, is a very successful sales person and has become very successful in a high level of knowledge, about how digital sales works. But his base knowledge is sales and how they work with our particular products in the marketplace.”  [Burnham is VP, local sales, for JRC]

Paywalls might work in niches

Q: What about niche publishing?

Paton: “It seems to me that niche publications are about to explode. The idea that you can, I mean the web is built for this. I decided that what I like are a particular kind of cowboy boots. I can pull together a site that does this. I can tag it so that it shows up in all forms of SEO results, I can market it through SEM and pretty soon I can have a viable audience for a very, very specific subject and then sell advertising around that. Niche publications before had a high barrier to entry: How did you get that information out over a wide area to a small but very interested group and of course they are willing to pay more for that information than almost anywhere else. If paywalls work anywhere really well, I think it will be there.”

Paton advises in answer to a question that he on the road a lot,  managing a great deal with his mobile devices, but that his base office will continue to be JRC’s office at Madison Avenue and 57th St. in New York City. JRC also has administrative headquarters in suburban Philadelphia. 

A future – but very different – for print

Q: How long will this transition take to digital?

Paton: “I think there’s a future for print. That print is going to be very, very different in the future. I’m just going to focus on news for a second. If it is digital first, and print comes last in that cycle of products that you create from SMS alerts to putting things on the web to enhancing them on the web through video and audio and then using social media to get more people to look at this, alerting people to what you have through social media, finalizing that product all day, enhancing it all day and then the last thing that you do is you put that print product out. What should that print product be? Back to the question asked about the Denver Post. What should the print product be going forward? I think it’s going to change dramatically.”

Slow news vs. fast news?

There’s lots of discussion about longer form journalism in print vs. the sort of quick bites you get — sort of slow food vs. fast food when it comes to news products. I think print has a viable future in all of our companies but it is a different kind of future than its had in the past. I think that clearly if we’re successful, within a five-year period, digital revenue in these companies could be the dominant revenues, certainly on track at JRC right now to be that, but even if it is 30% to 40% that’s a significant number. And by the I’m trying to talk about growth as opposed to that percentage through a rapidly shrinking print component, which is what’s happening in the case right now in lots of places in the industry.”

Customer vote on print: They’re going

“Print [sic.– he meant digital] is going to be the dominant medium. More Americans get more of their news and information via the web than they do from a newspaper. Where that information starts is a whole other argument for sure — it starts with us. But how they get it, they get it there. And as of last year there’s more web display advertising in America online than there is run-of-paper, run of press, ROP display advertising in newspapers. So the customers have voted — they’re going. More of them are that way, than this. Now we’re starting with a head start. We have a huge network of 41 million uniques.  MediaNews Group has more digital customers for its products, than it does print customers, as does JRC. So we’ve got he customers, and they are going rapidly. We’ve now got to put the products in place to make sure we keep them and grow that number. And we have to put the sales products against those products.

Q: What should we read to get insight into your vision?

Paton: “Because I believe that CEOs shoudl be transparent and they should be available to the people they work with, I blog at http://jxpaton.wordpress.com . Digital First blogging. Google it and you’ll find it there. There’s a whole bunch of entries and a whole bunch of comments from employees who are agreeing or not agreeing. And its an open dialog that I have with them. Sometimes I do well, sometimes I lick my wounds and go to sleep early. I would suggest if you want to know what we have been doing  at least, and what I think about that I would read oldest post to newest post. And that might be helpful. I do have I think perhaps, a December posting, and I spoke at Harvard, is probably the one that crystallizes what I think about this.”

“As for reading, I think “The Innovators Dilemma” is a great book to read in this area. I would heartily recommend [Jeff] Jarvis’ “What Would Google Do?” book to read. And I would heartily recommend the Pressthink blog by Dr. Jay Rosen. All cards are on the table. Both of those guys are on the advisory board of JRC. That’s why they’re there. Because I think they’re smart, and it turns out they are. And I would ask you and urge you participate.”

Not a net native; father worked on presses

“I am 54. I am not naturally a net native. It does not come naturally to me. My father worked on presses and I started as a copy boy in a newsroom. it is not a natural thing to must migrate over to the web. You have to play with it. It’s hard to discuss social media in a business setting if you don’t use it. You don’t have to use it a lot but you do have to use it, you do have to figure out what other people are doing. And if you don’t use it, then how do you participate in important meetings at MediaNews about where you’re going with your company? When so many people. If you don’t use a smart phone or don’t participate through a tablet or some version of that, how do you keep up, it’s pretty hard to keep up. So I would urge you that would be the primary thing I would do — to participate.” 

JRC-MNG relationship not exact yet

Q: Could you go a little bit more into what the relationship is going to be between JRC and MediaNews Group will be even on a more day to day basis?

Paton: “Right now we don’t know exactly how that is going to be. What I’ve been tasked with by the MediaNews board right now is to pull the groups together, start exchanging ideas, create a strategy, a new strategy for the company that is largely based on the digital-first strategy we have been pursuing, hence the name of that company, Digital First Media Inc. And to then come back to the board to talk about how we might do that, get their blessing. And I presume what will happen after that is that we will start putting groups together, virtually of course, you know, its expensive to fly from Denver to New York, and putting people together virtually to create networks of people to find solutions to various projects that we have on the go.”

“You know I mentioned the TapIn, I didn’t mention a whole bunch of things, but the Tap-In thing strikes me as, why JRC would we possibly want to go and try and refigure that out when you guys have done such a great job with that? And we’re about to redesign a whole bunch of newspapers and you have some spectacular newspapers that were designed by people on staff so I can see a bill being saved in that regard.”

(break in continuity) 

“I am available, it may take some time to get back to you. But email jpaton@digitalfirstmedia.com —  it will find me. I’ve got about 100 sometimes much more, from staff and it does take me awhile to get back. But if you ask the questions, if you don’t want to ask them now you want to ask them one-on-one I promise you I will answer.”

“I care about journalism”

“And I’ll also give you this undertaking, that I’m not kidding when I say I care about this, journalism I mean. Outside of my family it is what I care about the most. And I want to make sure that I give you all the time and all that dedication and all the effort that I can and I can pledge the same from the JRC side as well, to come together to make the necessary transformation so that these titles, that are so storied, that go so back, and are so interwoven with U.S. history, that we can make sure that they go forward in a vibrant way to serve their communities and their employees. So thank you.”

(Applause — END OF EVENT)

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One Response to John Paton on paywalls, strategy, Patch, outsourcing and keeping local journalism vibrant

  1. Pingback: AUDIO (mp3 format): JRC’s John Paton at MediaNews Denver | Densmore Associates

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