New York Times CEO Mark Thompson says there will still be a print paper in 10 years, but he's really into virtual reality
Business Insider IGNITION 2015Harvard Business Review editor-in-chief Adi Ignatius (L) interviews Mark Thompson, CEO of The New York Times, at Business Insider's 2015 IGNITION conference.
Mark Thompson became CEO of The New York Times in 2012 after serving multiple roles at the BBC for over 30 years. While there, he worked his way up to Director-General, a position with the responsibilities of chief executive and editor-in-chief. He launched many successful shows on the BBC and oversaw the UK's leading on-demand subscription service. Since moving to Times, Thompson has seen digital subscribers grow to over one million. At Business Insider's IGNITION 2015 conference, Harvard Business Review editor-in-chief Adi Ignatius talks with Thompson about the future of The Times and digital media and advertising.
Edited for length and clarity.
Adi Ignatius: So this session is called 'The Survivor.'
Mark Thompson: I saw that.
AI: Did you pick that name? It seems aspirational.
MT: It's certainly not my name.
AI: So let's just jump right into it. I would say for The Times - more than maybe any other publication - all the transitional experimental things you do, the whole world is watching. We're all watching very closely. The experimentation is interesting. It seems a little bit like you're throwing stuff against the wall to see what sticks. What is the strategy we're seeing play out?
MT: I'll give you two or three examples. We really want to innovate and be at the edge and be seen to be at the edge of innovation in storytelling. We think storytelling is deep in the blood supply of The New York Times. And that takes us directly to things like, a couple years ago, "Snow Fall," the idea of rich multimedia storytelling. It takes us this year to virtual reality. So the idea of how do you innovate specifically around journalistic storytelling is a thread behind many of the experiments.
Karyne Levy/Business InsiderThe Times' print subscribers received Google Cardboard to watch virtual reality films.A second example would be a perception that in the 1980s we, The New York Times, broadened from being a news and opinion offering to all sorts of culture and lifestyle offerings in new sections. And in the transition to digital that slightly got lost in the wash. And so we're trying to get back to that sense of a broader engagement with our users' lives.
A third example would be a sense that part of what makes the physical New York Times tick, and has always made it tick, is the sense of a must-have daily experience of a core of really engaged users who can't really function without it. So how do you create that kind of frequency of use and habituation in a smartphone context?
So I would say there are two or three strategic themes very much based on our sense of our brand and our relationship with our readers, our users. And we're experimenting about how you transition those themes. That plays out in all sorts of different ways. So cooking, we're now working on our 'Well' app and so on, these are ways of trying to express those themes. But they're all about adding value to users, trying to answer user issues and to deliver something which is worth paying for, even if some of it's free, that it all would be worth paying for.
AI: So on the topic of audience development, how has that changed the process in the newsroom?
MT: Well firstly, there was a question mark 15 months ago - when we started introducing techniques, and exposing our colleagues to audience data - about whether there would be complete cultural rejection of this or whether it would lead to kind of untoward editorial decisions and cat videos everywhere and all the rest of it. It just hasn't been like that. I think if Dean Baquet were sitting next to me, I think he'd say the same thing: it's been a really interesting and positive thing. Something the entire organization can get behind is the idea that every single person in the Times wants as many people as possible to get as much value and to get as engaged as possible with our journalism. That's the purpose of our audience engagement. We're not trying to simply get as many users as possible to drive clicks by anything. Everything we do we want to be congruent with our brand and what our journalism stands for.
AI: You talked about unique users. One of your competitors, the Washington Post, has made a lot of the fact that they claim they have more slightly more unique visitors per month than you do. What's your response to that?
MT: When you look at our model, we're focused. We want to be broad. It's fabulous that a newspaper, which once reached a million, two million people, essentially mainly in this city and the region, now reaches globally probably 90 million users overall a month. And we have a very big international audience as well as a domestic audience. We care most of all, however, about how many of those users we can deeply engage with our content. And crucially we don't want to do clickbait. We don't want to get to some artificial target of unique users by doing journalism or techniques which are against our brand. We want people to come to The Times for 'Timesian' journalism and 'Timesian' stories and we're very happy. We think we are successfully monetizing our audiences for news better than any other newspaper-based company in the world. We believe our digital subscription model is working brilliantly because everything that we do in the way of journalism is worth paying for. So we're very happy with our model. I'm not saying our model's right for everyone, but for us we think it's the right model.
AI: Someone backstage was saying that looking at uniques now is like two bald guys fighting over a comb. So what do you look at? Are uniques not important? Is that an irrelevant indicator?
MT: Uniques - they're the top of the funnel. They're people who are dropping in and I would say every single person first encountering Times journalism anywhere in the world. We are global. We have digital subscribers in Antarctica; this is a global enterprise. We should be doing our absolute best and it's a mixture of human judgment, editorial judgment, creativity; it's also data science. We should be doing the best we can to get that person to come in and read something else and try and develop them into a deep user. So the top of the funnel's important, but the most important thing of all is the shape of it. We don't believe in commodity news; at least that's not our model. Our model is to have deeply engaged, committed readers and then to figure out ways of monetizing.
AI: Harvard Business School, the way they teach the case on The New York Times, basically concluded that you were trying to sell people digital subscriptions but also print Sunday. That that would be the ideal subscriber. Is that right? Was that ever right?
MT: The way I think about it goes like this. We believe there's a market for high-quality journalism and that people will pay for it. We also believe the people who are prepared to spend the money, time, and attention it takes to absorb high-quality journalism are also of preferential value to advertisers. That's the core of our model. We're in a hybrid world: print and digital. Over time we expect digital to grow and grow and grow. It's a first-order issue for us to grow digital subscriptions and digital advertising together so that they more than offset the secular headwinds on the print side. Exactly how that plays out is complicated. Digital subscriptions are part of the story. Digital advertising and innovating in advertising and solving the issues of advertising in a smartphone are also an important part of what we're trying to do.
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MT: It's a very good business for us. We sell media. Advertisers pay us digital advertising rates for the prominence of the content but also because advertising agencies aren't really set up for long-form multimedia storytelling of the kind we do. We also have a significant and growing production business. There was zero revenue in 2013. In 2014, year one, $13 million in revenue. This year I think over $35 million of revenue. I expect it to do $50-$60 million of revenue next year. It's just a rapidly growing business. What works is high-quality content. And I think it's a fundamental wake-up call for advertising as a whole: The idea that you can force people in a digital environment to look at poor content or to force them through an adjacency to give their attention to something that doesn't really work for them, isn't relevant - that's on the way to being over. And you need to work with advertising partners. We do this across the board at The Times. So you've got really high-quality, engaging content. And it's straightforward, that's what's working in branded content are the pieces which are great, which are enjoyable, which are valuable, and which people talk about.
AI: Are you happy with the growth of digital ad revenue? You have big goals obviously.
MT: I am. We had a hiccup in Q3 this year, but we said on our last earnings call we expect to get back to growth in the current quarter. And I believe, again, here just like on the journalism side, part of the secret is innovation. And I think that there's a lot of very bad digital advertising and very bad advertising experiences out there. We want to differentiate our advertising by impact, by creativity, by quality.
AI: So you're a survivor in some ways because you've sort of matched the lost revenue....
MT: Yes, but I want to say on the digital side, I fancy our chances much better than many digital-only publishers. I think we have the advantages of brand, of breadth, of the caliber of journalism we've got, the brand recognition outside the US. I think, in a sense, pretty much all digital publishers now also are incumbents with many of the issues of incumbency, but without some of the virtues of the impact of a gigantic brand over time. And of a really large paying core audience.
AI: So obviously The New York Times has a mission as it plays an important role in society. Does that cut you a break as CEO in terms of the time you have, the runway you have, or the returns you need to make?
MT: No. The thing that cuts you the break to a degree is the very cash-generative print business. It's obviously subject to significant and irreversible headwinds, certainly on the advertising side and arguably over time on the subscription side. But it produces a lot of cash, and currently is an extremely profitable business. That gives you some time. But there's no future for great journalism for organizations like The Times unless we can also develop successful, digitally centered, and ultimately digital-only, business models. So it doesn't solve the fundamental challenge of itself. What we need to do to secure the quality of the journalism forever is to come up with a compelling business model, which itself fundamentally depends on engaging much, much larger audiences than was historically the case with the print model.
MT: The case you need to make with individual users is about the value of an experience, which goes beyond glancing blows with individual news stories. So you've seen us over the last year or so develop things like morning briefings. Start off the day not just with two or three headlines but with something which is designed to brief you on what's happened overnight, what's the news agenda of the day, here in New York, is the mass transit system working, weather, so a basic survival kit for the day, first thing in the morning. So we are moving to offering a value of bringing things together, of tailoring content to different need states, mood states, focusing very much on optimizing our own smartphone experiences, so that we make the case for being a destination. There won't be many journalistic destinations in the smartphone future. We believe we can be one.
AI: So I asked my son, who's 22, what question I should ask. And his question was "who reads the news?" And he's very well informed; it's just he doesn't subscribe to The New York Times on any level. How do you build that number of subscribers and develop those subscribers?
MT: In practical terms, this summer we launched a new offer specifically aimed at college students. It's a very simple, significantly discounted, a dollar a week for unlimited access to The New York Times. It's converting at an astonishing rate. We're very, very interested in reaching people your son's age and convincing them if they're going to subscribe to anything, that we can offer a service, which is not just good on news but opinion, on culture, movies, theater, art and so forth. And that we can add value. And we would give him a significant free trial period to get used to the experience. And we're finding at the moment a significant number of people of that exact age group are becoming Times subscribers. And we have of course many millions of millennials and younger in our monthly uniques already.
AI: So let's go back to virtual reality for a second, you mentioned it in passing. I guess there are some people who think that is a game changer, whether it's the version you guys have or however it evolves. And some think it's a fad. What's your view? Is this a fundamental game changer?
MT: The particular thing we've been trying to prove out is that virtual reality has a role in immersing viewers, users, in real-world news stories and other great experiences. And from day one we've had commercial partners - GE and Mini launched a virtual reality film on our app the day we launched. And Google supported us by helping us give 1.3 million Google Cardboards to our customers.
What I would say is: let's see where we go. It's been already an attractive, profitable exercise for us to be involved in. I think we've shown that we can more quite quickly. The entire exercise from first idea of doing something big to 1.3 million viewers going out was five months, six months. It's partly a proof of concept to the speed with which we can move. I think one of the things the Gray Lady needs to do is pull up her skirts and start running in some areas, and this would be an example of that.
We've launched a new VR film, "Take Flight." It's stunning. I think that we don't know what can be done with VR yet. I'm a TV guy, as you know, and I think it's creative and incredibly exciting. And it may turn out to be one of those things which lasts for a period of time and then has it's niche, video games and all the rest of it. I think it's interesting. I think it's creatively interesting. And I can tell you now that in the world of branded content there's immense interest in it.
AI: In 20 years is there still a print New York Times?
MT: Definitely in 10 years in my view. Our economics are such where we're profitable seven days a week and even on really quite tough scenarios about the decline of print, we're profitable every day of the week for many years to come. Definitely a decade. I think the key thing to say is I think the print product will evolve. I think one of the things we need to do over the next few years is work out what's the right way of thinking about your print platform in a smartphone world. Already 80% of our print subscribers are authenticated using digital. By 2020 everyone will be getting most of their news principally from smartphones. How does a physical platform fit into that? We're certain that people - hundreds of thousands, and more than one million on Sunday - will want such a thing in five years time. What should it be like? How does it fit into the story?