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March 20, 2009, 9 a.m.

Arthur Sulzberger & Walter Isaacson on making money online — in 1995

This week, I sat in on a conference on the future of journalism that was held 14 years ago. I was able to take in the proceedings through a two-volume transcript shelved away in the library of the Nieman Foundation, which hosted the conference in May 1995. I was, at the time, a reporter for my fifth-grade class newspaper.

For two days, luminaries of print media gathered at the Hyatt Regency in Cambridge, Mass., to discuss the hyphenated enigma that was, as recorded on the transcript’s cover, “the On-Line Era.” One panel at the conference tackled what would turn out to be the era’s most crucial issue — “The New Economics of Journalism — through a conversation between Esther Dyson and Arthur Sulzberger, Jr.

Dyson was a technology columnist at Forbes, and Sulzberger was three years into his post as publisher of the Times. Also joining the panel were Walter Isaacson, then the editor of new media for Time Inc., and Frank Daniels III, publisher of, an early news site.

We’ve referred to this panel twice previously, but now it’s time to release the whole thing. At this moment of crisis for the news business, the transcript feels, at times, instructive of how we got here. You can read all 18,000 words in any of the formats below or stick with this post for the highlight reel.


  PDF (148 KB)     Word (224 KB)     Google Doc


It’s easy to read the transcript for passages that, with 14 years of hindsight, seem spectacularly ill-conceived. And there are plenty. “Are you making the assumption that we’re going to put all of our reporters online?” an incredulous Sulzberger asked toward the beginning of the panel. Isaacson, who recently advocated a micropayment system for online news, was certain in 1995 that readers would shell out a monthly subscription fee for Time Inc.’s digital magazines. “Throughout all forms of journalism, people have been willing to pay,” he said.

But the transcript is also notable for how little distance some of these debates have traveled in the intervening years. Time Inc. is, in fact, still experimenting with online subscription models, and The New York Times Co. is still trying to figure out how to make money on the Internet.

Many terms of the debate, meanwhile, had already been set by 1995: Sulzberger indicated awareness that online competition would force newspapers to focus on unique and and in-depth reporting over easily replicable content. And he was already calculating, albeit with highly optimistic figures, the production savings in moving away from print.

The most significant difference between this conference and so many similar summits being held today was a lack of urgency. The Times had recently struck a deal to make its content available to users of America Online and planned — with a hesitancy that seems poignant in retrospect — to post every front-page article on the Internet for free. The Times Co. and Time Inc. still had thriving business models for their print products, and no one was prepared, as Clay Shirky wrote last week, to think “the unthinkable.” Sulzberger was forthrightly uncertain about the Internet’s implications for his business but at the same time, blindly confident:

MR. SULZBERGER: I don’t need to make money this year, and I don’t need to make money next year. And I’d like to lose a little less money the year after that… But at some point, and some point not very far down the line, we’re going to have to start seeing a financial return. And I don’t think that’s going to be as difficult as we think it is today, because I think the ethos and ethics of the web are changing.

I guess I’m betting on that, aren’t I? Am I wrong?

He was. And in a speech last week, Sulzberger acknowledged some of his industry’s mistakes. “Journalism’s relationship with our readers has been one-sided,” he said. That was an interesting comment in light of this exchange with Dyson in 1995:

MR. SULZBERGER: I think we shouldn’t pretend that we don’t already have a relationship with our readers, and that we don’t hear from our readers every day. Yes, it’s going to change. We all know that. But it’s not going to go from no relationship to a relationship. If all of us, as journalists or as publisher produced only a Page 1 that we wanted, with no caring whatsoever as to whether it was of interest to our readers, I suspect we would be out of business very, very quickly. We need, certainly, to define news to a certain degree. That’s our responsibility as journalists. But we also need to be aware of what it is that readers are interested in, on top of that. And we get that feedback. We get that feedback in circulation.

MS. DYSON: Yes, and you get that feedback when you go to cocktail parties at Michael’s, and people come up to you who are your elite readers. But now, you’ve got some guy who can’t really spell, who wants to waste your reporter’s time sending him email.

MR. SULZBERGER: […] I don’t think that’s going to happen. And maybe I’m fooling myself, but I really don’t think that an individual reader directly to reporter, that that’s going to be a major factor in how this is going to design itself.

MS. DYSON: But it’s going to be a major factor in how they have their time wasted, or how they have their time enriched.

MR. SULZBERGER: Are you making the assumption that we’re going to put all of our reporters online? Is that the assumption built into the question, that every day, all of our reporters will have hundreds and hundreds of emails that they’ve got to respond to? You can pick up a pen today and misspell a letter any one of our editors, reporters, business folks. Most — I will speak, I think, candidly for the newsroom — Most of those letters go unanswered. It drives me nuts, but it’s true.

MS. DYSON: Do they go unread?

MR. SULZBERGER: I don’t know. Probably not. They don’t probably go unread. They probably are read. But I’m not sure how that’s going to define what a newspaper of the future is, or how much different that’s going to be. When I was a reporter, people would come up to me and talk to me about what I’d written. People would write. People would call. And I suspect people will email when that becomes more and more common. I think that’s only a small part of what’s going to happen. And I don’t think — and I think this is the important point — I don’t think it’s going to drive our coverage. It’s input, and we should value input, all of us, as human beings and as journalists should value input. We shouldn’t be scared of inflation. But that’s a helluva lot different, I think, than saying, “Oh, I’ve now got seven people telling me to take a left at the stoplight, so I’m going to take a left at the stoplight.” If we do that, then we’re not doing our job as journalists, it seems to me.

To his credit, Sulzberger recognized long before most that only unique content would have a chance of selling on the web. That may have been the logic behind his aborted attempt to charge for op-ed columns and is certainly why the Times thinks it can charge $10 a year for its crosswords on the iPhone. In fact, the Times crossword has long been a money-maker in mediums beyond print:

MR. SULZBERGER: The value is in what do we bring to the news? What are we bringing in information? Is it unique to us?

Our telephone call-up service, I think is the best possible example of what I’m talking about. When we went into audiotext a number of years ago and we put up a variety of audiotext options, opportunities — everything from sports scores to financial tables to breaking, sort of quasi-breaking news, to the answers to the clues in our crossword puzzle. The only one of those that made money, and made a lot of money, was the crossword puzzle answers. Why? Where else were you going to go? We had the answers and you didn’t, and neither did NBC. And people called and called and called, and it’s just a nice little chunk of change. That’s real value added, nowhere else to go. Okay, I got it now.

If you accept that, where should newspaper publishers be putting their money? In their newsrooms. They’ve got to be funding their newsrooms to a greater and greater extent to try to capture information that is not available anywhere else.

He also saw the value in niches:

MR. SULZBERGER: As we’ve been thinking about this, and perhaps, as you’ve guys have been thinking about it, we think we’re coming to conclude — Sort of that’s the way you preface everything these days — We think we’re coming to conclude that the biggest change we’re going to have to make in the news we offer our readers is that we’re going to have to add a whole new way of looking at news that’s much more silo-based.

You know, newspapers generally offer a broad top-level view of the world to their readers, and very few get too deep into any one area. I mean, there are specialties, but it’s that — I suspect that the Internet, that this whole new electronic format is going to force us to create much more of a newsletter mentality. Yes, we will still have to play that essential role of offering broad news at the top across a wide spectrum of human endeavor, but that we’re going to have to get much more detailed, much more detailed, much more in depth in those categories that we think are important to the readers that we’re trying to attract.

And that’s going to add substantial cost to the newsroom. It’s also going to add substantial benefit to our readers, and I think that this, if the technology is driving us any one way, it’s driving us journalistically that way.

This is what Sulzberger was planning and thinking about making money online:

MR. SULZBERGER: We are going to do it all, because we don’t know what works yet. And we’re going to watch all of you do it all because we don’t know what works yet. We’re going to put Page One up on the Internet, and it will be free. That’s pretty broad, and that’s Page One. We will do much narrower things on the Internet, as well, and we will charge for them. We will continue on AOL, and we’ll put our news and information up on that, and we’re in the midst of creating and will be introducing shortly a new generation of AOL offerings, the next generation.

This is all an experiment. We don’t know where this is going. In the end, it’s going to have to pay for itself. We do know that. In the end, it’s going to have to pay for itself. And there’s not a lot of ways to make money.

As far as I know, there are only four — three, if you exclude blackmail — “Mr. Roberts, I won’t put that information up in exchange for $100,” which may be the only way to make money at this business today. Either the reader is going to pay or the advertiser is going to pay, or we’re going to get a piece of the transactional action. If the reader decides that she wants to get theater tickets from the Shubert organization for “Cats”, one, we’ll try to talk her out of it, but if she still goes out to see “Cats”, then maybe we’ll get, you know, one one-hundredth or one-tenth, or whatever the heck it is, of that transaction.

If the Times shut off its presses right now, it could lose as much as 90 percent of its ad revenue. As you can see, Sulzberger didn’t expect as dramatic a tradeoff:

MR. SULZBERGER: We have seen in the last few weeks newspapers go out of business, arguably because of paper prices. We know that paper prices are the single biggest cost newspapers have, at least The New York Times has, outside of the cost of people. When you remove that as a cost, the entire fiscal dynamic of the newspaper changes.

People say they are worried about losing advertising to the Internet, and I am worried about that, too. But I also know that if the tradeoff is losing 10 percent of my advertising and not having to pay my newsprint and distribution costs, I am vastly, vastly aided from a financial point of view.

Isaacson laid out these options for monetizing Time Inc.’s magazines online:

MR. ISAACSON: We’ve not yet decided or announced how we’re going to charge, but we are going to charge, and I think we feel comfortable with a monthly subscription charge that involves a certain loyalty to a product, probably to a package of products initially, as in Pathfinder, which gives you, you know, 20 magazines and ways to search for any type of subject you want amongst those magazines and other products, as well, that we’re bringing in. So there will be some monthly subscription charge, perhaps following the lead of, bundling with Internet access with people who want to buy Internet access in a package of information, and a home page and a guide that takes you around the Internet, all in one bundle. I think once we figure out, to the extent that we can bundle or sell on a monthly subscription basis, there will be certain things we put in that are premium prices. We will test the transaction.

Do you want, you know, this specific thing, to play a rotisserie league baseball game with “Sports Illustrated” editors, will you pay a premium price for that? Will you pay a premium price to find out an in-depth research report by Esther Dyson on this company that you’ve just looked up the stock price on? That might be a pay-per-view thing, where it would be $50 to get your report. That will be offered there, too. We’ll try out a lot of those models of premium pricing, along with sort of the basic thing. I guess it’s a little bit like Disneyland’s Six Flags model, where you pay a bit to get into the gate, but maybe certain rides will cost extra.

MS. DYSON: Great.

MR. SULZBERGER: You haven’t been to Disneyland. It’s the opposite of that.

Isaacson was particularly concerned about the integrity of Time’s brand:

MR. ISAACSON: Well, in terms of paying on the web, we talked to some people at AT&T and others, and they [say], “Oh, you’ll never ever pay for things on the web. We’re going to have sponsored news. You know, we’re going to sell the right to sponsor the parenting news to Proctor and Gamble, and the right to sponsor, you know, financial news to Fidelity,” and that sort of thing. Well, if you get to a web where people aren’t willing to pay for value-added information, on the credibility of having non-sponsored information, it’s going to be bad for journalism and all of us.

I think, throughout all forms of journalism, people have been willing to pay, you know, get our money from circulation, from advertising and transactions. You’re going to have to do that on the web, but you’re going to have to keep it distinct so that people know: This is not sponsored information. This is not Proctor and Gamble telling you about, you know, diapers and disposable diapers. This is something that’s, you know, from “The New York Times”, “Time” magazine, “News and Observer.”

MR. DANIELS: I’d just take one issue with that, is my guess would be that readers would find information on diapers sometimes more valuable from the manufacturers of diapers than from newspapers who perhaps—

MR. ISAACSON: But they’ve got know the difference of what they get and who’s giving it to them. And that’s when you start learning these distinctions, saying all the news on the web should be sponsored and free, then you’re going to end up learning those distinctions or people are not going to know the quality of the news they’re getting. […]

I’m resisting Time-Warner’s plan for world domination at every turn of the way. Time, Inc. is a journalistic organization. You know, we believe, and whether we succeed or not, we believe that our information is branded. It should be credible, and everything on there should be things that people can believe. That means that we cover the entertainment industry, or any industry, as best we can. I believe that as we go out with online or interactive television, or other new ways of delivering digital information, we got to do what you were talking about earlier, which is say, “Here’s a front page. Here’s some credibility. Here’s something you can trust.”

And unless our brand name is trusted — And you talked about what gives value to what we do. I’d put number 1: credibility, because once you’ve got this limitless sources of information you can get on your TV set, your computer or whatever, it’s the credibility of a particular brand name that says, “Okay, I’m going to go to that brand name, not just because I want to see John Markoff, but because I know anything in “The New York Times” tends to have a certain credibility to me.” So that’s what we do when we try to create front pages in cyberspace or whatever, is say, “You can trust us to be a filter and not just using automatic intelligent agents, but trust us. We’re credible.”

And this comment by Sulzberger seems like an appropriate kicker:

MS. DYSON: What do you do if they won’t pay for it?

MR. SULZBERGER: I’d go out of business, so they have to pay for it. I mean, I don’t have a choice. I mean, we can debate this until the cows come home, but if they don’t pay for it, I’m not there.

There are many more gems that I’d like to share, including a question posed to the panel by then-thirtysomething NYU journalism professor Jay Rosen. But you’ll have to dive into the transcript, linked again below, for more. Feel free to take it, reprint it, or remix it under our Creative Commons license — and toss your favorite excerpts into the comments.


  PDF (148 KB)     Word (224 KB)     Google Doc


POSTED     March 20, 2009, 9 a.m.
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